“Pay no attention to the man behind the curtain!”
Frank Baum – The Wonderful Wizard of Oz
Yesterday I commented on Forbes to refute a poorly researched article by one of their regular contributors. The title of the article is ‘Why Salesforce has Passed it’s Prime.” It’s ‘backed up’ by five ridiculously one-sided points that are either poorly researched and inaccurate or deliberately incorrect. I commented on this article and the comment went into a moderation queue. Forbes subsequently reviewed and published my article several hours later and posted it to LinkedIn (which I had given it permission to do). However, Forbes then deleted my post. That meant that this ridiculous article was posted into my feed with my face beside it saying that I had commented (but they removed the comment). It looked like I was endorsing the idea that Salesforce was declining. Nothing could be further from the truth.
I run the Salesforce.com Group and am building a business in Salesforce‘s ecosystem and that doesn’t look too good. So here’s the comment I made in response to Peter Cohan’s weak article (which I link to lower down).
“The most amazing thing for me is that you are writing for a company that has ranked Salesforce the most innovative company on the planet in any industry 4 years running. So either you think innovation is not a strong indicator of future success or you think your paymaster’s analysis is worthless. To top that off you write about a company you do not understand, you do not do adequate research and you deliberately bias the numbers to make a point. “Salesforce.com generated sales of $4.1 billion in the last 12 months.” No, it didn’t. It generated well over 5B USD in the last 12 months. You must be referring to what Salesforce call fiscal 2014 (effectively Feb 2013 to Jan 2014). Research is a valuable thing. You never invested in Salesforce in the past so, for someone apparently so interested, you show a lack of ability to identify the incredible growth machine that Salesforce has been over a long period of time.
Point 1. “Netsuite is taking Salesforce‘s customers”. You cite 2 instances and believe that’s enough for this point to be credible? Netsuite started around the same time as Salesforce, but the latter became 10 times bigger. Netsuite is now owned by Oracle i.e. goodnight innovation.
Point 2. “Significant competition from upstarts.” Yes – of course there is. You illustrate your point by comparing pricing for Salesforce Enterprise Edition with Zoho, Nimble and Insightly. That’s a ridiculous comparison of an enterprise-class platform and access to the most important B2B cloud ecosystem with good, but low-end apps. If this is supposed to be objective journalism, why do you not mention Group edition or Professional edition?
Point 3. “Spending too much on marketing.” You are comparing Workday marketing ROI and growth with Salesforce? Salesforce has revenues that dwarf Workday – it’s apples and oranges. Workday is a much younger, smaller company in a phase of hyper-growth. Workday is an excellent company but your comparison is not valid.
Point 4. “Rigid model that needs to adapt to social selling”. Have you ever heard of Social Studio, the Community Cloud and Chatter? Have you ever spoken with a senior sales or marketing person in Salesforce? I suspect they may be too busy to talk with you. Please go back to the drawing board and talk to someone who understands social media and how switched on Salesforce is.
Point 5. “High stock market valuation”. You quote the P/S ratio for Salesforce. Salesforce has always had a high one because it has evolved from a hyper-growth startup with an amazing app to an innovation machine with a high growth platform and an incredible ecosystem of apps and partners. However, the P/S ratio is lower now than its ever been. In Q1 in 2011, they had a P/S ratio of 44. It’s now 7.3 and dropping. The curve is pretty smooth and the market has been proven right to support Salesforce for over 15 years. You are just the latest prophet of doom. 100s of others got this wrong over the years.”
So why would an apparently intelligent person like Peter Cohan write such an inaccurate article about a company that continues to be a superstar? A strong clue might be found in point 1. The one that mentions Netsuite (Oracle). In the interest of fairness (and because two wrongs don’t make a right), here is a link to his article in full.
“Familiarity with any great thing removes our awe of it”
Frank Baum – The Master Key
No company lasts forever of course. Like every firm Salesforce will disappear some day. As I wrote in this piece, every Goliath-sized company creates its inner David eventually. However, that day is a very long way away for Salesforce in my opinion. Marc Benioff always indicates years in advance where the company is heading. His recent statement that “we’re in an AI spring” indicates to me that Salesforce is considering investing in being a serious player in data science (like IBM and Google) and even perhaps eventually cognitive computing. If that sounds far-fetched, note that Salesforce has hired nearly the entire original data science team from LinkedIn. Benioff always makes statements to prepare the ground for the future product roadmap – and he usually starts years ahead. My bet is that the Salesforce Analytics Cloud is only the beginning – Salesforce will gradually become a much bigger player in data science.
Just one example o f Benioff preparing the ground is the fact that on several occasions over the years he predicted the decline of email. Eventually, he made the provocative statement “Email is dead” and talked about social media streams as inevitably dominating communication. He knows email is not dead but he pressed a lot of naive buttons and got the big media response he wanted. A little later Social Studio was released to take on Hootsuite. Unrelated? I don’t think so. I talked about how Benioff cleverly and seamlessly integrates his communications with Salesforce’s product roadmap – often years in advance. You can hear more about that in this radio interview:
How Innovation and Marketing Tango in the Product Roadmaps of Salesforce.com
Marc Benioff is no Pied Piper or Wizard of Oz. He and Salesforce have proven themselves to be masters of both marketing and innovation. Salesforce.com shows every sign of continuing to innovate, diversify and grow.
“Business has only two functions – marketing and innovation.”