Salesforce CEO Marc Benioff on Where Big Tech Is Headed
Marc Benioff, the founder and CEO of Salesforce.com, has a knack for trend-spotting. He’s also a born marketer, with an uncanny ability to draw attention to subjects near and dear to him, of which there are many. He was among the first to foresee large software programs moving to the “cloud”— a concept he played a large role in popularizing—referring to inexpensively rented software sitting remotely on a network rather than on its owner’s computer. He was a heavy user of social media applications such as Facebook (FB) andTwitter (TWTR) well before other executives recognized their business potential. And from the founding days of Salesforce.com (CRM) 16 years ago, Benioff, 50, committed himself, his company, and his employees to charitable work, making him a role model for other businesspeople. In two interviews conducted in January—first at a dinner hosted by Fortune during the Consumer Electronics Show in Las Vegas and then a few days later at his San Francisco home—Benioff opened up about a variety of topics, including how data science will affect everyone’s business, where his ideas come from, why security should be companies’ top priority (above even customer-service software), and how he is working withMicrosoft’s (MSFT) new CEO, Satya Nadella. Edited excerpts:
What’s the most important trend you see right now in the technology industry?
We’re in an AI spring.
You mean artificial intelligence?
Yes. For our company, and I think for every company, the revolution in data science will fundamentally change how we run our business because we’re going to have computers aiding us in how we’re interacting with our customers.
What’s an example of a company that’s using data well?
You probably don’t have to go very much further than looking at Uber and asking, “Why would Uber have all these data scientists?” Well, they want to have trip optimization, and they want to be able to maximize the efficiency of their fleet and ultimately provide you with the best customer service. And they think they’re going to do all that through data.
What does that mean for an executive without a background in computers, like you?
Based on the simple fact that there’s just a huge amount more data than ever before, our greatest challenge is making sense of that data. And we need a new generation of tools to be able to organize and view the data. We need a new generation of executives who understand how to manage and lead through data. And we also need a new generation of employees who are able to help us organize and structure our businesses around that data. When I look at the next set of technologies that we have to build in Salesforce, it’s all data-science-based technology. We don’t need more cloud. We don’t need more mobile. We don’t need more social. We need more data science.
How confident are you that nonexperts can consume this data?
Because the whole concept of data science is that the software becomes the expert, and you as the average user are able to understand what’s going on.
Where do your ideas come from?
I like to be around creative people. That’s a way that I ideate. I like to be in locations that I kind of feel are very creative, that stimulate me in a creative process. I also get a lot of stimulation being around my customers. The next stage of my creative process is I start to ask myself the right questions. I think the quality of your innovation is directly proportional to the quality of your questions. And I think that I’m constantly asking myself and my team questions to kind of give us clarity on what the future should look like. And I think that helps create a vision. And once you start to create a vision, you start to create a framework of creativity, and ideas come out of that.
History suggests that big companies have a very tough time staying on top. How do you approach that as the CEO of a 16-year-old technology company worth $36 billion?
To quote Andy Grove, “Only the paranoid survive.” You have to be ready to have a beginner’s mind and constantly be creating the future. Always be ready to start again. And don’t be afraid to throw everything away and restart. I think that’s what you see in people like Neil Young who are not singing the same songs they were. I mean, he’s still singing “Heart of Gold” and “Old Man,” but he’s also writing new songs.
You’re an angel investor in startups like Fitbit, ZocDoc, and Hampton Creek. Why do you spend time on such investments?
I really try to stay in touch with all the new things that are coming, the entrepreneurs, what’s happening, and it’s been a way for me to stay in touch with the transformations that are happening in the industry.
Are valuations of these companies out of whack?
I think it’s really hard to tell right now. I think that for sure the valuations are getting really inflated. I think Warren Buffett said, “When others are greedy, become fearful. And when others are fearful, become greedy.” That’s a good phrase to kind of put on some of these right now. That said, some of them are certainly warranted. You see massive acceleration in revenue on some of these companies. Airbnb and Uber are two great examples. Those are companies that have multibillion-dollar revenue streams and that are growing. When the companies with the tens of millions of dollars of revenue start to reach out for those huge valuations, that’s when I think we get into trouble. And that’s where we’re getting to right now. There’s a company that I invested in with security technology, maybe only six or nine months ago at some eight-digit valuation, and six months later it has a nine-digit valuation. I don’t completely understand that. I worry mostly that it defocuses the entrepreneurs away from creating great businesses.
What’s the state of play in cyberterrorism?
Well, if you go to my Wikipedia page, you’ll see at the bottom there’s a report that I wrote in 2004 called “Cybersecurity and Crisis Prioritization.” I wrote that for George W. Bush. And you’ll see that we still have a crisis of prioritization regarding cybersecurity because cybersecurity is an oxymoron. And we built an Internet that was inherently insecure and unreliable. That was the nature of the Internet itself when it was built and designed in the ’60s. So there is no finish line when it comes to cybersecurity. Everybody should have security as his or her No. 1 priority because we are in a highly dynamic environment. That is not going to change. By the way, I have zero arrogance when it comes to cybersecurity. I am paranoid all the time because I see all the things that are happening, and I am completely worried every single day about security, and everybody should be.
How did Salesforce.com become so chummy with Microsoft, a sworn enemy?
I was at a dinner with Satya Nadella down at the Rosewood hotel in Menlo Park. And Satya was talking about what he is trying to achieve with the company and how he wants to be more collaborative. So I decided to test him. I told him I wanted to hire one of his technologists as head of our infrastructure. What would be in it for Microsoft is the foundation of a partnership that would give us more kinds of ideas of things that we can do together. And he said okay. Now we’re learning about things that we could do with Microsoft’s file-management technologies and Office that we would never have known on our own.
And you think that couldn’t have happened without Nadella?
The other guy [former Microsoft CEO Steve Ballmer] did not care about having a relationship with Salesforce. In fact, he kind of did everything he could to not have a relationship with Salesforce.
Salesforce’s revenues are big and growing fast, but the company is not profitable. Do you feel it’s important to produce some net income soon?
We have a huge market opportunity in front of us, so growth continues to be a top priority. No other top 10 software company is growing faster than Salesforce. As we take advantage of this growth opportunity, we are also improving profit margins. You can see that in our numbers this year, and we’re committed to continuing the trend next year.
Switching to philanthropy, do you feel that the current crop of tech entrepreneurs lacks your sense of civic responsibility?
Well, I think that’s the whole history of the tech industry. We have an industry that has a history of stinginess and that does not have a good history of giving back. I’ve been on my soapbox in trying to get these entrepreneurs to listen to me. And all I want them to know is that it’s an option. That’s it. It’s kind of like when I said to you that the quality of your leadership is the quality of your questions. Just asking them the questions—“Well, what are you doing philanthropically with your company? And what are you doing personally with philanthropy?”—is enough.
Read More: The Salesforce Do-Good Legacy
This story is from the February 2015 issue of Fortune.