Salesforce CEO Marc Benioff: This Is How We're Going To Win

all right joining me now is Salesforce CEO Mark Benny off Mark always great to get some time with you normally I would start this off talking about earnings but there was a lot going on that earnings call what stood out to me is you saying you have hit this hyperspace button what what is that button and what did you mean Brian it's great to be with you again and I'm so thrilled and you know well we were together at dreamforce and you were there when we laid out our profitability framework that by fiscal year 26 that we would exceed 25 margins well we actually did that today we ex hit that hyperspace button accelerated everything by two years we delivered uh for this quarter incredible 29.2 percent operating margin while also delivering 17 Revenue growth uh it was pretty awesome this quarter and uh I couldn't be more proud of our team and what everyone has done to make this happen he also talked about it being a a new day at Salesforce walk us through that well I think it's connected to what we're talking about you know we've really been focused on getting to higher levels of margin and higher levels of profitability and and now you can see the North Star more than 30 percent uh how we're moving forward as a company is not just being the number one CRM in the world obviously that's incredibly important for this company in sales and service and marketing in Commerce uh in all of our critical areas where our customers connect with their customers um but to really also deliver all the financial metrics we want to be the most profitable uh software company in the world one of the the very largest which we are and also the highest cash flows you saw we delivered more than 7.1 billion in cash flow for the year these were incredible numbers and you know we're committed to much higher results Mark I was talking to a couple analysts while the earnings call was going on I think you knocked them off their seats with a call out of a 30 operating margin yeah by the first quarter of what calendar 2024 how do you get there do you need more head count reductions does the economy have to come back how do you hit that number well you can see the direction um you know we've had increases in our operating margin each and every year in the last five years but you'll see also that we were able to exactly like you said hit the hyperspace button look we added Four Points this year not 400 not four basis points Four Points in operating margin and next year we're going to add or the current year that we're in fiscal year 24 four and a half points so directionally we're going in this incredible area and we're moving as fast as we can into the 30s I'd love to unpack a couple things you mentioned on this call let's let's start with you working with the team at Bain are you trying to find more efficient efficiencies why did you tap them and what are you working on with them well I should just bring them in or knock on the I should just hit my uh foot on the floor because they're actually in our building which is how I know Manny the CEO of Bain is here I bump into them on the elevator all the time and I said to him hey we're trying in our company we're a scaled software company now number three software company in the world we want to incr improve this these financial performance metrics and he has just a you know whole Playbook he just rips out and just says here we go one two three four five we're already implementing a lot of his ideas there's a lot more to do honestly we're just getting started I I couldn't be more excited about where we are but I couldn't be more excited about where we're going and Bane is is going to be an important part of salesforce's future and Manny especially where do you see Salesforce going well look if we're moving into this incredible new AI world you know where everything and anything and everyone is all connected and to to make that happen we're going to have to have a level of Technology infrastructure inside all of our customers it's really completely different than we have today a great example is Ford you know Ford I have a Maki I also have the new Ford Lightning these are electric cars that are autonomous you know the Lightning's an electric truck it's really cool but all the Telemetry data and all the connectivity from most cars is going into our data cloud and that data Cloud then ingests it and then through our a artificial intelligence through the real-time capabilities through the automation it's communicating back to me as I hit different thresholds of product performance and I get texts I get emails I get offers I I'm getting sold I'm getting serviced all through my data Cloud it's this connectivity between salesforces core cloud jobs and kind of this new world that we're in that is really exciting to me you saw incredible traction this quarter it became our fastest growing Cloud but not just at Ford at companies like Boston Scientific they did amazing things with the data Cloud F1 you know the the guys with the who do the the sports racing you know 99 of their customers they never even get to meet data Cloud connects them all automatically and this is what's getting me excited that we're going to be a huge player in the new AI world before the lay person out there that is not as tech savvy as you mark talk to us about Einstein GPT is that going to go to battle with the Microsoft Chat GPT explain it to us well Einstein is our core artificial intelligence platform at Salesforce you know we are the leaders in artificial intelligence and CRM and commerce we've delivered incredible results for our customers making sure that when their customers are online buying from them we're able to provide an artificial intelligence framework that we've been developing for a decade that is really incredibly state of the art with this next generation of generative AI what it means is is that that AI is going to be able to do even more for you it can code for you it can write letters for you if you're a sales executive or a service executive it's going to be able to create content there's a lot of things that AI is able to do today that we couldn't do 10 years ago and we're really about to enter an incredible new world where AI is going to really help all of our customers be more productive have higher performance and ultimately be far more profitable Mark I hope it doesn't start creating Finance content I need to be out here keeping this gig uh please please just I just can't I can't take that stuff all right so we have Einstein GPT second thing that picked up to me on this earnings call and I almost cannot believe I I heard it you disbanded your m a committee holy cow uh that is a big signal I think you said to investors I mean just walk us through that well we've done some great Acquisitions here at mulesoft and Tableau both who had great quarters in the fourth quarter slack which I know you used at Yahoo very aggressively it's a great product by the way it'll be a huge part of the AI future because slack for so many of our customers is a critical data set for their AI future as well as a user interface in the AI like a lot of these new AI startups uh that are emerging in the Bay Area they're all slack first companies and they use slack as the primary interface to their AI system so that's something that we're gonna definitely be demonstrating and when we walk in we don't to the development work for the AI to slack it's already done because that's how they kind of built their whole company that this is really where the world is moving to we're having a a new kind of world and our Acquisitions have set us up very well for that world at the same time for us to deliver these much higher levels of profitability and performance that we're committed to new levels of prioritization of our core organic products like data cloud Ryan that's going to mean that we're going to have to slow down and mitigate what we've been doing with M A and so we disbanded our m a committee to do that we created a new business transformation committee to focus on profitability and hey well you can see it in the results this quarter 29.2 percent operating margin we delivered 8.4 billion in Revenue Brian how many software companies have you reported on that have ever delivered a quarter quite like that fair point mark so is the big is the day of the big acquisition in Salesforce done for the next 24 months well I certainly think so uh I mean it's impossible to predict the future you know that but what I really can say is we're really focused on our profitability our core performance these Financial metrics that's why we delivered a great fourth quarter that's why we're going to deliver a great fiscal year 24. you know we're now estimating that we're going to deliver almost 35 billion dollars in Revenue uh this year with 27 operating margin this is what Salesforce is really focused on today while also we just hit a absolute record low in uh customer attrition because our customer success has never been higher so all of these things are working together and they're working very well for us here there's a couple changes coming to your board uh why have you made those changes oh we've had some great experiences with our board we've had two board members that were sadly having to say goodbye to they've been with us for 20 years Sandy Robertson and Alan hassenfold incredible Executives who've really guided the last two decades of our performance and we're saying hello to three great new Executives I mean one of them has been part of our ecosystem he might have seen him a dream Force when you were there Brian Mason morphett the CEO of value act Capital he he was not just a dream for us and has met with our customers and spent time with all of our executive employees but built these incredible decks showing us new levels of performance that we could get in a distribution strategy and pricing you know he was on the board of Microsoft so he was incredible wisdom uh from that and from you know running uh value act as the CEO so he said what Mason you should really be on our board you're really adding value like we've never seen from an outsider his Bounder Jeff Urban also was someone who was there at dreamforce with us he's an old friend of mine for many years incredibly wise and enlightened person as well and you know we're like wow Mason come in and help us and then uh Sasha Morin this you know the mastercard's a great customer of ours the Chief Financial Officer he's an his incredible Financial engineering expertise we've asked him to join our board and probably one of my favorite CEOs of all time one of the top CEOs in the world Arnold Donald is also joining our board so we got we have three great new board members and that's five new board members in the last 16 months incredible yeah I've gotten to know Arnold Donald through the years he's been uh he's been uh very informative isn't it just great let me ask you this Mark I I've been doing this for a while I know I may appear young but I have been doing this for a while I I've never that young Brian thanks so much I appreciate it thank you so much for the raw honesty the the active situation I I have never seen anything like this you know what is there a resolution in sight you know how does this all end and how do you move Beyond it well look I can really learn from anyone and I enjoy meeting new people and I enjoy talking to folks and and look there's lots of different levels of understanding of enterprise software you know there's different understandings of our company who our customers are um but it doesn't matter what grade all these folks are at I'm trying to adjust and learn and understand their perspectives I think it's extremely important that I have a beginner's mind you know I like to practice the Japanese concept of shoshin uh you know how do I have a beginner's mind and the expert's mine Brian you know there's no possibilities you know The Beginner's mind there's every possibility and that is really my Approach with everything that has been going on with Salesforce and it's been great and then out of that wow I was just really Blown Away with Mason morphod and how he was able to just you know grok what we're doing at Salesforce but then deliver these like I said these decks which outlined what we thought was just strategic directions for a company that really showed his expertise and that's why we've added him onto our board Mark you really um you've long been seen as a Pioneer in software but also in the business community and and you're a co-founder of this really large company how's this been to go through a situation like this I'm having the time of my life I I mean this has been 24 years you've been along the way for a long time too you know you've been to all our events you've talked to so many of our customers and our employees and look this is great who would have thought you know 24 years ago when I was a few blocks away from here at the top of Telegraph Hill in an apartment uh overlooking uh Mount Diablo before it had all this gorgeous snow covering that it has today I would say we could never have imagined that we would have delivered you know one of the very largest important software companies in the world I'm very grateful to everyone who's been part of this journey and I couldn't be happier with uh where we are today and where we're going where do you where do you see yourself in the next decade Mark what's your next ACT I'm right here in the present moment Brian which is where I think you should be too so I gotta ask the tough questions though Mark I gotta ask these things I have to which is part of the gig I am having a great time and I am just loving you know being the CEO of Salesforce if if you're if you're trying to allude to like what my succession strategy is I I mean you've been following the company a long time you know I always have a strong successor in place I always have a strong number two I always have a strong management team uh that's what I love and uh that's what I'm very much committed to at the board is that uh is that person inside the company have you a you have like a group of people oh we definitely have people inside the company absolutely and uh that is something that we'll continue to develop and grow and enhance and make sure that it's a core part of our strategy and it always has been and it always will be Salesforce uh co-founder and seal mark benioff thank you so much I know it's a busy time we'll talk to you soon thanks for taking the time Brian all the best thank you

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Id: sHkIxokdq2U

Length: 14min 7sec (847 seconds)

Published: Thu Mar 02 2023