Letter #163: Marc Benioff (2005)
Founder and CEO of Salesforce | First Shareholder Letter
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Today’s letter is Marc Benioff’s first shareholder letter. In it, he shares some high level stats that give us a sense of the company’s scale at the time, the world adapting to their offerings, highlights social proof of the superiority of their technology, and then takes a moment to reflect on how far they’ve already come and express excitement about how far they still can go. He then dives into the next stage of the on-demand revolution before discussing customization and integration, their tradition of rapid innovation, serving customers, and the platform they are building.
Marc Benioff is the Founder, Chairman, and CEO of Salesforce, which he founded in a San Francisco apartment in 1999 with the goal of “The End of Software.” Five years later, he took public at a $1.1bn market cap. Today, Salesforce is a ~$300bn company.
Prior to founding Salesforce, Marc was a rising star and key executive at Oracle, where he was mentored by Larry Ellison. Marc joined Oracle in a customer service role right after graduating college, and at 23, he was Oracle’s Rookie of the Year. Three years later, he was promoted to vice president—the youngest in Oracle’s history.
Before joining Oracle, while he was in college, Marc worked at Apple in the Macintosh Division writing assembly code—a position he got after persistently reaching out to early Apple evangelist Guy Kawasaki. This put him in close proximity with Steve Jobs, who he considered a close mentor. In fact, it was a conversation with Steve that prompted Marc to want to call Salesforce’s software ecosystem AppStore (today it’s known as AppExchange), and he purchased the domain appstore(dot)com. When Apple launched the iPhone, Marc gifted the domain back to Steve and Apple.
Marc started coding at a young age, and in high school, sold his first application, called How to Juggle, for $75. At age 15, he then started Liberty Software, creating and selling games such as Flapper and King Arthur’s Heir for the Atari 8-bit. While Liberty did not become a generational company like Salesforce, Oracle, or Apple, royalties from the games did help Marc pay for college.
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Steve Jurvetson Biography (Highly Recommend)
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Letter
Fellow stockholders,
It’s an honor to share with you our first annual report as a public company.
For fiscal 2005, we reported $176 million in revenue, an increase of 84% from a year earlier, and $7.3 million in net income, a 109% increase. As of January 31st, we had 767 employees working in 12 offices around the world.
We have built an organization that we believe is tuned for profitable growth, and we are pleased with the environment that we see for fiscal 2006, which began on February 1, 2005.
The on-demand model that we created is becoming an industry that we are proud to lead. With approximately 227,000 paying subscribers and 13,900 customers as of the end of fiscal 2005, our momentum continues. Companies around the world are embracing the idea that by subscribing to our service, they can benefit from world-class customer relationship management on demand, without having to purchase expensive and risky software and hardware.
And our technology continues to win head-to-head comparisons in independent publications like InfoWorld and PC Magazine. Industry analysts, too, are documenting the trend: one leading firm recently said it believed salesforce.com would be among the top three vendors of CRM applications this year, besting the combined CRM license revenues of Oracle and PeopleSoft.
That is a remarkable prediction for a company that started just six years ago in an apartment on Telegraph Hill in San Francisco. Today, thanks to the innovation of our technology team and the trust of our growing customer base, our vision for the future has never been bolder or more full of promise.
The Next Stage of the On-Demand Revolution
Since we started our company, we’ve talked about “The End of Software.” Back in 1999, it was part prediction and yes, part effective marketing. But today, it’s much more than that: it’s reality—an innovative and cost-effective way of doing business for our customers.
Our flagship product, Salesforce, dared to challenge the enterprise software world with a simple but essential missing element: success. Today, small, medium, and large customers are learning just how far they can go when information is liberated from the burdens of purchased technology. We have expanded that approach with Supportforce, which is brining the same values to on-demand customer support and call centers and is unrivalled for its openness and partner support.
Customization and Integration
We believe that no business should have to change to meet the demands of software. Like “No Software,” it’s a simple statement that speaks volumes.
With Customforce, we have redefined customization, making it easy for our customers to adapt our service to the realities of their businesses. That’s a radical break from the standard enterprise software approach, which favors pre-built industry-focused solutions—called verticals—that assume all financial institutions, transportation companies, or manufacturers in the same or related industries are all alike. We call it “the power to be unique,” and we believe that our reinvention of customization is a long-term differentiator for us.
The great lessons of the networked economy is that information grows in value in exponential proportion to the degree that it is interconnected. That’s why the integration capabilities of Sforce are so central to our strategy. Sforce ensures that Salesforce, Supportforce, and custom applications written for our platform are integrated into the fabric of our customers’ businesses.
Together, Sforce and Customforce are rewriting the rules of application development and delivery. Some 8,000 developers and 150 independent software vendors (ISVs) are using our technologies to create and integrate a new generation of applications. And because Sforce and Customforce are so easy to use, customers themselves astound us daily with their innovative use of our platform. The technologies surrounding the Sforce platform will continue to be a major focus for us in fiscal 2006.
Our tradition of rapid innovation continues with our Summer ‘05 release, scheduled for June. Watch for more announcement detailing upcoming new technologies to enhance customer success.
These technologies are helping us fulfill our vision of enabling our customers to manage and share their information on demand. We will not write all of the applications that take advantage of our platform—we would never assume that we are the only source of on-demand innovation. But we are building the platform of choice that will capture the tremendous interest in and creativity around the on-demand revolution, and we are intent on delivery that to our customers.
Our flagship products, our innovative technologies, our creative and strategic partners, and our rapidly-growing customer base form what we call a compelling community of success. We feel that is is unlike anything else in enterprise software, and I invite each of you to join us at one of our CRM Success Days around the world and see this power of community in action. The passion of successful customers conveys our story better than any marketing message we could craft ourselves, so our entire organization is built around sustaining and enhancing that success.
I encourage you to review the following pages and see how the success of our customers is becoming that of our stockholders as well.
Aloha,
Marc Benioff
Chairman and Chief Executive Officer
salesforce.com, inc.
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