Tech

Billionaire Salesforce co-founder Marc Benioff says capitalism is dead and needs a reboot

Key Points
  • Salesforce CEO Marc Benioff argues that companies have been too focused on shareholders at the expense of employees, customers and the communities they serve.
  • He advocates more regulation if companies won't serve stakeholders, and higher taxes to help fight inequality — quite a shift for a former Republican.
  • Benioff makes his case in his new book, "Trailblazer."
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Salesforce co-CEO Marc Benioff on reshaping capitalism and Big Tech

Marc Benioff rubs some people the wrong way.

He's too much. Too loud and too opinionated. The company he co-founded, Salesforce, has grown from two people in a San Francisco house in 1999 to a $130 billion company with more than $13 billion in annual revenue, making it one of the great triumphs of modern capitalism and turning Benioff into a billionaire six times over.

And yet, he has the nerve to criticize the tech industry for being too powerful, and the gall to say that today's version of capitalism is too focused on profits. In January 2018 at the World Economic Forum, Benioff made some enemies in the room by saying that if CEOs don't take action to restore trust in their companies, regulators must jump in.

"People were shocked that a tech CEO would say such a thing, that we need more regulation in technology," Benioff told CNBC in a recent interview. "But now everybody, including the tech companies and even those CEOs who initially were disagreeing with me, agree. Because the reality is, if these companies don't step into these new values proactively, then the government's going to have to shift them into those values."

Benioff's new book, "Trailblazer," will be similarly polarizing.

While portions of it read like a typical business book, with insidery anecdotes, like the story of why he decided not to buy Twitter, and hard-won bits of wisdom, other parts read like an Elizabeth Warren speech: Modern capitalism is dead, companies are too focused on shareholder returns and sometimes higher taxes are necessary. It's quite a shift for a former Republican turned independent.

New models

But Benioff insists that he hasn't really changed. Rather, he's simply trying to spread the same values that he instilled in Salesforce two decades ago — and the ones that have worked both for the company and communities where it operates.

"Over 20 years ago, when we started Salesforce, this was our idea," Benioff said. "We'd start a company with a new technology model, a new business model, and a new capitalism model." He was referring to Salesforce's practice of donating 1% of its profits, product value and employees' time to nonprofits.

When you look beyond shareholders, "Your customer's not a product, they're a stakeholder," Benioff said. "Your employee's not a cog in your wheel, they're a stakeholder. And kids aren't people you're driving by on your way to work, they're a stakeholder. And homeless aren't people you're walking by, they're your stakeholders."

Benioff's point is that corporate executives must recognize this in order for their companies to survive. He has little patience for the argument that this approach only works when business is good, but harder to justify during a recession or when times are rough.

"I didn't just become a CEO last year, I've ridden through a few recessions, I've been through economic downturns, I've had tough moments," he said. "I've been through everything you can go through as a CEO. You have to do it this way. If you don't, you're not going to survive."

He was hinting at some of the problems big tech companies are already seeing.

"Their employees are going to walk out, and they are" walking out, he said. "Customers will walk out, and they are. That's where you have to say, OK, I'm going to have to hold myself to a new standard and create a company where people want to work, that people want to do business with, a company that the community wants them to be doing business with."

Marc Benioff, Co-CEO of SalesForce speaking at the WEF in Davos, Switzerland on Jan. 22, 2019.
Adam Galica | CNBC

The narrative has started to play out over the last two years. Until about 2017, tech could do no wrong. Silicon Valley was full of innovators making the world a better place, and any bad patches were dismissed as exceptions.

Of late, public sentiment has turned, regulators are circling and presidential candidates are campaigning on breaking up tech giants like Facebook, Google and Amazon.

"There was a halo left over from people like Bill Hewlett and Dave Packard, and other very good people in the tech industry who did very good things," Benioff said. "A lot of people went to Packard Children's Hospital or the Monterey Bay Aquarium and said, 'Wow, he's really left a big halo on our community.' But then all of a sudden they're like, 'Hold on, you did what with my data? You did what with that election? You did what with your profits?' That's when all of a sudden people said, 'Wow, maybe this is not Bill Hewlett and Dave Packard running these companies.' Maybe this is a different generation of leader that is prioritizing power, and control, and sheer profitability, and capitalism without guardrails over the communities they're participating in."

He also says that a broader view of value is vital for recruiting and retaining millennials and younger workers.

"We are moving into a world where they understand that and certainly the generation after them that's been educated that we're going to have more plastic in the ocean than fish in 2050," he said. "That our homeless situation is increasing, and that there's more inequality, and that our public schools need to be supported."

'We have to do it now'

Benioff's activism could be viewed as an example of profit-washing, the practice by which successful capitalists deflect attention from systemic inequality and their own wealth by focusing on philanthropy. It's a thesis put forward by writers such as Anand Giridharadas.

But Benioff doesn't see himself that way and points out that he actually advocated for Proposition C, a San Francisco law that raised taxes on Salesforce and other large local employers to create new resources to fight homelessness. That move put him in opposition to other local tech leaders, including Jack Dorsey of Twitter and Square, and Patrick Collison at Stripe.

He points out that Giridharadas is an editor-at-large for Time Magazine, which Benioff bought in 2018.

"Anand is right," Benioff said. "We need higher taxes, and that is a key part of making the system work." Benioff even made that point in a recent New York Times op-ed.

"His comment is, people who are successful have a moral obligation to advocate for systemic change, and I agree with that, and I try to be an example of that," he said

Benioff adds: "It was very impactful for me when Paul Allen died. He said he was going to give away all of his money, and that he was really going to work on his philanthropy, and he did give away money, but he also had a lot of things that he had not accomplished in that area."

For Benioff, there's no time to delay.

"I think about that personally for myself and no, we have to do it now."

Correction: A previous version of this story misspelled the name Anand Giridharadas

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