10 years ago, what Benioff told me about AppExchange

Phil Wainewright Profile picture for user pwainewright January 14, 2016
My first meeting with Salesforce CEO Marc Benioff was ten years ago this week and much of what he told me then about AppExchange still holds true

Salesforce AppExchange 10yearslogo
Yesterday, Salesforce celebrated the 10th birthday of AppExchange, its 'marketplace' for apps that connect to or run on its platform. It reminded me that, the following week in 2006, I had my first encounter with Salesforce CEO Marc Benioff, who was in London for the UK launch. Many of the things he told me in that interview still hold true today. Here are five lasting takeaways.

It's going to be big

At the time, AppExchange was the umbrella name for the Salesforce platform as well as the directory of apps that work with it. Recently rebranded as the App Cloud, Benioff ten years ago had foreseen that platform could even become bigger than the core Sales Cloud application:

We've a second killer app. A lot of companies come along and say, ‘Yes, you're a one-product company, but can you have a second product?’ I think AppExchange really is the second product.

That's how I think about AppExchange. Even though [we're introducing it because] it makes Salesforce better, I think AppExchange [in its own right] is our second killer app.

Whereas Salesforce could only sell its CRM application to a subset of an organization's employees, AppExchange created the potential to offer something that all of them could use. Thus it held the potential to dominate the entire cloud applications market, he told me.

That was quite a claim when the AppExchange ecosystem consisted of barely a few dozen vendors and many of the applications on offer were in-house Salesforce examples.

Today, Benioff's early confidence is vindicated when you consider that the Salesforce ecosystem generates many billions of dollars in economic activity and early partners that built apps on the platform are now substantial ISVs in their own right.

It has a dual role

Despite that growing importance in its own right, the platform's primary role still revolves around the core product. Benioff recognized that duality of purpose right from the start:

We’re still in the CRM business, so whatever we do with AppExchange has to make our core product better. We're not just a development platform, we're not just doing data management generically, we have to live the duality that we are still a killer CRM app. And that [AppExchange] is making our app fundamentally better. It may pull us in new directions, but we have to remember that [duality].

That duality has sometimes created tension between the needs of the platform and the demands of the core Salesforce applications. It was farsighted to recognize it right from the start.

It's all about the customer

Benioff explained to me how the seeds of the AppExchange had been sown by customer demands for integration and customization to the original Salesforce application.

Companies really asked us for two things. First they asked us for integration support. A lot of them were like, 'This is a really nice app, but can you integrate with my internal systems' — whether it's Outlook or something else.

Once we had the API really working well, then customers really started to hammer me on customization. They would say, 'Why can't I change this tab name, why can't I change this field name, I want to be able to do this, and I want to be able to do that.'

To get the custom tabs, to have that level of customization, is very tricky — but very, very important, especially for vertical markets. So we started to see customers really start to customize everything.

It's a cloud directory

I have to confess I had not been impressed when Salesforce initially unveiled plans for the AppExchange in the fall of 2005. I was irritated by Benioff calling it the eBay of enterprise applications when it had no transaction capability. I felt — and still feel — that it's inaccurate to call it a marketplace when the ordering and payment process largely happens elsewhere. It's not exactly what you would call frictionless.

But it's easy to forget that many of the things we take for granted today were almost revolutionary when AppExchange was born a decade ago. The notion of simply downloading enterprise functionality from the cloud and getting it up and running without any major technical expertise was still a novelty, and that was something that AppExchange executed very well.

Benioff explained to me that day in London ten years ago how the notion had crystallized the previous year, after Salesforce first introduced the ability to switch between multiple applications on its platform.

That's when we really drove the concept of, what if you could save these applications? What are you going to save the application to, a disk? No. You're not going to save it to a disk! You're going to save it to a directory. That's a breakthrough idea, just right there.

Platforms will catch on

While the notion of an online marketplace was well established at the time, the idea of a cloud application platform is still today one that Salesforce alone has really taken to maturity. It's only in the past year or so we've seen many more people start to see themselves in that vein (and perhaps even some platform winners and losers). But Benioff understood the gameplan right from the start.

I think this platform idea is going to push the whole industry forward and show a lot of CEOs of software-as-a-service companies are either a) looking at how they can participate in our ecosystem or b) trying to take this idea and apply it to their own products.

My take

There was one other thing we discussed at that meeting in January 2006. After his stopover in London, he was flying on to the World Economic Forum at Davos in Switzerland to spread the word about corporate philanthropy.

It all goes to show you can't fault Benioff for consistency of vision.

Image credit - 10 years birthday logo, feature pic of Benioff speaking at Dreamforce 2015, both courtesy of Salesforce.

Disclosure - At the time of writing, Salesforce is a diginomica premier partner.

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