Executive Vice President of Corporate Development & Salesforce Ventures, Salesforce
John Somorjai Keynote at The Montgomery Summit 2018
John Somorjai, Executive Vice President, Corporate Development & Salesforce Ventures, Salesforce, Inc., sits down with Rich Karlgaard, Publisher, Forbes, for a keynote interview at The Montgomery Summit 2018 presented by Macquarie.
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 (45 segments)
I
Interviewer0:10
Well, first of all, Jamie and Peggy, really well done. That was great, and we will cover some of the same ground. Everybody knows Salesforce and its iconic entrepreneur Marc Benioff, the tremendous success they've had. What prompted you to start Salesforce Ventures, John?
J
John Somorjai0:29
Well, can you hear me okay? So it was 2009, and it was actually Marc's idea. We had just come out of the financial downturn, and a lot of the companies in our ecosystem were having trouble raising money. You know, I think today you look at the cloud and it's soaring, with lots of IPOs and very successful market exits. But back in 2008-2009, it was a very difficult time, and we felt it was really important to have an ecosystem of partners globally that were building solutions that would integrate with Salesforce and help our customers across the world. So Marc came up with the idea that we should start investing in these companies and help them grow faster. We started investing in 2009, and in that class was DocuSign, Box, HubSpot, Appirio—which was a system integrator bought by Wipro recently. So some great companies came out of that. What we found was we started this as a very strategic project, and the financial returns actually came afterwards. So we started investing more and more, and now we have, as you just heard, a portfolio with more than 210 companies.
I
Interviewer1:59
Well, 2009 from an ROI perspective would have been a great time to have started a fund because you got a lot of great companies for certainly a lot less than you would get them now. But tell us, between ROI and strategic investment, which is the greater priority when you're making investments?
J
John Somorjai2:19
Definitely on the strategic side. That is always where we focus first and foremost because the mission is to build this ecosystem of the best enterprise cloud companies that work with Salesforce. So we invest in companies that are building on our platform or integrating with our products, or their system integrator partners who are implementing our products. We think about it from a strategic perspective first, but these are also areas where we can help the company be more successful. So our sense is the financial returns will come down the line if we help these companies. A big part of what differentiates Salesforce Ventures from other corporate venture programs is we really get in and try to support the companies, provide a lot of advice. As Peggy was saying, we also help them navigate Salesforce, and we help with their fundraising. I take a lot of calls from investors who are thinking of putting money into certain rounds, and we help provide validity and credibility for those rounds. So I think there's a big part of caring and feeding that we have with the portfolio that helps them do better, and then ultimately that generates returns.
I
Interviewer3:36
Well, in the world of corporate venture capitals, certainly in Silicon Valley, there are some great examples: Intel Capital, Google's venture arm, and others. But if you step back and look at corporations that have dipped their toe in that water, the results are more mixed. Looking at all the models out there from Intel Capital and Google and others, how did you decide—what lessons did you learn, and what did you decide to do differently?
J
John Somorjai4:06
Well, one of the things we do is we listen to what our customers are telling us they're interested in. We get a lot of signals from the customers through our AppExchange marketplace, through frequent dialogues we have with them, and they give us a strong sense of what are the types of technologies they are interested in buying. We leverage all of that data when we're making our investments. We also run a very successful platform called Heroku, as well as the Force.com platform. Together, they are part of our platform technologies that allow companies to build applications on top of that. We get all the data on how those applications are being used, and again, we bring that to bear with our investment decisions. So I think we have a bit of an advantage when we're looking at what are the best companies we could put money into. We've also worked very hard to establish relationships with the VC community and make sure that they see Salesforce as being additive to their rounds and additive to their companies, so that we get deal flow coming in as well.
I
Interviewer5:18
Which is why you're on the board of the National Venture Capital Association. What rounds do you generally come in on? You're not angels or seed, but at what stage and at what sort of valuation range do you typically come in?
J
John Somorjai5:36
We used to do some seed investing and found that it wasn't the stage where we could add a lot of value. In fact, many of the companies where you might put in a small seed investment thinking they're strategically aligned, they end up pivoting to doing something entirely else. So we decided that Series A is really our entry point of where we would want to start with a company. We will invest also all the way up to the latest stage rounds, but our goal is to try to be in the A and the B round where we can help the company grow at the most pivotal point.
I
Interviewer6:15
So that they don't do a complete 180 on you because something they tried didn't work. You're looking for what sort of benchmarks? If they already have paying customers, or...?
J
John Somorjai6:26
Yes. Ideally, they would have paying customers, some noticeable customer traction. We would be able to talk to those customers and see how they're enjoying using the technology. We'd want them to have a very strong management team, be going after a big opportunity, and also be people that we like doing business with and who share our values.
I
Interviewer6:54
Well, talk about that. Jamie and Peggy talked about the Microsoft culture and how it's changed under Satya Nadella. And I know that Marc Benioff is a giant charismatic figure in technology, is really big on a certain kind of corporate culture, down to even mindfulness and meditation and those kinds of things. What is a good cultural fit? And have you turned down an investment because it flunked that one particular thing in your intuitive view—that they maybe would have been good and successful and even additive to your ecology, but there was something about the culture that didn't, that seemed like it wouldn't work?
J
John Somorjai7:48
Well, there are certain things about Salesforce that I think we're very noted for. Our top value is trust, and trust means many things, but encapsulated within that, I would say, is transparency. It often is interesting when you meet with founders how you can really hone in on what type of people they are and do they have a culture of trust, where they care about their employees, where they care about their customers, and where they're also transparent and open and honest. Oftentimes you go through diligence sessions and you don't get that feeling, and so that is probably someone you know that is not a type of company you'd want to showcase to your customers. So we think very hard about culture. Equality is another high value for us. Matt Garrett, who I think is somewhere here, who leads the venture program for Salesforce, he just put on an equality panel for our portfolio companies yesterday where the focus was on helping them have more diversity, more inclusion in what they're doing, thinking about equal pay, thinking about how do they make their cultures more open to people who have come from underrepresented areas and to women. We also have a big focus on investing in companies that are led by female founders too. So bringing the equality mission, the trust mission to our investment programs is really important.
I
Interviewer9:26
Yeah, reminds me of a parenthetical story I'll tell in 10 seconds. It's Zappos, and when Zappos is bringing in—they're so big on culture—when they're bringing in people from outside the Las Vegas area to interview for jobs, unbeknownst to the job applicants, the shuttle bus driver is out of HR and listening and seeing if there are any jerks, you know, people that they really wouldn't want to have. And the story is that somebody makes it all the way to the interview, and the interviewer says, 'We don't think there's a fit right off the bat.' Yeah, so that's—I just think it's sneaky, but it's good. I applaud that kind of sneakiness.
J
John Somorjai10:12
Yeah. Another thing we've been focused on is giving back. As you probably know, we have the 1-1-1 model at Salesforce, where we give 1% of employees' time, 1% of our profits, 1% of our product to nonprofits. And we've brought that to our portfolio. We have now almost 50% of the portfolio that have adopted the 1-1-1 model, and so you can amplify the whole process of giving back to the community in a really big way.
I
Interviewer10:46
Well, what would you say to the—let's address the two types of people in the audience. So some of them are direct or indirect investors in venture capital and private equity funds, and then there are the entrepreneurs. Make the Salesforce Ventures pitch to those two groups.
J
John Somorjai11:10
Well, I would say to the entrepreneurs, what we provide, which I think is a little bit more unique, is that advice and support that you would get as you grow your company from the people that really know what it's like to build an enterprise cloud company from the ground up. We've seen all the issues that you can have scaling a business, and we can provide a lot of advice there. We also can introduce you to our customer base, and we can help you navigate Salesforce, which is now a company of 30,000 people, so it's a little bit harder today to find your way and get to the right people. And that's a big part of the support that we give. For the VC community, I think we can enhance the value of the companies that they invest in by giving all this support, by making customer introductions, and really helping grow their businesses faster.
I
Interviewer12:17
Now, how many employees were at Salesforce when you joined 13 years ago?
J
John Somorjai12:22
800.
I
Interviewer12:23
800. And you, prior to starting Salesforce Ventures, you were in mergers and acquisitions?
J
John Somorjai12:29
Correct. Yes, and I still run that.
I
Interviewer12:34
How do those two overlap? I mean, how has being involved in M&A at Salesforce given you insight into running Salesforce Ventures?
J
John Somorjai12:48
Well, I think the techniques that you learn around due diligence and financial evaluation of companies on the M&A side directly apply to what you do on the venture side. You can take a little bit more risk on the venture side in investing in more early-stage companies where you don't really know how they will do. But as you do that, you're getting early financial information and tracking the development of that company, which provides a lot of signals that we can use on the other side of the house when thinking about acquisitions and what are the best markets that we should get into. So the two, I think, relate very well to one another. I would say that we have two very different teams that do that, so the personality types of the folks that do investing and the folks that do acquisitions are a little bit different. So they work very well together, but they do their own thing.
I
Interviewer13:55
Well, talk about—you'd mentioned it earlier—the coaching and mentoring that you give. Part of it is how to navigate a 30,000-person company because you're investing for that strategic relationship. But apart from that, what sort of lessons of management and fast-scale business management and all of those sorts of things do you believe you bring to the table?
J
John Somorjai14:23
Well, one specific example is we will bring in some of our sales executives to meet with the companies to advise them on how they should be scaling their sales organization and what are the right ratios that you want to have for pre-sales, post-sales, for SEs and AEs, for people that handle the customer success role on the back end, for all the different sales management roles that you might have, and for each segment of your business, what's the best way to segment your business. We have many years of learnings on how to run a really fast-performing, high-octane, efficient sales organization, and we bring that to these companies. Now, that's a type of advice that's super helpful for the later-stage companies. For the earlier-stage companies, it's more around talking with our infrastructure teams and learning about how can they make sure that their systems are scalable and reliable and they're using the best technology out there that will be successful.
I
Interviewer15:38
Now, if you were the sole investor in a startup—a Series A or B, I guess by Series A by definition you wouldn't be the sole investor—but how do you, if it were entirely up to you, you're saying that you're investing for the strategic relationship, and if you get a really good upside on the ROI, all the better. But Sand Hill Road is investing for the ROI. Does that ever, when you're talking with your partners from the pure venture world, are there ever any conflicts about that? And if there are, how do you resolve them?
J
John Somorjai16:22
I think it's a different mentality, and it doesn't mean that you can't collaborate and focus on the same company. But where it might come to bear is in the follow-on round, where we might make an investment in one company and then that's it—we're going to move on and focus on other companies. I think a typical venture firm would invest originally and then they would invest in each subsequent round to at least maintain their pro-rata position. That's not really that important to us because we're not out to maximize the financial return. So for us, it's more about making sure that we're in the best companies and that our team isn't crushed by all the follow-on demand that comes in, because we have a fairly small team for what we do. The entire venture program is nine people who are investment professionals, so there's only so much they can do, not to mention our attorneys that have to absorb all the work we're giving them. So we might turn down the follow-on investment because we just simply don't have the bandwidth to focus on it.
I
Interviewer17:42
How many investments do you typically make in a year?
J
John Somorjai17:45
Last year we did 75.
I
Interviewer17:47
And of the 75, with many people?
J
John Somorjai17:48
And of the 75, it was roughly, I want to say, 48 were new investments, and the others were follow-ons.
I
Interviewer17:59
Do you take board seats?
J
John Somorjai18:02
We don't take board seats, which is another reason why we are able to do so much with so little. But we'll take board observation, and some companies—or many companies—will have a board of advisers that is, perhaps. But I think our role is we do try to advise all these companies, and then we include as many of them as we can in our events. If our seat—you know, I was just working with Marc's EA on giving them a list of our portfolio CEOs so that when Marc has his events and his dinners, we can include some of the CEOs in those as well. So the advice is non-stop.
I
Interviewer18:41
Do you invest around the world or primarily in the tech hotspots?
J
John Somorjai18:47
Starting in the Bay Area, so we invest in 14 countries actually. We have three people in our London office and two people now in Tokyo. Japan has actually been a very successful investment market for us.
I
Interviewer19:01
Talk about this—this is a little bit of a switching of subjects, but we'll bring it all back. It has to do with the culture, the startup culture in different countries. And France—you and John Chambers have gotten close to France, and you as well. What have you seen there? Because how does a country that has previously not had a robust startup culture, how do they turn it around? Whether it's India or France or whatever country that is.
J
John Somorjai19:44
So France is an interesting example where they have a lot of entrepreneurs and they graduate incredible engineering students every year, some of the best schools. But what you saw in the past is a lot of those students, when they graduated, would quickly immigrate to the US, or they would start a company and when it reached a certain size, they would leave France and go to the US. There was this anecdotal story that even the chefs were leaving Paris to go to London, God forbid, the business environment was so rough on business owners. They had these labor rules where if you had 50 employees, you would have to create a special council of employees that would be required to approve major developments of the company. So a lot of French companies, when they hit 49, they would hire everybody else outside of France. So that was the France of the past. I think what we've seen is President Macron has made incredible steps—he's taking incredible steps to transform the labor market and make France much more attractive for investment. So we are investing more there. We're seeing a lot more startups in France who want to stay there and grow their businesses there, and I think that's important.
I
Interviewer21:10
Well then, how does an entrepreneur approach you? What's the proper way to approach you, or does it usually come as a recommendation through venture firms that might have been in the seed round?
J
John Somorjai21:25
We have a lot of entrepreneurs who just reach out to Salesforce Ventures through that website. And we have a lot of VCs that will bring us into rounds where they're raising. We also see great leads from our product teams, from our board, and then most of all from Marc Benioff, because he just gets a flood of emails that come to me, that come to him, and then they get forwarded to me first if they're an enterprise company versus a more personal investment.
I
Interviewer22:03
Yeah, well, that's the benefit of having an iconic entrepreneur. He gives the best deal flow. The bad rap on some corporate venture funds is that they take forever to make a decision. I'm thinking of one of the big notable ones I mentioned previously in Silicon Valley—that is their reputation, they just take forever, perhaps because they're too big. Are you plagued by that, or is it because your size is so lean that you don't get trapped that way?
J
John Somorjai22:41
I think we still try to function like a small company in many ways. Salesforce is a company where decisions get made very, very rapidly. Our investment committee is really small—it's our CEO and CFO. And once we get an executive sponsor—and that's the key, that's actually one thing I didn't mention yet—is every investment has an executive sponsor within the business. That's someone within the business unit who says not only that this is an important company for us to invest in, but they will stand up and help this company be more successful. Once that executive sponsor is identified, then the investment decision gets made very rapidly. Then it's really just about the diligence and how much do we invest and the terms. But I think that's the key part, is getting that executive sponsor lined up.
I
Interviewer23:36
We have about a minute and a half left, so tell us about your latest portfolio. Where are you—what really has you excited in 2018, 2019, 2020?
J
John Somorjai23:47
Well, we're obviously spending a lot of time in AI. That's been a huge focal point for the last three years. And I would say the second area would be verticals. So you've seen the success of one big public vertical with Veeva. There are a lot of private companies that have built great businesses in certain verticals, but there are so many business opportunities there, particularly in retail, in financial services, in healthcare, and in manufacturing. So huge untapped opportunity in those vertical industries. The last area would be IoT, where you see massive data streams coming into the corporation and finding companies that can make sense of those insights so executives could make decisions locally.
I
Interviewer24:41
But everybody and his brother seems to be in IoT these days, from startups to companies that have been around like GE, you know, 150 years. What is the differentiator in IoT? And that's the last question.
J
John Somorjai24:55
Well, I think it's finding those companies that really are able to help an executive make that critical decision at that point in time to help them solve an important business issue. So those are the types of companies we'll look for.
I
Interviewer25:13
Well, thank you very much, John. Let's give him a big hand.