Salesforce.com CEO Marc Benioff Thinks Most VCs Don't Add Any Value To Startups
Dec 6, 2014, 21:23 IST
Justin Sullivan/Getty ImagesSalesforce.com CEO Marc BenioffSalesforce.com, now worth over $37 billion, is considered one of the most successful enterprise companies in the world.
But Salesforce.com wasn't the hottest startup when its founder and CEO Marc Benioff first launched the company back in 1999 as a side project. In fact, Benioff was turned down multiple times by some of the biggest venture capital firms in Silicon Valley.
"No venture capitalist would give us money. We raised all the money privately. I was thrown out of Sequoia three times, US Venture Capital three times," Benioff told Andreessen Horowitz's cofounder Marc Andreessen in an interview that took place in October at Tech Summit 2014 (The audio file of their conversation was posted on Andreessen Horowitz's website on Friday).
So instead of VCs, Benioff turned to his long-time mentor and friend, Oracle founder Larry Ellison. Benioff was an Oracle executive at the time, but Ellison, his boss, allowed Benioff to pursue other side projects, even brainstorming together for new Salesforce.com ideas. Benioff would work on Salesforce.com in the mornings and Oracle in the afternoons.
One day, in June of 1999, three months after launching Salesforce.com, Benioff walked into Ellison's office to give an update on his startup. After hearing its progress, Ellison told Benioff, "I really think you should just take six months off and focus on this full-time, because this is going better than anybody could have expected."
Ellison, in fact, liked Salesforce.com so much that he ended up investing $2 million in seed money and joining the board of directors, according to Benioff's book, "Behind the Cloud." Until then, Salesforce.com was self-financed by Benioff. By 2000, Salesforce.com was growing like a "runaway train," Benioff says, and the rest is history.
During his conversation with Andreessen, Benioff stressed this is why he usually tells other entrepreneurs to seek private money first instead of venture capital.
"Why even go to venture capitalists? You should just raise money privately, unless someone like yourself (Andreessen) actually adds value because you're an entrepreneur. But most of them aren't going to give you any value anyway."