Two months ago, at a conference in Monte Carlo, Marc Benioff showed off the prototype for his new Internet startup, Salesforce.com. It promised that it would let any company automate its sales force via the Web for just $50 per month per user. He expected it to be a hit with small and medium-sized businesses.
Now, however, it looks as if the Salesforce.com model also may appeal to large corporations. And if it does, Benioff will find himself in direct competition against Siebel Systems (nasdaq: SEBL), the company that dominates the sales force automation software industry.
The situation is ironic because Benioff and Tom Siebel have been friends for years--in fact, Benioff was one of the original investors in Siebel Systems seven years ago.
What's more, Salesforce.com nearly began life as a subsidiary of Siebel Systems. Last year at this time, Benioff and Siebel hatched a plan that would have put Benioff in charge of a new company financed by Siebel. But Siebel changed his mind at the last minute, deciding that he'd rather create a division of Siebel than an outside company. Benioff, who after 13 years as a top marketing executive at Oracle (nasdaq: ORCL), was feeling the entrepreneurial spirit and decided to go it alone.
Benioff, a 35-year-old with the face of a mischievous choirboy and the body of a defensive tackle, put together a team of backers able to bestow a "can't miss" label on a young company that included Oracle Chief Executive Larry Ellison, a longtime friend; CNet (nasdaq: CNET) CEO Halsey Minor; and Magdalena Yesil, a well-respected partner at U.S. Venture Partners. He fashioned a small team of engineers, designers and marketers, including several people who followed him from Oracle. Then, early this month, he named a CEO for the new company--John Dillon, formerly CEO of Hyperion Solutions (nasdaq: HYSL), a leader in analytic software with revenue near $500 million.
Benioff gave his designers a clear mandate: Build a Web site that offers a full complement of sales management tools, including the ability to monitor accounts, spot opportunities, forecast results and generate reports. Make it possible to quickly customize the interface. And make it as easy to use as Amazon.com.
In about eight months, his staff (now numbering about 40) put together "something that's very new," Benioff says: "an Internet site that's also an enterprise application."
San Francisco-based Salesforce.com, which has lined up $17 million in funding so far, won't go live until early next year, but already it's one of the most successful startups of its kind. A pilot program has attracted some 400 people at 30 companies, including Excite@Home (nasdaq: ATHM), ZDNet Group (nyse: ZDZ) and Hoover's (nasdaq: HOOV). By January Benioff figures he'll have 1,000 users, and he hopes to raise the number to 100,000 by the end of next year.
Because Salesforce.com is entirely Web-based, customers need no special hardware, software, service or maintenance in order to use it. And they don't even need a database. Salesforce.com stores and manages customer information on its own Oracle database. That gives the company huge advantages over software makers, whose client-server solutions can cost more than one million dollars and take months to implement.