I don't know seriously who I would pick. I would ask you too, who do you like the best? There's nothing that I think that is really that good out there. So you think vendors get some of the blame?
Oh, it's totally the vendor. The vendors will blame it on the customer, which is ridiculous. But you have to deliver a piece of technology where the customer is going to win. The software is only one-tenth of the total cost of ownership, according to Gartner. And [vendors] are building these large scale, mission-critical systems and it's too complex. There are too many components and too many failures. They think the journey is the reward. That's the vendor's approach to technology. I read where you recently said that most CRM vendors didn't understand CRM early on. What didn't they get?
I think most CRM vendors started out doing sales force automation and then they released another product for service and support and a third product for campaigns. They all have different data schemas. They're all un-integrated. They're different islands of information. Most companies still can't figure out what are the best leads coming in, who are their most productive salespeople, what are their best territories. I think you had a lot of ad hoc software development without a focus on the user, without a focus on the long-term vision. That's why Gartner says
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55% of all software installations fail. That's like saying I'm going to take a $20 million dollar house and I'm not going to move into it. That's ridiculous. And there's no mea culpa from the industry. Well, you've worked in the past with Larry Ellison and Tom Siebel. Now you're clearly pretty critical of both of their companies. How do they take that? I like them. I don't take any of this personally. I'm just playing tennis. I take the Japanese approach to relationships. Relationships are permanent, but business is temporal. Technology changes every 10 years. If you changed your friends every 10 years, it would be a huge mistake. Who you are competing with yesterday, who you work for today and who you are partnering with tomorrow is potentially the same. So, as my friend [Buddhist scholar] Robert Thurman would say, 'There is no here, there is no now, your exes will be your exes in the future, your past wife will be your future wife.' And there's some truth to that. Does Salesforce bare the brunt of any of the blame?
Well, we don't have anything to implement. We have no application servers or databases to buy because we're a utility?. . . It's two totally different models. One is software the other is a utility. Give me an adjective you'd use to describe the CRM market today?
I think the CRM market today is in transformation. I think there were a lot of good ideas in the beginning. Certainly Tom Siebel had a good idea when he was at Oracle and said "Let's automate the sales force." And he took that to Siebel and built the client-server sales force automation application. You've got to give him a lot of credit for really commercializing the concept of sales force automation. But today the market is in transformation because most customers don't have this technology. There are millions and millions of companies in the world today and most don't use CRM. They simply cannot afford it. They can't take on the risk. We need a new generation of technology that brings CRM to the rest of us. Now you've got Microsoft making some CRM noise. Do you hear their footsteps?
I think that Microsoft is a very different value proposition than Salesforce.com. If you want to buy Microsoft NT, if you want to buy a PC, if you want to buy Microsoft IIS, if you want to buy SQL Server, if you want to buy Exchange and then Great Plains and add onto that CRM, and then if you want to upgrade it, update it, maintain it and keep it all in synch, keep it all bug free, you should go for it?. For most companies it's too many components and too much technology. Then you have to start talking about security, load balancers, all the various capabilities that you need for this kind of solution. Versus, you have an Ethernet jack right there at your desk. Plug in and start using Salesforce.com. You're very eager to say that the CRM big guns should be nervous of Salesforce.com. What about them makes you nervous?
I think the only thing that makes me nervous is that they're giving CRM a bad name. The failure rate associated with these companies is just unacceptable to me. They scare customers off. Customers aren't going to realize the power or the functionality that they can get, because maybe they've failed with an SAP, Siebel, Oracle of PeopleSoft. The technology that these companies have manufactured is relatively poor in value. But you still have to convince customers that getting software as a service is viable. The ASP model hasn't exactly taken off.
We are evangelists. We're pioneers. We're prophets. We were early in the market. We were believers in this. We have pioneered three new models. One model is a new business model. We charge by the month. We don't recognize the revenue when we sign the deals, we recognize it when we deliver it. We have a radically different technology model. We have 200 companies in Japan, 3,000 in the United States and 600 in Europe and all of them run off one computer in Sunnyvale, Calif. The third thing is that more than 1% of our company's stock is in a philanthropy foundation, more than 1% of time goes to help disadvantaged people, 1% of our users are free users.
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