Is it time Benioff bows out of firm?
As Dreamforce, Salesforce’s annual block party masquerading as a tech conference, gets into full swing Monday, it’s worth asking a seemingly absurd but completely relevant question.
Is it time for CEO and founder Marc Benioff to exit stage left?
Benioff is no doubt at the height of his powers. The San Francisco business software company is, as tech bros say in line at Blue Bottle, absolutely killing it: In the fiscal year that ended in January, Salesforce’s revenue jumped 26 percent to $8.39 billion. The company
earned $179.6 million in profit, compared with a loss of $47.4 million in the previous year.
Since the start of this year, Salesforce shares have jumped 45 percent to Friday’s close of $102.71. With the company seeing sales increase by 25 percent a quarter, Salesforce — like its new tower looming over San Francisco — seems to have only one direction to go, and that’s up.
No wonder that Salesforce is frequently mentioned as an acquisition target for the likes of IBM, SAP and Bay Area rival Oracle Corp. With the race to dominate cloud computing entering a feverish phase, there’s no doubt that Salesforce could command a huge premium for its business.
“At the right price, Benioff would sell it,” said Steve Koenig, an analyst with Wedbush Securities in San Francisco. (Benioff owns 33.8 million shares, or 4.7 percent of the company.)
At the same time, “he is still having fun,” Koenig said. “He’s very much in the game now.”
Benioff ’s representatives did not respond to a request for an interview, and the company declined to comment on a possible acquisition.
Dreamforce, which attracts around 170,000 people to downtown San Francisco, very much personifies Benioff and his penchant for energetic, high-minded chatter with big-name celebrities about topics like leadership, the environment and equality. In addition to the usual shop talk about sales apps, customer relationships and marketing, the conference will feature former first lady Michelle Obama, actor Ashton Kutcher, musician Will.i.am and philanthropist Laurene Powell Jobs.
Alicia Keyes and Lenny Kravitz will headline a benefit concert for Benioff ’s favorite cause: the UCSF Children’s Hospitals in San Francisco and Oakland that now bear his name.
“Benioff loves that he has this circus in town for people to come see him,” said Jill Rowley, a former top software sales executive in Silicon Valley who regularly attends Dreamforce.
So much so that you wonder whether Benioff ’s ambitions stretch beyond merely running Salesforce. He is politically outspoken and is a generous donor to issues like health care, education and poverty. With his stake in Salesforce worth about $3.4 billion, Benioff certainly has the financial means to do whatever he wants.
Yet Rowley and other observers say Benioff is unlikely to walk away from Salesforce — at least anytime soon.
“I see his identity and soul tied with his company,” Rowley said. “It keeps him grounded. It’s his platform.”
But money talks, and some would pay a lot to acquire Salesforce, especially Oracle — where Benioff spent the first 13 years of his career.
After a slow start attacking the market for cloud software and services, the Redwood City software giant has been trying to make up for lost time by aggressively buying scale and technology: PeopleSoft ($10.3 billion), BEA Systems ($8.5 billion), Sun Microsystems ($7.4 billion), Micros Systems ($5.3 billion).
Last year, Oracle paid $9.3 billion to buy rival NetSuite of San Mateo. Oracle founder and Executive Chairman Larry Ellison also happened to be the largest investor in NetSuite, owning about 32 million shares.
Ellison was Salesforce’s first investor, too, and joined its board — until Benioff pushed him off in 2000, seeing Oracle’s plans to compete with Salesforce’s cloud software.
But they may have to set any past rancor aside.
That’s because Oracle is running out of software companies to buy, Koenig of Wedbush said.
“The list of companies large enough to make an impact at Oracle is pretty small,” Koenig said.
And Rowley argues that Oracle can’t grow fast enough in its own.
“Oracle can’t be No. 1 in cloud computing organically,” she said. “Ellison has to make a massive acquisition.”
I naturally assumed Benioff, as a former protege of Ellison, would never sell his company to his fiercest rival. But Rowley, who briefly worked at Oracle after the company acquired Eloqua in 2013, said the two men are more alike than you would think.
“There’s a lot of Oracle in Saleforce,” she said. “Larry Ellison and Marc Benioff are two different people. But they are very similar in that they both want to take over the world.”
The question is how they accomplish that goal. While both men care deeply about their companies, “Oracle is Larry’s life’s work,” Koenig said.
Benioff, on the other hand, exudes a kind of restless energy that makes you wonder whether Salesforce will ever be enough to satisfy the master of the software stage.
“I see his identity and soul tied with his company. It keeps him grounded. It’s his platform.” Jill Rowley, former top software sales executive in Silicon Valley