No single phrase defined the 1980s better than Gordon Gekko’s shameless declaration that ‘greed is good’. It summed up the perception that most people had about the world of Wall Street and business people in general.
It was a world of sharp suits, fast cars, ludicrously overpriced real estate, soaring share prices, quick returns and above all self-interest. Thatcherism and Reaganomics were the orders of the day and business was booming – albeit inevitably followed by the social and economic hangover of the 1990s.
But with the advent of the 21st century a new breed of capitalism is emerging with some high-profile CEOs as its most outspoken and enthusiastic evangelists. Call it compassionate capitalism, call it charitable intent or call it plain old-fashioned decency and respect but the ‘greed is good’ culture is in retreat throughout the business world. But while many of the most high-profile examples involve the mega-rich such as Bill Gates and Warren Buffett giving away billions of dollars to good causes, there is another approach to compassionate capitalism that owes more to changing the culture of big business, argues Marc Benioff, founder and CEO of software industry high-flyer Salesforce.com.
The on-demand customer relationship management firm is one of the fastest growing software firms in Silicon Valley and at the forefront of a new model of computing called Software as a Service (SaaS). It is a dot-com that shook off the stigma of the dot-com bust to pull off a successful Initial Public Offerings (IPO).
Indeed there is still a lot of ‘dot-com’ about Salesforce.com’s HQ on the Embarcadero in San Francisco – open plan, exposed brick walls – and indeed about Benioff himself, the lurid Hawaian shirts, the daily Yoga sessions, his rebellious smuggling of a golden retriever into the pet-free office building and so on. For all that, Benioff has a pretty conventional Silicon Valley track record. Graduating with a BS in Business Administration from the University of Southern California in 1986, he had a stint at Apple before founding Liberty Software. He later spent 13 years at Oracle where he held a number of executive positions in sales, marketing and product development before founding Salesforce.com in March 1999.
One way in which the company differs from the mainstream software industry is the compassionate capitalism that runs through its strategy. Much of this philosophy comes from the personal beliefs of Benioff, a man who cites influencers as diverse as Colin Powell, Billy Graham and the Dalai Lama – all of whom have shaped his thinking and Salesforce.com strategy to a greater or lesser degree. The roots of the philanthropic bent of Salesforce.com can perhaps be tracked back to Benioff’s days at database giant Oracle where he masterminded Oracle’s Promise, a variant on Colin Powell’s America’s Promise initiative. (Oracle CEO Larry Ellison got the glory, appearing on Oprah Winfrey’s show among others.)
Powell to the people
It is no surprise then that Powell is cited as one of Benioff’s role models. “He should be President of the United States,” declares Benioff, who was himself appointed by George W. Bush as co-chairman of the President’s Information Technology Advisory Committee (PITAC), a bi-partisan organisation of business leaders and academics that guides the US administration on developing and adopting vital information technology.
“Colin Powell showed me that you can be a leader with great values and change the world. I never knew business could be used for good. Our compassionate capitalism model was from his inspiration.” Powell was guest of honour at the formation of the Salesforce.com Foundation. “He was a great support to us at that time,” recalls Benioff. “I first met him in 1997 when we launched Oracle’s Promise at the Radio City Music Hall in New York. At Salesforce.com, he came along to the kick off the Foundation free of charge. He just came along to support it and endorse it.”
The Salesforce.com Foundation is perhaps the most visible public manifestation of the compassionate capitalism culture, a public charity established at the same time as the company itself. Salesforce.com’s IPO in the summer of 2004 instantly turned that one per cent of equity into a $12 million asset base, a figure now closer to $20 million.
At Salesforce.com, charitable philanthropy is a fundamental tenet of the company. “Our employees give up one per cent of their time to volunteer work, we donate one per cent of our equity and give away one per cent of our profits to various causes, such as technology for youth initiatives,” says Benioff. “We want to be great entrepreneurs and great philanthropists.Wherever we do business we can do philanthropy. Other companies have been asking what our strategy is, how we combine the two, so we are setting an example that others can follow. Imagine if we could turn the software industry into a nice industry.” Salesforce.com has made a big commitment to supporting community service initiatives, both locally and internationally, through the Salesforce.com Foundation.
The personal appeal
While there are striking examples of the Salesforce.com Foundation in action around the globe, Benioff cites a kid called Theodore Ellington from San Francisco as a prime example of the reach that the Foundation can have. Coming from a troubled family background, Theodore turned up in one of Salesforce.com’s media centres when he was around 14 years old and was working away enthusiastically on the computers. Despite a few minor problems en route – Benioff discovered that he was playing truant – it was clear that he had the potential to achieve great things.
Theodore is now in college, something which most probably would not have been possible without the Foundation. It is clear that it is the almost small scale, personal nature of this story that appeals to Benioff. “At the end of the day you can spend millions of dollars but it is the person that is the important thing,” he explains.
At a corporate level, Benioff believes that the desire to ‘give something back’ is not very far below the surface of most CEOs and senior executives – “People want to do the right thing” – and he sees the reach of compassionate capitalism extending. Already the author of one of the few books on compassionate capitalism, this September saw the publication of a new book The Business of Changing the World, authored by him and a number of leading business figures, including Klaus Schwab of the World Economic Forum, Michael Dell, CEO and founder of Dell Computers, financier Michael Milken and musician Peter Gabriel. Most recently he points with some glee to the decision by Google to replicate the Salesforce.com one per cent model for Google.org, its charitable foundation arm.
Of course it is not all about charity. Salesforce.com is a defiantly disruptive phenomenon in the hi-tech industry, changing the market dynamics of the software industry and forcing far bigger and more powerful companies such as Microsoft and Siebel to react. The Salesforce.com phenomenon has set an agenda against which far more established players have positioned themselves.
A lot of this is the responsibility of Benioff’s prowess as a marketeer. His keynote presentations and sales pitches to prospective customers are a compelling mix of impudence, bravado, passion, charisma and humour. One attendee at a recent Salesforce.com presentation sat down as a cynical observer and emerged as a born-again SaaS convert. It is a not uncommon story.
New world order
The evangelical nature of Benioff’s presentations is entirely appropriate: he is not just punting out another product, he is attempting to reorder an entire industry and introduce a new way of implementing and using software. To that end, there is a lot of humour used. Unlike many other CEOs, Benioff has no shame when it comes to winding up the opposition. So he dramatically moves a massive pile of heavy books from one side of the stage to another, informing the audience that these are the manuals needed to install rival Siebel applications software. He gets a big laugh from the audience and wins a bit more support for his argument.
But it is not all sight gags – or even particularly sophisticated humour. In fact, some of it would not seem out of place in the playground. A forthcoming release of Microsoft software code-named Titan is renamed Titanic; while a massively complex Oracle development project is dubbed Confusion rather than be afforded its correct title of Fusion. But somehow he gets away with it. Where remarks like that would sound shrill and petulant on the lips of many other CEOs, Benioff makes them amusing and rather powerful weapons in his marketing armoury.
Benioff clearly relishes leading from the front. He did hire a CEO, John Dillon, shortly after starting Salesforce.com but his tenure was short lived. “Marc decided that he wanted a turn at the wheel,” recalled Dillon later. In many respects he has learned at the feet of the master, his former boss Larry Ellison, founder and CEO of Oracle. Ellison also led from the front, powering the dramatic growth of his own software firm through a combination of charisma and utter ruthlessness. When it came to winning marketshare he used formidable, some might say downright frightening, sales tactics.
There are those who see similarities between Salesforce.com in its current state and the nature of Oracle at the same stage in its development. Benioff can see some common elements, although he is quick to distance himself from some of the less appealing aspects of Oracle in the early 1990s where sell, sell, sell was the mantra and it was not enough to win; the other guy had to know that he had lost.
Ready for battle
While the likes of Siebel took the aggressive, almost obsessive sales tactics from Oracle, Salesforce.com has adapted the art of war. “It’s about a spiritual approach to market dynamics,” says Benioff. “It’s about how to crush the opposition but to do it in a mindful way. It’s about how to win out against much larger players. We’re out there trying to win marketshare against established competitors as Oracle was. But Oracle got out of control in terms of the kind of deals that it chased and it struck.” Nonetheless there are strong similarities between the two firms. “Oracle was trying to evangelise new technology and a new approach and so we are we,” concedes Benioff.
“We are still on a mission and we are all still missionaries. I talk to crowds of people who have never seen our technology or don’t understand what SaaS is all about. It’s very important that we keep getting out there and getting the message out there.
“We are also more focused on customer success than Oracle was. It’s like the song to our lemmings: focus on the customer. Every customer has to be successful as far as we’re concerned. That’s all we do. We have never had a large customer leave us – that’s really unusual for a company in our field.”
Those early pioneering days at Oracle spawned a number of CEOs of other software firms, people who learned or honed their skills at the database giant then took themselves off to set up often competing businesses. Many of them were driven by a personal enmity towards their old alma mater and in particular its CEO Ellison. It can be argued that for some CEOs – such as Siebel’s Tom Siebel or PeopleSoft’s Craig Conway – this antipathy became a serious weakness that Oracle itself was able to exploit to its own advantage.
Benioff differs here. While more than happy to rake over the shortcomings of his former employer’s strategy, he maintains an admiration for Ellison and is still in contact with his old boss. (Siebel and Conway on the other hand seem unable to be in the same room as him without a row breaking out). Indeed Salesforce.com got off the ground with the help of a $2 million investment from Ellison.
“Of course 13 years at Oracle shortened my life,” laughs Benioff. “But it also made Larry my primary business mentor. He taught me the art of war. He showed me how to manage innovation, distribution and marketing but mostly he showed me how to be a leader.”