1 billion dollars on cloud: Online software vendor Salesforce undertaking

"40 years ago, I went back to the United States from Vietnam and had access to the technology and business of data processing in the military, when IBM said that only a few computers would be able to handle most of the world's work."　　"In the afternoon of San Francisco, standing at the main venue of Moscone Center, former U.S. Secretary of State Colin Powell was talking. You might be wondering why Powell has bypassed the hottest Sino-US relationship, but is interested in talking about data processing, Facebook and Twitter? The answer is simple, because he is facing more than 17,000 programmers, software engineers, it bloggers ...　　Marc Benioff was the inviter of the meeting. Marc, the founder and CEO of Salesforce.com, named the company's annual conference: Dreamforce (the Power of the Dream), you can interpret this as: "The Dream power of software lore." "Salesforce.com is a company that started to provide online software services, and Marc Benioff intentionally molded itself into a blade fighter for subversion of the traditional software industry." He is directed at SAP, Oracle, Microsoft and other traditional client software providers. In the tenth year of the company's inception, Salesforce.com is expected to achieve 1.292 billion-1.294 billion U.S. annual turnover.　　In the previous 2009 fiscal year, the company's annual turnover reached 1.076 billion U.S. dollars. What they are doing is now known as the "cloud service"-the hottest buzzword in the IT world, and Marc Benioff some smug claim that his company was the first "cloud company" to have a turnover of more than 1 billion dollars; in fact, 10 years ago, including Marc,　　A total of 4 young people, including Benioff, lived in a single room next to his house, where Marc rented it, and began to grope about who did not know what to do with "online software service Providers" and, of course, "What is Cloud computing". Leaving Oracle around 1995, Silicon Valley and the surrounding areas of Silicon Valley are full of entrepreneurial impulses, and people are thinking more about how they can add ". com" suffixes to themselves or their companies. This year, the establishment of two Silicon Valley companies, so that when the Oracle Senior vice president of the Marc Benioff for the first time began to doubt their future, the two companies are Amazon and ebay. "I really believe that the web will change the business landscape," says Marc, when he sees Amazon changing people's shopping habits; the question is, is he unsure what to do next, "Leaving Oracle to start a business?"　　In hesitation, Marc took a long vacation and came to Hawaii and India. On an island in Hawaii, Marc rented a cabin, apart from thinking about the future. In the meantime, Marc often talked to visiting friends about how the search engine and how the Web would change society., a former colleague who once worked for Oracle, Terry Garnett, encouraged him to start a business, and Terry worked in Venrock, the Rockefeller family's venture capital, who had invested in Apple and Intel. The real catalyst is Siebel's IPO. When Marc was chasing dolphins in Hawaii all day, sieble, the sales management software trader, completed its IPO.　　Marc was Siebel's early angel investor, and Siebel's founder Tom Siebel once worked for Oracle, where Tom developed a software for company sales management in Oracle, which later became the Siebel Company's fist product. "In the late 1990, when I was doing market research on this type of product, I realized there was a lot of room for improvement." At that time, commercial application software for many customers is a kind of torture and burden. It takes months or years for companies to install, customize, and maintain these software systems. Marc wrote in his autobiography, "After the cloud" (behind the Cloud), "I was curious as to why the company would use the software if it was so torturous." That's because if this kind of software helps to increase sales by 5%, it's worth the pain. Marc Benioff began to wonder if it was possible to offer such services at a faster rate and at a lower price. "If we can provide a product that can improve the productivity of salespeople while it's easy to use and cheap, what happens next?" Can you recover costs within 6-12 months without having to wait 2 years? "In the 1990 's, the revenue structure of the software provider at the time consisted of license sales costs, software customization development, consulting and training costs, and later support costs."　　If a 200-person company wants to use a low-end business application, it will cost at least about 1.8 million dollars in the first year. Vaguely aware of the opportunity of Marc often with Tom Siebel explore the possibility of developing an online CRM software. "I told the Tom,saas (software as a service) version of CRM that a monthly small fee (USD 50-100) would be used, which would save about half of the cost for software users. "Marc Benioff finally realizes the gap between the two sides, and in Tom Siebel's view, the SaaS version of CRM is a good idea and it will be a branch of Siebel's huge business, while Marc Benioff as a" revolutionary milestone in the software industry "," I was so overwhelmed by my thoughts that I felt like a loner. "In the fall of 1998, Marc Benioff a solid step toward SaaS. He invested in a human resources management software company Saba CompanyFounder Bobby Yazdani introduced three software engineers to him, including the current Salesforce.com second character, responsible for the company's technology development executive vice President Parker Harris.　　The three engineers had experience in developing automated sales management software, and the trio also opened a company called Left Bank software. Even though Parker and others are familiar with the development of automated sales software, Marc's idea is somewhat like a madman's self-talk.　　The three founders of the Left bank software came to Marc Benioff's home in November 1998, who prepared a simple business plan. The Dave Moellenhoff of the left Bank software was a plan to convince Marc Benioff "how dreamy his thoughts are".　　Not tall, stocky, and as if useful energy, Marc Benioff told the visitor, with a rock star temperament, that what he was going to do was "going to subvert the traditional software-technology development model, which would subvert the traditional software-profit model, and end the software industry as we know it."　　In the spring of the following year, Salesforce.com was set up in a rented single room, with the founder of Marc Benioff and three left-shore software founders. But, in fact, until the summer of 1999, Salesforce.com could also be seen as a sideline for Marc Benioff, who worked for Oracle before July, or you could say that Marc Benioff was hedging risk-if the venture failed, can also continue to work in Oracle. To that end, he discussed the sideline he was working with Oracle's founder Larry Ellison. The latter are extremely interested in the idea of software as a service, even providing 2 million of dollars in seed money, and allowing Marc Benioff to dig people from Oracle, if not more than 3, and Marc Benioff did. This includes digging up a colleague, Nancy, who is in charge of recruiting from Oracle. Nancy's arrival has made Salesforce.com more and more people. "The next step is that you have to leave Oracle and start working full-time at Salesforce.com." "After nearly six months of operation, one of the company's investors made a request to Marc Benioff. [Page] crab looking for diners Marc Benioff started working full-time at Salesforce.com, the company already has 10 employees.　　Compared with some radical entrepreneurs, Marc Benioff, who is full of acting on the podium, is apparently calmer and even cautious and conservative, as evidenced by his previous part-time job. However, forThe initial operating cost estimate is too conservative, let salesforce.com initial operation face pressure, although as the founder, Marc Benioff himself to provide 6 million dollars of seed money, but previously he designed the charging model, that is, monthly customer small user fees, Determines that companies cannot generate too much cash flow in the early days. Correspondingly, to achieve the online delivery of customized and rapidly available software services to different companies, Salesforce is bound to invest heavily in technology upfront.　　So, like all entrepreneurial companies, Salesforce.com also faces the challenge of financing. Stock prices in the 1999 Nasdaq were still roaring higher, while the west coast of the United States seemed to be awash with flowing VCs, and Marc Benioff once thought it was hard to find a VC, and was rejected again and again to become aware of the "SaaS model",　　Has actually turned his company into a crab-and only people with great courage and foresight are likely to try. As a last resort, Marc Benioff, imitating the young Warren Buffett, began to raise money to friends, colleagues, and families around him, which was not uncommon on the west coast of the United States.　　After trying to invest in acquaintances such as Larry Ellison, Salesforce.com also fought for part of the venture, which, during the period from 1999 to 2002, made five rounds of financing and raised about 65 million dollars.　　For investors, Salesforce.com is a crab; in other words, for software users. Prior to the advent of Salesforce.com, installing software, especially ERP, CRM, and so on, is usually done by the software provider with the CD-ROM with the software, and then the software is installed and implemented on the client, and all the data running on the software runs in the user's own closed IT system. If a large company like General Motors is to run an ERP system for internal resource management, it is likely to take several years to complete the installation and integration of the system before it can be used. However, as a result of ERP/CRM and other software, the company's internal and external information can be more effective control, so even if the installation of the system is very tormenting people, or more and more companies began to information.　　As mentioned earlier, because of this period, involving a large number of IT investment and human resources, so a large ERP software implementation, often have to invest tens of millions of dollars. It doesn't take 2-3 years, it takes just a few months to run your CRM, and at the same time your upfront investment can be as low as half, which sounds appealing. However, no company dares to try because if you use online CRM, that means your data is stored in salesforce.com.　　You know, the core secret of business competition is key operational data. After realizing the above problems, acquaintances once again became the first choice for Marc Benioff. Blue Martini Software is a small software company previously invested by Marc Benioff. "When I called his founder, I knew I was looking for his help."　　Marc Benioff said that blue Martini software needed a set of CRM software, but could not afford a product like Siebel.　　Blue Martini Software eventually became the first customer of the crab, but without Rob Acker to relocate Salesforce, the company might not enter the 1 billion dollar club in its tenth year of development. Rob Acker, a former sales manager for Oracle, joined Salesforce.com in 2000 to begin forming a customer management team. As responsible for tracking the relationship between customer Word-of-mouth and actual sales, Rob noted the Salesforce.com in the small company's customer base. So he found Marc Benioff, who suggested that the niche market for small companies was a gold mine, and that before that, Marc Benioff, a custom-serving large company, had been working in Oracle for 13 years, thinking that small companies could not contribute to profits. "We had to be very cautious when we were small companies and we had to use our resources to get new business." I keep challenging Rob to see if he sticks to his point. "In the end, Marc Benioff to rob four salespeople, and then the small company brought a rapid increase in business, in 6 months time, the salesperson from 4 to 20."　　[Page] A subversive who lives a fortune. 2001 years ago, the growth of Salesforce.com business was the small company that Rob had aimed at, especially in the form of entrepreneurial networks.　　There was an online search site called LookSmart, a salesforce.com user who had increased from one seat to 50 seats in one months. Then, the dot com bubble broke, salesforce.com business fell sharply, and each month also need 1 million-1.5 million of spending, the company's operating cash flow is negative, bankruptcy seems imminent.　　Few investors at the time had given a reasonable valuation and invested in a company with a suffix that said ". com".　　After several rounds of investor meetings, Salesforce.com's first investor, Yesil, suggested Marc Benioff: instead of continuing to look for investors, change the company's revenue model-changing the monthly fee model to replace it with annual fees. A monthly fee model used to attack traditional software such as SAP, Oracle, and Salesforce.comThe company's razor, an on-demand business model, has even become an important feature of Salesforce.com executives in the face of media. Now Yesil has asked Salesforce.com to put away the blade, to "charge by the year".　　Yesil's analysis is: annual fee can solve the company's current cash flow problems, in order to encourage customers to accept the model of annual fee, may wish to provide partial discount. is self slapped or survival, most operators will choose the latter, Marc Benioff is no exception.　　Shortly thereafter, Salesforce.com introduced a new policy, the existing customers can choose to pay the annual fee, still enjoy the standard of 50 U.S. dollars per year, or can choose monthly payment, but must be paid per person 65 dollars per month. In retrospect, Marc Benioff said, "We didn't expect about half of our customers agreeing to do this right away," and "some customers think it's easier to pay every year than a month, and I always thought people hated being tied to the annual contract."　　"There are still a considerable number of clients expressing anger over this shift, however, as a one-time fee is charged for one year, it is financially recorded at a point in time for submitting the service, in other words, the company is actually charging far more cash than is recorded on the financial statements. In line with the change in the fee model, in order to motivate the sales staff to develop annual orders, salesforce.com the annual Order sales commission increased by 50%, "each of their orders for the next 12 months, we will pay the equivalent of 2 months of sales commission; But in fact we have a 10-month income." "Even if it is difficult, we have not given up the idea of providing software services over the Internet." "Now I recall the days of the brink of bankruptcy," said Marc Benioff, quite proudly. In the process of engagement with investors, a considerable number of investors have suggested that Marc Benioff should be walking on both legs, providing SaaS on the one hand, and offering traditional software packages like Oracle and SAP, "I believe the web will change business", and if I have such a hedging mentality, I'm sure I'll fail in SaaS.　　Marc Benioff said. Marc Benioff's paranoid insistence stems from his observations of companies such as Google and Amazon. He believes these companies are characterized by the very rapid release of some of the new products-some of the trial version of the application, and then through the network to allow as many people to experience, in the user experience of the process of continuous advice, and then continuously improve the product until it is more and more perfect.　　It's important: users like to do it. Therefore, in the book "Behind the Cloud", in how to grasp the trend of technology development, MARC Benioff the proposal is: Follow the companies that are embraced by the user. In his view, Google, Amazon-style service model, should dominate the next phase of the service market, and software is a service. [Page] At the end of 2006, at the beginning of 2007, Google proposed "cloud"-a description of the computational power of large-scale storage and data processing, derived from the early concepts of distributed computing, such as grid computing, and developed. The development of "cloud" and another trend---------------------gradually mature e-business 1995 years or so, when IBM came up with "E-commerce," it was just a good wish to digitize business processes. The real "E-commerce" into the public eye is: including Amazon, Ebay, Alibaba and other online retailers or online sales platform, as well as the Second Life (second lives), Facebook,twitter and other SNS sites, They allow people to gradually become accustomed to live online. With the "cloud" and "online" enhanced, Google's "cloud" is rapidly becoming a "red cloud", and the platform is becoming a new and highly respected business model, whether it is Facebook or Apple's App store.　　Faster, simpler, and cheaper, is an important criterion for comparing service. The Web sites that provide all kinds of services to consumers are almost synchronized, and Salesforce.com in the Business-to-business world. Around 2005 Marc Benioff realised that Salesforce.com should not be limited to SaaS, it should be a company that provides "cloud services." So, shortly after the listing,　　The company began to develop a platform called Force.com, where various independent software developers can develop applications with the help of various development tools, while Salesforce.com began building a service-oriented infrastructure to become a company with the most complete cloud service industry chain. The feeling of Tengyun, perhaps too good, made Marc Benioff, at the 2009 Dreamforece Conference, to scoff at SAP's slow and failure to understand and grasp the SaaS trend. The German business application giant began brewing SaaS products in 2007.　　In the second half of 2008, SAP announced delays in the release of ByDesign products and adjusted the direction of bydesign development-from small to medium enterprises to providing cloud-based services for large enterprises. In fact, it is now asserted that the next stage of the business application software market will be the main ups and downs, and some too early. SAP, which is deploying and mastering "cloud" mode, still has the largest number of enterprise-class customers in the world, and if it can build a business network (Business receptacle) that has a customer core through "cloud" capabilities, this willImport new ones for them, especially those that serve large companies.　　The premise, of course, is whether it can discern the great success of its traditional business, and its leaders have enough foresight and courage to reinvent themselves. As for Salesforce.com, how to further extend to the core ERP service from CRM and financial management module is still a challenge. While owning Iaas,paas,saas, SaaS remains the most important source of revenue for the current revenue structure.