tv Bloomberg West Bloomberg September 17, 2015 11:30pm-12:01am EDT
we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. emily: welcome to a special edition of "bloomberg west." i will speak with salesforce ceo marc benioff coming up. ♪ mark: -- emily: the fed leaves rates unchanged. what it means for technology? plus, a real-life unicorn with new predictive technology. and we talk salesforce philanthropy. if uber has benioff a hard. first to our lead, the biggest story of the day. the federal reserve delaying a
long-awaited decision to raise interest rates. what does it mean for technology? i want to bring in bloomberg intelligences -- bloomberg intelligence's chief u.s. economist who joins us from new york. our editor at large cory johnson in san francisco. carl, give us all the details. what happened today? carl: good afternoon. the fed was getting very close to pulling the trigger on interest rate increases late in the summer. however, when china devalued the currency and the turmoil erupted, the fed lost faith that the timing was appropriate. so, instead, the fed is waiting to see the extent of negative feedback into the economy over those events. so, they need to wait longer before raising rates. they still have an objective to raise rates this year. not to guarantee that they will deliver, but they're watching to see the extent of feedback. the recent signs give them reasons for pause. last week, we saw consumer sentiment much weaker than expected.
the new york empire survey was softer this week. the philly fed survey this morning showed a pull back in business sentiment. so there are signs of negative feedback. as we look at the bigger picture, i think the feedback will be more of a hiccup or sneeze than something more severe. and that means that later on in the year, the fed will be able to proceed. emily: cory, what does this mean for technology? technology has been considered a safe haven investment. amazon, for example, one of the best performers in the s&p. cory: i was going to ask carl that question. this is the tech show. we don't care about your empire state survey. we know they sell manufacturing goods. what do we know about how technology is impacting, the thing the fed is looking at maybe the most, which is inflation? carl: that is a big question mark for the fed. the fed has this dual mandate of full employment and price stability. in terms of full employment, we
are getting very close to the level that should be consistent. we are starting to see wage pressures in the economy. on inflation side, the fed is missing the mark. headline inflation running at .3% year on year. way off the fed's 2% target and core inflation has shown signs of backsliding. it is a confluence of factors. it's a tech show, so i will say part of that is the productivity story. things like uber and ride -sharing and all of the online conveniences, navigation systems. all of this is leading to productivity gains in the economy which means we get more output with less input. this is restraining inflation pressures. that is the tech side of the story. the old macro side of the story is that energy prices are falling. that is percolating into the broader economy and the dollar is extremely strong, and that means import prices are plunging.
emily: cory, how do you expect this impact something like the ipo pipeline? cory: look, as long as the fed is keeping rates at historic close like zero, investors are always going to be pushing for some place to find yields. if they cannot find yield buying established, the last time aroue dot com bubble, we saw big increases in productivity that in retrospect were not big increases. they were spending by tech companies fueled by the ipo market. it looked like a product to the increase, but it wasn't -- productivity increase, but it wa productivity increase we are seeing right now are big spending by these private companies that have unicorn multibillion dollar valuations, who are spending a lot of i.t.
goods, but maybe those are not long-term changes in productivity. it is just short-term spending by a flush tech company. mark emily: cory johnson, our editor at large. we will have to leave it there. bloomberg intelligence's chief u.s. economist. a lot to talk about. thank you for joining us from new york. i do ask marc benioff what he thinks about the fed leaving rates unchanged. coming up, how it impacts sales force. our full conversation coming up. ♪ emily: welcome back to a
special edition of "bloomberg west" live from salesforce's big annual conference, dream force. i'm here with dave elkington. inside sales is a real live unicorn. -- real-life unicorn. dave: or stallion. i do not like the unicorn moniker. mark you emily: uber for being the list alley and. guest: unicorns die easily. emily: but why are you guys here today? you unveiled new predictive technology. dave: the event is amazing. it has become something larger than just a salesforce event. it has become an industry event. there is over 170,000 people here. this is a great venue to share new products. our newest product is our predictive cloud. our core technology is a tool that helps users with predictive analytics and a.i. to do smarter, sell better, sell faster. what we did is we put an api on
top of our learning engine and we allowed other companies to build predictive systems. really very diverse. we have a company called the ven board, a meeting room management platform. we allow them to do smart meetings, which means that we can predictably tell them what time of day, who should be attending the meeting, what room in the building they should be in. we have another that is kind of calledre, but a company called cloud craze. we're providing all of the predictive capabilities amazon has to almost anybody. emily: we are seeing major tech -- tectonic shifts happening in the enterprise software world. oracle reported yesterday that are not moving as quickly with the cloud as some would have hoped. where do you see this going? where do you see the hierarchy of enterprise software companies?
dave: it's interesting. i have been speaking with a bunch of the legacy folks, i won't say who -- emily: please do. dave: a large company that is just splitting into two. i won't say who it is. and they were really excited they are getting some of the applications into the cloud? i'm like, really? you are excited you're finally getting your applications into the cloud? same thing with oracle. why has it taken oracle so long? they are so far in the rearview mirror. what i think is happening is i think there is a new emergence of, we will call them unicorns, for your sake -- that are really supplanting those old-school companies. so, the reason why you are seeing such huge valuations and smaller companies like mine are because we are building new value for customers. value that the old legacy companies cannot do anymore. more than anything, we are seeing the value shift from these legacy companies and moving into newer and smaller companies. emily: but how many of these unicorns are going to make it? dave: we have talked before. not all of them. i think that is a great thing. it sounds terrible, but i think
i mentioned before, you cannot grow a forest without a forest fire. i think some of them will emerge. the ones that will emerge will be the large enterprise companies. they have long customer contracts. they provide real customer value. the companies that honestly are value based off of user account click traffic,f i don't think they are going to last. emily: well, we will be watching you, stallion. sales ceo dave elkington. thank you for joining us. we'll be back with more "bloomberg west" coming up. stick around. ♪ emily: welcome back.
i want to go straight to cory johnson, who has the bwest byte today. that number is one, as in one dollar. chicago is imposing a one dollar tax on all right share services in the city. the proposal is part of a larger package of tax increases that chicago is an plummeting in 2016. if passed, it will be the highest right chair tax in the country. chicago will bring in 70 million bucks a year if passed. emily: cory johnson. thanks, cory. i want to get back to salesforce's dream force conference.
i am here with the president of the salesforce foundation. we know that philanthropy is hugely important to marc benioff and salesforce. you're the person in charge of making it all happen. tell us about the charitable giving efforts that are underway here. you, emily. it is great to be here. it has been a pet has to query -- a fantastic week at dream force. week. been a incredible our values, renovation, giving back. giving back is incredibly important to the culture of our company. we have raised one million books, raised $10 million for the children's hospital. i ran into a group of girls from black girls code. we have 500 kids here this week. it has been fantastic. we have 700 veterans that are here for career mentoring. every day, there is a theme here at drink or that aligns with our coalition.
emily: they champion the 1, 1, 1 model were companies give 1% of their time, resources, equities to charity. you have been trying to get other companies to do this, other technology companies. some have, but but the majority -- some have, but majority still are not doing that. what are you doing to try to convince them? suzanne: we have had some really big wins this year. truly a just announced -- trulio announced that they have equity. so, there's been some great wins. we had 400 companies that have taken the pledge this year. i think it depends on the ceo -- if they want to build a great company and attack -- attract greater talent or not. emily: i asked marc why companies are not doing more and he says he thinks they are afraid. suzanne: i think they also don't know what to do. part of the initiative is to take the myth out of it is hard to do plan to be. -- do philanthropy. it is really not hard. emily: what is your argument to
an uber, who this week is giving a dollar of every ride to san francisco schools, which i think is fantastic, but it stops at the end of the week. how do you convince travis kalinik to do more? suzanne: what is really powerful is when you make it structural. point -- at some point, they will have a big ipo. if they do this, they could generate hundreds of millions of dollars on that first day. also they can put it into their new hire orientation so that every driver that starts with uber knows it is an important part of their mission. emily: suzanne, president of the salesforce foundation. very important work to do. thanks so much. now we do have that interview i did with marc benioff, the ceo of salesforce, moments ago. take a listen to what he had to say. marc: it is time to experience a whole new level of customer success. for all of these amazing companies from all over the world, they have the same problem -- they are looking to connect with their customers and all these exciting new ways.
i was just downstairs in our trade show and i saw toothbrushes connected to the internet, light bulbs connected to the internet, thermostats connected to the internet, and these companies that before were somewhat abstracted from their customers are now connected in amazing new ways. we are learning how to manage these customer relationships in this magical framework that we call the internet of things. emily: 155,000 people at dream force, right? this is something that you invest a lot. how many new customers do you get as a result of dream force? -- dreamforce? marc: this is a major opportunity for us to educate our customers and build will be -- what we call our pipeline. we have a multibillion-dollar pipeline here. emily: what do you mean by that? marc: what i mean is that there are billions of dollars of opportunity for salesforce and our customers here.
our job is to take that pipeline and turn it and revenue over the coming year. emily: oracle reported earnings yesterday and we saw that they are still struggling to get their customers to the cloud. he really consider oracle a bribery it -- oracle a rival in the cloud anymore? marc: oracle is paying the price for being a cloud. instead of saying the world has changed, the world is going mobile, the world is moving into data science and analytics and the internet of things, oracle's message is the world is not changing and you need to buy more oracle databases. that is why they are paying a terrible price, they don't have products that customers want. when you look at those revenue numbers, they are really pretty bad. emily: on that note, oracle likes to point out that salesforce runs on an oracle database. yet your marketing cloud runs on microsoft technology. it salesforce moving away from oracle? marc: there are a lot of amazing database choices.
that is one of oracle's challenges. we have sql server, we have oracle, we have open source databases. oracle is a key provider to us of technology, as is hewlett-packard, as is dell. as are many companies. but for our customers, that does not matter. we extract that from them. they do not know what we use. they don't need to know. all they need to know is that we are going to help them connect with their customers in any way. -- in a new way. and that our technology is delivered as a service right over the internet. and so that is the magic of salesforce. emily: let's talk about microsoft. obviously, now you guys are partners. though nobody would've expected it, because you do still compete. how would you describe your relationship with microsoft? marc: we have an amazing relationship with microsoft. you probably saw yesterday, they announced they are using our brand-new i.o.t. cloud which is built on our thunder platform to manage the relationship between their customers of their new product, office 365. so they have chosen salesforce to manage the customer relationships.
that's very exciting. and as you mentioned, we are also a customer of microsoft's. we use sql server in our marketing cloud. we are also very good partners. i have been in their keynotes this year. they have been in our keynotes this year. we're also competitors. we have some competitive technology. it is a very complex relationship, but it is really working well. emily: would you say frenemies? marc: you could say a lot of things, but -- we're looking at microsoft, the number one software company in the world. and next year salesforce will be the fourth largest software company in the world. only microsoft, oracle, and sap will be larger than salesforce next year. and then, you know, i think we will pretty soon be the third largest software company in the world. first by market cap and then by revenue. emily: the last time we sat down i asked you, do you really want to sell this company, is all this stuff true? you said you are more excited about salesforce and ever. -- than ever.
where do you see salesforce and marc benioff in five years? marc: doing exactly what i'm doing right now in this present moment, which is making our customers successful. just look around. look how happy all of our customers are. you could just go to our trade show. we have 400 other software companies presenting downstairs. we had keynotes. we had 15,000 people in our keynote room yesterday, 10 million online, as you mentioned. yesterday 175,000 people registered to attend our conference. we are going to have a concert tonight. i hope you will come. the foo fighters with 50,000 people tonight. this is amazing. way beyond our wildest dreams. but at the end of the day, it is just about helping our customers be more successful. emily: when it comes to salesforce's growth, things have slowed down. it had been 30%. now it is more like 20%. what should we expect going forward and how do you maintain
that kind of growth? how important are partnerships like what we have seen with microsoft going to be to your future? marc: i'm committed to be their fastest-growing enterprise software company ever. no one has ever gone faster than we have grown to $10 billion in revenue. the way we have done it is to invest. we invested ahead of our revenue in terms of salespeople and marketing people and customer success programs. all the things we need to do to be ready to be a great $10 billion company. that is what i'm really focused on. that is what i'm really excited about. we have a cruise ship this year because we have run out of hotel rooms. did you know that? emily: we went out there to shoot it. the dream boat. marc: air bnb has maxed out. uber added 1500 more cars. it's amazing. emily: i wanted to ask about the fed because they decided to leave rates unchanged. what is your reaction to that? how does it impact salesforce? what does it mean for m&a? marc: i do not think it impacts us at all. you look at the people behind us, you go talk to these customers, they are excited about the future. they are excited about
innovation and the changes that are happening in our industry. our industry is an exciting industry. our customers are asking for more people to get jobs, help -- to come into our industry so that they can get jobs, help them, be more successful with her products. that is what i'm focused on. i do not think the interest rate situation is a major issue. i think we are focused on, of course, the macro global economic issues, but in the cloud, that's the fastest-growing part of the i.t. industry today. emily: are we going to continue to see salesforce making acquisitions? marc: i hope so. emily: you unveiled something yesterday focused on artificial intelligence. is that a potential area? marc: they came from a great acquisition. we have bought two or three dozen companies now over the past five years. and the number one thing we get when we buy these amazing companies is the amazing people. all these entrepreneurs that we would never have had if we do
-- did not buy these companies. we announce the salesforce i.t. -- salesforce iq cloud. you can set up your small salesforceiq.com. for small businesses, for enterprises, they can use it on top of our existing sales cloud which is so cool. that came from an amazing acquisition we did last year. then we re-factor the technology. we tripled the team and rolled it out at dream force. -- duringforce. that is a successful acquisition. force.am emily: now, i recently spoke with chuck robbins, the new ceo of cisco, he sees mass consolidation coming to the technology industry. meg whitman has told me the same thing. we just saw hp lay off potentially 30,000 people. do you see mass consolidation? where is all this going? marc: i don't see mass consolidation. what i see is mass innovation. and there is more innovation
happening in our industry today than ever before. there are more new companies getting created than ever before. i know without talking to you that your phone is off the hook with people calling you wanted -- wanting to get on the show to talk to you about their incredible company. probably at a greater level than ever before. this city, san francisco, is sold out. there is no commercial real estate. there are more new companies that have been created here in the last three years than in the history of the city. so, you look at a world of mass innovation. now, when you have all these new companies getting created, then what is bubbling up is all these great companies like salesforce and others that are redefining our industry. those existing legacy players like hewlett-packard and cisco , who are great companies and, by the way, great customers of salesforce, they are redefining who they are. that is completely appropriate in this world. emily: salesforce ceo marc benioff. you can catch our full interview online, including his comments about uber. and that does it for our special live edition of "bloomberg west" from dreamforce. ♪
so the u.s. has opted to keep federal reserve's-- policymakers still expect to raise rates this year. >> the outlook abroad appears to have become more uncertain as of late. heightened concerns about growth in china and the third market economies have led to notable volatility in financial markets. >>