Benioff Sounds Off

In an interview, the outspoken CEO of Salesforce.com discusses customers, cash, and competitors—including his former boss at Oracle, Larry Ellison

A year and a half ago, when software maker Salesforce.com was growing at a rate of about 60% a quarter with less than half a million users, its colorful CEO, Marc Benioff, declared that the company had a "million-subscriber dream."

Salesforce.com's (CRM) growth has cooled a bit since then, but on Dec. 5, Benioff got his wish, announcing that the number of subscribers to its online customer management software will cross the million mark in December, up from 900,000 in September. Salesforce.com also said it will donate $1 million to 10 charities, including the University of California San Francisco and the Bridge School, the school founded by musician Neil Young for children with disabilities. And the company unveiled a new software feature, available for an additional fee, that makes it easier for companies to share leads and orders.

Amid fears that corporate technology spending may be slowing, Salesforce.com continues to post solid results. On Nov. 15 it reported that fiscal third-quarter revenue rose 48%, to $192.8 million, and per-share net income climbed to 6¢, from break-even a year earlier. Salesforce.com also said it expects to exceed $1 billion in revenue for the fiscal year that ends in January, 2009.

But big competitors are sharpening their knives. At a conference in Boston on Dec. 4, SAP (SAP) showed a new version of its customer management software that users can run over the Web. SAP, the No. 1 vendor of business applications, is also aiming for a bigger slice of software sales to midmarket companies (BusinessWeek.com, 9/19/07), an area where Salesforce.com has been strong. And Oracle (ORCL) announced on Nov. 14 that it will deliver new customer management software (BusinessWeek.com, 11/15/07) early in 2008 to compete with Salesforce.com.

In a recent conversation with BusinessWeek.com's Aaron Ricadela, Benioff held forth on the company's revenue and cash-flow growth, the prospect of larger acquisitions, and competition with Oracle and SAP. Edited excerpts follow.

Salesforce.com signed a 30,000-user deal with Citigroup (C) during the third quarter, and you've recently closed a couple of other large contracts. Now you're announcing you're on the verge of having 1 million Salesforce.com subscribers. But you've stopped reporting subscriber numbers each quarter. Will you return to that?

Our deal with Citigroup was the biggest customer relationship management deal in 2007 that I'm aware of by anyone. I could say the value of the deal, but I'm not going to. In financial services, we have Merrill Lynch (MER), Deutsche Bank (DB), SunTrust Banks (SIT), and many others around the world as customers. Citigroup, who can choose to buy anything, chose software as a service. It was a very competitive transaction: Executives from other [vendors] were involved—the top guys. And we've won Canon (CAJ), an Oracle account that was using Siebel [a vendor acquired by Oracle]. We had a previous relationship with them, but this is a significant expansion—about an additional 4,000 users. Japan Post has 60,000 Salesforce subscribers.