Innovation, like creativity, is an amorphous concept. It’s the holy grail of business, but achieving it—even merely explaining it—is lightning-in-a-bottle difficult.
In that way, Salesforce (CRM) is a major outlier. Despite the fact that its products are mundane business productivity tools, Salesforce has nevertheless managed to bake innovation into its very corporate fiber. It’s a company that was innovative in the way it started doing business, in how it sold its products, and in the articulation of its corporate mission.
Indeed, asking cofounder and CEO Marc Benioff, 53, to describe how Salesforce is innovative is a bit like asking Plácido Domingo to hum a few bars of a favorite aria. With little provocation Benioff will rattle off the three ways Salesforce has been a trailblazer since its inception nearly two decades ago. “I think our top three are a technology model which is now known as the cloud, the subscription business model, and our 1-1-1 model,” he says, referring to the company’s philanthropic commitment to give away 1% each of equity, products, and employee hours.
These now widely copied practices are merely the beginning. Under Benioff’s quirky, obsessive, and dripping-with-chutzpah tactics, Salesforce is as original a product marketer as exists in enterprise (or nonconsumer) technology. It has proved adept at predicting and embracing technology shifts, the latest being an aggressive move into artificial intelligence. Salesforce even innovates in the realm of financial accounting, having waged a multiyear battle to persuade standards boards and regulators to adopt its methods of revenue and expense recognition.
These accomplishments help explain why Salesforce has landed atop the inaugural Fortune Future 50 list of innovative U.S. companies (ranked No. 1 on the “Leaders” list of corporations with a market value above $20 billion). Based on analysis by BCG, Salesforce earns its ranking from a variety of factors including Wall Street’s expectations of future growth and public messaging that communicates a future-focused orientation.
Innovation has its limits, of course, and Salesforce has proved adept at supplementing its growth with acquisitions, a tool long available to older rivals like Oracle (ORCL) and SAP. Salesforce acquires companies—it has snapped up 55 since 2006—that are either more innovative or that have pioneered market segments that Salesforce hasn’t yet cracked.
There are plenty of risks to the Salesforce model—with Benioff’s indispensability topping the list. Though the company has a deep management bench, no one disputes the top dog’s singular role. All major decisions are his, and the entire 28,000-person-plus organization caters to his sometimes capricious whims.
Benioff’s outsize role would be less of an issue if he hadn’t already signaled a willingness to let go, namely, his flirtation with selling the company to Microsoft two years ago. (No deal materialized.) Benioff himself doesn’t discount the possibility that he’ll step down as CEO one day. Asked the likelihood of his being in the top job for another 30 years, he says, in reference to the many social causes he champions: “I don’t think it’s very high, because I really feel the pull of the world on me. The world has more challenges than ever.” Benioff says he spends 95% of his time on Salesforce, and “5% is on a lot of the issues and things that are really important to me. I think at some point that will shift a little bit more where I’ll want to spend more time directly working on those causes.”
But Benioff isn’t quite ready to call it a day at Salesforce. There are still too many potential customers to woo.
Salesforce employees are so immersed in the fervor over their offerings and their unique workplace that they are nearly incredulous to learn that few people beyond the legions of customers using Salesforce’s product have the faintest idea what the company does. San Franciscans, at least, are well aware of Benioff’s personal largesse and Salesforce’s corporate generosity: Together, the CEO and his company have given away hundreds of millions of dollars to fund schools, hospitals, and a myriad of causes. And they certainly know about Salesforce Tower, the soon-to-be-completed 1,070-foot skyscraper that will be San Francisco’s tallest and is already visible for miles outside the city.
As for its products, Salesforce started with an application that helps salespeople track their clients and their managers measure their progress. That sort of thing had existed, but Salesforce innovated by putting its product online and letting customers pay by the month. This lowered technology costs for buyers and also diminished the risk of purchasing the wrong software. Over time the company built or acquired applications for customer-service workers, marketers, and companies who sell goods and services online. It’s all the nuts-and-bolts stuff of business, but configured for the Digital Age. “They took existing markets and made them cool,” says Brent Thill, a research analyst with the investment firm Jefferies who followed Salesforce for years.
As a company, Salesforce moves fast, a shift from the traditional providers of software to “enterprises,” or big-business customers, whose product updates typically were measured in years. “We ship a new version every four months,” says Alex Dayon, the company’s chief product officer. This means every customer always is using the latest version of the software, a high bar in an industry used to a patchwork quilt of software generations and sporadic updates. “It’s our secret sauce,” says Dayon, a Frenchman who joined Salesforce in an acquisition nine years ago. “No one else can update hundreds of millions of users three times a year.”
Another crucial part of Salesforce’s formula is aggressive marketing, which it has been doing since its inception. Parker Harris, the company’s chief technology officer and a cofounder, recalls the company’s introductory “end of software” marketing campaign, an elaborate misdirection stunt suggesting that because Salesforce was selling software as a service rather than in a package, it wasn’t selling software at all. The company hired actors to stage fake protests at conferences hosted by a competitor. Prospective customers challenged Salesforce, arguing that it, too, sold software but in a different format. “At that point we had them, because we had engaged them in the conversation,” says Harris.
The lavish spending on marketing has an impact on Salesforce’s bottom line. For years it rang up net losses. But the tactics also have fueled the company’s growth. As an example, Benioff has been a longtime acolyte of Klaus Schwab, the German business academic who founded the World Economic Forum and helped popularize the “stakeholder” theory of business, that shareholders aren’t the only constituency that matters for business success. Schwab’s ideals appealed to Benioff, who proceeded to spend many millions of dollars to become a key partner of Schwab’s forum. The result: Salesforce punched way above its weight in “thought leadership” in the influential global organization, a status that opened doors for sales to the kinds of companies that were otherwise reluctant to buy from an unproven upstart.
Persuading customers to use their software—as well as teaching them how—is often a challenge for nonconsumer technology companies. Salesforce takes a predictably unconventional approach. It spends extravagantly on its annual Dreamforce developers conference in San Francisco, an event that is as likely to include a performance by a magician or rock star as its many software tutorials.
Yet Salesforce has topped itself recently by designing a whole new “design vocabulary,” as Benioff calls it, for educating users. The challenge, says Sarah Franklin, who heads developer relations, is, “How do you skill everyone up on what we do?” The solution, which she credits to a game-happy “evangelist” on her staff, was to create an elaborate online training program that draws inspiration from the U.S. national park system. Franklin called the program “Trailhead,” and the people who use it, Salesforce’s cherished customers, “Trailblazers.”
It’s all a bit hokey but nonetheless effective in persuading customers and developers—some 500,000 of whom have given it a try so far—to earn badges signifying completed training classes. Franklin says she conceived of the program, which at great expense would change the entire look and feel of the company’s public profile, after a conversation with Benioff. Unable to sleep that night, she picked up her phone and typed a manifesto, which she sent to Benioff. In the morning he replied, “Approved. Aloha, Marc.”
Benioff and his family spend as much time as they can on the Big Island of Hawaii. Each major Salesforce building has an “Ohana” floor, a community space named for the Hawaiian word for family, which Benioff wants every Salesforce employee, customer, and partner to feel a part of. It is fitting, then, that at least where the CEO is concerned, Salesforce operates on a corporate version of “island time.” Meetings with Benioff start and end whenever he’s ready.
I learn this firsthand on the day I arrive to interview him. (As a fellow San Franciscan, I’ve known Benioff for years.) I’d been invited to arrive 90 minutes early to tour the nearly completed Salesforce Tower with Benioff—a thrilling opportunity to view the Bay Area from the 62nd floor of a building whose windows haven’t yet been installed. He didn’t show up for the tour, though we did have lunch across the street at another Salesforce building afterward. When we finally sit down, it’s clear the agenda is his, not mine. He takes me through the working-document version of the keynote presentation he’ll give at Dreamforce in about two months. I see how Benioff hones his message, trying out lines as Leandro Perez, a product marketing executive, takes notes on Benioff’s riffs. (Perez, whose official role is “corporate messaging and content,” says: “We make sure our executives are spreading the message consistent with Marc’s.”)
Taking into account Benioff’s tweaks, this is the 86th version of the presentation, on its way to about 150 in total. It hits all the company’s key messages including its core values (trust, growth, innovation, and equality) and explains the three “chapters” of the company’s history: the cloud (1999–2009), the customer (2009–2017), and the Age of Intelligence (2018–).
We run out of time before I get to ask a single question.
A week later Benioff FaceTimes me from Hawaii, where he’s taken a long weekend, and patiently allows me to direct the flow of the conversation. He proudly reflects on Salesforce’s accomplishments. He calls Joe Allanson, the company’s longtime controller, “the cloud industry’s unsung hero” for working with accounting standards boards to allow for the deferred recognition of sales commissions—an arcane but important maneuver that enables subscription-model software companies to more accurately reflect the reality of their finances in their accounting. Benioff notes that 3,000 companies have adopted Salesforce’s 1-1-1 philanthropic model. He also pays homage to Amazon, an early inspiration for the type of consumer experience Salesforce aims to deliver. He unabashedly notes that Salesforce’s earliest versions were copies of Amazon’s user interface. The goal, he says, was to “build an enterprise app that looks, feels, talks, and walks like Amazon, because they are not training anybody to use their website, and we want to build software that’s not going to be like the current generation of enterprise software.”
Benioff is as sui generis as they come, yet he credits a diverse set of influences. From Schwab, he took the concept of “stakeholders” as opposed to only shareholders. Larry Ellison, his first boss, motivated Benioff by helping him see the value of new ideas, even if “working for Larry was at times psychological warfare.” And he has learned the value of being inquisitive from a guru of self-improvement: “My friend Tony Robbins says the quality of your life is created by the quality of your questions.”
More than anything, perhaps, Benioff values his own intuition. Salesforce engineers didn’t understand his devotion to social media, especially when he asked them to create Chatter, an in-house messaging tool for Salesforce’s applications. They complied, though, and the move gave Salesforce a consumer-oriented edge.
Similarly, Benioff explains the company’s move into artificial intelligence as his realization that “a lot was happening in A.I. But I also realized it wasn’t clear what Salesforce’s role in A.I. was. That’s when we started acquiring quite a few artificial intelligence companies, maybe a dozen.” That’s also when, according to Benioff, the owner of the website Einstein.com contacted him out of the blue and offered to sell it. To Benioff, it was a sign. “Right then I’ll always say to myself, ‘Why is somebody doing that?’ And then I’ll have an intuitive response: ‘This could be our A.I. brand.’ ” Today, Einstein is the Salesforce-branded product that’s integrating machine learning and other A.I.-related technologies into the rest of the company’s offerings.
For all of Salesforce’s uniqueness, a nagging criticism has crept up internally and externally. As the company grows, it begins to look and act ever so slightly more like the Goliath to which Salesforce has always played David: Larry Ellison’s Oracle. Like Oracle, Salesforce has become an acquisitions machine, prompting some to suggest the company overpays to make up for its own shortcomings. “The question I hear most from investors is, ‘Is this the modern-day Oracle?’ ” says Brent Thill, the analyst. “ ‘Can they grow without acquisitions?’ ” (Investors weren’t pleased last year when Benioff explored buying Twitter after bidding against Microsoft for LinkedIn. He backed off on the former and lost out on the latter.)
The seeming proof of Salesforce’s incipient Oracle-ness is the presence of president, vice chairman, and chief operating officer Keith Block, a 26-year veteran Oracle sales executive before joining Salesforce four years ago. In many ways the buttoned-down yin to Benioff’s Hawaiian-shirt-wearing yang, Block says Salesforce isn’t like any other company he’s seen, including during his days as a Booz Allen management consultant. “We’re not diluted by servers and storage,” he says, a knock on Oracle. “We’re not diluted by games,” he adds, a reference to Microsoft’s Xbox franchise.
Yet almost inevitably Salesforce partners talk about the company with equal parts reverence and fear. A company doesn’t get to $10 billion in revenues without stepping on a few toes. “Salesforce is like the rose-colored version of Amazon,” says a venture capitalist who invests in companies that compete with Salesforce. Examples abound of Salesforce making moves that rival Amazon’s legendarily cold-blooded tactics. It pushed aside onetime partner Marketo, for instance, by buying ExactTarget, whose product line included Pardot, a direct competitor. Similarly, pricing software startup Apttus had been a key Salesforce partner, which didn’t stop Salesforce from buying an Apttus competitor called SteelBrick—even as Salesforce’s corporate venture arm invested in Apttus.
Salesforce acknowledges that its own growth is more important than its partners, which it excuses by playing the honesty card. “I have seen this movie in a prior life,” says Block, alluding to his Oracle days. “We need to be transparent. We need to publish road maps of where we’re going.” Block is looking after another big-company aspect to Salesforce’s growth, the need to add systems that can take the company from $10 billion in revenue to $20 billion. “I think we can have our cake and eat it too,” he says. “We can be a different Fortune 100 company. We can think differently, but with operational discipline.”
Then there’s the question of how long Benioff stays around. In spring 2015 reports surfaced that Microsoft offered to buy Salesforce. Benioff characterizes the ensuing talks as being merely a public company’s fiduciary responsibility to listen to acquisition offers. He reportedly asked for more than Microsoft was willing to pay.
I meet with Benioff one last time for this article as he answers a few questions on video and prepares to have his photograph taken for Fortune’s cover. Since he first ran through his Dreamforce presentation for me the previous week he’s presented versions of it to customers in Atlanta and Los Angeles. Like a comedian testing an act in small clubs leading up to a large-venue gig, he plans to repeat the performance multiple times before his keynote address in San Francisco the first week of November.
We meet on the “Ohana” floor of Salesforce East, the office tower kitty-corner from the new Salesforce Tower. On what ought to be a stunningly sunny mid-fall day, San Francisco’s skies are clogged with smoke from the devastating wildfires still raging in Napa and Sonoma counties north of the city. Making small talk before we start, Benioff tells me he’s tired. His family has just adopted a rescue kitten, and there is much excitement—and too little sleep—in the Benioff household.
As it happens, Benioff tells me, the 7-month-old, gray-black Siamese already had a name, given by his original owners. They called the kitten “Cloud.” This was before anyone could have any idea this little animal was headed for a glamorous life in the home of a billionaire who made his fortune selling software online—what became known as the cloud. The story is too good to be true, and I tell Benioff with mock derision that I don’t believe him. That evening he sends me an email with the subject line “Proof.” Attached is a photo of the sign that hung outside Cloud’s cage at the shelter, verifying his pre-adoption name.
Some things just can’t be explained. Not even by Marc Benioff.
A version of this article appears in the Nov. 1, 2017 issue of Fortune with the headline “Benioff in Bloom.”
