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The Golden Boy
Sunday, February 01, 2004

By Gavin Daly

For a man regularly described as flamboyant and mercurial, the Marc Benioff sitting in a south Dublin boardroom seems decidedly jaded.

He has just come from "this Davos thing" ± where he launched his unlikely titled book, Compassionate Capitalism ± and is, he says, "ready to go home now".

It's not the most auspicious start to an interview with the man tipped as a technology guru and saviour of corporate America. The founder, chief executive, chairman and 31 per cent shareholder in Salesforce, 39-year-old Benioff has graced magazine covers and rubbed shoulders with the world's most powerful people.

Salesforce has just filed documentation for an initial public offering (IPO) aftrr making impressive gains, with a profit on revenue of $66 million to the end of October 2003. Industry watchers are expecting great things of Salesforce - and Benioff.

"Yeah, it's going to be an important year," said Benioff, before quashing any hope of deep insight. "I don't know how to predict the future,you know.We just take one day at a time."

He has, I venture, done a good job so far. "So far," he says shortly. The idea of selling software as a service over the internet came to Benioff when he was on sabbatical from his vice president role at Oracle, with the blessing of Larry Ellison.

"I was doing a lot of work around the world and then finally [in 1999] I decided that the internet was mature enough to do it." Salesforce raised $65 million in funding from venture capitalists and private investors including Ellison and Gateway bossTed Waitt.

Its Californian landlord, advertising company and recruitment firm are also shareholders and should benefit from the imminent flotation. Benioff is wary of making forward-looking statements or discussing the risks, however.

"Everyone has to make their own decision about what are either the significant ones or the little ones". Not least of the risks is the size of Benioff's own personality - he has dominated the firm, even firing a former chief executive, John Dillon, in 2001. He is no ordinary boss, though, with no formal employment agreement, life insurance, share options or even salary. "I don't think it is appropriate at my level to take a salary," he said.

"I think that there is a lot of excesses in my industry, as well as in other industr ies, with option packages for chief executives who already have significant shareholdings. I am trying to walk my talk."

It is something of a turnaround for Benioff, who was reported to be earning $300,000 ayear and driving a Ferrari when he was 26. [He has since traded the Ferrari for a Mercedes.] "I wasn't at that level, unfortunately," is all he will say, when I suggest he enjoyed excesses at Oracle. "I don't know why the ceo of a
company, whether it is Oracle or Siebel or Microsoft, needs an option package when they already own a huge position in the company. Do they not already have enough? Why take it away from the shareholders?"

Benioff has also pioneered the `1 per cent model', whereby 1 per cent of Salesforce's equity, employee time and profits go to charity through the Salesforce Foundation. "Because I was successful when I was young, I was able to see a lot of different models personally and professionally," Benioff said.

"I was with several high-growth technology companies, and I knew I wanted my company to be different." While some commentators have questioned whether companies should be giving away sharehold e r s mon ey, B e n iof f i s unrepentant.

"We have a model that has dramatically impacted the quality of our company, as well as the communities we serve."

As with most things, he claims Salesforce's charitable model is far ahead of that adopted by his former employer, Oracle, for which he launched a $100 million foundation in 2000.

"It was just bolted on at the end," he said of the Oracle fund. "Having just money doesn't do it, just writing a cheque for some school in Kenya is not going to help them. The real power of the company is in all the other hidden assets including the employees time."

It would, he said quietly, be "great if it was possible" for other companies to follow the foundation's lead.

Indeed, he seems more interested in the foundation than the attention Salesforc e's planned flotation has generated,with talk of another technology boom.

"I don't think there is going to be a wave of IPOs in the United States because the regulatory environment isn't going to allow it. I think it is much tougher today that before to bring a company public and I don't think the US government is going to allow it."

Rather, he says, companies such as Salesforce and Google have reached a level where they need to be more transparent to customers. "I don't think it's going to happen fora lot of other companiesthis year," he said, before adding, "I'm not an expert on the stock market."

Nor does he expect widespread consolidation, despite Oracle's bid for rival PeopleSoft. "I think there is a lot of hype. Oracle hasn't bought PeopleSoft, SAP hasn't bought PeopleSoft, Microsoft hasn't bought PeopleSoft, nobody has."

"The big companies haven't come together. Companies that have come together, you are still wondering what their plan is. I mean, look at Hewlett-Packard. This is a company that is big and has acquired other companies, but is it really ready to take on IBM? I'm not sure."

He is an obvious and ardent admirer of Michael Dell ("doing a really outstanding job") and Steve Jobs ("really good"), as well as Microsoft's Steve Ballmer and IBM's Sam Palmisano.

There is no praise, however, for Larry Ellison, who still owns around 4 per cent of Salesforce.

"The most innovation that has come out of Oracle in the last 5 years was the hull for Larry's Americas Cup yacht," he said. "He has done a good job of creating efficiency in his company, but it is not clear where Oracle's growth is going to come from."

He is convinced Ellison's bid for PeopleSoft is "just a really good advertising campaign. I don't think he ever actually wanted it. Oracle needs to consider real acquisitions it can accomplish or come up with radical new innovation."

Still, he says, Ellison is "a quality shareholder", and Salesforce uses Oracle's database software, which he rates as the best in the world. "They have slagged us off and then tried to compete with us, but they haven't done very well by doing that."

"In the technology industry some companies are mature and they are trying to maximise existing revenues and perpetuate the myth that technology has matured. But eBay's not mature, Amazon's not mature, Google's not mature, Salesforce's not mature."

"There is still a lot happening. Microsoft is not going to double its staff here over the next year, for example.Oracle is not going to double its staff here. But eBay may,or Google may."

His lessons from the technology boom seem disarmingly simple and appropriately nebulous - "you have to be patient, make the right investments, build a good management team and a good brand.We've been fortunate in that a lot of things have worked in our favour."

"Make sure your customers are happy and they will be with you. If our customers are not happy, they can send me an e-mail."

Overall, he says, he has no sleepless nights, thanks partly to mediation,yoga,time spent at his home in Hawaii, and, of course, running Salesforce.

"If you look at most of the companies getting funded in Silicon Valley today by venture capitalists, they have our model. There's not too many new enterprise software companies that have emerged."

"But there is a lot of companies trying to be the next Salesforce. Even the enterprise software companies aretrying to bethe new Salesforce.

"You are going to see a lot of people chasing us into the future,which is where we want to be."