Salesforce's Marc Benioff unplugged for two weeks, and had a revelation that could change the tech industry
- After a summer vacation, Benioff made the surprising decision to elevate Keith Block to co-CEO, enabling a "divide and conquer strategy" and giving Benioff time to do the things he enjoys.
- Benioff loudly took on the tech industry last year, particularly Facebook, which he compared to cigarettes.
- He led the MuleSoft acquisition, Salesforce's biggest ever, and bought Time Magazine with his own cash.
- After promoting Block, Benioff took two weeks ahead of the November elections to lobby for a measure that provided funding to the homeless.
- Shares of Salesforce surged 34 percent in 2018, while the broader market had its worst year in a decade.
In early July 2018, Marc Benioff packed his iPhone and iPad into a FedEx envelope and mailed it to his summer home in Hawaii. The billionaire CEO of Salesforce then hopped on a plane out of San Francisco for a quiet two-week vacation across the Galapagos Islands, Bora Bora and Easter Island.
He was unplugged and unreachable except by landline. Benioff, who preaches the virtues of mindfulness and seeks guidance from Buddhist monks, was left with plenty of time to meditate while enjoying some of the world's most glorious beaches with his family.
All that relaxation led Benioff to one big revelation: He's too busy.
Weeks at work are filled with dinners, parties, events and business council meetings exclusively for CEOs, meaning that if anyone from Salesforce is to attend, it has to be him. Meanwhile, he's trying to run a 30,000-person company, build Salesforce towers across the globe, bolster his philanthropy, invest in start-ups, mentor other business leaders and become a louder voice on a number of social and political issues.
"So I made a very good decision — to have two CEOs," Benioff said with a laugh, during a recent interview at his home in San Francisco. "Then it's a divide and conquer strategy."
Following his time off the grid, Benioff flew to Hawaii refreshed and resolved to focus only on the things in life he enjoys. Upon arriving at his five-acre estate on the Big Island, he still had to retrieve his devices, and break the news to the person who would soon become his co-CEO: Keith Block.
"Right away he liked it. He's wanted to be CEO of a company his whole life," Benioff said. As to the speculation that Block had another CEO offer on the table that he was considering, Benioff replied: "Not that I know of."
Block, like Benioff, is an Oracle veteran. He joined Salesforce in 2013 and has been leading the sales and support organizations for five years. When his promotion to the top job was announced on Aug. 7, analysts at Piper Jaffray called it a "profound combination not having been seen in the software industry for the last decade."
A very busy 2018
For Benioff, it was just one big decision in a jam-packed year that saw his profile balloon from that of an industry leader and local giant to a global force with apparently unending ambitions. In an interview from his home boardroom overlooking San Francisco's Presidio and with a view of the Golden Gate Bridge, Benioff reflected on some of the key moments of 2018, a year that included Salesforce's biggest ever acquisition — the $6.5 billion MuleSoft deal — and his family's purchase of Time Magazine for $190 million.
Investors clearly have his back. Salesforce shares rose 34 percent last year, outperforming all of the biggest names in tech and crushing the broader market, which had its worst year in a decade. The company's revenue and earnings beat estimates in the latest quarter. Benioff, who owns about 5 percent of Salesforce, saw his net worth swell to over $6 billion.
But he's clearly after something bigger. Benioff, wearing a black sweatshirt and jeans with a black Under Armour baseball cap, gives the distinct impression that after a particularly dark year for much of his industry, he's on a mission to help save technology from itself.
The big stories of the year were deeply troubling, whether it was the privacy and platform manipulation issues that ravaged Facebook, Google and Twitter, or the hit Amazon took for treating the HQ2 bid as a beauty contest for the prettiest corporate handout.
"Companies that are struggling today are struggling because of crisis with trust," Benioff said.
Facebook is a 'train wreck'
Even though Salesforce occupies a relatively sleepy corner of the tech universe, selling web-based software that helps salespeople and marketers do their jobs, Benioff is using his megaphone like never before to get that message across.
His name was all over the local papers ahead of the November elections, when he was supporting a measure to fund homeless programs in San Francisco through a corporate tax while lambasting tech leaders for ignoring the problem that's sitting at their front door.
He was in attack mode as far back as January during the World Economic Forum in Davos, where he publicly shamed Facebook, saying it was as addictive as tobacco. That was before the Cambridge Analytica data-sharing scandal and the many reports of bad behavior that Facebook had hidden from the public.
Benioff said his comments in Davos were unplanned. Prior to the event, he'd been chatting with friends like Jim Steyer, founder of Common Sense Media, and tech investor and Facebook critic Roger McNamee, and it had become "crystal clear that [Facebook] was a train wreck and that the management team was making it worse," he said.
He'd also recently met with ex-Uber CEO Travis Kalanick about his mistakes at the ride-hailing company, and how the tech industry had to shift from a relentless pursuit of ideas to a focus on trust.
As it happened, he was on a panel titled "In Technology We Trust?" with Uber's new CEO, Dara Khosrowshahi. Then, Benioff let loose on Facebook, telling CNBC that the company's "product designers are working to make those products more addictive," and suggesting we fix it "exactly the same way that you regulated the cigarette industry."
The clip went viral — and the remarks didn't sit well at Facebook. Chief Operating Officer Sheryl Sandberg contacted Benioff to express her displeasure.
"Her response and others was that it wasn't true what I was saying and they were going to send me a variety of materials to prove to me that I did not understand the situation," Benioff said. "I said I'd be happy to change my position if they sent me those materials that showed I was wrong. Maybe I was wrong, and I'm happy to fall on my sword."
He paused. "But of course those materials never arrived."
(When contacted about the dispute, Facebook said it sent Benioff the materials on April 6.)
In the great tech backlash of 2018, not even Salesforce was immune. In March, the company announced that U.S. Customs and Border Protection (CBP) was deploying Salesforce's analytics and cloud products to "modernize its recruiting process" and help the agency manage its border activities.
In President Trump's America, few issues are as politically charged as border security, given the administration's aggressive clampdown on immigration. Workers at Microsoft and Google objected to their employers' controversial government contracts, and now it was happening at Salesforce.
Employees signed a petition in June over the CBP deal, and protesters at the annual Dreamforce conference in September brought along a large human cage. It symbolized that the company was complicit in the government's immigration policy, including the separation of families at the southern border.
From Hawaii, Benioff spent a good part of the summer wrestling with the matter, as well as some of the bigger moral issues that Salesforce and its counterparts are facing, particularly as sophisticated technologies like artificial intelligence gain wider adoption and weave their way into everyday products. Benioff knew he didn't have a ready or adequate response to the employee pushback regarding the CBP contract, and that such tensions aren't going away.
"They ask me questions I don't have the answer to and I don't have the authority or understanding to be able to opine on," Benioff said. "I said I need a team that I can pivot to to say, 'What is the right thing to do here?' And I'm like, it's crazy that we don't have a team like this. And it's crazy that no company does."
Benioff opted to keep the contract, but he put Tony Prophet, the company's chief equality officer and a former Microsoft executive, in charge of building a group equipped to handle related issues in the future. The process took six months, Benioff said, culminating with the hiring on Dec. 10, of Paula Goldman from Omidyar Network as Salesforce's first chief ethical and humane use officer.
"You don't want to be a CEO or co-CEO and all of the the sudden you get a phone call, 'I don't agree with your ethics, I'm leaving,'" Benioff said. "I could not imagine if that actually happened. I'd be very upset."
Benioff co-founded Salesforce in 1999 after a 13-year career at Oracle, where he worked for founder Larry Ellison and became the company's youngest ever vice president. Salesforce got its start pushing customer relationship management (CRM) software from traditional desktop computers into the cloud — a market that didn't exist at the time.
In today's economy, Benioff's marketing wizardry is in avoiding a focus on specific products like CRM that most people don't understand, and instead he touts the grandiose vision of a digital transformation that Salesforce is powering. All big companies are moving from old legacy systems into a future of total interconnectdeness, or what Benioff calls the "fourth industrial revolution."
He even helped turn an old military campus — he points "just over the hill" — in the Presidio into the Center for the Fourth Industrial Revolution, a project with the World Economic Forum. Benioff, naturally, is the inaugural chairperson.
"He's larger than life and he always has been," said Max Levchin, co-founder of PayPal, founder of fintech start-up Affirm and a friend of Benioff's.
Talk to other friends and you'll hear similar descriptions. Magdalena Yesil, who was the company's first investor and a founding board member, describes his "maniacal focus" on the local community and his expanding "global footprint."
Yesil was among the hundreds of people at Benioff's 54th birthday party in late September on the top floor of the 1,070-foot Salesforce Tower. There was food from celebrity chefs Michael Mina and Tyler Florence and a cake that resembled a piece from Japanese artist Shinji Murakami, whose work is on display throughout the building. The party coincided with the start of Salesforce's massive Dreamforce conference, and served as the opening of floors 60 and 61, which Benioff designed.
Metallica drummer Lars Ulrich, another longtime friend, was also there. He returned to the top floor with Benioff a few weeks later to watch the U.S. Navy Blue Angels' annual Fleet Week air show, which is so loud that it can be heard across San Francisco and much of the surrounding area.
"A couple of times they were circling the building and the whole building was shaking," said Ulrich, who calls Metallica the Salesforce house band. "Once or twice they were below us."
The 360-degree space, replete with a coffee bar, multicolored couches, beams covered in plants and flowers and a Steinway piano, is called the Ohana floor, after the Hawaiian word for family. It's a term so embedded in the Salesforce lexicon that you'd be right to identify it as having a cult-like appeal.
It's yet another way for Benioff to try and distinguish himself from the tech elite. Instead of an exclusive view available to the C-suite, board members and close friends, he plans to offer the space for free for non-profits' events, and eventually he wants to open it up to the public
"Ohana floors are a great way not just to provide really unique hospitality for employees and partners during the week but to connect with communities where we have urban campuses," said Elizabeth Pinkham, executive vice president for global real estate at Salesforce.
Even Colin Powell has a Salesforce Tower story. The former secretary of state under George W. Bush and a retired four-star Army general joined the Salesforce board in 2014. Powell, who was born in Harlem and raised in the Bronx, says upscale Bay Area cuisine is largely lost on him.
At a board meeting earlier in the year, Benioff said he had a special treat for Powell, knowing of his preference for hot dogs, hamburgers and french fries.
"They said they had like a veggie burger that tasted just like a hamburger," Powell said. It was an Impossible Burger, a plant-based burger that's supposed resemble the taste and texture of actual beef.
Powell appreciated the effort, "but I'm 81 years old, I'm not going to change too much," he said.
Person of the Year
Perhaps no event in 2018 signified Benioff's zeal as much as his purchase of Time Magazine.
Benioff and his wife, Lynne, bought Time in September from media conglomerate Meredith Corporation, following Amazon CEO and Washington Post owner Jeff Bezos into the world of old media. Benioff described the 95-year-old magazine started by Henry Luce as a publication producing "incredibly high-quality journalism" that just needs a little more love and care.
In mid-December, he was decked out in holiday attire at an upscale venue in Manhattan to honor "the guardians," a group of journalists, including murdered Saudi Arabian columnist Jamal Khashoggi, who Time collectively declared person of the year "for taking great risks in pursuit of greater truths."
The event also served as a holiday celebration for employees and family members as well as partners and customers. It was a stark contrast to the prior year's gala, as several employees reminded Benioff throughout the night, which was held at a dive bar and wasn't open to spouses or significant others. Benioff's Twitter feed offered a running roster of attendees: Chef José Andrés, Composer Yoshiki, filmmaker Darren Aronofsky, journalist Gretchen Carlson and CNBC's Jim Cramer.
"The most memorable thing to me about the party was just the number of people who came up to me who were so appreciative that we were having a party," Benioff said. "I just look at the quality of work that they do and I feel like they were just being undermanaged and some of them underappreciated."
Edward Felsenthal, Time's CEO and editor-in-chief, had already gotten a taste of life under Benioff, when he visited the new boss at his home in San Francisco a week after the deal was announced in September. Felsenthal was in town for his twin nephew and niece's bar and bat mitzvah at the same temple where Benioff is a member and had just blown the shofar on Rosh Hashanah, the Jewish new year.
Felsenthal's casual visit with Benioff turned into a three-hour meeting. Unbeknownst to the career journalist, he was engaged in a trademark Benioff "V2MOM," which stands for vision, values, methods, obstacles and measures. It's a management process Benioff started formulating at Oracle.
"I didn't realize the conversation we were having was a V2MOM," Felsenthal said in a phone interview. "It was about how do you make decisions about how to focus, how to invest and how to prioritize. It starts with — what's the vision for Time?"
Benioff puts the Time purchase in the category of "impact investing," which includes a number of his and Lynne's venture deals and philanthropic projects. The couple has made equity investments in companies like smoking cessation start-up Carrot and financial education platform Harness Wealth, and the family name is on pediatric hospitals in San Francisco and Oakland, thanks to a $250 million commitment to UCSF Benioff Children's Hospitals.
Colin Powell says Benioff's philanthropic accomplishments are among his most impressive. Powell has known Benioff since before he began developing the 1-1-1 model (1 percent of equity, profit and employees' time to charity) and he's even been a beneficiary — Benioff is a major donor to The Powell School in Harlem.
"He believes in it, he believes he has that responsibility," Powell said. "In the past couple years, as the company has become more successful and revenue has gone up significantly, he's become much more philosophical, and he wants to spread that into more issues facing the nation."
The most recent example was Proposition C, which was on the November ballot in San Francisco.
The measure called on corporations in the city with revenue over $50 million to pay a tax of 0.5 percent of gross receipts towards homeless programs. Benioff committed almost $8 million to passing the bill, and between mid-October and election day, he tweeted about it more than 50 times.
With Block now having CEO-level authority, Benioff said he could afford to take two solid weeks to focus on Prop C, convening meetings in Salesforce Tower with local business leaders, non-profits and homelessness experts.
But something unexpected happened to give Benioff the momentum he said he needed.
"God sent me this angel from heaven — Jack Dorsey," Benioff said. "And then," he gestures with his hand to show an airplane taking off.
Dorsey, the CEO of Twitter and Square, took the other side of the issue, because of the higher tax on financial services like Square, which he said would struggle to stay in San Francisco. Other local entrepreneurs like Stripe CEO Patrick Collison and Zynga founder Marc Pincus joined Dorsey in siding with San Francisco Mayor London Breed, who opposed the measure because she said the city didn't have the controls in place to ensure the money was spent wisely.
Benioff said that ultimately, "there's people that want to give money to the homeless and people who don't." To those business leaders who opposed Prop C, "then I say, 'what is your plan?' Benioff said. "They didn't have one."
Prop C passed with about 60 percent support, and Benioff's only regret was that he didn't get started sooner. "We moved the numbers a huge amount in a short period of time," he said. "It was crazy."
The more Benioff's profile grows the more questions arise about his future and his political ambitions. He's been at least near the politics arena, hosting a fundraiser for Hillary Clinton in her 2016 run for president. Benioff told Recode's Kara Swisher in a recent interview on MSNBC that he will never run for office. Yesil said "it's a question that's been asked of him for the last 20 years."
If you take Benioff at his word, he has no plans to step back from day-to-day life at Salesforce, and sharing the top role with Block buys him more time to do the things he wants. He's in the process of writing his fourth book, this one about Salesforce's journey from $1 billion to $10 billion in sales, and is aiming to have it ready for Dreamforce 2019.
In working on the book and preparing for Salesforce's upcoming 20th anniversary this year, Benioff has been reaching out to early employees for various artifacts and memorabilia. Tien Tzuo, Salesforce's 11th employee who's now founder and CEO of Zuora, said Benioff emailed him recently looking for hand drawn sketches of the original AppExchange, the company's app marketplace that was launched in 2005.
"His emails are very short and very specific," Tzuo said.
Benioff has targeted fiscal 2022 as the year Salesforce will reach $20 billion in sales. He's got plenty of challenges on the way, including the integration of MuleSoft, which develops technology that stitches together data in disparate applications, a market that's far afield from Salesforce's core.
The bigger Salesforce gets, the harder it becomes to grow organically through new customers and the more the company is at risk of turning to Oracle-like software tricks of jamming customers through price increases and longer contracts. There's also tension in the partner ecosystem. The acquisition of SteelBrick in 2015 and the launch of a field service product the following year undercut start-ups that had long partnered with Salesforce.
Then there's the case of Zendesk, which isn't allowed to be a Dreamforce sponsor since the company rebuffed an acquisition effort by Salesforce years ago, according to a person familiar with the matter.
But Benioff's most pressing struggle is cultural. Is he able to maintain the company in his image as it rapidly expands while also using it as a platform to express his views? Salesforce has offices everywhere, and the rest of the world doesn't share the politics of the Bay Area. So when Benioff chooses to take on LGBT issues as he did in Indiana in 2016, or speak out on homelessness in San Francisco, does he risk alienating employees?
"You're right — that's a challenge," Benioff said. However, when asked if he's seen any employee or customer attrition because of the stances he's taken, Benioff said, "I don't know of a single incident. But there must be. How could there not be?"
You get the feeling this isn't what keeps him up at night. As he packs his bag for another technology-free beach vacation, this time to the Caribbean, Benioff has a simple message: "We're on the right side of history."
Correction: The original version of this story mistakenly referenced Tom Steyer instead of his brother, Jim Steyer.
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