Monday, June 15, 2009
(Cont'd from above)...

Jim (cont'd):   


Jim:       Mr. Benioff, welcome back to Mad Money.

Marc:     Hey Jim, thank you so much for having me.

Jim:       One thing that I want to just get right off of the table… you were the last to see the slowdown because your business is that strong… are you surprised, you know you have always been a non-hype artist… that you are still growing the business, despite the slowdown.

Marc:     We are growing the business, Jim. As you said, I think really clearly, we are the fastest growing software company in our class in the world today. And we will deliver over 17% growth this year. Against our peers that is pretty dramatic growth. And we know have almost 60,000 customers using our services. In our first quarter, with some of the numbers that you sited, we delivered over $300m in revenue, which was over 20% growth from the previous year. And we turned about a third of that revenue into cash or $100m, I think that you referenced, we have almost a billion dollars in cash now. As well as almost 90% growth on profitability. You know that we delivered over 300 basis points last year in profitability, and we are on track again to do that again this year.

Jim:       Marc, do you think that if you felt that there was any uptick in the economy, that the trends that we saw before the slowdown would just revert to the good news cycle?

Marc:     Well, I think that you know, a lot of the customer buying behavior in the enterprise, Jim, is linked surprisingly to the stock Marcet. I think in the fourth quarter, when you saw that big kind of uncertainty and tremendous declines, that really impacted enterprise buying. And we saw in the first quarter, customers starting to get their sea legs again. So that is why I am much more optimistic about the future, because customers are learning how to operate in this environment. I know as a CEO, I am.

Jim:       It is funny, because when I went over your outlook on the conference call, you were not as bullish as you just were… you really weren’t… you actually were talking about business trends being crimped… are you saying that even in the time since May 21st things have gotten better?

Marc:     Well, what we saw in the first quarter, Jim, is what we call our new business sales. They were slightly below last year. And compared to our peers, that was dramatically better than what they were seeing which was mostly 20% to 30% declines. And the reason why I think that is, is because still cloud computing has an ultimate position in enterprise buying. If you want to lower your costs, and you want to make it much easier for your IT department, it is better to go on cloud than on premise. So a lot of companies, whether they are small companies, medium companies, or even some of the largest companies in the world, as you know, have moved to our model. And we know have almost 60,000 of these customers. So when we see that economy start to increase, we will see those customers adding on their implementations. In the first quarter, we did not see that. And we are continuing to look for that. But while we do that, we are adding dramatically to that installed base. In fact, we added a record 3900 new customers in that first quarter.

Jim:       Marc, can you tell me why the others are unwilling to do it? I am trying to get an analogy from you… I was thinking that if you were a pure internet company, lets say in publishing… the other guys might be a publisher that has an internet division… and the internet division really cannibalize their print… would your model cannibalize an IBM or Microsoft? Is that why you have such a big advantage over them?

Marc:     Yes, Jim, that is exactly right. What we are taking on is the huge maintenance streams of Oracle, Microsoft and SAP, by offering companies, small, medium and large, basically a much lower cost model. A subscription model. And you know what, one of the great things about our model is as the economy has had its ebbs and flows, our customers have not been as impacted. Because they can evolve their subscription agreements with us. This is one of the advantages of our model, and this is why you saw that net customer number go up in the first quarter. And it is also why saw these dramatic declines in companies like SAP last quarter. And I think that this is why cloud computing is so well positioned going forward, Jim.

Jim:       I think that I have to emphasize to everybody, that everybody else is loosing share… that everybody else’s business is in decline… so before all of these analysts freaked out, they ought to recognize what the affirmative is… can you tell people what you are doing? I work for General Electric, CNBC works for General Electric, what the exciting thing you are doing with our company is?

Marc:     Well, we have tremendous success with General Electric. And, of course, General Electric has been traditionally standardized with on premise software like so many companies. But now some divisions, including GE Capital, or the division that you have with NBC Universal is standardized on Salesforce.com. So you are able to not only manage your sales operations and your sales force systems, but we are even looking at how we can place the ads directly from our servers onto the network using our new Force.com platform. And so, you have got a fantastic system there, and we are really excited to be working with General Electric.

Jim:       I also have to tell you, that as Chairman of TheStreet.com, we just brought in Salesforce.com… I like to disclose this stuff… because you have to understand why the heck I am excited about some company that other people are downgrading… because people bring in Salesforce.com to safe money and grow their business… and have accountability in a department, that when I use to work in had no accountability… am I right?

Marc:     The most important thing is customer success. The most important thing is that customer evangelism. And I know cause I have seen those emails when they get sent in your direction from NBC, or other groups in General Electric, you know really evangelizing the Salesforce.com services. And we really want to do more with companies like yours and others to take you into the cloud. While at the same time dramatically lowering your costs and risk of on premise software by moving to cloud computing. And we need to do that with not just 60,000 customers like we have today. But we need to get to 100,000 as fast as possible.

Jim:       Alright, Marc Benioff, Chairman and CEO of Salesforce.com, you are an evangelizer for a product that I have bitten onto and like… and so in full disclosure, you are doing a great job… thank you very much.

Marc:     Thank, Jim. Great seeing you.

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