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How Keith Block, Marc Benioff's Number Two, Is Shaking Up Salesforce (Q&A)

A year and change into the job, Salesforce's president and vice-chairman sits down for an interview.

When CEO Marc Benioff tapped Keith Block to be the company’s president and vice-chairman a little more than a year ago, it was a signal that the company would undergo significant change.

Gone is the scrappy image of the startup with the cheesy marketing stunts. Salesforce is now well on its way to generating $5 billion in revenue by the end of its fiscal year, making it the biggest cloud software company in the world on that basis. Once it was the company that challenged the establishment of enterprise software. Salesforce in 2014 has morphed into a key plank of that establishment.

Benioff’s long-term goal is to expand Salesforce into a $20 billion company. That’s going to require a more mature and deliberate approach.

Enter Keith Block, who has become Benioff’s number two and who inspired a shake-up in Salesforce’s upper management ranks.

Two Salesforce presidents bolted, one for New Relic and another for the software company PROS. Block set about hiring his own team, among them Anthony Fernicola, a longtime Oracle sales veteran, and senior Cisco executive Dan Smoot.

What else has changed? How Salesforce talks to it customers. Rick King, executive VP and COO for technology at Thomson Reuters, says its relationship with Salesforce has improved after Block’s arrival. “I’ve seen a big change in how Salesforce approaches us, with a greater focus on our business needs,” King said.

This afternoon, much of the enterprise tech world’s attention is on Benioff’s keynote address at the company’s Dreamforce event in San Francisco, where he is demonstrating new products devoted to analytics and business intelligence.

Re/code caught up with Block ahead of the conference for what is his first meaningful interview since taking the job.

He discussed the scope of responsibilities, his view of the competitive landscape (note his swipes at SAP but not Oracle), and how there are “no sacred cows” at Salesforce. None, that is, except the customers.

Re/code: You’ve been on board for about a year. Since then your mandate from Marc Benioff has been what exactly?

Keith Block: Number one, the company has always been focused on customer success on a broader scale, so to accelerate that is certainly one of the things that Marc wanted me to help do. But also it’s to think about where the company needs to go and where we want it to go, and that’s to be a $20 billion company. You’ve probably heard me talk about surpassing SAP as the number three software company in the world, so that’s where we want to go. It’s really a question of optimizing what we have, and accelerating out growth into the enterprise. There’s a whole bunch of programs and initiatives around international expansion too, but it’s really about continuing and accelerating our customer success. So those are what the goals have been and still are.

So when you talk to those customers, what are their biggest concerns?

I wouldn’t position it so much as a concern as an opportunity. I did my homework before joining the company and that reinforced the following message: When you think of social, cloud and mobile, that magic intersection of the three, you have an opportunity to transform a business model. And every customer that I talk to, they say the same thing: It’s all about helping them to transform their way of doing business. And when you really think about it, you think about companies who run their relationship with their customers, whether it’s selling, service or marketing, they’re running that relationship with a process that’s 10, 20 or 50 years old. It’s just the way that they’ve always done it … All of those customers say the same thing. They want to think differently, and they all will say they’ve been shackled by old technology and couldn’t change it if they wanted to because the technology wasn’t available. So we go industry by industry today. The opportunity is to talk to them about how they can do things differently, whatever industry they’re in … So you can call it a concern but I call it an opportunity.

Let’s talk about the competitive landscape. Where do you bump up against either Oracle or SAP when you go in on deals?

It’s usually in the installed base. I could give you several examples of SAP customers who can’t get the data out from their system of record and end up spending a lot of money on that. I had one very senior executive from a Fortune 50 company say “I need some help unlocking the data from my system of record.” He wanted help getting that data into social and mobile applications, and couldn’t do it. So we stepped in and put a wrapper around SAP. We built an order-management system with our Force platform that interfaced back into SAP. We’ve got one customer who had a terrible time with SAP but they had to keep it going. So with our Salesforce1 platform they built an order-capture platform that brings information back to SAP. … Some of our wins are just replacements, but some are about getting our customers to think differently about their industries.

Over the long term, Salesforce has been successful mainly because it has been disruptive to companies like Oracle and SAP. But it’s been around for about 15 years, and that’s a pretty long time. I’d argue that it won’t be long before Salesforce is itself the target of disruption. That’s the nature of things. Where and when do you see that kind of competitive threat?

Anytime you’re successful, people are going to come after you. One of the ways that we stand out from others is the culture of innovation. If you walk around here and talk to people and the approach that we take around, it just reeks of innovation. … But we’re not afraid to take risks and we’re not afraid to cannibalize the business or change course or be decisive about things. A lot companies that build and grow over time are afraid of that. Companies fail because they fail to recognize the next thing and because they’ve gotten too used to the way things are. The software industry has to mature in the way the steel industry did, but it will, just like every industry did throughout the industrial age. And if you’re not thinking about the next big thing, if you’re not willing to take risks, it’s tough sledding. If you’re an on-premise software company and you want to move to the cloud, that means you have to cannibalize your business, and that’s hard to do. Just changing your billing system doesn’t make you a cloud provider. It’s a shift in culture and a lot of companies will have a hard time making it.

So is it safe to say that there are no sacred cows at Salesforce? Would you in some scenario consider changing something fundamental about the core CRM product?

It’s not a sacred cow so long as it doesn’t disrupt our customers. That’s a very open-ended question. If it were reality, we would make an assessment and we’d figure out a way to make the change in an elegant way that doesn’t penalize the customers. That’s a different answer than “I can’t do it.” One of the things that I appreciate this place for is the willingness to test and find a solution.

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