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Yahoo Finance Presents: Salesforce CEO Marc Benioff

On this episode of Yahoo Finance Presents, Salesforce CEO Marc Benioff joins Yahoo Finance's Julia La Roche to discuss Salesforce's huge second quarter earnings beat along with their recent inclusion into the Dow Jones. Benioff also talks about the recent reports of layoffs happening within the company.

Video Transcript


JULIA LA ROCHE: What a week it's been for Salesforce, the Customer Relationship Management-- CRM-- provider. They were named to the Dow Jones Industrial Average, replacing Exxon on that closely followed stock market index. And the company reported better than expected earnings results, reporting revenue of more than $5 billion for the first time in the company's history. And as I'm recording this, the company also had its best trading day ever, rising more than 26% on the heels of those better than expected earnings results.

We're joined now by Salesforce co-founder and CEO Marc Benioff, who is also a member of the World Economic Forum's board of trustees and a best-selling author. Marc, it's always great to be with you.

MARC BENIOFF: Well, Julia, it's always great to see you. Thank you so much for all of everything that you're doing.

JULIA LA ROCHE: Of course. Well, what a week for you all. I mean, revenues more than $5 billion for the first time in your history, up 29% year over year, also beating up on those earnings estimates. And I got to say, Marc, a lot of folks are probably really interested in your playbook these days. And one of the things that really stood out to me is not only did you have this incredible quarter, but you said on the earnings call that, in many ways, this was really a victory for stakeholder capitalism. You also pointed out that values really bring more value. Take us inside your playbook. How do you do it, Marc?

MARC BENIOFF: Well, Julia, these have been such challenging times for so many of us all over the world. Nobody expected this pandemic. I remember when we were at the World Economic Forum together in January, this wasn't really much of a conversation. We knew things were happening, but we didn't really know what was going to happen to all of us and how it was going to impact ourselves personally or even our businesses.

So the last six months have been unlike anything I've ever been through. And one thing that occurred to me, I would say right around March or April, was that we could continue our current playbook or we could make changes. Well, we could shift, we could evolve, we could move forward-- that we could say, you know what? This is a moment where we need to throw everything away and regain our beginner's mind. And that's something at Salesforce is part of our playbook to be able to stop and say, OK, now what are we going to do, like, right from the beginning. And we rewrote our playbook, and we rewrote our operational values. And those new operational values have been guiding us very well.

JULIA LA ROCHE: Elaborate a bit more. You wrote the playbook, your operational values-- talk to us a bit more exactly how were you able to do that? And what were those-- how did you kind of pivot? And what were the opportunities that you were going after?

MARC BENIOFF: Well, I think one way to get increased performance today for a CEO is to focus more on your relevancy during times of the pandemic. This is a critical time to assess, do you have the right products? Do you have the right people? Do you have the right messaging? Are you able to communicate to the world exactly your level of relevancy? And that's one reason we built Work.com. We now have a product that does contact tracing, shift scheduling, workforce command centers. It's in place for thousands of companies, but it's also in place for 35 states-- it's how they're doing their contact tracing.

When we were together at the World Economic Forum in January, that product didn't exist, Work.com. Now, it's a mainstream product in our businesses and how we go to market. Every company needs this. Everyone has to be able to do contact tracing to be able to keep the pandemic at a reduced level in their organization. That's an example of relevancy.

Another example is something that happened this quarter. You saw we introduced incredible new product called Salesforce Anywhere, because all of our customers need to sell, they need to service, they need to market, they need to conduct their e-commerce from anywhere. I'm talking to you from my home. You're in your home. Everyone's in their home. That means that we have to have different kind of tools to be able to operate. That's why we introduced a new type of product that let people do CRM from anywhere.

JULIA LA ROCHE: When I look at the performance, really, a lot of strength just across the portfolio-- whether it's the sales cloud, service cloud, Tableau even in the platform and other doing quite well. But there was one stat, Marc, that really struck me-- a 63% increase in seven-figure deals from a year ago. So what that kind of tells me, Marc, is that you're having a lot of probably CEO conversations these days What are you hearing from your clients? What are you all discussing? And how are you kind of conveying to them that you can do well by doing good?

MARC BENIOFF: Well, you did-- you saw exactly like you saw-- a tremendous increase in seven-figure deals. And of course, we did deliver more than $5.15 billion revenue in the quarter. It was a rise of 29%. When I look at some of these large customers, the characteristics of these deals are, indeed, different. So one large customer that we signed in February, for example, was AT&T-- that became a very large deal in the second quarter-- was an acceleration on their relationship with us. We've deployed now more than 35,000 users at AT&T.

They're building a single source of truth for their customers. So whether you're at an AT&T store or in their apps, calling them on their call center, or whether an AT&T technician is showing up at your house to do service, they have a single source of truth regarding you, as a customer. This is a customer 360. This is why we are the number one CRM. This is a very important moment when every company needs that type of technology. But to see them accelerate that and to want to go faster, that is a surprise. And we're seeing that with so many of our customers.

JULIA LA ROCHE: There's something I want to bring up with you-- I think it's really important that we address it here. Of course, there was a report today about layoffs coming to Salesforce, affecting about 1,000 different workers. And some of the reaction on social media, some folks are saying they didn't think the optics were very good because of, you know, given the company being added to the Dow, reporting incredibly results, the stock performance, obviously, being another factor. And you were one of the ones early on to make the no layoff pledge-- that 90-day no layoff pledge. I would like to give you an opportunity to respond to the reports and let us know what's really going on.

MARC BENIOFF: Well, you're right. When this pandemic began, we really said, we're freezing our business. We're having a 90-day delay of pledge. We're not sure what actions we're going to take. We don't know how to be successful during this pandemic. Now we've written our pandemic plan, we're reshaping our business, we're reassessing what it will look-- what Salesforce will look like next year.

We have 54,000 employees, and we look at rebalancing 5% to 10% of those employees every single year. It's how we deliver performance. It's part of running our business in a successful way. And that does impact employees at different moments. And at this point in this quarter, for example, unfortunately, we're going to have to make changes to how our employees are structured and exactly where we're investing.

Of course, we're reskilling, we're retraining, we're working with those employees, we provide them with every capability to find a new position, either in our company or another company. But this is part of having a successful business. It's also part of stakeholder capitalism. We want to do well, and we want to do good. We want to be able to do both.

And, look, investors have benefited greatly. Since we went public in 2004, we've grown our company dramatically-- as you can see, more than a 5,000% return on our shares. But we've also given back very dramatically to our community. We run 50,000 nonprofits and NGOs for free on our service. We've given away hundreds of millions of dollars, including this quarter we gave $20 million to our local public schools. That's more than $120 million to the local public schools. And we've even done millions of hours of volunteerism.

That idea that we're going to do well and do good also means that we're going to be an example of what stakeholder capitalism means. At the end of the day, we're still running a business, and we're going to have to continue to make investment choices. But we will do it in the best way, a more compassionate way, a more sustainable way, a more equitable way, a more just way, and we'll be an example of exactly how to do that.

JULIA LA ROCHE: Yeah, I totally hear you on the retraining, the reskilling, helping folks find opportunities within the company, just given the environment that we're in. I would also just be curious, because it sounds to me, Marc, it's about growth here. That's something I heard you say on the earnings call. Really, it's more about creating an opportunity for growth. So where are you seeing-- because of all the changes, where are you seeing the opportunity for growth and to place people within Salesforce?

MARC BENIOFF: Well, you can see right now, we grew 29% in the current quarter. We grew 30% last quarter. There's never been an enterprise software company that delivered a $5 billion a quarter growing at 29%. So that's why it's really critical for us to continue to make the changes, the additions, the shifts so that we can continue to grow, so that we can continue to be successful.

Last year, we made a major acquisition for example with Tableau. That company has turned out to be far more successful than we could have ever anticipated. They've really had a phenomenal year. Every company needs analytics and data visualization. The year before that, we acquired this amazing company, MuleSoft, so that we could build our customer 360 and integrate everything together. These two companies have been tremendous drivers of our growth. It's allowed us to deliver a more complete solution to our customers as they build this customer 360.

A huge win this quarter was with the Veterans Administration. The Veterans Administration is using Salesforce to build tools and capabilities to provide the next generation of service to our veterans-- very powerful when we start to apply these next generation capabilities.

JULIA LA ROCHE: Yeah, I heard you singing Tableau's praises on the call last night, even hinting that this could possibly be maybe, in your view, one of the most successful acquisitions in the software as a service in the whole space that you operate in. Talk to us a bit more about that. I found that very, very intriguing. And on top of that, are you looking to do more deals?

MARC BENIOFF: Well, I think when you look at some of our big wins during the quarter, like Banco Brandesco and Sao Paulo, they have a tremendous CEO. I just spoke to Octavio-- incredible what they're doing. And that idea that analytics are a critical part of a financial service organization building a customer 360, so they can sell, they can service, they can market, they can provide e-commerce, and they can have the analytics and the integration to wrap it all together.

Another huge win in the quarter was PWC. They have a tremendous CEO, Bob Moritz. Huge Tableau customer-- this idea that they can go wall to wall with Tableau, that they can have a data visualization framework for all of their service professionals worldwide, while wrapping, of course, their ability to have B2B sales-- the ability directly to go to market using our sales solution or provide customer service and solution support to their customers as well-- that is our customer 360 vision. And we continue to illuminate that and make it stronger through these transactions like you saw with Tableau and with MuleSoft.

JULIA LA ROCHE: Well, I certainly know you as someone who has a real pulse as to what's going on with your customer base. You're someone who has so many different conversations. You do a lot of these video seminars, if you will. And you've been making changes at Salesforce. You've been advising your clients on making changes. There was something you said on the call-- it was about your success is dependent upon getting all of your employees-- I think you said they were-- getting them to play in the game, I guess, on the field, if you will. And how do you sort of do that in this kind of new normal network we're currently in? How do you keep people motivated? And then how do you translate that to other companies so they can kind of apply best practices, if you will?

MARC BENIOFF: Well, we talked about relevancy is more important than ever for companies. And I think that participation is more important than ever. Employees have to know that they have a key role in the company. They need to be on the field. They need to be performing. They need to be delivering. They need to be, exactly like we just said, trained and skilled. That's why we've invested so aggressively in Trailhead so that all-- not just our employees, but the millions of people who are part of our ecosystem can be what we call rangers-- have all the skills of Salesforce available to them, which is-- we provide all this training at no charge on Trailhead.com. That's been a tremendous opportunity for so many all over the world.

And as we grow, as we evolve, as we move forward, as we sign these incredible customers, we want to add new capabilities. We talked about Work.com and how important that's been for the quarter. When you look at our relationship with CVS this quarter, it was incredible. They have this incredible new capable capability called Return Ready, which is their test team and how they transform their pharmacy as they do 100,000 tests a day and how they've integrated with health plans like Aetna so deeply. Well, we're a key provider there. We have a key partnership with CVS-- the ability for them to have a customer 360 and bills and service and marketing and all of these capabilities. That's something that we want to move forward very dramatically for them.

JULIA LA ROCHE: Yeah, you mentioned Work.com. Obviously, it's been a major success driver for you all, and you were able to innovate so quickly, make-- I think you said it was the quickest you've ever been able to roll out a new product offering. And speaking of Work.com, you're talking about, you know, helping universities, businesses, nonprofits return to work. You all have now said it's optional, I believe, to work from home until August 2021.

And a lot of folks, again, it goes back to a lot of people having conversations, kind of looking to see what is Salesforce going to do, what is Marc Benioff going to do? Talk to us about your thinking as it relates to reopening your offices, returning to work, and what do you think the future looks like for yourself? Do you see yourself going into the Salesforce tower in San Francisco or going to conferences again? And I know Dreamforce isn't happening this year, but I would like to unpack what you think the future looks like.

MARC BENIOFF: Well, Julia, we loved having you at Dreamforce last year, and I wish there was going to be Dreamforce this year. But as we all know, we can't do large-scale events. It will just spread the virus. We have to be more careful how we are operating ourselves and our businesses. That's why we're wearing masks. We're doing social distancing. That's why I'm at home right now myself.

So how are we going to move forward? Well, I wish I could tell you that I have all the answers, but I really don't. Look, some of our offices have reopened, like in Japan, in Korea, in certain parts of Europe. But some of our employees don't want to come back to the office at all. They've retrained themselves. They've reskilled. They're able to work at home very efficiently, very effectively.

I mean, even me-- usually, I would have to go to a TV studio to have to speak to you. Now, I can just do this at home on my computer. That's-- you know, that's amazing. That's a reskilling of myself and my own ability to run Salesforce. So where will we be a year from now? Where will we be two years from now? I don't know. Will the vaccines be effective? I hope so. Are we sure? Nobody really knows.

Which one of the 100 vaccines will be effective? What will be the degradation rate on the antibodies? We don't know. How many injections per vaccine? We're not sure yet. So there's a lot of unanswered questions. And until we can get to a point where we can all be back at the office safely, until we can get to the point where we can have conferences safely, until we can travel safely, well, then we're going to have to adjust. We're going to have to change. We're all going to have to make these changes in our business so that we can continue to be successful, because we can make that decision.

But we have to make the core decisions around, what is the level of participation? What is that relevance that we're going to achieve? Do we have the right level of enablement? Do we have the right products? And put it all together so that we can deliver a quarter like we just did for our customers.

JULIA LA ROCHE: Yeah, certainly a quarter for the history books. If you could leave us with one final thought here-- we've all in the last several months have done a lot of thinking, had a lot of conversations like this, and we're doing a lot of learning and reflection. What has been the biggest revelation or key learning for you, Marc, during the last several months during this pandemic we're going through-- and the multiple social crises, if you will.

MARC BENIOFF: Well, these have been such challenging times. I mean, it's a pandemic. It's an economic crisis. It's a social justice crisis. It's an environmental crisis. It's a global leadership crisis. And through all of this, we have to find ways to be successful, to grow our businesses, to deliver value to our customers, to take care of our families, to take care of ourselves.

How do we do all of these things? So we all need to, like, have a beginner's mind. In Japan, they call it Shoshin-- a beginner's mind. In the beginner's mind, there's every possibility. In the expert's mind, there's few. So how do we cultivate that beginner's mind? How do we think about, what can I do now to have the trust with my family, with my customers? How do I be healthy in this environment? How do I be successful in this environment? How do I give back in this environment?

These are the questions that we have to be able to answer, and the answers are probably not the same as they were a year ago or even six months ago. That's why we have to kind of regain our beginner's mind. And if we can do that, if we can really have a growth mindset and let go of our fixed mindset that we used to have, I think we can all have this tremendous success. And I hope that Salesforce will be an example-- that stakeholder capitalism is an example of doing well and doing good.

And yes, we'll have to make difficult decisions in our business, and that's always difficult. But at the end of the day, we have to keep the bigger picture in mind. And we have to achieve our ultimate creation-- where are we going together as one humanity? This is an opportunity to look at that.

JULIA LA ROCHE: Well, Marc Benioff, CEO of Salesforce, certainly appreciate you sharing your insights, and always great to have you on. Hope to have you back soon.

MARC BENIOFF: Great to be with you always, Julia.