A Billion Kudos
Salesforce chairman and CEO, Marc Benioff, delivered the good news to eager investors and financial analysts yesterday in his quarterly earnings call after the market closed. It was like a spring rain in a desert. For the year just ended—its tenth—Salesforce.com generated just over one billion dollars in revenue, smashing its previous records and adding 3,600 net new customers.
Ten years ago Benioff, Parker Harris and a small group of determined San Francisco technology mavens and executives founded the company on the premise that the world ought to move to on-demand computing. While the idea was intuitively obvious to true believers, there was a great deal of doubt in the rest of the world. Skeptics complained that no one would trust their data to the emerging Internet or that an application that ran in a browser could be very powerful. Times change.
I remember the first time two people from Salesforce—Clarence So and former CEO John Dillon—briefed me in February 2000 very clearly. I had just started a job the prior month as a senior analyst at the old Aberdeen Group and for whatever reason I had decided to cover the emerging market of CRM and hosted delivery models.
My previous jobs had mostly been in software sales and the first time I saw the product I thought, this makes perfect sense and why wasn’t this available when I was selling? It was such a clear idea, the kind of thing that I would later call a disruptive innovation.
Today Salesforce is the CRM market leader—if not in absolute terms, then certainly in momentum and mojo. They took on Siebel in what looked like a preposterous and Quixotic adventure and ended up eating Siebel’s lunch. Whoa!
The company has achieved a great deal in the last ten years, making on-demand or SaaS or whatever they decide to call it this week an increasingly conservative choice for new solutions. Not just CRM but increasingly, HR and back office applications are being sourced on-demand today.
No body starts a company and builds conventional applications any more either. The economics don’t work. And it is so obvious that a new generation of innovators is not only building their apps the on-demand way but they are building new business processes as well. People like Salesforce alumnus Tien Tzou founded Zuora last year with a small cadre of friends. Their vision? To deliver an on-demand billing and payment system for on-demand companies. It turns out that these companies have requirements that are not easily met by conventional billing systems. So the innovation process has started anew.
The business model took a lot of getting used to at a time when technology company revenue charts looked like blueprints for ski resorts. In a world where technology costs were high and products went obsolete and then had to be replaced by subsequent larger investments, it was a challenge to convince financial analysts that this way was better. Customers would respond to low TCO with loyalty. In the end the company’s momentum and happy customer base gave the financial whiz kids the encouragement to back the company’s IPO.
Steve Cakebread came on board as CFO to help the company in its successful pre-IPO courtship of the movers and shakers on Wall Street and just a few weeks ago Cakebread left the company, perhaps to start the long process over again this time as CFO of Xactly. Cakebread’s contribution was graciously acknowledged by Benioff in yesterday’s call.
There will be plenty of time later to discuss the company’s latest adventures in Cloud Computing, and to critique this or that. Today, we can savor the moment when on-demand computing hit the billion-dollar mark. Happy tenth birthday Salesforce.com.