Executive Vice President of Corporate Development & Salesforce Ventures, Salesforce
Salesforce Part 1 | John Somorjai
John Somorjai is the Executive Vice President of Corporate Development & Salesforce Ventures at salesforce.com. Since 2005 ...
About John Somorjai
John Somorjai, Executive Vice President of Corporate Development & Salesforce Ventures at Salesforce, discussed the company's acquisition strategy and venture activities in several 2024 and 2025 appearances. At Dreamforce 2025, Somorjai said his team reviews "several thousand opportunities every year" but acquires only a small number. He outlined key acquisition criteria: the ability for a company to become accretive to cash flow and profitability within one to two years, a reasonable price, and a non-dilutive structure for shareholders. He cited the pending Informatica deal and the acquisition of Regrello, now part of Salesforce's Agentforce Supply Chain, as recent examples. Somorjai also described a framework for integration that emphasizes speed, transparency about challenges, and alignment of culture and values between the acquired company and Salesforce. In September 2024, Somorjai announced a new $500 million AI investment fund from Salesforce Ventures, bringing the firm's total commitment to AI innovators to $1 billion over the prior 18 months. He stated that the fund aims to invest in entrepreneurs "helping to solve business challenges in unprecedented ways" and noted that Salesforce Ventures has invested in companies such as Runway, Anthropic, Hugging Face, and Mistral. Somorjai said the firm typically invests at the Series A stage, co-investing with venture capitalists, with Series A investments not exceeding $2 million and Series B investments not exceeding $5 million. He added that Salesforce Ventures has invested in 162 companies and is one of the most active corporate tech investors.
Transcript (11 segments)
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John Somorjai0:00
Thank you all, it's really great to be here. I got talked into doing this by Tim Draper. I ran into him at a party over the holidays and he was telling me about all the great students that are coming to his university and really wanted me to spend some time with you and talk about what we do, but also what we're seeing in the startup world and how we make our investment decisions and what Salesforce thinks about innovation, which I think would be pretty helpful to all of you.
One of the things that I'll just touch upon briefly is that I also worked at a startup before I joined Salesforce, this company called Ingenio. And I went through the ups and downs of being at a startup. We were a few days from going bankrupt, saved the company, turned it around, and got everything back on track to the point that we were able to actually sell the company to AT&T for 250 million dollars. So it's a pretty amazing success story and I think a lot of the lessons that I learned in that I've applied to my job at Salesforce.
I joined Salesforce in 2005 when we had about 850 employees and about 300 million in revenue. And today we are a lot bigger. So we ended last year at 6.67 billion in revenue. We're projecting over 8 billion in revenue for this year. We have 20,000 employees at the company. We're now part of the Fortune 500. We've won a lot of really prestigious awards from various important publications, including one I'm very proud of, which is being the most innovative company for four years in a row. And I think last year we were second or third. So I've been there now 11 years. This is actually an unbelievable ride and I hope all of you get to experience something like this, to go from a moderate-sized company to a behemoth as we are now. And it's really fun, it's really challenging.
And I want to tell you how we got there. So for those of you that don't know what we do, we sell a variety of different products. We're best known for our customer relationship management products, so sales force automation, which we call the Sales Cloud. We deliver everything as a service over the internet in the cloud, and so all our business units are called clouds. So we have the Sales Cloud, we have the Service Cloud for managing a large call center, and both of those are focused on connecting with your customers in a whole new way. We have the Marketing Cloud, which was primarily built through acquisitions, and that's about building one-to-one customer journeys. We also have the Analytics Cloud, the IoT Cloud, which is about getting smarter about your customers, and then we have the App Cloud, which is our platform, essentially both Force.com and Heroku, where you can build your business and run your business from your phone.
So Alex Dion is our head of products and actually joined us from an acquisition. And so I run all M&A at Salesforce, and he is really like the prototype of the best acquisition you could possibly do. We paid 31 million dollars for his company in 2008, and today that business is really the foundation for our Service Cloud, which is a two-billion-dollar business. And the CEO of Instranet, that was his company, is now running all of our products. So that's kind of the best you can do in the M&A world in terms of acquisitions. We have a lot of other acquisitions that have been less successful than that, but this is just a quote from Alex about what we do, how we think about innovation.
Our company has always approached innovation as being really one of the most important values of the company, and being really paranoid about what's coming up in other areas, never getting too complacent with our success, but really looking at all the different developments going on in the software industry and making sure that we have a role in that. And sometimes that will mean that we're going to be developing new products. For example, Chatter, which is a great example of how we looked at what was going on with Facebook and we thought, wow, we need an enterprise version of that to allow people who work in a company to collaborate with one another. We've built things like the Sales Cloud from the ground up, where we have the best collection of different software packages to really run your entire sales force on a global level, and that was all built internally. But then we've had to supplement with acquisitions to make sure that we're always staying ahead of the game and making sure that we can't get disrupted like we disrupted some of the old legacy players like Siebel, for example.
So this is an example of how we have applied different acquisitions to help bolster each of our clouds. Marketing Cloud is entirely made up of acquisitions, but the others are really additive to what we've built internally, other than maybe the Analytics Cloud is predominantly built on acquisitions as well. Heroku, which is a big foundation of our platform, is another acquisition. But this gives you a sense of some of the things that we're doing. Now, over the last year, we've bought eight companies, and a few of those have been in the deep learning and machine learning, artificial intelligence space. So MetaMind and PredictionIO are examples of that. Tempo, which is a smart calendar, is another example. But this is an area that we're investing very heavily in because we really do see intelligence and machine learning as the future of the software industry. And so being able to proactively suggest what people should be doing, or just having a machine do it, that's where we really think the whole industry is going. And so we're trying to apply all of these to every one of our clouds. We're applying an intelligence layer to it.
We do four types of acquisitions. The large-scale public companies, where you're really buying a business, and you do this when you want to enter a new market. And so ExactTarget was one of the leaders in marketing automation. We bought the company in 2013. This will be a billion-dollar business for us this year. We do strategic product adjacencies, which are examples of what I talked about on the last slide, where we help bolster an existing cloud with an acquisition. We have a whole initiative around services, because we now have so many customers that are these large global 2000 customers, massive businesses, and they want help in trying to figure out how to digitally transform themselves so that they don't get disrupted by the next generation of companies. And so we're helping them think through that with some services acquisitions. And one of the issues that you would find if you work at an enterprise company where you're servicing all these large customers is that you really do need a professional services arm to go along with the software sales. It's not just enough to sell your software; you actually have to show people how to use it, how to be more effective with it, and help them transform their businesses. So that's why we've done a few acquisitions there. And then we do all the time, almost one a quarter, we do a technology tuck-in, where it's usually we're buying technology that can help a product, we're bringing in a really talented team of people, and we do quite a few of those.
Okay, so then I have Ventures. So the other part of my job is, before you want to buy a company, you might want to invest in them, or you may have no intention of buying the company, but you want to learn what's going on in the industry, you want to help a partner, you want to stay attuned to the innovation that's going on out there. So we created Salesforce Ventures. We've been investing for seven years. We have 162 companies in our portfolio. We're one of the most active corporate tech investors. And this is part of the corporate development group, and so we keep it, it's not a separate fund, it's very strategically related to Salesforce. We only invest in companies that relate to our business, and we give them a lot of help, and I'll talk about that in a moment.
So why do we do this? We're really trying to grow an ecosystem and help the company grow as a result of building this ecosystem, because we're providing more integrated solutions to all of our customers. And so our goal is really to increase the cloud adoption, accelerate the momentum of not just our technologies but the cloud as a whole. We sometimes use investments to access new markets. This is a huge part of why we make investments, is that there's this new area coming up in the software industry, you don't really understand it, but we want to make sure that we have a very good sense and provide that data to our product teams so that they can think about this technology and think about how we might want to leverage it in our own products and learn from the teams. Sometimes we make investments that are total failures, but we learn from them, and that's the key thing. It's like you might lose all your money in an investment, but at least we learned. It's better to make a couple million-dollar investment and see that there wasn't really a great market opportunity than spend tens of millions of dollars wastefully trying to get into that same opportunity. So we learn just a ton from these investments.
We also focus a lot on philanthropies. So I don't know how many of you know about our 1-1-1 model? No one knows? Okay, well this is a great opportunity for me to try to sell you on having this for your own company. So when we started Salesforce, we created this philanthropic model where one percent of the equity in Salesforce was put into a foundation, and employees would give one percent of their time, paid by the company, to help nonprofits. We would give away one percent of our product for free to nonprofits, and we would give away a lot of our time and our energy to help nonprofits. But fast forward, we've been in business now 16 years. We've now given out over a hundred million dollars in grants. Employees have donated over a million hours of time. We have 28,000 nonprofits that run on Salesforce for free, and it's really making a big difference. So we're encouraging our whole venture program, all the portfolio companies, to adopt a similar model. We have 48 of them that have adopted it. This is the sort of thing that when you're hiring people of your generation, Millennials, this is what they expect their companies to do. And we can really make a big difference in the world if everybody contributes back like this. So hopefully that resonates for you as you think about starting your own companies.