Salesforce: Have no fear of Microsoft

CEO Marc Benioff tells aspiring entrepreneurs that many successful Internet companies have managed to carve their own niche without relying on the world's largest software maker.

newsmaker With proclamations of "The End of Software", followed by a staged demonstration--complete with "protestors"--during his visit here last week, some may dismiss Salesforce.com's head honcho Marc Benioff as merely a master of gimmicks.

Call him what you will, but there is no denying that the chairman and CEO of one of the most influential IT companies today has single-handedly made terminology such as on-demand and customer relationship management (CRM) hip again.

Benioff founded Salesforce.com in 1999, after a 13-year stint at Oracle, with the belief that on-demand applications can democratize CRM by delivering immediate benefits to companies of all sizes, at reduced risks and costs.

In February this year, the company launched AppExchange, an online marketplace that allows developers and Salesforce.com customers and partners to distribute and access applications via Salesforce's computing platform.

The software service model has proven successful as the company reaches its first US$100 million turnover--its entire revenues in fiscal year 2003--for the quarter ended April this year.

In town recently on the invitation of Singapore's Infocomm Development Authority (IDA) as a Distinguished Speaker, the blunt leader gave his address in front of a packed auditorium and later fielded questions--with his tongue in cheek--about competition from its biggest rival Microsoft and how Salesforce's AppExchange can benefit aspiring entrepreneurs.

ZDNet Asia highlights some of these, and more, along with Benioff's candid replies.

Q: Why did you come up with the name Salesforce.com, and how has your initial vision for the company evolve?
A: My believe is that in marketing you've got to be very specific and clear about what your product does and what your company does. The biggest opportunity for us at this point has been managing customer information.

We called our company Salesforce.com so that we can tap into this market. It's kind of our Trojan horse where we get our first entry point into the customer's company, and then once we get there, we explain our offering. But over time, our name became more about the software service model than just about our CRM offering, so we debate about this constantly.

"It's been a long since Microsoft really has been able to hurt a company."

But, we're very happy with the Salesforce.com name. It means success, it means on-demand, and it means software as a service. It's been good karma for us, so we decided to keep it.

What we're seeing now is that the giants of the industry--Siebel, Oracle, Microsoft--are catching on to your idea. You know that when someone like Microsoft gets into the market, it usually spells trouble for the little guys.
[To laughter from the audience] That's right, the guys from Google are very afraid right now.

What's the vision that you have that's going to distinguish you from the competition ahead?
As I travel around the world, every journalist asks: What about Microsoft? It's the largest software company in the world, with a market capitalization of US$280 billion--four times the market capitalization of the second largest company Oracle. It's very interesting, but the world has changed.

There are so many entrepreneurs around the world, but the entrepreneurs of the Internet--especially those who are not wedded to Microsoft's model of software and channel of distribution--have created their own world. They live in their world.

Google, for example, does not rely on Microsoft in any way. Steve Jobs (Apple Computer CEO) does not rely on Microsoft. No one in the area I just mentioned is really reliant on Microsoft. It's been a long time since Microsoft really has been able to hurt a company. You know, they did have some unfair business practices that have been addressed by the U.S. government which ruled them a monopoly, and by the European Union which recently imposed fines of a significant amount of money.

The reality is that on the Internet, there are now the eBays, the Amazons and the Googles. The reason there are the iTunes, the BlackBerrys and the Salesforce.coms is because Microsoft just is not what it used to be.

"It costs nothing to go [on AppExchange] to post your application and say, 'Look, I'm available, I built this in Singapore and you can buy it today.'"

This region has one of the most mobile workforces in the world. What can the software as a service model and Salesforce.com, specifically, offer users here?
Our model is interesting because of our server, which has the ability to drive applications on mobile phones and send data back and forth to those phones. We're not wedded to the PC or the browser, and we can operate with this type of mobile environment.

Before we came along, there were 40 enterprise applications available for RIM's BlackBerry device. When we introduced AppExchange, we added 300 mobile apps for the BlackBerry.

How can AppExchange benefit entrepreneurs and creative workers in this part of the world?
I think the AppExchange is where the action is. The reason why is because we provide three things. First, we provide the technology that helps you build an AppExchange product. Second, we provide a directory so you can freely post your application on the AppExchange platform for no charge. And third, we give you an infrastructure of customers.

There are 22,700 customers ranging from some of the largest technology companies in the world like Cisco Systems, to the largest banks in the world like Deutsche Bank and Merrill Lynch, and others, that have standardized on the platform. They're going through our directory systematically looking for great entrepreneurs and applications, and literally by one click, they can add these applications for the whole company. Some of these entrepreneurs are becoming very wealthy very fast because of this new AppExchange concept.

You asked about Microsoft. It has been very successful because the company owns its distribution channel and has dominated the hardware distribution. Microsoft also has the VAR (value add reseller) and the ISV (independent software vendor), that would come and set up the company's software for you because it was very hard to set up.

Well, that was their distribution channel so when someone wanted to come in with his new software, he'll have to spend a lot of money to get his application supported on that Dell computer or spend a lot of money to get it to that VAR or ISV.

Well, our distribution channel is the AppExchange and our customers are on the AppExchange. It costs nothing to go there to post your application and say, 'Look, I'm available, I built this in Singapore and you can buy it today.' And with one click, that customer in Europe or in the United States or Japan, can have access to that technology with no additional work.

That's a big change and a big idea that will really impact not just us and our company, because I think there'll be other AppExchange products and other directories.

To all the great entrepreneurs who are in this room, or thinking about starting companies, I want them to have no fear of Bill Gates or Microsoft. If I had that fear, I wouldn't have started my company. Larry Page and Sergey Brin (founders of Google) didn't have that fear, Apple's Steve Jobs didn't have that fear and Jim Balsillie (chairman and co-CEO of RIM) didn't have that fear. I didn't either, and I don't want you to have that fear anymore either.

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