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The Salesforce Departures: Much Ado About Very Little

The Salesforce Departures: Much Ado About Very Little

Three high-ranking Salesforce executives left the company recently, and immediately much of the SaaS knowledge-sphere began wringing their hands, consulting the tarot cards, and presuming the worst for the firm. But reading about a couple of layoffs and resignations and making overly broad inferences about a company, an industry or an entire economy helps nothing, writes CRM Buyer columnist Denis Pombriant.

By Denis Pombriant CRM Buyer ECT News Network
02/11/09 4:00 AM PT

Late last week Salesforce laid off three executives, or so the story went. Actually two senior sales execs were let go and venerable president and former CFO, Steve Cakebread, just left. Immediately the knowledge-sphere (and I am tempted to write that word without the 'K') started rumbling about what dire straits Salesforce must be in.

I write a lot about Salesforce, so people were calling me up for comment trying to prove their hypotheses. I posted a comment that I didn't know the two execs, but Cakebread is a ninja, and this kind of person tends to spend a career going from one high-flying company to the next, helping out with the process leading up to the IPO. Cakebread had been at Salesforce for six years, and I thought it was time for him to look for the next opportunity.

The trough of a recession is the perfect time to begin the process, as it calls for a time to decompress, to survey the landscape and time to work off any non-compete that might have been built into your employment contract.

Imagine my surprise when someone misquoted me saying that the layoffs were a direct result of the recession. What I had written, among other things was, "Three jobs, even executive jobs, at a billion-dollar company is hardly newsworthy except that it gives tongues the opening they might need to wag." And wag they did.

Less Wagging, More Working

For the record, I write about Salesforce, but I don't have a seat on the board, and on most things people don't call me up to give me some inside scoop. I receive a steady stream of pre-announcement briefings like any other analyst covering the space.

I suspect that the fortunes of the SaaS (Software as a Service) community will mirror the progress of the recession, though with some differences. I don't think SaaS vendors will be hit as hard because SaaS is a logical decision for companies looking for cost-effective applications. On the other hand, some customers might adjust their seat counts as they adjust headcount. That's just common sense.

The broader picture worries me. We spent 2008 in denial about a recession that had already started and a housing situation that was beginning to look like bubble gum on a ball player's face. Now that we've caught up with that reality, we seem to be marketing the recession as if it was the next big thing. Everything is related to the recession, from the scary and real 600,000 jobs lost in January to your kid's D+ in algebra. Give me a break.

I have seen (and written) too many articles about selling in a recession. Why aren't we writing articles about selling our way out of a recession? Really, guys, it's fun to be a prognosticator for a bit, especially if you were 12 the last time something like this happened, but sooner or later we have to realize that things aren't going to get better unless we all do something. All of this tealeaf reading and hand wringing just feeds on itself and depresses people and markets.

Strange Beasts Indeed

My last post also said that increasing SaaS uptake could be a leading indicator of recovery forming, and I wondered if the feds would ever use it as an economic barometer. That would be useful, but what's not is reading the news about a couple of layoffs and making broad inferences. Public companies are strange beasts, and they do things to influence the market for their products as well as the markets for their stocks. We forget this at our peril.

Public companies are always doing short-term things to keep their share prices up for many good reasons. A share price that drops the cost of a company to below the value of its total assets, or book value, effectively puts the company on sale. Smart raiders know a good deal when they see one and would be happy to snap up a good company at a bargain price and simply wait until conditions improve to refloat it. Note the conditional tense of the verbs in this paragraph and remind yourself this is all hypothetical.

So yes, we're in a recession, and yes, we will climb out of it if we pull together and act logically and with conviction. The situation is scary in many ways, but we need to keep in mind that there is opportunity embedded in the bad news if we know how to dissect it. Finally, the recession might be a fact of life, but it is only one factor. It doesn't tell the whole story or anything close to it. Now get back to work.


Denis Pombriant is the managing principal of the Beagle Research Group, a CRM market research firm and consultancy. Pombriant's research concentrates on evolving product ideas and emerging companies in the sales, marketing and call center disciplines. His research is freely distributed through a blog and Web site. He is working on a book and can be reached at denis.pombriant@beagleresearch.com.


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