Business.view
Mystic Marc's guide to success
Nov 24th 2009
From Economist.com
The founder of Salesforce.com explains how to start a business
IT IS not every management book that can include blurbs on its jacket from Anthony Robbins, a motivational speaker, and Neil Young, an ageing rock star, alongside the founder of the World Economic Forum, Klaus Schwab. Yet it is not every company that is built on a moment of inspiration during a swim with dolphins in Hawaii. “Behind the Cloud”, Marc Benioff’s new book about how he foundedSalesforce.com, one of the leaders in what is now called “cloud computing”, is full of personal tales including Mr Benioff’s encounters with the Dalai Lama and Ammachi, India’s “hugging saint”, but for all its New Age feel it is full of advice from which any entrepreneur can learn.
In its ten years, Salesforce has turned from a Hawaiian dream into a company listed on the New York Stock Exchange with a market capitalisation of $8 billion. And Mr Benioff has turned from an ebullient salesman with a promising idea into a proven visionary who saw the potential for “on-demand” computing services delivered via the internet when most in the industry were still wedded to traditional software.
A prime mover in the “cloud”Mr Benioff’s vision was shaped at Oracle, where he worked closely with its boss, Larry Ellison. That involved inevitable exposure to what Mr Benioff describes as “Larry’s well-known ‘management by ridicule’ style” and a corporate culture summed up by insiders with the phrase “we eat our young”. Mr Benioff seems to have coped with this through a mixture of spiritual retreats, yoga, close contact with dolphins and close consultation of Sun Tzu’s “The Art of War”. He decided to build Salesforce on a corporate culture that, though demanding (Mr Benioff preaches “fire fast” as well as “hire fast”), aims to nurture rather than terrorise.
Mr Benioff believes that every company should build a corporate culture based onmahalo—the Hawaiian spirit of gratitude and praise. Every salesman at Salesforce who meets his quota gets a three-day trip (with a plus-one) to Maui: typically 65% of the sales team gets to go each year. “Most companies reward only the top 10% to 20% of their sales reps, but that strategy doesn’t yield a very high return. Morale for the top people is sky high, but it is brutally low for the 80% to 90% of people who are not recognised,” he says.
Corporate philanthropy, in Mr Benioff’s view, is a valuable recruitment tool. The majority of the young people Salesforce would like to hire want to work for a company with goals beyond profits, and once recruited a shared sense of mission encourages their loyalty, he says. He has set out to make Salesforce a more generous and efficient donor than any other firm.
Having cut his teeth running a charitable project at Oracle—Mr Ellison is not entirely stony-hearted—Mr Benioff launched Salesforce with a “1-1-1 Model”: 1% of Salesforce’s equity was donated to its foundation; 1% of every employee’s time was to be dedicated to volunteering, and 1% of profits was to be given away—which, over time, has evolved into 1% of products, as Salesforce has provided free services to thousands of non-profits. It was a speech at Stanford University on this topic that inspired Sergey Brin and Larry Page to implement the same model when they launched their firm, Google.
Like many management books, “Behind the Cloud” contains plenty of the sort of jargon that turns off admirers of great literature. It is structured as a “playbook”, with 111 different plays, ranging from the commonplace—“Believe in Yourself” and “Defy Convention”—to the rather punchier “Be Innovative and Edgy in Everything You Do—Except When It Comes to Your Finances” and “Telesales Works (Even Though Everyone Thinks It Doesn’t)”. It recommends the rather clunky mnemonic V2MOM, which stands for “vision, values, methods, obstacles and measures”.
Salesforce’s vision, however, has been fluid. In fact, it has so far had at least five, from the original “rapidly create a world-class internet company/site for Sales Force Automation” to the current, even less snappy, “Create wildly successful customers, secure every renewal, and grow our customer relationships through the Service Cloud and Force.com. Increase the productivity of every employee and every department, to gain market share and dominate enterprise cloud computing”.
Nor does Mr Benioff’s charity extend to those of his neighbours who work in “venture capital, sometimes called ‘vulture capital’.” As he hawked his business plan around Silicon Valley, like many an aspiring entrepreneur, he found that “VC after VC turned us down.” In the end, Salesforce was financed in its early stages with a mixture of Mr Benioff’s own money and that of his friends. And although few entrepreneurs will be able to match Mr Benioff’s wealthy connections (Mr Ellison invested $2m, for instance—a stake now worth at least 100 times that), he believes that it is becoming cheaper to found companies: “Thanks to the falling cost of hardware, overseas coders, and on-demand services, start-ups need less capital to get off the ground.”
Mr Benioff’s story is full of paradoxes. He recommends lavish marketing events, such as a launch party in early 2000 that out-exuberanced other dotcoms at a cost of $600,000, including $250,000 to hire the “world’s greatest party band”, the B-52s. Yet he claims “our approach to finances was extraordinarily conservative”. Indeed, some may feel there is too much paradox for him to be a good role model. But given Mr Benioff’s success, the question this book should raise in the mind of every aspiring entrepreneur is “Why not?”
No comments:
Post a Comment