Salesforce Founder Benioff Steering Clear of Unicorn Investments

  • Billion-dollar startups must go public to check valuations
  • Yahoo CEO Mayer facing issues confronted by all top executives

Marc Benioff, co-founder and chief executive officer of Inc., said he’s done investing in tech startups claiming to be worth more than $1 billion.

Instead, these startups known as unicorns need to go public and let the markets “rationalize” their valuations, Benioff said in an interview with Stephanie Ruhle that aired Wednesday on Bloomberg TV.

“I don’t think a day goes by today that I don’t get a call of a company raising money at a billion dollars or more. And this is just, you know, unheard of,” he said. “It’s become a self-esteem issue for these entrepreneurs.”

The number of private tech companies with valuations of more than $1 billion has increased as easier access to venture capital has allowed firms to stay private longer and avoid the scrutiny of public markets. Companies such as Uber Technologies Inc. and Airbnb Inc. have pushed their valuations higher than $20 billion through private rounds and there are now 145 unicorns, most of which are located in the U.S., according to researcher CB Insights.

The next year could see increased scrutiny for some of these companies, Benioff said.

Failures Ahead

“You’re going to see some unicorns that are dead, some that are fallen over, some that are sick and some that are doing fine,” he said.

Backers like Fidelity Investments and Blackrock Inc. that rushed into private companies at high valuations may have made mistakes, Benioff said.

“The unicorn mania that’s going on, that’s dangerous for our Silicon Valley economy,” he said.

Taking some of these companies public would help cool valuations and help their leaders refocus on the right metrics, Benioff said.

Mayer’s Task

“We can’t just sit back and relax. We have public investors to answer to,” he said of those who run publicly traded companies. Part of that is dealing with activist investors like the situation facing Yahoo! Inc. CEO Marissa Mayer. Successful CEOs know how to manage various stakeholders, from employees to activists, he said.

Yahoo is facing pressure from Starboard Value to consider a sale of the company’s core Internet business rather than follow through with the planned spinoff of its stake in Alibaba Group Holding Ltd. Starboard said last month it would consider a proxy fight if the company didn’t change its strategy. Yahoo’s board is meeting this week to consider a range of options.

Benioff praised Mayer and said if she were available he’d hire her “in a second.” Dealing with criticism is part of any CEO’s job, he said.

“She has to be held accountable,” he said. “That’s where she is right now.”

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