Salesforce Marc Benioff says goodbye to his co-CEO and apparent successor — and also his retirement
Salesforce is one of the largest software providers ($144B market cap). Its stock has been nothing short of impressive since going public in 2004, with a total return of nearly 3,600%.
But few companies move up in a straight line, and is facing its next set of troubles…
Problem #1: Succession plan
Salesforce is the latest company to join Starbucks and Disney with a succession problem. Bret Taylor, co-CEO and apparent successor to Marc Benioff, is resigning at the start of 2023.
In 2016, Salesforce acquired Taylor’s company, Quip. He quickly became a major role at Salesforce and oversaw the $27.7B acquisition of Slack. Now he’s off to build his third company.
No one had expected this, not even Marc Benioff — who sounded like he was going to break down in tears on the earnings call:
Fly Taylor, Fly. Benioff is saying goodbye to his second co-CEO in just three years. It’s tough to retire these days, even for billionaire CEOs.
Problem #2: Slowing growth
Salesforce is famously known for maintaining a 20% sales growth since going public — even during the depths of the 2009 recession. But growth is harder to come by at Salesforce’s behemoth size today.
For their earnings report, Salesforce reported:
- A 14% sales growth in the third quarter — the first time it’s fallen below 20% as a public company.
- They’re forecasting an even slower 8-10% growth next quarter.
The company made several large acquisitions in the past few years, impacting its profitability. At growth’s cost, investors are pressuring them to bring profitability back up.
Investors: Cuts run deep
At the start of the year, marketing costs were the first to be cut alongside operational and HR functions. With the downturn dragging on — and no end in sight — cuts are being made to other, more critical areas. This week:
- Cybersecurity provider Crowdstrike (NASDAQ:CRWD) reported weaker forecasts in anticipation of slower consumer spending this year.
- Cloud storage and computing provider Snowflake (NYSE:SNOW) — another crucial component for tech companies — lowered their sales forecasts.
Companies are trying to cut costs wherever they can. And no one is safe.
