Salesforce's happy workforceJanuary 19, 2012: 7:00 AM ET
Marc Benioff has the mind of a fox and the body of a bear. He's also a super salesman who's built a Bay Area giant that employees love for being prosperous and good.
By David A. Kaplan, contributor
FORTUNE -- It took a Reuben sandwich and Dr. Brown's Cream Soda to close the deal.
Nobody's as good at salesmanship in the world of high tech as Marc Benioff, the nimble and gregarious 6-foot-5, 290-pound co-founder and CEO of Salesforce.com. A few months ago, his burgeoning company -- the San Francisco-based powerhouse in cloud computing for businesses -- was looking to buy Rypple, a startup in Toronto that specializes in human resources apps. The two companies had already had several rounds of discussions. In late October, the 47-year-old Benioff was in Manhattan to speak before the G100 conference of executives. So were Daniel Debow and David Stein, the 38-year-old co-founders of Rypple. The night before, Benioff took them to San Pietro, the Midtown Italian restaurant where he holds court every time he's in town: "Right over there is where I sent my favorite California Cabernet to King Abdullah of Jordan -- to say thank you for helping to build peace in the Middle East!" And the king was so impressed he sent his bodyguards back to the hotel "to bring me one of his famous beautiful watches!" Benioff has told the tale so many times at the restaurant that the waiters can recite it. He made sure that Stein, a wine buff, got the same bottle of Dalla Valle as the king.
After attending G100 events the next day, Benioff suggested that he and Debow hit the renowned 2nd Avenue Deli for lunch. (Stein had to go back home.) There weren't any tables, so Benioff got them seats at the corner of the counter. And he ordered up the full array: corned beef, sauerkraut, and melted Swiss on rye, with lots of dressing; matzoh ball soup; chopped liver; chased with warm assorted rugelach. They didn't talk business. "We just kibitzed," Debow says. Soon thereafter, Rypple took Salesforce's $60 million, turning down a richer offer -- from SuccessFactors, which was just bought by SAP, one of Salesforce's archrivals. "It wasn't only about deal terms, but corporate culture," Debow says. "We barely met the other CEO." Debow says he sensed Benioff was the kind of person "we could deliver our company and employees to … that we entrepreneurs could be part of their family. Nobody can keep up the artifice over a couple hours of sharing pickles."
It's that kind of episode that has helped make Salesforce (CRM) a remarkable success story in terms of employee contentment, as well as growth. And it illustrates why Salesforce is on Fortune's 2012 list of the 100 Best Companies to Work For -- ranking No. 27, up 25 slots from last year. There are plenty of reasons Salesforce is cool to work for: its downtown San Francisco vibe, its matchless end-of-the-year revelry, its embedded philanthropy, and its idiosyncratic leader. It may not have the élan of a consumer brand like Apple (AAPL) or Facebook -- after all, "enterprise software," despite being a vast industry, is about as sexy a business as aluminum smelting. But Salesforce has reinvented how companies get the software they use to handle ordinary but critical tasks like customer relations, sales, accounting, and internal communications.
Employees love being on the cutting edge. Salesforce gives its more than 100,000 "subscribers" -- including NBCUniversal, Dell (DELL), Bank of America (BAC), Cisco (CSCO), Google (GOOG), and the Japanese government -- access to that proprietary data in the "cloud," over the Internet. In industry parlance, it's "software as a service" rather than "software sold in a box."
That's a radically different, simpler, and cheaper model than what business software behemoths like Oracle (ORCL) and SAP (SAP) offer -- where customers keep information offline on their own computers, which in turn requires installation of expensive software, upgrades, maintenance, and a dreaded IT department. Even so, major Salesforce customers can pay hundreds of thousands of dollars in annual subscription fees. Salesforce employees are messianic in touting their model over the "dinosaurs" of Oracle and SAP, which still have revenue and market capitalizations that dwarf Salesforce's. The underdog mentality of the 13-year-old company is akin to that of a renegade startup. Last summer a trade publication on its cover proclaimed Benioff America's No. 1 Innovator. "Marc's energy and dedication remind me of the people in my world," says his close friend Neil Young, the nonpareil musician (and sometimes technologist) whom he met as a neighbor in Hawaii. "That's what great artists have in common. It's about intensity. He has a rock-and-roll attitude -- he's a throwback in his willingness to have fun."
In one notorious guerrilla-marketing stunt early in Salesforce's history, Benioff arranged for "protesters" to picket the users conference of an old-school competitor at the Moscone Center in San Francisco. The paid actors brandished no software signs as they chanted, "The Internet is really neat … Software is obsolete!" (Never mind that Salesforce used software too; the difference was its virtual delivery system.) Benioff also hired a mock TV crew from bogus station KNMS (no more software -- get it?) to cover the "protest." The competitor was incensed and called police -- who promptly arrived to protect the demonstrators. (With characteristic reserve, Benioff decided against having an armored tank roll by driven by someone dressed as Patton.) The trade press ate the stunt up -- and Salesforce soon won 1,000 new subscribers. Along with a puffy cloud, the company now includes the Ghostbusters-style logo -- "software" surrounded by a circle, with a line through it.
Employees adore that subversive atmosphere. "Most people don't have to work here," says George Hu, the COO of Salesforce who started as an intern a decade ago. "They're self-selecting," given that many have a range of companies they could work for or made enough money in the IPO that they don't need to work anymore. In its latest innovation, Salesforce is espousing the corporate "social enterprise" (a phrase Benioff uses in conversation about his business as often as he puts !!!!! in e-mails). While Facebook may have spawned the online social revolution, it is Benioff rather than Mark Zuckerberg who has become its loudest barker. In this new age, in Benioff's telling, "customers" become "friends," and all employees "have a voice."
"We achieved our market position by being born cloud," Benioff writes in a book due out later this year, "but we are being 'reborn' social … We need to transform the business conversation the same way Facebook and other social sites like Twitter have changed the consumer conversation and created incredible loyalty -- and love."
"Go fast and don't break things"
Salesforce's new social-networking app, Chatter, for example, functions much like a Facebook inside a company -- and helps enhance office culture. Whether on a computer or mobile device, Chatter is dynamic and collaborative -- e-mail, by comparison, is static and private. In open groups or news feeds like Finance or Sales, multiple employees can share ideas in real time on projects, analyze data, and compare drafts. "I learned more about my company in a few months through using Chatter than I had in the last three years," Benioff says.
At Salesforce itself -- where there are about 3,000 daily Chatter posts, and internal e-mails have decreased 30% since Chatter went live -- there are groups designed to get employees across departments and rank talking to each other about work life, including Tribal Knowledge and Airing of Grievances. You can't post anonymously, so complaints and queries are rather tame. But it nonetheless generates a degree of cooperation unseen at large organizations. Employees who've worked at Facebook, Google, and Goldman Sachs (GS) all say there's "less politics" around the office at Salesforce.
Currently provided for free, Chatter is used by virtually all of Salesforce's customers. The idea of Chatter came as an epiphany to Benioff in 2009 and, against initial internal resistance, he pivoted the company's engineering efforts to build it, immediately diverting half of Salesforce's developers from existing projects. "We strive always to have a 'beginner's mind,' " says Benioff, invoking the lexicon of Zen for the fourth time this afternoon. Facebook's CIO, Tim Campos, says his company and Salesforce are cultural peas in a pod. "Facebook is a 'move-fast' company," he says. "Salesforce has the same characteristics. If you see your efforts get results quickly, you feel good about your work." Facebook has been a Salesforce customer since 2009.
The curious thing about Chatter, innovative though it may be, is that it's a copy of Facebook. Does Facebook complain it's being ripped off? "They don't, but they should, because they are," Benioff says. "We rip off everybody's ideas."
Acting swiftly -- you often hear "go fast and don't break things" -- applies to employee complaints about the de rigueur free treats on all Salesforce floors. A few years ago Parker Harris, a co-founder and now the executive vice president of technology, decided to offer better snacks to his team: fruit and more soda variety. "The salespeople then started coming up and taking our snacks!" Harris says. Dissension brewed. So he implemented "Snackforce" (get it?): a companywide upgrade in food and drink. (Benioff says the absence of a Google-like array of in-house lunches and dinners is an ongoing bugaboo.)
There is an entire outside ecosystem built around Salesforce's business applications. The infrastructure is technological, but the open mindset is what's significant. Benioff says it came from Steve Jobs. At 19, during college, Benioff worked as an Apple summer intern, writing code. Jobs became a mentor to Benioff over the years and, when Benioff felt "lost," he called on Jobs to reset his jib. In 2002, Benioff and other executives went to Apple headquarters to talk about Salesforce's products. Jobs urged Benioff to do much more with customized applications that could run on salesforce.com. As a result, Benioff came up with the idea of an "app store" and registered that domain name. When Jobs in 2008 announced his own app store for the iPhone, Benioff was in the audience. Benioff says he went up to Jobs afterward and turned over the app store domain name -- as a gift. Benioff used AppExchange.com instead.
The last time he heard from Jobs was in July, 12 weeks before Jobs died. "Things all around have turned out better than we could have ever imagined," Jobs e-mailed him, closing with "Big hugs, Steve." Says Benioff: "I really loved him -- I don't know what it will be like in business without him."
Cutting-edge culture is great, but it surely helps Salesforce morale, too, that Benioff pays well. Engineers fresh out of Carnegie Mellon or Stanford can earn six-figure annual incomes. If you arrived before the 2004 IPO, you made out like a bandit; Jim Cavalieri, the chief trust officer, has two Ferraris, but don't tell anyone. The best salespeople -- who, unlike at engineer-centric companies such as Google, rule the roost -- can earn millions in commissions and, with a spouse, get to go on a $5,000 "Breakfast at Tiffany's" shopping spree in Hawaii, in a specially constructed store built for the event. There's also a flexible work environment that lets software developer Gary Baker, 37, live up at Lake Tahoe and fly his small Piper Cherokee in monthly to "sort of show my face." (Only 53% of employees were eligible to receive stock as part of their compensation last year; that's one reason Salesforce doesn't rank higher than No. 27 on our list. At No. 1 Google, it's every employee.)
There's a spectacular urban setting; maniacal respect for customers; a pervasive ethos of corporate philanthropy; a Hawaiian shtick that has Benioff sign e-mail (and the annual report) "aloha" and the names of conference rooms in Hawaiian (good luck figuring out if the big meeting you're late to is in Haka Haka or Haku Haku or Mahi Mahi or Maka Luani); and the biggest, baddest holiday party in the Bay Area, which this year featured lithe, upside- down, high-heeled, spangle-clad acrobats, suspended from chandeliers, dispensing champagne. There's even a Chief Love Officer, who wags his tail: His name is Koa, the 12-year-old golden retriever that belongs to Benioff. All these quirks combine to create an estimable workplace.
Lots of folks want to join it. In 2011, Salesforce hired 3,100 full-time employees, typically receiving 60 résumés for each position. Almost half the new hires were referred by current employees, who receive an average $3,000 bounty for a lead that pans out. On every floor of headquarters are giant color poster boards of employees who've cashed in. The displays beseech employees to refer potential hires. "Teresita Meroff is chariteedy," reads one poster board. "She's charitable. She's greedy. She just made 5K for helping get someone an amazing job."
Salesforce's total of 3,000 employees in San Francisco (it's more than double that worldwide) makes it the city's seventh-largest private employer, surpassing Levi Strauss and Charles Schwab (SCHW). With revenue last year of more than $2 billion -- and with the company projecting 2012 to approach $3 billion -- Salesforce is now the biggest tech employer in the city. (Even with the stock down 23% in 2011 -- because it missed Wall Street expectations -- the stock has still more than quadrupled since late 2008.) At its latest hiring pace -- roughly 75 a week -- the company will have close to 10,000 employees overall by the end of 2012. (In mid-January it hired Vivek Kundra, who was the first U.S. chief information officer, as executive vice president of emerging markets.) Much of the nation is in an economic slump, of course, but in the halls of Salesforce, the notion of hard times has come only from looking out the window at the tent city of the Occupy movement along the Embarcadero.
Salesforce uses its location as a recruitment tool for twentysomething engineers. It's a lot more fun being in San Francisco surrounded by clubs and bars than in an office park 25 miles south in Silicon Valley proper, where the culinary choice extends to -- decisions, decisions -- Hobee's or Jack in the Box. The company was founded not in the archetypal Silicon Valley garage but a one-bedroom apartment on Telegraph Hill; a photo of the Dalai Lama hung over the fireplace, with another of Albert Einstein on the wall.
By current estimates, growth is so explosive that Salesforce's new 2-million-square-foot headquarters -- a 14-acre, eight-building complex under development three miles south of downtown that won't open until at least 2016 -- already may not have sufficient space. (Salesforce ranked No. 35 on Fortune's 2011 list of the 100 Fastest- Growing Companies.) "We could have gone to the Valley," Benioff told me one evening as we flew across the country on a Salesforce-chartered Gulfstream V and dined on, of course, deli sandwiches. "We made a conscious decision to stay in the city because our employees want to be here."
Zen, Tony Robbins, or fortune cookie?
At the center of the Salesforce universe is the multibillionaire, ursine, wavy-haired, sometimes clean-shaven Benioff -- or "Barnum," as his father-in-law describes him. The publicity-happy, emotive Benioff is a charming bundle of contradictions: bombastic and mellow, genuine and crafty, competitive and caring, self-absorbed and generous, Jewish and Buddhist Lite. He voted for Ronald Reagan but now is a fan of Barack Obama; the President visited his San Francisco house last April for a small $35,800-a-head fundraiser at which Stevie Wonder performed. Benioff counts among his personal and professional "gurus" an eclectic array: Neil Young; Tony Robbins, the motivational speaker; Colin Powell, the retired general; the Dalai Lama; Benioff's late grandfather Marvin Lewis, a legendary San Francisco trial lawyer and father of Bay Area Rapid Transit; and Larry Ellison, the co-founder and CEO of Oracle, with whom he used to double-date and with whom he's scarcely talking these days, after Ellison canceled him at the last minute from giving a keynote at a recent Oracle OpenWorld.
For all his zeal, Benioff can be relentlessly oblique, even odd. When I asked him whether that deli luncheon in Manhattan was as lacking in "artifice" as Debow supposed -- or was it really the master pitchman and showboat at work? -- Benioff replied inscrutably, "What you focus on in life is what you create."
"But what does that mean?" I asked. "Is that Zen, Tony Robbins, or the sayings of a fortune cookie?"
"All of the above. It is how serendipity happens."
Which seems to indicate the impromptu meal was actually just a bit Machiavellian, not that Benioff would acknowledge so. Salesforce employees have long embraced his eccentricities. Sure, there were several eye rolls at an offsite Hawaiian meeting of his top executives when he brought in interpretive hula dancers, but the executives got out of their chairs and tried a few moves. Early in the company's history, Fridays were Hawaiian Shirt Day -- many employees carry on the ritual. Peek in their cubicles and you'll see plenty of stuffed versions of SaaS-y (as in "software-as-a-service"), the lowbrow rotund mascot who performs at Salesforce conferences (with help from the likes of Young, Metallica, will.i.am, Foo Fighters, and Jay Leno). At those worldwide extravaganzas, attended by as many as 45,000 current and prospective customers, employees join in what is equal parts sales call, evangelical service, and political rally. They help rev up the crowd before Benioff takes the stage, works the audience, and sells the mundane product, as well as his self-described crusade to change how businesses get software.
And when employees meet in his jumbo corner office, they've stopped paying any heed to the bizarre surroundings: In addition to the framed magazine cover stories and standard-issue notes from U.S. Presidents, there's a life-size mannequin of Princess Leia in hot white boots, toting a revolver; a bobblehead of Powell, with a handwritten note from the general, saying only "Oy!"; a lava lamp from Google; Kermit the Frog; an animatronic donkey sporting a Cal-Berkeley yarmulke; and a big container of Purell mini-bottles. You can learn a lot about CEOs by what they keep in their office, but with Benioff, we're mostly baffled. "I have eclectic tastes!" he says.
Like his employees, Benioff's Salesforce board of directors indulges him as well. At a long board meeting I sat in on last month -- in which Benioff gave a preview of 2012 -- his cellphone went off accidentally. The ringtone was a one-minute inspirational message that Tony Robbins had left Benioff in a voicemail. Earlier in 2011, Robbins had been the guest speaker at the big Las Vegas kickoff of the Salesforce sales force. "I'm so impressed with what you've done with your culture at Salesforce.com!," Robbins's voice intoned through the boardroom, as Benioff hunted for his phone. "It's a blast to spend time with you!"
Board members merely chuckled -- at the message and the fact the CEO had installed it as a ringtone. Benioff laughed it off, too: "It's the most expensive ringtone in history!" Robbins got $200,000 for his half-day.
Giving back to the community
While Benioff has taken to mocking Ellison and Oracle -- Benioff didn't invite him to his own wedding in 2006 -- it is Ellison who gave Benioff his big start in high tech. And Benioff quickly proved to be a gifted salesperson, the kind where buyers hardly realize they're being sold to. Benioff had learned programming in high school, starting a software company that "put me through USC." Joining Oracle right after college in 1986, in sales, he began by answering customer queries on the 800 phone number. Within seven months he ranked No. 1 in telesales, making $100,000 a year.
Within two years, at 23, he was the top Oracle salesperson for new accounts. At 25, he was VP of the PC division, then at 27 head of all marketing. With the money he was taking in from IPOs of Oracle friends who had left to start companies, he was worth more than $10 million. Yet after a decade at the company, he underwent some kind of entrepreneurial- cum-spiritual rebirth. He took a six-month sabbatical, rented a beach hut on the Big Island of Hawaii, swam with dolphins ("I like interspecies communication"), went to India, met the Dalai Lama, explored the Arabian Sea in rice boats, and, Benioff says, most important, was introduced to "the hugging saint," Mata Amritanandamayi. "It was she," he recounted in his business memoir Behind the Cloud, "who introduced me to the idea … of giving back to the world while pursuing my career ambitions. I realized that I didn't have to make a choice between doing business and doing good." Enlightenment also awakened him to the Internet: He registered you.com -- which he still owns.
Benioff went back to Oracle for a time, but ultimately set out on his own, founding Salesforce with two others in 1999. (Ellison was a major backer, investing $2 million in seed money.) While providing business software on the web was the core mission, so, too, was establishing an institutional philanthropic philosophy. "We very consciously sought to be different," he says. He wanted philanthropy to be deemed part of the corporate DNA rather than just a lifestyle choice. Building on the models of such companies as Hasbro (HAS) and Levi Strauss, he believed philanthropy was both an end and a means. It was "the right thing to do," Benioff says, but it also boosted the self-image of customers and employees, as well as polished the brand.
In addition to basic competence, the key attribute Salesforce looks for in new hires is "an interest in giving back to the community." That value, according to Benioff, has not only benefited the community, but also redounded to the company by making employees believe their professional being was not simply about profit maximization. That may sound like touchy-feely utopian pap, but it's pure Benioff and Salesforce. He says his employees are happier and more dedicated because of it.
The philanthropic system Salesforce pioneered -- which has been emulated by Google and others -- is called "1/1/1." Salesforce donates 1% of its software to small nonprofits and 1% of its employees' time (six paid days a year) to volunteerism. Plus, when Salesforce went public, it put 1% of its stock in the Salesforce Foundation, which it uses to make grants aimed at youth, education, poverty, technology innovation, and specific volunteer projects of employees.
One of the foundation's 50 employees, Julie Trell, has a title that Mister Rogers' Neighborhood Inc. might have invented: VP of All Things Fun, Meaningful, and Rewarding. "You bring your whole self to work," Trell says. "Employees bring in their causes, others join in, and it teaches team building." Volunteerism can also mean some swell trips. Here's something from the seventh-floor bulletin board: "Volunteer for a week with a local nonprofit, Surf for Life in Puerto Viejo, Costa Rica, on the beautiful Caribbean coast, and help build the poor community's first-ever high school!!!!!! We're filling 14 spots from Feb. 25 through March 25." (Alas, you have to pay travel costs yourself.)
The foundation also sells Salesforce subscriptions at 80% discounts to higher ed and large nonprofits -- the proceeds of which stay with the foundation, which currently has $20 million in its coffers and aims to be self-sustaining. Over its history, Salesforce employees have donated more than 250,000 volunteer hours, and the foundation has awarded $30 million in grants. Benioff himself has been a major philanthropist in the Bay Area, most prominently last year, with his wife, Lynne, pledging $100 million to the University of California at San Francisco toward construction of a children's hospital in their name.
The party of the year
Philanthropy, nice digs, solid pay, and rapid adaptation to the marketplace -- these bless the Salesforce culture. And then there is the incomparable, preposterous private holiday party the week before Christmas. The 2011 edition had its highest attendance ever of employees and guests: 5,000 in all, in a hangar the size of four football fields on the San Francisco waterfront.
From its earliest days the company has viewed the party as a signature gathering. "It's probably the biggest thing we do," says Tim Lynn, the chief party planner who was Benioff's college roommate and is now his chief of staff. "It has a cultural impact." Most of the Bay Area workforce attends -- in tuxedos and evening dresses. The game is to guess who'll provide the entertainment, which is kept secret. Says Lynn: "I am honestly asked every year in the kitchen, at lunch, at offsites, at the urinal, 'Tim, who's it going to be?'"
Last year it was Cyndi Lauper. This year it was supposed to be One Republic, but they canceled the day before because one of the performers lost his voice. Somehow, Lynn managed to wrangle Barenaked Ladies. This year's theme was Revenge of the Geeks. So the mammoth videoscreens were filled with clips from 2001: A Space Odyssey and Barbarella and a dozen other movies. There were green aliens serving pink hors d'oeuvres, LED-festooned "light beings" on stilts, a tall Godzilla who happily posed for pictures, a live Star Trek a cappella group, a hanging sculpture that looked like a giant squid, and a room full of retro videogames like Asteroids. The bill: $2 million, not including Pepto-Bismol if you ate too many late-night gourmet, hand-baked Belgian Bacon Street waffles, after indulging in a glorious tableau of meatballs, the four sushi bars, vodka, mini-burgers, corn dogs, more vodka, and homemade, nitrogen-cooled, instant scoops of vanilla from Smitten Ice Cream.
Benioff himself wasn't even there -- having gone to his beloved Hawaii for vacation, the better not to be a center of attention as the troops celebrated -- but you could tell it was a production befitting him. Just one thing: No corned beef?
This article is from the February 6, 2012 issue of Fortune.