Salesforce: Trust is the Key Value for Tech Companies

Salesforce: Trust is the Key Value for Tech Companies

Speaking to Jim Cramer on Mad Money, Salesforce CEO Marc Benioff argued that for technology companies, the key value is no longer the great idea, but trust:

In technology over the last two decades, the most important thing has been the idea. That is, the best idea wins.   That has been what gets you funded, that’s how you grow your company, that’s been your highest value: the best idea wins. No longer true.

The current highest value is trust, and if trust is not your highest value, if the most important thing to you and your company is not trust, you need to look again, and that’s what’s happening with these companies today.

Salesforce CEO Marc Benioff

Benioff observed that a lack of trust is eroding Silicon Valley companies such as Facebook.  “Their executives are walking out, employees are walking out,and that happens with a lot of companies in tech right now. We’ve had a lot of walkouts this quarter.  And the reason why is because it’s kind of amessage to the executives: it’s time to transform.”

“Every company has to hold themselves to a new level of trust, and if your brand is not about trust, you’re going to have customer issues, and you can see that in that brand,” observed Benioff.

And trust has long been part of Salesforce’s value proposition.  The firm emphasizes it’s 1:1:1 philanthropy program (Donating 1% of technology, people, and resources) which has been adopted as a model by other companies.  Salesforce also promotes local nonprofits at Salesforce events, emphasizes Trailhead and meetups for skills advancement, embraced a San Francisco tech company tax to address homelessness, called for a US GDPR to protect privacy, raised womens’ wages to address a pay equity gap following a self-audit, and spoke out against anti-gay legislation.  Under a short-term profit-maximization model, these activities make little sense, but under a longer-term stakeholder’s approach, they make perfect sense.

Trust is based on a stakeholders approach to corporate governance.  It recognizes that Milton Friedman’s stance against social responsibility (“there is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays in the rules of the game, which is to say, engages in open and free competition, without deception or fraud.”) is wrong.  A stakeholders approach recognizes that employees, customers, partners, investors, and the general public all place value on companies that take a long-term view of their role in society.  Simple profit maximization is a short-term approach which fails to recognize that you can’t attract the best employees or close multi-million dollar deals if you are not trusted.

And you can see this in the stock price growth of Facebook and Salesforce over the past five years.  Facebook’s stock price outpaced Salesforce for the past five years, but once Facebook lost trust, its stock price declined.

Salesforce and Facebook both had strong stock price growth over the past five years, but Facebook retreated this year after it lost trust amongst stakeholders.
Salesforce and Facebook both had strong stock price growth over the past five years, but Facebook retreated this year after it lost trust amongst stakeholders.

Oracle Acquires DataFox

Oracle recently acquired DataFox, providing them with access to 2.8 million company profiles, including funding and M&A data.  DataFox “gives customers real-time insight to know when a business exhibits noteworthy behaviors.”

“The combination of Oracle and DataFox will enhance Oracle Cloud Applications with an extensive set of trusted company-level data and signals, enabling customers to reach even better decisions and business outcomes,” wrote Oracle’s EVP of Applications Development Steve Miranda to customers and partners.

Oracle provides the following deal shorthand:

Oracle Cloud Applications + DataFox = Even Smarter Decisions

DataFox is growing its database at 1.2 million companies annually.  The database will deliver real-time insights into its cloud-based ERP, CX, HCM and SCM platforms.

DataFox Data Engine Overview (Oracle Presentation, October 23, 2018)
DataFox Data Engine Overview (Oracle Presentation, October 23, 2018)

In a bit of extreme puffery, Oracle described DataFox as the “the most current, precise and expansive set of company-level information and insightful data.”  Bureau van Dijk and Dun & Bradstreet have 50X the active company coverage including detailed global linkage, risk models, and multi-year financial data.  Bureau van Dijk also offers the Zephyr database, an M&A and funding dataset with over twenty years of closed, pending, and rumored deals.  Where DataFox may have an advantage is in their focus on mid-size and emerging companies which have been recently funded, but this is a small subset of the company universe.

DataFox will continue to sell and support its products.  However, the DataFox roadmap and product line are fluid:

“Oracle is currently reviewing the existing DataFox product roadmap and will be providing guidance to customers in accordance with Oracle’s standard product communication policies. Any resulting features and timing of release of such features as determined by Oracle’s review of DataFox’s product roadmap are at the sole discretion of Oracle. All product roadmap information, whether communicated by DataFox or by Oracle, does not represent a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. It is intended for information purposes only, and may not be incorporated into any contract.”

Along with AI insights, Oracle called out the needs for quality data to back data maintenance, artificial intelligence, and business signals.

Customer Data Challenges (Oracle Presentation, October 23, 2018)
Customer Data Challenges (Oracle Presentation, October 23, 2018)

DataFox has over 275 customers including Goldman Sachs, Bain & Company, Outreach, Live Ramp, and Twilio.

DataFox raised $19 million in funding.  Terms of the deal were not disclosed.  In January 2017, DataFox was valued at $33 million by Pitchbook.

Oracle should study Salesforce’s acquisition of Jigsaw (later renamed Data.com) as a cautionary tale.  Software companies struggle in selling data files as company and contact data decays rapidly and it is difficult to push data quality above 90% absent large editorial investments.  Furthermore, Jigsaw never represented more than 1% of Salesforce revenue so quickly fell off of the company’s internal radar.  The firm is now looking to decommission Data.com and asking its AppExchange partners to fill the sales intelligence and data hygiene gap left in its absence.  Coincidentally, DataFox is one of Salesforce’s Lightning Data partners.

On the positive side, LinkedIn hit $1.3 billion last quarter and has thrived under Microsoft’s ownership.  However, LinkedIn was a much more mature company at acquisition than DataFox with multiple revenue streams and a unique user generated content model.  Microsoft has provided LinkedIn with development capital and allowed it to maintain its independence.  It has also looked to leverage LinkedIn and Microsoft strengths when building sales and marketing products, instead of simply copying other vendors.  For example, Sales Navigator continues to respect the privacy of its members while using aggregated data to provide hiring and employment insights that other companies cannot deliver.  Navigator has also added strong messaging tools (chat, InMail, and PointDrive) which work around its lack of company emails.  Other innovations include SNAP workflow connectors, its new Pipeline CRM updating tool, and Buyer’s Circle for identifying the buying committee at large firms.

Benioff Dreamforce Keynote

Salesforce CEO Mark BenioffSalesforce CEO Mark Benioff has long taken a stakeholders’ approach to his business, understanding that technology firms can do both good and evil.  Unlike many of the social media companies which are now beginning to understand the dangers of taking a laissez-faire approach to how others use their technology, Benioff has ensured that his enterprise cloud company takes an affirmative action towards social justice, equality, and the ethical application of his firm’s technology.

Eighteen years ago, he started the 1:1:1 campaign (1% of product, time, and resources) to nonprofits and philanthropic purposes.  At Dreamforce and World Tour events, the firm regularly promotes local nonprofits and holds sessions for them.  The firm has also taken stands against discriminatory legislation and adjusted salaries to ensure gender pay equity.  Benioff is calling for “inclusive capitalism” which benefits all members of society and recently created an Office of Ethical and Humane Use of their technology.

Here is what Benioff had to say at this year’s Dreamforce (abridged):

What is really important to us? what is the most important thing what are our values? What are we going to stand for? What do we really want?…

We’re watching…for companies who are not listening to their key stakeholders, not listening to their customers, not listening to their employees, not listening to the kids…Then we watch the executives walk out. The employees walk out.  The customers walk out as a vote of no-confidence against their values and as a community we stand here and we say we are going to commit to a higher level.  We are going to a higher level together to express our values.  We know what the most important thing is to us and in this community and we’ve said it for years and we’ll say it again:  Our culture is built on trust – The fundamental trust that we have with you; the fundamental trust that we have with our key stakeholders, with our customers, with our employees, with our partners.

Our trust is with you and we take that very seriously.  It’s our highest value and we ask every company to ask what is your highest value and in the world when technology is taking us over and in a world where technology through the Fourth Industrial Revolution is grabbing us, realize that we all have a higher responsibility to ask that question especially you see the gambits that are unfolding really before us. Especially as artificial intelligence gets released into the whole world we must ask this question, “What is truly important to us?”…

We realize technology is not good or bad, it’s what you do with it that matters…We’ve restructured our company to have an Office of Ethical and Humane Use of the technology so that as our employees or our customers or our partners say “Are we doing this? Are we aligned with our values? Are we moving forward?”

We can have a structured conversation not just with our own employees myopically but by bringing in the key advisors and supporters and pundits and philosophers and everybody necessary…to ask the question, “Is what we are doing today ethical and humane?” and we’re all gonna have to ask that question in the technology industry and every company and every CEO better be ready to answer to that question through their values.

And we’re putting our values into action because our values create our behaviors…

We believe we have to bring everyone in.  Everyone has to come in to the Fourth Industrial Revolution. It’s inclusive capitalism.  Inclusive capitalism means we’re all going together into the future.  We are leaving no one behind. Nobody will be left.

 

 

Salesforce: Benioff Names Block Co-CEO

logo-salesforceAfter 19 years, Marc Benioff has chosen to share the reins at Salesforce, naming President and COO Keith Block his co-CEO.  Block, who decamped from Oracle in 2013 where he ran the sales and consulting groups, will focus on “growth strategy, execution and operations.”  Benioff will lead Salesforce’s “vision and innovation in areas including technology, marketing, stakeholder engagement and culture.”

Block emphasized that Benioff is not looking to step down at the company he helped found in 1999.  “This is just a natural evolution of what’s been happening over the last five years,” Block told The Wall Street Journal.  “Marc is very engaged in the business, and he’s going to work for a very, very long time.”

Block was responsible for Salesforce’s verticalization strategy with targeted offerings in financial services, healthcare, and retail.  He also has been out front in explaining recent acquisitions such as the $6.5 billion purchase of MuleSoft in March.

“Keith has been my trusted partner in running Salesforce for the past five years, and I’m thrilled to welcome him as co-CEO,” said Benioff.  “Keith has outstanding operational expertise and corporate leadership experience, and I could not be happier for his promotion and this next level of our partnership.”

The firm also named co-founder and CTO Harris Parker to its Board.

“Since our founding in 1999, Parker has been instrumental in driving Salesforce’s innovation and shaping our culture,” said Benioff.

Salesforce: There is a “crisis of trust” concerning data privacy and cybersecurity

A few weeks ago, I wrote about enterprise software vendors calling for an American version of GDPR with Microsoft announcing that it was building GDPR into its global product line as its standard privacy protocol.

On the Salesforce earnings call last week, CEO Marc Benioff observed that the software industry has been going through a “crisis of trust for the past six months” related to privacy and data ownership:

“From the European perspective the way they look at data is data belongs to you, it’s your data. Now for us at Salesforce, we understand that. We’ve had that position from the beginning. Our customers’ data belongs to them, it’s their data. I think in some cases, the companies that are start-ups and next generation technologies here in San Francisco, they think that data is theirs. I think the Europeans with GDPR have really flipped the coin, especially in advertising but in another areas saying hey, this data belongs to the consumer or to the customers, you guys have to pivot back to the consumer, you have to pivot back to the customer.”

Benioff once again called for a US privacy law similar to GDPR which provides “guardrails” around trust and safety. “This is going to help our industry,” said Benioff.  ”It’s going to provide the ability for the customers to interact with great next generation technologies in a safe way.”

Benioff also warned that when AI technologies are indistinguishable from humans, trust will also be an issue.

GDPR Perspectives from Microsoft, Salesforce, and SugarCRM

810px-Flag_of_EuropeIt is less than 36 hours until GDPR becomes the law of the land in the EU Zone.  As the regulation has extra-territorial privacy requirements, non EU companies, even those without a physical presence in the EU, are subject to its requirements with respect to communications with EU citizens and management of their data.

The US has a much weaker set of laws and there is concern that US firms are laggards with respect to compliance.  However, a number of US technology firms have called for adoption of a US GDPR.

On Monday, Microsoft once again reiterated its belief that “privacy is a fundamental human right” and announced that GDPR will be their privacy standard globally.

“As people live more of their lives online and depend more on technology to operate their businesses, engage with friends and family, pursue opportunities, and manage their health and finances, the protection of this right is becoming more important than ever.”

  • Julie Brill, Microsoft Corporate VP & Deputy General Counsel

Companies, therefore, have a “huge responsibility” to protect and safeguard personal data.

Since GDPR was enacted in 2016, Microsoft has dedicated 1,600 engineers towards compliance.  “GDPR compliance is deeply ingrained in the culture at Microsoft and embedded in the processes and practices that are at the heart of how we build and deliver products and services,” said Brill.

She noted, however, that GDPR is a “complex regulatory framework” subject to “ongoing interpretation” by regulators and feedback from customers.  As such, the firm will “determine the steps that we all will need to take to maintain compliance.”

As a provider of corporate infrastructure, Microsoft views GDPR as an opportunity to differentiate itself and assist its customers with compliance on the Microsoft Cloud.  “One of our most important goals is to help businesses become trusted stewards of their customers’ data,” said Brill.  “This is why we offer a robust set of tools and services for GDPR compliance that are backed up by contractual commitments.  For most companies, it will simply be more efficient and less expensive to host their data in the Microsoft Cloud where we can help them protect their customers’ data and maintain GDPR compliance.”

Additional details about Microsoft GDPR compliance can be found in their Trust Center.

Salesforce and SugarCRM have also taken a strong position on GDPR calling for similar legislation in the US.  “What we need is a national privacy law, and that will really not just protect the tech industry; it’s going to protect all the consumers,” said Salesforce CEO Marc Benioff.

This is not a new position for Salesforce.  Back in 2014, Benioff said, “I’m all in favor of consumers having more power and more control over their data. As a consumer, you should have all of the rights. It’s like a cloud Bill of Rights. As a consumer or as an enterprise, you should have the right to be forgotten or to add or take away your data.”

As part of its compliance, the firm named their Senior VP of Global Privacy and Product Legal Lindsey Finch as their new Data Protection Officer.  Finch has been with Salesforce for a decade with previous stints at GE (Privacy Counsel), the Federal Trade Commission, and Homeland Security.

“The official DPO designation is a natural outgrowth of our existing programme. My team and I will continue to partner across the company to foster a culture of privacy – designing, implementing, and ensuring compliance with our global privacy programme, including ensuring that privacy is considered throughout the product development lifecycle,” said Finch. “The top theme I’m hearing is that our customers are using the GDPR as an opportunity to focus on their privacy practices and putting their customers—oftentimes end-consumers—at the center of their businesses. The GDPR is a complex law, but putting the individuals to whom the personal data relates at the forefront, and focusing on their expectations and preferences, is a great starting point for compliance with the GDPR and other privacy laws.”

Finch described Salesforce’s approach to GDPR compliance:

“We started by kicking off a thorough review to ensure compliance across the company. The GDPR is an incredibly rich document—99 articles and 173 recitals across 88 pages! Our Privacy team broke this down into key principles and worked closely with our Technology & Products organization to review our compliance. We found that we were already in a really great place,

Since then, a lot of the work we’ve been doing has been to document how our customers can use our services to comply with some of the key GDPR principles, which we’ve published on our GDPR website. There is no finish line when it comes to GDPR compliance. While Salesforce currently offers the tools for our customers to comply with the GDPR, we will continue to release new innovations that help our customers achieve compliance success.”

Salesforce CMO Simon Mulcahy echoed Benioff and Finch at the Salesforce World Tour event in London last week.  Mulcahy stated that many companies simply view GDPR as a compliance issue and nuisance, not an opportunity to align company interests with customer desires.  “It is a compliance issue, but it’s also a phenomenal opportunity to give your customers what they want. What they want is to know that when they give you their data, you’re looking after it appropriately.”

“Benioff is right that we will need some regulation and I can’t see how we can set two standards–EU and US–so we’ll likely need to adopt what the EU has done or risk chaos.  This also fits well into the narrative of the information utility. GDPR is another driver sending us toward utility formation for the information industry.”

  • Dennis Pombriant, Principal Beagle Research

Larry Augustin, CEO of SugarCRM noted that firms have been lax in their privacy and cyber security processes saying that self-regulation has proven to be insufficient with “too many incidents.”

“Data privacy issues are not going to go away. People are thinking a lot here now about GDPR, because Facebook, Twitter, and all of these issues keep coming. And Experian in the US, about managing personal information related to credit card data… there’s just a constant barrage of issues around data privacy and personal information,” continued Augustin.  “Everyone has to address it, whether it’s in the context of GDPR or the next thing that’s going to come along. There is definitely a heightened awareness and interest.”

SugarCRM has built a data privacy manager into its CRM as a “command center” for the data privacy officer.

In my discussions with clients. they all admit to the regulations being a muddle that initially adds risk to their business models.  The penalties are draconian, but the compliance requirements are ambiguous, particularly for B2B firms.  As such, we are likely to be hearing about issues concerning GDPR compliance requirements over the next few years.

SFDC Unplugging Data.com Connect

Salesforce Lightning Data partners include Clearbit, HG Data, Bombora, MCH, and DataFox. InsideView and Dun & Bradstreet were not included in this week's announcement.
SFDC is promoting Lighting Data solutions as an alternative to its Data.com Prospector and Clean offerings.  Salesforce Lightning Data partners include Clearbit, HG Data, Bombora, MCH, DataFox, InsideView and Dun & Bradstreet.  Additional partners are planned.

Salesforce told its Data.com Connect customers that the product will no longer be available as of May 4, 2019.  As such, the firm will not renew any customers after May 3rd of this year, and users will not be able to license any points, contacts, or plans after May 3rd.  However, users will be able to earn points through community updates through the expiration of the product.  While Salesforce has not announced shutdown dates for the native Salesforce Data.com Clean and Prospector offerings, their shutdown is “currently targeted for some time in 2020.”

Data.com Connect contacts data will continue to “used in the maintenance of the Data.com Clean and Prospector products,” said the firm.  “After the Data.com end-of-life is complete, the contact database may be archived by Salesforce.”

Data.com Connect is the successor to Jigsaw, which the firm acquired in 2010 for $142 million.  Connect Members either purchased plans or earned points through adding and maintaining records within Connect.  After acquiring the database, Salesforce realized that Jigsaw company data was too weak to be sold and partnered with D&B (now Dun & Bradstreet) to deliver the WorldBase company file alongside Jigsaw contacts.  This partnership was in place until early 2017 when SFDC announced the end of the licensing relationship.  Legacy customers continue to receive Data.com WorldBase account data, but the firm is encouraging clients to evaluate Lightning Data partnership offerings from Dun & Bradstreet, Bombora (intent), HG Data (technographics), DataFox, Clearbit, MCH (healthcare), and InsideView.

Future Lightning Data partners include Thomson Reuters, Aberdeen (technographics), Datanyze (technographics), Compass, and Equifax.

“We’ve built a powerful, flexible set of capabilities into the Salesforce platform we call the Lightning Data Engine.  It uses sophisticated matching algorithms and machine learning to make it easy to implement and deliver strategic data and insights from trusted, third-party sources. Lightning Data apps give customers next-level data quality, enabling them to create more intelligent processes built on better, more targeted data, which improves CRM user adoption and ROI. Best of all, seamless integration requires minimal ongoing maintenance, and makes data readily available on any device without IT involvement.”

  • Salesforce.com

Dun & Bradstreet said that it expects Data.com revenues to decline 30% in 2018.  The announcement that the Data.com Prospector and Clean products will be shuttered in 2020 is likely to expedite the revenue wind down.