Salesforce Marc Benioff says goodbye to his co-CEO and apparent successor — and also his retirement – The Average Joe

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    Salesforce Marc Benioff says goodbye to his co-CEO and apparent successor — and also his retirement

    victorlei

    December 1, 2022

    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 $CRM 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.

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