Salesforce.com As Economic Barometer
Marc Benioff's interview with the Wall Street Journal today has an interesting little tidbit about the value of his on-demand model, and what an astute investor could do with data about the usage of a service like Salesforce.com. In the interview, Marc ponders the question of whether we're in a recession and answers with the following observation: "If this were a recession, we would see customers cutting back their sales forces. But we're not."
In other words, SFDC's usage statistics, were they available, would be a fabulous leading indicator of how companies large and small are thinking with respect to the question of the moment -- recession or no recession. Inside those databases at SFDC's data centers are some fabulously rich indicators of economic activity, and not just with respect to the size of the sales force. Think of what you could predict about market trends by aggregating opportunity and closing data from thousands of customers across dozens of industries: the models you could build would be a hedgers dream.
Of course, actually acting on that data might be the ticket to SEC enforcement action as well. And it could easily violate privacy laws, as well as the terms and conditions of use that SFDC sets out for its customer. But it doesn't hurt to dream, does it?
Marc and I had talked about the macroeconomic data trove he is sitting on a number of years ago, when SFDC was largely a small company company and the data about the size and activity of sales teams sitting inside the SFDC databases was interesting but not necessarily an indicator of how the larger economy was doing. But now that SFDC counts large companies with thousands of seats as its customers, it's clear that a little data on how all these companies' sales efforts are doing would go a long way towards answering the kind of crystal ball questions that everyone with any stake in the equity markets are asking these days.
All of this begs the larger question of what legal protections there are for aggregated data from large on-demand networks like SFDC's. I honestly don't know the answer, though I am certain that there is little in the way of law and precedent to govern the internal use of this data for tracking macro-economic trends. While it would clearly be illegal if someone with information on a specific company's plans to cut their sales force acted on that information by dumping a stock, it's not clear what would happen to someone with aggregate data from an SFDC-like company if he or she tried to trade on that information. But it's a good question, and one that needs answering.
In the meantime, more's the pity that SFDC last year went from reporting its users numbers quarterly to a bi-annual basis. Knowing exactly how the last quarter's sales forces grew or shrunk across the SFDC customer base would still be interesting data, knowing what happened six months ago would be much less useful. Either way, inside SFDC is a little economic indicator or two waiting to get out.
Maybe Marc's next act will be as a market maker: he may not be an Alan Greenspan, but, if Benioff says he's not seeing recessionary layoffs in his customers' sales forces, I'm going to take that as a very positive sign. For now.