How Marc Benioff kicked Larry Ellison off Salesforce's board
It had skyrocketing revenue, and is on track to hit $10 billion in some not to distant future, CEO Marc Benioff keeps say.
It started construction on a massive new skyscraper in San Francisco, opened new data centers around the world, is a worldwide icon of corporate giving and became a huge example of corporate activism. And it became a force in the Silicon Valley ecosystem, being the top investor in cloud-software startups.
But back in 2000, it was a one-year-old startup, spun out of a meeting that took place a few years earlier between Oracle CEO Larry Ellison, who was Marc Benioff's boss at the time, and another key Oracle player, Evan Goldberg. Goldberg thought of the idea of software as a service, the story goes, and left to build a cloud financial app, NetSuite.
Benioff decided to do the same for sales tracking tools, known as customer relationship management (CRM). Like Goldberg, Benioff got Ellison's blessing and some seed money. Ellison invested about $2 million of his own money to help found Salesforce. (In comparison, Ellison, through his venture companies, invested about $125 million into NetSuite and still owns 41% of the company, according SEC documents.)
Ellison also joined Salesforce's board at the time. But things got rocky between Ellison and Benioff pretty fast. In an interview with Benioff from 2000 with the Mercury News, Benioff describes how he wound up kicking Ellison off his board.
First step: in 2000, Oracle launched a direct competitor to Salesforce. You probably never heard of it. It was named OracleSalesOnline.com, and to compete with Salesforce, Oracle let people use it for free. (Today, Oracle has a couple of cloud competitors to Salesforce's bread-and-butter CRM app, Oracle CRM On Demand and Sales Cloud.)
So Ellison was competing with Benioff from the very start. The Mercury News asked Benioff about that.
Q: Because of Oracle's history of both cooperating and competing with partners, is it fair to say that when you asked Ellison to be on your board, you had fair warning that he might have competing interests?
Benioff: What Larry had always told us was his solution was going to be only for large businesses. So when we saw what Larry was doing, we had to say, "OK, well, Larry, why are you doing this?"
And he's, like, "Look, this is the future. I have to defend my market."
And I said that I respect that. I said, "I'd like you to resign from the board."
And he goes, "Well, it would be much cooler if you just threw me off the board."
I pretty much worked for Larry directly my entire career at Oracle. He taught me a lot. So I have a lot of respect for him. But if I was in his position, I would be trying to compete with us, too, because we are doing really well.
Benioff: He's very entertaining and he's smart. He's like a lot of the people here (pointing to pictures of himself with world political and religious leaders).
I'd put Larry Ellison and the Dalai Lama and Colin Powell in the same category. And I'm probably the only person in the world who does. But they're all three leaders, and they are all trying to do something unique.
However, Benioff doesn't shy away from slamming Ellison's company, Oracle, calling it a "cloud denier" and saying its products are "not modern" and a "dinosaur."
Meanwhile, Ellison continually says these days that Salesforce has become one of Oracle's biggest competitors.
So for the record, Oracle has viewed Salesforce as a competitor almost from the get-go, just a short time after Ellison cut the check to help fund it.