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Salesforce exec promotions strengthen a multi-voice future for a multi-cloud vendor

Stuart Lauchlan Profile picture for user slauchlan November 21, 2017
Another stellar quarter from Salesforce - and some new executive voices coming to the fore for the next phase of growth.

(l-r) Dayon, Taylor, Block, Harris and Benioff

Off the back of a successful Dreamforce, Salesforce CEO Marc Benioff has much to be thankful for as he sits down to Thanksgiving dinner this week in another quarter of high growth for the cloud computing firm.

Announced yesterday, third quarter revenues were $2.68 billion, up 25% year-on-year and ahead of Wall Street expectations. Profit for the quarter was $51.4 million compared to a loss of $37.3 million for the same quarter last year.

Breaking down the clouds, Sales Cloud remains the biggest revenue generator on $906.5 million for the three months to end of October, followed by Service Cloud on $783.1 million. Platform and Other chalked in with $495.3 million, while Marketing Cloud and Commerce Cloud totaled $346.2 million.

The firm’s now projecting full year fiscal 2018 revenues of $10.4 billion and full year Fiscal 2019 revenues of $12.5 billion. But for Benioff, the focus is on another figure - passing the $20 billion run rate milestone:

As the fastest growing enterprise software company ever to reach $10 billion, we are now targeting to grow the company organically to more than $20 billion by fiscal year 2022 and we plan to do that to be the fastest enterprise software company ever to get to $20 billion.

In support of this ambition, said Benioff, there’s been some executive changes, with Bret Taylor, co-founder of Quip, which was acquired by Salesforce last year, appointed as Chief Product Officer, and Alex Dayon, co-founder of Instranet, also acquired by Salesforce back in 2008, moved on to become Chief Strategy Officer. Benioff said that combined with long-term Chief Technology Office and co-founder Parker Harris, this will be the triumverate which will shape product direction:

Parker continues to run and is our Chief Technology Officer, responsible for all aspects of technology and engineering. That’s my co-founder in the company and [he] runs all of our engineering efforts and infrastructure efforts.

Bret is our Chief Product Officer now. He is responsible for the overall product management and marketing organization, as well as the clarity of all of the products that we are building and responsible for defining those products and delivering those products.

And Alex is now taken on a new responsibility that I feel is extremely important for the company, which is why I asked him to take this position, which is our Chief Strategy Officer, to help us to map out not to $20 billion - because we have short-term clarity to that - but really beyond that. Salesforce just has so much potential that as we really map out to become I think [an] extremely large company from where we are now, we need to have a executive team completely dedicated to mapping out the future. Alex is going to be absolutely amazing in that role.

Taylor talks

In what might be read as a vote of confidence, Benioff demurred to Taylor on the post-earnings analyst call to give a view on where he sees product development heading:

The trend we're seeing with so many customers is not just being a B2B company or B2C company, but sometimes both, whether it’s [motorycle manufacturer] Ducati connecting with our customers or customers that sell directly and sell to distributors. What I really think is so powerful about the Salesforce platform is, we're the one CRM platform that can do both, whether [you are] a B2B company - which is where we started - or you are a B2C company doing traditional marketing through our Marketing Cloud or you are a company that is hybrid.

The reason our partners are choosing us as the vendor is because we offer a platform [where] they can do both now, and also grow them in the future. That's really unique in [that] these capabilities truly provide that single view of customer, whether or not they bought their product directly or indirectly. And it's something I think it's the really strategic advantage for our product line and the area that we're investing in primarily.

Taylor also talked up Salesforce’s Lightning offering:

The power of Lightning [is that] it's not just a new interface, it's a decoded platform…This means that people [who] are experts in their business, [but] who are not necessarily experts at computer programming, can make meaningful business applications that transform their companies and transform their relationship with their customers. So, it's truly an enabler.

One of [our] themes is just helping companies with their change management as they transform their businesses from the classic interface to Lightning. You saw that in our Dreamforce announcements with the continued investments in Trailhead. Trailhead is our learning platform…This really feeds into our company's strategies to move to this new platform and also feeds into enabling a broader base of their employees to participate as developers in the Salesforce ecosystem, which is a big part of our Lightning strategy.

Trailhead is a big deal, as anyone who attended Dreamforce earlier this month would have been left in doubt about. Taylor expanded:

We really do think that [what] differentiates us as a company is the community of people who have been built around it. There is a lot of folks who have made mid-career transitions into technology because of the power of Salesforce and the power of Trailhead. We do believe it's an honor for more people in our society to benefit from the economic opportunities of technology.

Of course, no Salesforce product talk is complete these days without mention of Einstein and AI. Taylor obliged:

I think the Artificial Intelligence in the future [that] we’re launching with Einstein perfectly captures the power of the cloud. Previously our customers didn't need to buy new hardware, with every release they get these new capabilities automatically. That is the power of the cloud. We are constantly re-architecting our systems to incorporate the latest and greatest technologies that are customers can use to transform their businesses. And because it's based on the cloud, it's just too simple turning them on. It's not just cloud and on-premise, [it’s] also the way we package them.

You heard a lot at Dreamforce about trailblazers. What this means to us is taking these technologies and enabling our customers to use them, with ‘Clicks Not Code’ . Fundamentally our vision is to broaden the base of people who can adopt these new technologies within their companies, beyond just computer programmers and experts and data scientist, but anyone with the domain expertise in their industry can actually adopt these new technologies.

My take

Leaving aside the strong financials - Wall Street is getting so accustomed to strong quarters that the share price barely flinched! - there was a sense of something changing on the conference call yesterday. Back in the day these post-earnings briefings were dominated by Benioff as the main voice. A few years back, COO Keith Block was added to the mix and I said at the time that the dynamic between COO and CEO was a powerful one.

Now this latest executive reshuffle adds further voices to the gestalt. Benioff has made no secret of his admiration for the technology prowess of Taylor, so the promotion to Chief Product Officer is a logical extension of that. And the way that the Salesforce founder deferred so frequently to Taylor on the call yesterday suggests that there’s real intent behind this appointment. With Dayon now looking further afield from a strategic point of view, I suspect 2018 and beyond will see the multi-cloud company increasingly become a multi-voice company.

That’s no bad thing. I’ve said for a while that Salesforce’s growth trajectory is going through an interesting phase. With the $10 billion revenue milestone now basically a formality, the emphasis is on driving forward to $20 billion. To achieve that, Salesforce needs to adapt and evolve. That takes planning and it takes having the right people in the right postitions - and having the faith to let them get on with their roles. Taylor and Dayon’s new roles suggest that this is something that’s recognised.

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