When they were young

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When Salesforce was young: the early years

Salesforce had $5.4M two years after launch, $22.4M after three years and $51M after four years

Innovation series by Steven Loeb
October 3, 2017
Short URL: http://vator.tv/n/4a3c

As our readers know, Vator has started a series called when they were young.

It's a look back at the modest days of startups, what traction they had in their first few years, and how they evolved. In the end, we hope to provide a glimpse into what great startups looked like in their first three years.

Stories like these are always well received because it reminds us that anyone, regardless of pedigree and environment, can rise above the noise and have great influence. They show us the value of being resilient, persistent, and committed. If we can follow their footsteps, maybe we too can have similar success.

This segment is on Salesforce.

— Salesforce's First Year —

Founded: Salesforce is incorporated on February 3, 1999. The company's original office is a one bedroom apartment next to Marc Benioff’s house, at the top of Telegraph Hill in San Francisco.

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Founders (ages at the time): Marc Benioff (35), Parker Harris, Dave Moellenhoff, and Frank Dominguez

Initial company description: Parker, Moellenhoff and Dominguez, founders of consulting firm Left Coast Software, meet Benioff through one their clients, Saba Software, in the fall of 1998. Saba's CEO, Bobby Yazdani, recommends them when Benioff is looking for engineers for his new company.

“When we first met Marc, we had already been doing sales force automation for many years. And we had been doing early SaaS work, when Java was just starting. What was compelling was I could visualize it all in my head. We could see how we would build sales force automation and we knew how to do early web services. Even though I didn’t know Marc [Benioff] at all, and didn’t know his reputation, I could just kind of tell from learning a little bit more about him that he would be a good person to tie myself to. I think it’s more important who you tie yourself to for success than the idea," Parker says in 2014.

Parker, Moellenhoff and Dominguez come to work at Saleforce full time in March of 1999.

"Salesforce.com was founded in 1999 with a vision for three new revolutionary models: A new technology model where customers access business services via the cloud rather than buying and installing software; a new subscription-based business model where customers pay as they go; and a new 1/1/1 integrated corporate philanthropy model, where 1 percent of the company's people, product and equity are given back to the community," the company writes in 2009.

The original version of the website is meant to model to look like Amazon's site at the time, with tabs across the top.

First funding, at two months from founding: In April 1999, Benioff, Moellenhoff and Harris invest $517,000 in Series A funding.

Second funding, at four months from founding: In June 1999, Benioff, Moellenhoff and Harris, along with Halsey Minor and Magdalena Yesil, invest $3.78 million in a Series B round

Press coverage, at four months from founding: In June of 1999, Salesforce is mentioned in the San Jose Mercury news, with rumors of Benioff leaving Oracle to work on the company full time.

"In wake of talk that Sales.com will be spun out of Siebel Systems Inc. -- the enterprise software company that Tom Siebel started after he left Oracle -- there's word that Oracle senior VP Marc Benioff may be striking out on his own to form Salesforce.com," the article says.

"The ideas behind the two companies are strikingly similar. Both hope to encourage salespeople to use the Internet to do their jobs. It's not clear how they will do this, but in its current incarnation Siebel's Sales.com offers travel tips, news about client companies and other sorts of assistance for the salesman in the field."

Third funding, at five  months from founding: Benioff goes to work full time at Salesforce in July of 1999. He leaves Oracle with $2 million from his mentor, Larry Ellison, who also joins the company's board of directors. 

 

Traction, at six months from founding: In August of 1999 Blue Martini, which has since been acquired and is now known as Escalate Retail, becomes Salesforce's first customer. 

"We did not have a formal sales organization at this time so in our quest for early customers, everyone on the salesforce.com team was encouraged to contact anyone he or she knew in any industry, or at any start-up. Diane Mark, our product manager, won our second client while she was standing in line at the local market, Mollie Stone’s," Benioff later writes in his book, "Behind the Cloud: The Untold Story of How Salesforce.com Went from Idea to Billion-Dollar Company-and Revolutionized an Industry."

Traction, at seven months from founding: By September of 1999, Salesforce has five pilot customers using it for free.

Fourth funding, at nine months from founding: November 1999, Salesforce raises a $13.17 million Series C from Benioff, Minor, Igor Sill, John Friedenrich, Patrick McGovern and William Hambrecht.

Press coverage, 10 months from founding: In December of 1999, Salesforce gets its first major press attention in a Wall Street Journal article entitled, "Salesforce.com Takes the Lead In Latest Software Revolution."

"The day after the article came out, the phones began ringing like mad. We were inundated with leads. More than a hundred people came to our Web site and requested information," Benioff writes in his book.

 

— Salesforce's Second Year —

Launch, at 12 months from founding: In February 2000, Salesforce begins offering its on-demand CRM application service.

At what is known as "The End of Software" launch event at the Regency Theater in San Francisco, the company turns the lower level of the theater into a space that resembles Enterprise Software aka “Hell." It features screaming salespeople actors in cages and games such as wacka-mole where the moles were other software companies. Once they make their way through the dirt, they ascend to find Salesforce.com.

Branding, at 12 months from founding: At the launch event, Salesforce debuts its "No Software" catchphrase and logo.

"The End of Software mission and the NO SOFTWARE logo effectively conveyed how we were different. I put the logo on all our communications materials and policed it to make sure no one removed it. (They did so anyway.) I wore a NO SOFTWARE button every day and asked our employees to as well. (They did so, somewhat reluctantly.) It wasn’t just the logo that we used, our gonzo PR strategies (more on those later) were also tactics that served our differentiation strategy," Benioff writes in his book.

"In an effort to further raise the collective consciousness about our war against software, I created a provocative advertisement with a fighter jet shooting a biplane. The jet represented our company, which was built on the most advanced technology and was a vast improvement on anything that came before it. The biplane was a metaphor for the software industry: obsolete and ill-suited for its task."

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Personnel, at one year and four months from founding, four months from launch: In June of 2000, after discovering that Oracle is developing a competing product, Benioff kicks Ellison off the company’s board, which also includes Minor and Stratton Sclavos, the chief executive of VeriSign. Benioff explains two months later to the Mercury News how he fired Ellison:

"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."

The incident starts a years long feud between the two CEOs. 

New office, at one year and nine months from founding, 9 months from launch: In November 2000 Salesforce moves into its new office at One Market Street, just one block away from its previous headquarters.

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— Salesforce's Third Year —

Expansion, at two years and two months from founding, one year and two months from launch: In April of 2001, Salesforce announces its expansion into the worldwide marketplace with headquarters in Dublin and Tokyo.

The company also announces the internationalization of its service with expanded functionality to accommodate a global audience including localized sign up and Web sites throughout Europe, Africa, Japan and the Middle East.

Fifth funding, at two years and four months from founding, one year and four months from launch: In June of 2001, Salesforce raises $46.91 million in Series D funding from Attractor Investment Management, Credit Suisse First Boston, MF Capital, Meritech Capital Partners, WR Hambrecht, Minor, Benioff, Stratton Sclavos, Ted Waitt and William Hambrecht.

Traction, at two years and eight months from founding, one year and eight months from launch: In October 2001, Salesforce adds its 3,000th customer, making it the fastest growing CRM company according to Morgan Stanley. 

"These ROI numbers are unprecedented in the CRM market," Benioff says in a statement. "The benefits of online services like salesforce.com go directly to the bottom line, making companies more profitable, bringing them closer to their customers faster than ever before."

Revenueat two years and 11 months from founding, one year and 11 months from launch: Salesforce sees $5.4 million in revenue in fiscal 2001, ending January of 2002.

 

— Salesforce's Fourth Year —

Product, at three years from founding, two years from launch: In February of 2002, Salesforce announces availability of its new Enterprise Edition, unveils the product roadmap for its Offline Edition and the first online CRM solution with complete back-office visibility.

Traction, at three years from founding, two years from launch: Salesforce has 3,800 customers by February 2002.

Traction, at three  years and seven months from founding, two years and seven months from launch: In September of 2002, Salesforce announces it has achieved 5,000 paying customers around the world. The company has 70,000 users in 107 countries accessing the service in multiple currencies and eight languages. 

"We are 100% focused on making our customers successful," Benioff says in a statement. "That is why, more often than not, companies are choosing salesforce.com over solutions from our competition. Our customers consistently experience a high level of success in a matter of weeks versus months and without the risk of high up-front costs, lengthy implementation cycles and failure rates associated with traditional software."

Traction, at three years and 10 months from founding, two years and 10 months from launch: In December of 2002, Salesforce announces that it now has more than 5,400 customers worldwide.

Revenueat three years and 11 months from founding, two years and 11 months from launch: Salesforce see $22.4 million in revenue in fiscal 2002.

 

— Salesforce's Fifth Year —

Product, at four years and four months from founding, three years and four months from launch: In June 2003, Salesforce partners with Dell to provide Dell users with salesforce.com S3. Salesforce.com S3 is featured as an on-demand application on Dell's small business solutions website, while Dell PowerEdge servers power salesforce.com S3, delivering more than 100 million transactions per month.

Traction, at four years and seven months from founding, three years and seven months from launch: In September of 2003, Salesforce reaches 100,000 customers in 100 countries. 

"More than 100,000 subscribers - Fortune 500 to small business users in every category - have chosen our software-as-service model," Benioff says in a statement. "Our growth is a direct result of organizations seeking the dramatic success their peers have realized from software-as-service. Our success is directly tied to the success of each of these subscribers, and we are focused on providing the absolute best technology and functionality available."

Traction, at four years and eight months from founding, three years and eight months from launch: In October of 2003, Salesforce has more than 8,000 customers and 110,000 subscribers worldwide speaking 11 languages.

Business model, at four years and nine months from founding, three years and 9 months from launch: In November 2003, Salesforce holds its first Dreamforce user and developer conference. The theme is of the event is: “Imagination You Can Use.”

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Product, at four years and nine months from founding, three years and 9 months from launch: At Dreamforce, the company announces sforce 2.0, the second generation of its application server. It allows developers to customize, integrate and extend the salesforce.com user interface, business logic and data model to support their specific business requirements with unprecedented simplicity and success.

Traction, at four years and 10 months from founding, three years and 10 months from launch: In December of 2003, Salesforce has 8,400 customers and 120,000 subscribers worldwide, adding 10,000 new subscribers in two months.

Revenueat four years and 11 months from founding, three years and 11 months from launch: Salesforce sees $51 million in revenue in fiscal 2003.

 

— Salesforce Today —

Salesforce had its IPO in June of 2004, pricing its shares at $11. The company raised $100 million, and ended its first say at $17.20 a share. It is currently trading at $93.94 a share.

In its most recent earnings report in August, Salesforce saw $2.56 billion in revenue on $0.33 EPS, beating expectations of $2.51 billion on $0.32 EPS.


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