Salesforce’s journey to dominance happened in three stages.
Stage one: upstart. The first cloud company. An CRM challenger. The simpler, easy-to-install, low-cost competitor. Then, moving upmarket. Classic Clay Christiansen.
Fun fact: in 2004 when Salesforce IPO-ed, its sales and marketing spend was 10x its R&D spend. “No software” indeed.
Stage two: platform. AppExchange launched in 2006. In 2008, a proprietary language and runtime environment. The strategy: incredible.
Salesforce transformed from the customer system of record into an owned platform, like iOS. This was a GOAT move — especially in B2B.
Salesforce was where companies modeled their business processes. Teams installed platform-specific apps. Then, internal developers wrote more code. Both, in a proprietary language (Apex).
To a purchaser or an implementer, this offered infinite customizability. For Salesforce itself, wide functionality with minimal surface area. For an end-user: one unified interface.
Stage three: conglomerate. Salesforce moved beyond CRM into lots of adjacent categories. It launched Support Cloud. It made acquisitions — Demandware, Mulesoft, Tableau, Pardot, Slack. And then — lots of cross-selling.
Today, less than a quarter of Salesforce’s revenue comes from the CRM. Around a quarter comes from its ticketing software. The rest comes from its acquisitions: Mulesoft and Tableau in data and analytics (16% of revenue), Pardot and Demandware in marketing and commerce (15% of revenue), plus Slack, a few others, and some platform fees.
Salesforce has invested…less…in creating a unified product experience across SKUs.
I’m a believer in Venkat’s concept of ”ancient rivers of money.”
Buying patterns are stable over time. Sales is still the most powerful function in most organizations.
To build the next Salesforce, the path is similar. Start with the CRM. Build a platform. Then expand outwards.