The King of the Cloud
By Marc Benioff and Carlye Adler
Josey-Bass; 278 pp.; $27.95 In the annals of technology, the latest phenomenon to get the attention of the industry's powerful hype machine is cloud computing. This is the idea that instead of people and companies owning and managing the computers and software that perform many of their everyday tasks, much of that technological scut work will be handled by others, out of sight, in the mists. People can tap the power of the cloud from any computer or gizmo that's attached to the Internet.
This new style of computing is generating a new kind of tech company. In his book Behind the Cloud, Salesforce.com (CRM) Chief Executive Marc Benioff explains how he built one of those outfits—the world's most successful business-to-business cloud-computing company.
Salesforce.com sells an online service that helps businesses manage sales, customer service, and marketing functions. The 10-year-old San Francisco company topped $1 billion in revenues last fiscal year and is growing at 20% this year in spite of the recession. Benioff's reward for piloting this buster of the traditional business model is an 11% stake worth more than $800 million.
Behind the Cloud is both a how-we-did-it account and a how-to guide for entrepreneurs. (It's also a fun read for anybody who is fascinated with the world of startups.) In 111 "playbook" lessons, co-authors Benioff and freelance writer Carlye Adler take the reader through Salesforce.com's history and its ways of doing business. To Silicon Valley cognoscenti, many of the lessons will be familiar. But there's enough new here to make the volume well worth reading. And even when the advice is familiar, Benioff offers the same service his cloud service provides: He makes it user-friendly.
Benioff and a handful of colleagues started Salesforce.com in a tiny San Francisco apartment in 1999 with the idea of creating corporate software that would be as simple to use as Amazon.com. But while Salesforce.com was born in the dot-com era and Benioff has a reputation as a gonzo marketer, the company was not built on overblown promises like so many of its Internet brethren. That explains why it survived the dot-com bust and is thriving in spite of the Great Recession.
Salesforce.com has succeeded mainly because it assiduously caters to its customers. That's a requirement for cloud-computing companies: Since customers are buying a service rather than a product, they can walk away if they're not satisfied. Salesforce.com courts its customers in a long list of ways, from offering frequent seminars to intimate dinners at tony restaurants—including New York's tough-to-book Per Se.
In cloud computing, client feedback is vital. One of Salesforce.com's most effective means of getting it is Play #61: Harness Customers' Ideas. The company created a Web site, IdeaExchange, where it introduces and solicits suggestions and has received more than a quarter of a million comments. It even invited customers to vote on a possible name change. Their vote: Stick with Salesforce.com.
Benioff doesn't always make the right business choices, but he learns from his mistakes. Play #56 addresses building trust. In late 2005 the company's computers crashed repeatedly. While engineers scrambled, Benioff wouldn't answer calls from reporters or customers. The blogosphere went nuts. "We realized that silence had been a terrible strategy," he writes. So thereafter he opted for total transparency—creating a Web site that offers up-to-the-second status reports. That gesture, plus fixing the problem behind the crashes, restored customers' trust.
Benioff could have written an entire book about marketing. This one is peppered with ideas that once seemed over the top but turned out to work. Early on, for example, Benioff hired actors to pose as protesters outside a user conference held by larger rival Siebel Systems. They chanted that traditional software was "obsolete" while a fake TV crew interviewed passersby. The stunt generated a lot of press—aka, free advertising.
Benioff still faces plenty of challenges. The cloud competition is just beginning. But Behind the Cloud paints a clear picture of what it takes to succeed in a world where many of the old rules no longer apply.