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Marc Benioff: Who's Afraid of Siebel?

The ultracompetitive Marc Benioff, CEO of Web-services pioneer, would be lying if he said he hasn't enjoyed watching competitor Siebel Systems (SEBL) flounder. Just a few weeks ago, Bruce Cleveland, Siebel's head of on-demand computing, was talking up his company's plans to overtake Benioff's (CRM) in two years. Since Cleveland made that statement, Siebel -- which a decade ago was a pioneer in software for managing sales forces -- reported that it missed first-quarter sales expectations by 12% (see BW Online, 4/8/05, "Siebel Is Stuck on the Seesaw"). On Apr. 13, Siebel announced the resignation of CEO Mike Lawrie.

Meanwhile, Benioff is working to make about much more than providing a software service that helps companies manage their sales teams. In June, the San Francisco-based outfit will start offering tools that help customers build their own software services. With no coding, for example, a hiring manager could set up a Web page that would track open positions as well as the status of recruiting people to fill them.

Never short on ambition, Benioff is looking to get a piece of the real estate on a computer's desktop -- and just maybe elbow in on Microsoft's (MSFT) turf.

Benioff gave customers an early taste of the new features at an event at the Four Seasons Hotel in San Francisco on Apr. 12. BusinessWeek Online reporter Sarah Lacy caught up with Benioff after the shindig and talked with him about's strategy, competitors, and the status of his oft-proclaimed "No Software" revolution. Edited excerpts of the conversation follow:

Q: What were you trying to get across to customers today?

A: It's critical for us to really come face-to-face with customers and prospects and tell them what we are doing and how are we different than the competition. It's more important than with traditional vendors, because we've done three of four major releases with 100 to 150 new features. That's a relentless pace of innovation, similar to what you might see at Amazon (AMZN), Google (GOOG), or eBay (EBAY), not with an Oracle (ORCL), PeopleSoft (PSFT), or SAP (SAP).

Q: What do you make of what's going on at Siebel? Two weeks ago, Bruce Cleveland said he could overtake in two years, then they reported a big quarterly miss.

A: Did you see their numbers? Unbelievable. I don't know the specifics, but they said they added 5,000 on-demand seat [licenses] in the quarter. We added more in the last quarter than they have total users. How does that work out to somehow overtake us? I think his calculator is broken.

Q: Cleveland and others have also said that you were unwisely taking on Microsoft with your move to leverage Salesforce into an operating system. What do you say to that?

A: I think Bruce should worry about making customers successful and not worry about us. That's his problem. He's more interested in us failing than making Siebel succeed.

Our event today showed how customers are embracing our vision. What creates excitement is how we're changing the industry. That's why we're doing so well. Our goal is the end of software, as I've said over and over again. We have to do it. If not for us, who would?

Q: Are you biting off more than you can chew as a small company?

A: We're not a small company anymore. We did $175 million in revenue last year. We feel very good about our capability to continue to deliver technology. In technology, people always overestimate what you can do in one year and underestimate what you do in a decade. We have big eyes and a big vision, and see the industry differently.

Competitors say they can't [see] going down this path, but we couldn't disagree more. Customers are driving us in this direction. We didn't come up with it on our own. The whole day today was about listening to customers. So far, we're doing a good job.

Q: Are you trying to become more than just a customer-resource-management company with this release?

A: This is all built on making our CRM products better. It's making our ability to compete in the market more competitively. We don't have just a prepackaged CRM application, but customers can build and customize the whole platform. That's something no one else is even trying. We're seeing customers build all kinds of new applications we couldn't have come up with.

At heart, we will be a CRM company for the foreseeable future. CRM is our heart and soul, and these other applications are appendages. We have 13,900 customers, and we mostly run their sales organizations. But, for example, at Magma Design Automation (LAVA), there are 30 salespeople -- but over 500 users of Salesforce because they have built applications that are about more than CRM. That's our strategy.

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