John Somorjai, speaking at the invitation of Tim Draper, shares his journey from rescuing the startup Ingenio (sold to AT&T for $250 million) to leading Salesforce’s corporate development. He outlines Salesforce’s rapid expansion from 850 employees and $300 million in revenue in 2005 to 20,000 employees and $6.67 billion in revenue (projected $8 billion) and Fortune 500 status. He explains the company’s product strategy built around distinct “clouds” – Sales, Service, Marketing, Analytics, IoT, and App (Force.com/Heroku) – and how internal development is complemented by a disciplined acquisition program. He details four acquisition types (large‑scale public, strategic product adjacencies, services, technology tuck‑ins) with examples such as the $31 million acquisition that became the $2 billion Service Cloud, ExactTarget, Heroku, and recent AI/ML buys (Metamine, Prediction.io, Tempo). Somorjai describes Salesforce Ventures, a seven‑year corporate investment arm with 162 portfolio companies, used to scout technology, enter new markets, and learn from failures. Finally, he highlights Salesforce’s 1‑1‑1 philanthropic model (1 % equity, 1 % product, 1 % employee time), which has delivered over $100 million in grants, 1 million volunteer hours, and supports 28 000 nonprofits, encouraging portfolio companies to adopt similar practices. The talk blends growth metrics, strategic frameworks, and cultural values aimed at inspiring future entrepreneurs.
Chapters
Thank you all. It's really great to be here. I got talked into doing this by Tim Draper. I ran into him at a party over the holidays, and he was telling me about all the great students that are coming to his university and really wanted me to spend some time with you and talk about what we do, but also what we're seeing in the startup world and how we make our investment decisions and what Salesforce— how Salesforce thinks about innovation. which I think would be pretty helpful to all of you. One of the things that, just to touch upon briefly, is that I also worked at a startup before I joined Salesforce, this company called Ingenio, and I went through the ups and downs of being at a startup. We were a few days from going bankrupt, saved the company, turned it around, and got everything back on track to the point that we were able to actually sell the company to AT&T, for $250 million. So it's a pretty amazing success story, and I think a lot of the lessons that I learned in that I've applied to my job at Salesforce. I joined Salesforce in 2005 when we had about 850 employees and about $300 million in revenue, and today we are a lot bigger. So we ended last year at $6.67 billion in revenue. We're projecting over $8 billion in revenue for this year. We have 20,000 employees at the company. We've been— we're now part of the Fortune 500. We've won a lot of really prestigious awards from various important publications, including one I'm very proud of, which is being the most innovative company for— we were the most innovative companies for 4 years in a row, and I think last year we were second or third. I've been there now 11 years. This is actually an unbelievable ride, and I hope all of you get to experience something like this, to go from a moderate-sized company to a behemoth as we are now. It's really fun. It's really challenging, and I wanna tell you how we got there. For those of you that don't know what we do, We sell a variety of different products. We're best known for our customer relationship management products, so sales force automation, which we call the Sales Cloud. We deliver everything as a service over the internet in the cloud, and so all our business units are called clouds. We have the Sales Cloud. We have the Service Cloud for managing a large call center. And both of those are focused on connecting with your customers in a whole new way. We have the Marketing Cloud, which was done primarily built through acquisitions, and that's about building one-to-one customer journeys. We have the— and also we have the Analytics Cloud, the IoT Cloud, which is about getting smarter about your customers, and then we have the App Cloud, which is our platform, essentially, both force.com and Heroku, where you can build your business and run your business from your phone. Alex Dayan is our head of products and actually joined us from an acquisition. I run all M&A at Salesforce, and he is really like the— this is the prototype of the best acquisition you could possibly do. We paid $31 million for his company. in 2008, and today that business is really the foundation for our Service Cloud, which is a $2 billion business, and the CEO of Intranet, that was his company, is now running all of our products. That's kind of the best you can do in the M&A world in terms of acquisitions. We've had a lot of other acquisitions that have been less successful than that, but this is just a quote from Alex about what we do, how we think about innovation, and our company has always approached innovation as being really one of the most important values of the company, and being really paranoid about what's coming up in other areas, never getting too complacent with our success, but really looking at all the different developments going on in the software industry and making sure that we have a role in that. Sometimes that will mean that we're going to be developing new products, and we're going to be Some of the products we've developed, for example, are Chatter, which is a great example of how we looked at what was going on with Facebook and we thought, wow, we need an enterprise version of that to allow people who work in a company to collaborate with one another. We've built things like the Sales Cloud from the ground up, really. where we have the best collection of different software packages to really run your entire sales force on a global level, and that was all built internally. But then we've had to supplement with acquisitions to make sure that we're always staying ahead of the game and making sure that we can't get disrupted like we disrupted some of the old legacy players like Siebel, for example. So this is an example of how we have applied different acquisitions to help bolster each of our clouds. Marketing Cloud is entirely made up of acquisitions, but the others are just, are really additive to what we've built internally, other than maybe the Analytics Cloud is predominantly built on acquisitions as well. Heroku, which is a big foundation of our platform, is another acquisition. But this gives you a sense of some of the things that we're doing. Over the last year, we've bought 8 companies, and a few of those have been in the deep learning and machine learning artificial intelligence space. Metamine and Prediction.io are examples of that. Tempo, which is a smart calendar, up there is another example. But this is an area that we're investing very heavily in because We really do see intelligence and machine learning as the future of the software industry, and so being able to proactively suggest what people should be doing or just having a machine do it, that's where we really think the whole industry is going. And so we're trying to apply all of these, to every one of our clouds, we're applying an intelligence layer to it. We do 4 types of acquisitions. The large-scale public companies where you're really buying a business, and you do this when you want to enter a new market. And so ExactTarget was one of the leaders in marketing automation. We bought the company in 2013. This will be a billion-dollar business for us this year. We do strategic product adjacencies, which are examples of what I talked about on the last slide, where there is an existing cloud and we help bolster it with an acquisition. We have a whole initiative around services because we now have so many customers that are these large global 2,000 customers, massive businesses, and they want help in trying to figure out how to digitally transform themselves so that they don't get disrupted by the next generation of companies. And so we're helping them think through that with some services acquisitions that we do. And one of the issues that you would find if you work in an enterprise company where you're servicing all these large customers is that you really do need a professional services arm to go along with the software sales. It's not just enough to sell your software. You actually have to show people how to use it, how to be more effective with it, and help them transform their businesses. So that's why we've done a few acquisitions there. And then we do all the time, like almost one a quarter, we do a technology tuck-in, where it's usually we're buying technology that can help a product. We're bringing in a really talented team of people, and we do quite a few of those. Okay. So then I have ventures. So the other part of my job is before you wanna buy a company, you might wanna invest in them. Or you may have no intention of buying the company, but you wanna learn what's going on in the industry, you wanna help a partner, you wanna stay attuned to the innovation that's going on out there. So we created Salesforce Ventures. We've been investing for 7 years. We have 162 companies in our portfolio. We're one of the most active corporate tech investors. This is part of the corporate development group, and so we keep it, it's not a separate fund, it's very strategically related to Salesforce. We only invest in companies that relate to our business, and we give them a lot of help, and I'll talk about that in a moment. So why do we do this? We're really trying to grow an ecosystem. And help the company grow as a result of building this ecosystem because we're providing more integrated solutions to all of our customers. And so, you know, our goal is really to increase the cloud adoption, accelerate the momentum of not just our technologies but the cloud as a whole. We sometimes use investments to access new markets. This is a huge part of why we make investments, is that there's this new area coming up in the software industry. We don't really understand it, but we want to make sure that we have a very good sense and provide that data to our product teams so that they can think about this technology and think about how we might want to leverage it in our own products and learn from the teams. Sometimes we make investments that are total failures, but we learn from them. And that's the key thing. It's like you might lose all your money in an investment, but at least we learned it's better to make a couple million dollar investment and see that the whole, there was a failure, that there wasn't really a great market opportunity, than spend tens of millions of dollars wastefully trying to get into that same opportunity. So we learn just a ton from these investments. We also focus a lot on philanthropy. How many of you know about our 1-1-1 model? No one knows? Okay, well, this is a great opportunity for me to try to sell you on having this for your own company. So when we started Salesforce, we created this model, a philanthropic model, where 1% of the equity in Salesforce was put into a foundation, and employees would give 1% of their time, paid by the company, to help nonprofits. We would give away 1% of our product for free to nonprofits. And we would give away a lot of our time and our energy to help any nonprofits. But fast forward, we've been in business now 16 years. We've now given out over $100 million in grants. Employees have donated over 1 million hours of time. We have 28,000 nonprofits that run on Salesforce for free, and it's really making a big difference. So we're encouraging our whole venture program, all the portfolio companies, to adopt a similar model. We have 48 of them that have adopted it. This is the sort of thing that, you know, when you're hiring people of your generation and Millennials, this is what they expect their companies to do. And we can really make a big difference in the world if everybody contributes back like this. So hopefully that resonates for you as you think about starting your own companies. Thank you.
