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FT editor Roula Khalaf selects her favorite stories in this weekly newsletter.
Salesforce co-founder Marc Benioff likes to remind people that he’s a part-time media mogul. On Wednesday afternoon, the tech billionaire offered some thoughts on OpenAI: “And then [OpenAI] I stole data from many companies like Time, Dow Jones, New York Times, Reddit.”
His tone was understandable. Benioff bought the venerable Time magazine for $190 million in 2018. But his biggest problem lies in the customer relations software he Sales force It specializes in.
Salesforce shares fell a whopping 20 percent on Thursday, wiping roughly $50 billion off their market value. Expected and projected revenues and reserves were lower than expected. Second-quarter sales should grow by less than a tenth, a rare single-digit outlook.
But the elephant in the room remains. artificial intelligence. Companies have limited IT budgets and the concern for large software companies is that customer resources will be diverted to shiny new AI-related products.
Benioff, in his extensive remarks, asked observers to take a deep breath and look at what he sees as the bigger picture. Things are not as bad as they might seem now. Salesforce’s annual revenue since the pandemic has increased from $20 billion to nearly $40 billion. Benioff noted that Salesforce customers were still absorbing a lot of new IT and software they had acquired over the past four years.
That has distracted its customers, not to mention Salesforce itself. The software group had 57,000 employees in 2020. That number eventually skyrocketed to nearly 80,000. After an intense activist campaign by Elliott Management last year, the workforce has been reduced to about 70,000 people.
Elliott had urged Benioff to cut bloated overhead expenses and focus on profit margins and return on capital. Initially that ploy was successful. Salesforce shares doubled in 2023, after a disappointing 2022.
But now ripe fruits have been picked and some existential fears have appeared. Like every tech boss not named Jensen Huang, Benioff insists that his company will also be a big winner in the AI revolution.
Benioff projects that AI models, even with their clever user interfaces, will become commodities. Instead, your customers will benefit from Salesforce software. The data you collect for customers will be the true lifeblood of any AI model that companies look to use in the future.
All editors should understand the power of a compelling narrative. But for now, not many are buying Benioff’s.