The Cloud is passe: the world according to Benioff

CEO Marc Benioff of Salesforce.com fired a shot across the bows of a host of companies when he pronounced that the cloud is passe.   He said that his company has moved on and that the future of business lies in the creation of something he calls “the social enterprise”.  I think he was just being realistic.  Things changed when a new generational wave crashed the shore made up of traditional business models.  The winners will be those companies that figure out in a real-time way how their brand is doing and what they can be doing differently to positively influence that.  He’s known for stirring the pot and I’m sure he was being intentionally provocative, while at the same time obliquely pushing his own company’s applications that play to that space.  But his record of business success is strong. 

Much as certain large vendors would like to convince you that they can provide all the IT you need to run your business in the Cloud, the reality will be a lot messier and complicated, and a whole lot more flexible and dynamic.  If you read the article, you’ll see that the future Mr Benioff envisions is one driven by innovation and a clear focus on the customer as an individual.  Having that as a primary business goal may sound lofty and expensive but it’s also a smart way to constantly strive for differentiation from the competition.

Salesforce.com stays put in SF

Marc Benioff is the CEO of Salesforce.com and in this interview with the Wall Street Journal he pretty much nails exactly how I feel about location for high-tech firms.  Despite higher costs in terms of office space, employee living expenses, and density of traffic, he’s decided to keep Salesforce.com in San Francisco rather than relocating to Silicon Valley.  I suspect if he was on this side of the continent, here in Toronto where I live, he would have made the same decision for the same reasons.  He mentioned the concentration of highly educated people and the wealth in number and variety of restaurants but I would add a broader, and more difficult to measure, metric.  A heterogeneous culture should be a desirable characteristic for high-tech firms when they are seeking locations because of its unmatched potential to ultimately reflect the market they intend to serve with their products.  What better way to create something for a wide cross-section of society than by employing people who reflect it?

So why do companies locate far from centers of action?  It probably makes sense for some types of businesses because of the cost of property and they feel there is nothing really compelling about the city from a business point of view.  Meaning that the level of  doubt about the ability to attract and maintain qualified staff is considered low, and a dearth of local amenities is not seen as important.  And to my earlier point, perhaps the product produced is meant for only a narrow slice of society. Therefore those variables are not factored in.  But for high-tech firms that need to cover a wide swath of society with their products, and that rely upon the energy, vitality, and flexibility of youth, it makes sense to locate where those people are and where they prefer to be.  You can’t beat SF and Toronto for that.

Benioff’s decision confirmed for me ideas that have been presented by people like Richard Florida of The Martin Prosperity Institute. In this article about the knowledge in cities he cites data showing various cities in North America and, basically, what they are good at.  While San Jose shows up (logically) as an engineering and IT place, Toronto (as well as Chicago, Los Angeles, and Miami ) show up as enterprising places.  Meaning that they have high knowledge of:  sales and marketing, economics and accounting, customer and personal service, and information technology and telecommunications.  In other words, they are broader and more diverse and have in place a solid infrastructure to support all aspects of the knowledge economy.  San Francisco was not mentioned in Florida’s blog post but it might be in the report he speaks to.  Anyway, SF is much smaller but very similar to Toronto in many cultural ways.  The decision to keep his company in the city doesn’t surprise me and I think it’s a great one.   Benioff needs to keep growing his culture and that culture is fed by the environment of the city. As he says in the interview, “I honestly think it’s so much better. I worked in Silicon Valley for 13 years. There are no restaurants, there is no shopping, there is no energy.”

Yes, exactly.