💃 Salesforce ✂️ 10% of Workforce, Stock Goes 📈 🕺

Good morning, Salesforce Nerds! Last week, Salesforce announced that they would be cutting 10% of their workforce, and they may not stop there. Marc Benioff was subsequently blasted across mainstream and social media. Yesterday, Salesforce (CRM) stock rose 4.69%. Wall Street clearly agreed with the cuts.

What are the dynamics at play here? This does not have to be a zero-sum game where Wall Street's gain is Main Street's loss. Salesforce's previous two years saw explosive growth in their revenue AND hiring. Unfortunately, here we are today with hundreds of Salesforce employees being shown the door while the company's value rises (at least for a day).

Agenda for today includes

• The Salesforce Cost Cutting - Let's Explore the Perspectives

• Daily Principle

• All the Memes

Salesforce Cost Cutting - Let's Explore the Perspectives

In addition to cutting at least 10% of their workforce, Salesforce CEO Marc Benioff will also look to shed some real estate (it was noted some Salesforce offices have less than 10% occupancy). His goal is to cut costs by up to $5 billion.

Salesforce Perspective

A company's biggest expense is typically payroll. Salesforce has over 8,000 employees in addition to contractors. With tech salaries exploding in the recent years, Salesforce surely is feeling the crunch. In addition, their recent high-priced acquisitions, Slack and Tableau, have not brought in the big revenue streams that were expected.

Public companies, like Salesforce, have an often impossible job of satisfying investors and maintaining a decent public image. In this near-recession, high-inflation environment, the investors want to see costs controlled. When you are an iconoclastic CEO like Marc Benioff, you will be the face of the difficult decisions.

Public Perspective

Salesforce had done an amazing job of winning the public's hearts and minds. They built a glorious park in the middle of the densest area in San Francisco, they had the everyman's super-celebrity Matthew McConaughey in their Earth-loving Super Bowl commercial, and their SaaS model was the perfect solution for the pandemic that drove huge troves of sales teams to work from home. Salesforce could do no wrong.....

Within a year, the artificially propped up economy came crashing back to earth, and Salesforce is now faced with rising costs and impossible growth expectations. They are making cuts that impacts thousands of people - not only the employees being laid off, but their families are also affected. With nearly 1000 people expected to be let go, and in the very tight-knit community that is Salesforce, it is likely that we have crossed paths with somebody impacted by the layoffs.

Wall Street Perspective

The tech industry has transformed Wall Street into obsessing over market capitalization and high-velocity growth. Wall Street says Tesla is worth more than Ford and Toyota COMBINED. That Tesla is considered a high-tech carmaker and has a (relatively short) track record of impressive year-over-year growth, they have been a Wall Street darling (until their owner's recent actions....).

At its peak, in 2021, Salesforce's market cap was $217 billion, which is DOUBLE what it was only 2 years previously. Like the market average, Salesforce lost about 30% of their value during 2022 and is currently valued at $147 billion.

Salesforce cannot continue to operate like it had as their value skyrocketed - high-priced acquisitions, costly parks and office buildings, and maintaining a large and expensive workforce. Difficult decisions had to be made, and they were...and Wall Street liked them.

Newly ex-Salesforce Employee Perspective

The people that were let go are the real losers here. From new-hire account executives to veteran software developers, the cuts were far and wide. There are few things more difficult to accept than to have your dream job, working at the mothership, and then have your livelihood being taken from you due to events out of your control.

Large companies, like Salesforce, typically offer generous severance packages. As well, the experiences you gain just through being employed at a $150 billion company are priceless. The rest of the Salesforce ecosystem is salivating over these newly available resources - consulting partners, businesses with complex orgs, and recruiters...definitely the recruiters. We are sending all the positive vibes to those that were let go.

Daily Principle

Derek Sivers makes it clear this is not his original idea. However, he has an array of impressive goals he has accomplished, (one example - he sold his first company for $22 million and then gave it all away to charity) so he knows what he is talking about. He goes on to say -

and now....Your Daily Memes