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Endeavor is pleased to make public the following transcript and video from a presentation at the 2011 Endeavor Entrepreneur Summit in San Francisco. The event, which assembled over 450 entrepreneurs and global business leaders, featured dozens of entrepreneurship-related presentations by top CEOs and industry experts.
Overview: As one of the highlights of the Summit, Linda Rottenberg joined Marc Benioff on the stage to host a conversation and facilitate audience questions. Benioff, Chairman and CEO of Salesforce.com, discusses the transformational impact of cloud computing technology and the extraordinary opportunities for entrepreneurs to make an impact today.
Bio: Marc Benioff is chairman and CEO of salesforce.com. He founded the company in 1999 with a vision to create an on-demand information management service that would replace traditional enterprise software technology. Benioff is regarded as the leader of what he has termed “The End of Software,” the now-proven belief that multitenant, cloud computing applications democratize information by delivering immediate benefits at reduced risks and costs. For the full bio, click here.
Linda: Marc Benioff’s story epitomizes the journey in Silicon Valley from 1980 to today. He started off launching his first company at 15. He then paid his way through college by becoming a programmer at Apple with Steve Jobs working with them in 1984. He then spent 13 years at Oracle working his way up to the inner circles of Oracle, very close to Larry Ellison. And then an unusual decision: at 32, he decided he was a bit burned out and he would go on a sabbatical to India and Hawaii. Then he came back and said he needed a different type of experience.
He had an epiphany for Salesforce.com and he started making these declarative statements about the end of software. He was taking on huge vested interests like Sibyl Systems and others. Everyone thought he was going to crash. Defying a lot of conventional wisdom, he created this incredible company in Salesforce and took it public in 2004. Today it is the leader in enterprise cloud computing. He really talked about the cloud before anyone else did.
We’re all cloud people and you’re the leader, so to start before we go backwards, where’s the future? Where are we going?
Marc: We’re in an amazing time in the technology industry and it’s an amazing time for entrepreneurs. There are four huge drivers for my world and where I come from, which is:
The consumerization of IT is a massive trend. We have these really easy-to-use computers and everybody’s accessing technology. Cloud computing is obviously becoming a mainstream capability. Not just organizations like yours, but lots of companies around the world can automate themselves when they previously could not.
Mobile has now surpassed web-based browsing as the dominant way to get information.
And the social phenomenon. We see these social platforms basically eating the web. You have consumers spending more time on the social platforms than on the Internet itself – that’s a phenomenon.
These four things together – if you can get the four things to work for your company or your organization – is a super-charger. I think that’s the opportunity for the entrepreneurs today, and you see that with a lot of entrepreneurs who are here in Silicon Valley or around the world and you’re seeing that in the public markets. You’re seeing in the private markets and you’re seeing it with the customers.
I’ve spent the last four or five months mostly on the road with customers and have probably met with more than 300 enterprises and CIOs, and I do programs all over the world for groups of customers. I notice three major trends doing this:
I’ve never seen larger groups turn out for these types of programs.
I see this huge dramatic shift for organizations to become social enterprises.love story
The opportunity has never been bigger because you still have the entrenched competitors who are selling the same old stuff and then trying to figure out how they’re going to move forward but are still very conflicted. You see that with Microsoft and you see that with a lot of the big traditional companies in the tech industry.
So this is a spectacular time and if you can get through that door as an entrepreneur, it can be amazing for you.
Question and answer session
Question: Are you concerned about the decentralization of peoples’ data on the web? Now private companies – through this cloud concept – are holding in their hands hundreds of millions peoples’ data. Five, six years down the road, is this killing the web, making us more vulnerable?
Marc: Personally I think that it’s really healthy and great to see the constant shifts in paradigms and that those shifts are owned by different leaders. When we look at the history of our industry you realize you need these leaders to move the paradigms forward. We had Thomas Watson Jr. with the main frames, and Ken Olsen with mini-computer and Bill Gates with PCs and then we had a tremendous shift when we look at the Internet. Certainly people were asking that question ten years ago about them, and they’re certainly not asking that anymore. And then you’ve got Steve Jobs and people were asking the same question about him and his iPad and the app stores. And now you’ve got the social revolution and Mark Zuckerberg and Facebook. And it’s very possible that when that company goes public he could be the richest man in the world. And is that interesting? I think it’s very interesting.
I think that this is a marathon – our industry – and that innovation is very much a baton getting tossed between entrepreneurs between paradigms. When we’re in a current paradigm we always can ask: well what about the control issues, what about the privacy issues, what about the security issues, on and on and on. But the reality is these paradigms are quite temporal. Our industry is an industry of impermanence and things are constantly changing and evaporating through our hands. I think that’s the power of our industry. So I don’t really think about that. Instead, I try to align my company with the industry. So right now, the big thing that’s happening is this social revolution – and Facebook is eating the web. Companies need to go social. They need to be on public social networks, they need to be building private social networks like Linda has done in her organization with Chatter, and I think that this kind of ebb and flow of the private and public social networks – or customer and employee social networks – is a huge shift and there will be another shift that follows it. But it’s because of Facebook’s dominance. And I think that you have to have a dominant player and you have to have a leader that people can get behind. When I look at my own company, I’m constantly rebuilding my positioning to get behind whatever that force is, and that’s what I think that force is today.
For us, we have our big Dreamforce user conference coming up. We’ll have 30,000 customers here in town. The keynote that I will do will have 14,500 people in the room, and the audience wants to know how to become social, how to become social enterprises. The great companies in the world who are there, whether they are small companies or entrepreneurs like yourself, whether they are very large companies, governments – all coming to learn how do to become social. So we need that. If we don’t have that we get lost. It’s a super important part of our industry that we have that leadership.
Question: How do you foresee the future of communications between customers and friends, and how do think in the future this relationship will be affected by the social media space?
Marc: I think it’s dramatic. It used to be that brands were all about your print advertising and your TV, and your brand was kind of a collection of memories. It was about the things I remembered about the brand. Now I really see the brand as a real time conversation that’s happening on the web and you need new tools to pay attention to what’s going on.
I think that it’s shocking – I just came from a meeting with one of the largest retailers here in the United States. They’re primarily a TV advertiser. They’re on Facebook but they don’t have a meaningful presence. I feel my job is to open their eyes to what the possibilities are. So I think that we’re seeing something of a revolution for business – and this revolution for business – we haven’t even touched it yet. Most businesses have these tools, but they don’t understand how to use them, they don’t understand how to get them to work for them. So these are multi-billion dollar businesses that are just opening up for entrepreneurs.
Question: I run a company that’s developing software for many big companies here in the US. Then there are companies like yours that are packaging that software and in some way competing against us on developing those products. How do you see that evolution happening in the future?
Marc: Well, we are a trying to become a real company. We have grown to about 6,000 employees. We’ll do more $2.1 billion in revenue this year. We’re a very fast growing company – we had 34% top-line growth in our last quarter, we had nine quarters of accelerated revenue growth. And what we’re looking to do is to really be much more competitive. Probably not as much toward you, but we are looking at the dominant forces in the enterprise software industry like Oracle and SAP and Microsoft who’ve had control over the industry and control over those markets. We want to open those markets up for new players.
When we have our Dreamforce conference here on Aug 31 we’ll have 240 companies who are presenting our solutions to our customers. That’s a big part of it that we’re dragging a lot of companies with us into enterprise cloud computing. We don’t want to do it alone; we want companies to build, preferably natively on our platform, and if not natively on our platform, then integrated with our platform. We have customers who have built hundreds of thousands of applications natively on our platform and we also have probably helped our partners sell between a half a billion and billion in their own software through our app exchange, which is our kind of Apple app store exchange for software enterprise. So we are very partner-oriented; we want to create that partnership between us and other entrepreneurs to help them to be successful.
Linda: Given the rapidly changing environment, what’s your perspective for entrepreneurial companies coming outside of the United States?
Marc: I don’t think it matters where your company is based, but what I do think matters is where you’re selling your products. In our industry there are really eight markets that matter. It’s the US, the UK, France and Germany, Canada, Japan, Australia and the Netherlands region. Those eight markets represent probably 95% of enterprise software sold in the world. There’s obviously a lot of exciting emerging markets for enterprise software in the world, but you don’t see the revenue coming to companies like mine.
Steve Balmer just gave a pretty incredible speech in China where he has invested huge amounts of money in developing the Chinese market, but his revenues in China are less than the Netherlands. That’s because the Chinese software market for enterprise software is not as large for him as it in the Nordic region. So that’s something to be looked at. And I think if you’re an entrepreneur and you’re coming from another region, you better be selling into the regions where the purchases are being made. I think for a lot of entrepreneurs, they don’t get aligned along that fast enough. I don’t really know why that is. For instance, Japan still represents about 10% of the marketplace in IT software and Japanese software is 5-10% of most mainstream companies revenue, but we don’t see entrepreneurs focus on Japan. It’s amazing when I’m over in Japan I think it’s just phenomenal. And same thing with the UK and countries in Europe. And then I’ll see entrepreneurs wade into markets that are not as large, and they work very hard, but don’t get the kind of results they would get if they focused on those mainstream markets. So I encourage them to think about that in software. I know in all markets it’s not true. But even if you look at the video of Steve Job’s iPad 2 launch, he talks about his eight largest markets – his main markets – and it pretty much matches what I just went through. I think that’s a common mistake that entrepreneurs are making.
Linda: Speaking of entrepreneurs, we talk a lot about being crazy. I’ve always said that I think crazy is a compliment. I actually believe that at that early stage when people are calling you crazy you have less to lose. You have the hunger. How do you, as people start coming to your ideas, keep that entrepreneurial hunger and passion and creativity alive?
Marc: First off, we’re a company that could never get venture capital. All those venture capitalists, when I went to them, would never give us capital. I had to raise money myself from individuals. So I was thrown out of all the names you know in the Valley – Kleiner Perkins, Sequoia, US Venture Partners, on and on. Everyone threw me out, not once, but multiple times. I think that’s a huge lesson for entrepreneurs. Even as the company started to deliver its performance, they said no, we wouldn’t give you money. So that just blew my mind. That you’ve got to keep going no matter what anybody is telling you.
Linda: Do you think in retrospect that was a hindrance or were you able to think longer term?
Marc: That was a hindrance! Because what we ended up doing is we had to go to individuals as I said, and we raised the money in incremental pieces. We ended up raising $65 million private. And that’s a lot of money to raise –it took time, and it took focus. A couple of individuals made a big difference. Obviously they had a fairly dramatic return. But it wasn’t like how it is now where you have so much capital available for mediocre ideas in many cases. It was quite difficult.
Linda: So if you knew then what you know now, what advice would you impart to entrepreneurs today?
Marc: I have had so many individual entrepreneurs come to me and say: what should I do and how do I get going and will you mentor me and blah blah blah that I can’t do it. And so wrote a book called Behind the Cloud which has become a national bestseller. It’s a how-to guide for entrepreneurs from start-up to execution in terms of job function – in sales, marketing, and accounting and fundraising and positioning and product development. I felt that that book needed to be written. I don’t know why there aren’t more books like that.
When I went to business school, most of the things I learned are not really that applicable today. And I think that’s really interesting. I think that you have to learn a lot on the job. You have to be willing to learn from your mistakes because there’s no other way you’re gonna really learn it. I certainly had a tremendous mentor in Larry Ellison who I worked for for 13 years and worked directly for ten of those years. I got a lot of experience and he mentored me specifically on a lot of the things I put into place today. I think one of the reasons Salesforce has one of the five largest software market caps in the world today is because of specifically what he taught me to do and what not to do.
Linda: What were some of the things not to do?
Marc: Well, I think that something you should not do is allow yourself to get disfocused. I’ve been doing this now 13 years and I’m still as focused and as excited and as energized as the first day that I did it. I think that a lot of entrepreneurs and certainly a lot of my friends who are entrepreneurs, get disfocused. I think that it’s very classic and reasonable that an entrepreneur coming in is very creative and very project oriented, but also an entrepreneur can have a sort of ADD type of thing – Attention Deficit Disorder. That’s classic, but the thing is you have to build the tools to help you refocus yourself and channel that energy.
And if you don’t, then I think you end up becoming a serial entrepreneur, and that’s fine, but it’s much more exciting to build a sustainable company that can become a leader in the industry. I have a couple friends of mine who have built companies and just as they get it going and are ready to break through, they become disenchanted, defocused, they sell them, they bring somebody else in – you know, “I’m done.” I think, what are you doing? I will take them out to lunch and call them on the phone. I will try. I have seen over and over again that these entrepreneurs get distracted, and I think that that is a huge problem for the entrepreneurial personality.
Linda: So what’s helped you keep focus?
Marc: I write about this in the book. We have an internal tool that I use and a communications cadence to help me to stay focused – because I can be the kind of person that needs help staying focused. That tool is called a V2MOM (acronym that stands for Vision, Values, Methods, Obstacles, and Measures) and there’s five questions that I’m constantly asking of myself. I do that basically every six months for the company. I ask the employees to do it once a year, to publish it and make it transparent for all the other employees. To take those five questions and constantly think about where we are positionally. Here’s how it generally breaks down:
Vision: write it down in 10 to 15 words. When I meet with entrepreneurs, I’ll say to them: what do you want? That’ll be my opening question to them.
Values: What is most important about that vision? What are the values of the vision? Is it growth, is it quality, is it excellence? Write those things down and prioritize them.
Methods: The question is, how are you gonna get it? What are the actions that you’re going to specifically take? In priority, write them down.
Obstacles: What is preventing you from having that vision – achieving that outcome – right now? Write it down.
Measures: And finally, how will you know if you’re successful? What are the measurements of success? Write it down.
Then get ready to recreate that on a continual basis. For me that is a focusing exercise, and then I will present that back to the company on an annual basis. I will show them where I’m going, what I want to do, and I will ask them to do that back so that it’s a collaborative exercise. I think that if you’re an entrepreneur you need to over-communicate and over-share those things. The leader needs to set the organization forward so together we can get what I call alignment. That is a huge challenge. But it builds a lot of trust in the organization if your employees can see that this is what you’re doing. Of course, you’ve got to walk your talk. If you’re gonna write it down and say you’re gonna do it, you better do it – or your employees are gonna walk out and say I’m going to find somebody to follow who’s going to actually get this done. Transparency builds trust. And collaboration builds trust. These are kind of modern values that we need in the entrepreneurial organization.
I have these entrepreneurs who somehow end up in my world and I work to facilitate the V2MOM with them – and it’s tough for them. We’ll go through the exercise and then I’ll send them away and they’ll come back. We’ll start off and they’re all over the map. Then I send them away and they come back and present it to me. Then maybe two or three weeks later they’ll say: we’re working on x, y and z, and I’ll say, how does this relate to your V2MOM? And they’ll be like, well it doesn’t, and I’ll be like, maybe it should be brought in then or maybe it shouldn’t because I think they have an issue of disfocus. So you have to swing them back in line on purpose and vision.
Linda: Funny when you say V2MOM. I have 6-year-old identical twin daughters and they told me a couple years ago as I was getting off to go on a plane, “you can be an entrepreneur for a short time but you are a mom forever.” So it made me very aware that I had to de-personalize Endeavor from myself and make sure there were other ambassadors.
Marc: And those are the values. They want to make sure that you are remembering them – that family values are important to you. And that’s why you’re bringing that up – because that is important to you. And I think that for everyone in the room, they all have a different set of values and want a different outcome, but do you know what that outcome is? Are you in touch with it? Are you writing it down? Are you communicating it to your employees, to your board, to your investors? I present that V2MOM to the Board of Directors. I present that V2MOM to the people in my world that matter so that I’m getting aligned with everybody – it’s really important. I learned this at Oracle, and the reason I learned this at Oracle was because when we were growing quickly and I was in the bowels of the organization, I was like, what is the plan? What is happening? You can have high growth and all these things, but if you don’t have alignment it can be a real struggle for the employees. If you can get everybody on the same page, it can be a huge super-charger.
Linda: Now that you mentioned values, I would love you talk a little bit about the 1-1-1 model which you pioneered and which a lot of companies are adopting. I then want to end with what Endeavor’s been doing, which you were a big role model for. What is 1-1-1 and how has it affected your corporate culture? Walk us through.
Marc: We took one percent of our equity, one percent of our product and one percent of our time and put it into a 501(c)3 charity. It was very easy because we had no profit, we had no time, and we had no equity. But it created a foundation. Now we have 60 employees in our foundation, which is kind of amazing. And they serve about 10,000 non-profits and foundations around the world and offer our services for free. For non-profits and NGOs that really want to go to the maximum with us, we created a highly discounted program through the Foundation using a 501(c)4 to be able to take revenue from these organizations and then deliver it back out as grants. I encourage entrepreneurs and many have – to do the 1-1-1 because it gives you a capability of adding a service back into your organization very easily. And as the company gets bigger, it scales. Our company this year will do hundreds of thousands of hours of community service. That’s become a huge part of our culture. And it’s exciting for me to see that that’s still moving along.
Linda: It was very personal to have you here, Marc, because four years ago at one of these Summits – we were actually in Miami – I sat down on a stool and said that I spend most of my time hoping to take people with big dreams, these high impact entrepreneurs, and use whatever power I had to inch them a little bit closer to their dreams. And so I wanted to share my dream with them. I said beyond being the leader for the high-impact entrepreneurship movement globally, my dream for Endeavor was to create a scalable, sustainable organization of, by and for entrepreneurs, and I used you and the 1-1-1 model as an example of giveback. The Brazilians decided to one-up it and create 2% equity, and I remember a group of Mexicans and a group of Chileans deciding on their give-back model at the Summit – and today every country has a give-back model of cash, of equity, of time. We have two entrepreneurs who are now Chairman of the Board in Argentina and in Egypt that are Endeavor Entrepreneurs, and just today as I was landing in the plane I got a note from one of our Endeavor Entrepreneurs from Chile saying that he’d just closed a deal – it’d be one of the biggest deals in Chile in the internet space ever – and that he is so excited to be making 2% equity giveback donation. I thought, how a propos because you really were such an inspiration.
Marc: That’s great. It’s an exciting model. I’m excited to hear that and I definitely commend you for doing that. I think everybody should applaud you for putting it into the organization.
And the thing about it is it’s so easy to do because when you’re an entrepreneur and you’re starting out, you don’t have public shareholders. This is the time to say I’m gonna take one percent of my equity or one percent of my profits or one percent of my time and just say this is part of what we’re gonna do in the future.
Linda: Parting thoughts as you’re talking to the 170 entrepreneurs mostly from Latin America, the Middle East, South Africa that you would like to share?
Marc: Parting thoughts: Like I started out, this is the most exciting time in our industry in a long time. Being an entrepreneur right now – and having the ability to get things done and have an impact no matter where you are in the world – has never been better. And so it’s time to be very motivated, very excited, and to be very enlightened that you can do it, you can be successful and you can have a huge outcome. You just have to make that decision and stay focused on it.
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