Why tech giant Salesforce is cozying up to Canada
Justin Trudeau was greeted by a mob of employees fighting for selfies, a Canadian flag waving on an enormous digital screen in the lobby, and a soundtrack featuring Neil Young and the Tragically Hip when he visited technology giant Salesforce.com Inc.’s San Francisco headquarters in February.
Trudeau was in town to meet several major tech companies, including Amazon.com Inc., which had recently named Toronto one of its top 20 candidates for its second headquarters. The Amazon competition isn’t likely to play out in Canada’s favour, but the federal government’s good relations with Salesforce seem to be turning into something more concrete.
Salesforce founder, chairman and co-chief executive Marc Benioff in February pledged a US$2-billion investment in Canada, which includes expanding its workforce, real estate footprint and data centre capacity.
As part of the investment, Salesforce Ventures, the company’s investment arm, in May announced the launch of the US$100-million Canada Trailblazer Fund “to invest in Canadian startups and fuel cloud innovation and customer success in the region.” It also awarded US$100,000 to Waterloo, Ont.-based B2B sales and marketing startup FunnelCake at its first-ever Dreampitch Toronto competition (the startups had to be Salesforce customers to qualify for funding).
The fund is just another development in a relationship that has doubled Salesforce’s Canadian workforce over the past two years to 1,400, and boosted its Canadian customer pool past 6,000.
Though critics might moan about yet another tech giant sucking up local employees, startups and customers, Salesforce’s Canadian partners don’t seem to mind, and co-chief executive Keith Block said the relationship between the company and Canada goes far deeper than money.
“I don’t think we would want to be characterized as kind of the classic tech company that’s coming to take over,” he said at Dreamforce, the company’s immense and at times evangelical megaconference in San Francisco in late September. “We’re a values-based company. I think Canada is very much a values-based country. It’s a very open country. Equality is very, very important in Canada. Those are the sorts of things that resonate with us.”
Of course, Salesforce and its dominant market position will exist whether they set up in Canada or not, said Andrew Graham, co-founder and chief executive of Borrowell Inc., a Toronto-based fintech company. And while he believes there’s a lot to like about the big tech players focusing on Canada, he would rather the government focus on helping the country’s next generation of companies grow.
“The tech sector in Toronto and in Canada is at full employment, so when we encourage foreign firms to come here and set up shop, it can absolutely create challenges,” Graham said. “So when we read about thousands of tech jobs, it’s often displacement, and it can be displacement from a company like ours. It makes a tight labour market even tighter. It also hurts domestic firms that are in the process of scaling up.”
The general public may not know Salesforce as well as its San Francisco peers such as Airbnb Inc. and Dropbox Inc., or its biggest competitors Oracle Corp. and Microsoft, but it is among the world’s most successful tech companies.
Its market cap has increased by more than US$50 billion during the past year to about US$110 billion, and Benioff announced an astounding 27-per-cent year-over-year revenue jump in Q2. (Its top line has benefited in part from its acquisitions of MuleSoft Inc. and Datorama Inc. in 2018 for US$6.5 billion and US$800 million, respectively.) It also employs more than 30,000 people — about the same as Facebook Inc. and Netflix Inc. combined.
Originally known for its cloud-based approach to customer relationship management tools, Salesforce has now integrated itself into areas such as marketing, customer service and e-commerce.
Block lists the company’s core values as trust, customer success, innovation and equality. It is far from the first Fortune 500 company to list equality as a core value, but it appears to have a unique understanding of its connection with talent acquisition and deal-making.
Canada is very much a values-based country. It’s a very open country. Equality is very, very important in Canada. Those are the sorts of things that resonate with us
Sales Force co-CEO Keith Block
Block and chief philanthropy officer Suzanne DiBianca both emphasized Salesforce’s adoption of stakeholder theory, wherein a company takes on the duty of pleasing its shareholders as well as its customers, employees, communities, local governments and other stakeholders.
Asked about the most important things she’s learned in her 18 years at Salesforce, DiBianca pointed to the company’s discovery in recent years that executives and developers, arguably the market’s most sought after employee segments, are the groups most strongly attracted to “a company that has a soul.”
Dreamforce is a perfect example of the company’s dedication to a more liberal point of view. The event, which hosts more than 170,000 attendees, is one of the world’s largest tech conferences and it featured dozens of panels addressing racial, gender, sexual orientation, class equality and diversity from a variety of perspectives.
One panel, which included chief science officer Richard Socher, looked at the issue of racial and socioeconomic bias in artificial intelligence algorithms that can determine things as trivial as product recommendations and as important as loan approvals.
Other gestures in promoting equality include spending more than US$6 million in recent years to balance wages, and hiring Tony Prophet, formerly a vice-president at both HP Inc. and Microsoft Corp., as its chief equality officer.
Last year, Dreamforce’s keynote speaker was Michelle Obama. This year’s was Al Gore, who didn’t hide his disdain for the current U.S. president. Benioff, who has said he’s neither a Democrat nor a Republican, has donated to and publicly supported the campaigns of Barack Obama and Hillary Clinton.
“Your prime minister touring our headquarters, he was very gracious,” Block said. “I think there’s a mutual admiration there.”
Block, who became co-CEO in August, added that the relationship between Salesforce and the Canadian government was strengthened at the World Economic Forum in Davos, Switzerland, in January. Benioff was among several executives and political leaders to meet with Trudeau at the conference.
Another mutual interest is their respective fights against global warming. Both Salesforce and Trudeau said in statements they were “disappointed” when U.S. President Donald Trump pulled out of the United Nations’ Paris Climate Agreement in 2017, but pledged to keep fighting climate change. Salesforce has committed to achieving 100-per-cent renewable energy company-wide by 2022.
There is one area where there appears to be some disunity in the love fest between the two. Salesforce was recently blasted by pro-refugee organizations — and 650 of its own employees — for signing a contract in March with U.S. Customs and Border Patrol, the organization responsible for the separation of migrant families at the U.S.-Mexico border. Canada, meanwhile, has been praised by such groups for its immigration policies.
Amid the backlash in July, Benioff tweeted that his company’s contract with U.S. Customs has nothing to do with the separation of families. However, that didn’t stop protesters from erecting a 14-foot, 800-pound cage to show their displeasure at Dreamforce.
In 2017, Salesforce was No. 1 on Fortune’s Future 50 list, surpassing Tesla Inc. and Facebook. In 2018, it was No. 3 on Forbes’ “Most Innovative Companies” list. Much of this acclaim is thanks to a substantial investment in artificial intelligence talent, research and acquisitions.
Along with acquiring the AI-powered marketing intelligence platform Datorama this year, Salesforce acquired AI startup MetaMind in 2016, which brought aboard Socher, that company’s co-founder and CEO. The Stanford PhD has become a global thought leader in the space.
In short, Salesforce is turning into the kind of juggernaut that swallows up talent, customers and startups, taking them away from local interests. It’s something its executives have clearly thought about.
“We’re a company that’s all about transformation, but we’re also the good part of the transformation,” Block said when asked if some companies should fear Salesforce’s expansion in Canada. “We want to make sure that people are doing well and that we’re contributing to the community and that we’re reskilling the workforce as necessary so that people have the modern skills for the Fourth Industrial Revolution.”
Salesforce is turning into the kind of juggernaut that swallows up talent, customers and startups, taking them away from local interests
The term “Fourth Industrial Revolution” was bandied about throughout Dreamforce, and is a core theme in Salesforce’s plans for the future. Coined by Klaus Schwab, a German engineer and founder of the World Economic Forum, it’s defined as “a fusion of technologies that is blurring the lines between the physical, digital and biological spheres.”
The latest revolution includes popular tech trends such as the internet of things, machine learning and artificial intelligence, a particular focus for both Salesforce and the Canadian government.
Salesforce’s artificial intelligence platform, Einstein, is becoming more intelligent and practically useful each year, while the Canadian government in 2017 announced a $125-million Pan-Canadian Artificial Intelligence Strategy, partnering with AI institutes in Edmonton, Montreal and Toronto.
“There’s a lot of great tech companies in Toronto. AI is leading the pack,” said Jacqueline Cooper, chief revenue officer at Toronto-based startup Interaxon, of Salesforce’s relationship with the Canadian government. “Our job is to make sure that we develop a workforce so that we don’t have the shortages, and so that we can really create that IP and keep it within Canada. That’s our job as tech companies.”
Interaxon, the creator of the Muse brain-sensing headband, is one of a handful of Canadian companies that closely work with Salesforce on everything from sales to marketing to data analysis. It recently hired a developer to specifically focus on its Salesforce platform and was in the process of hiring a Salesforce admin.
Cooper is also a supporter of Salesforce’s venture fund, whose first four investments were in Toronto startups Tier1CRM Inc. (fintech) and Tulip (a mobile retail platform), Burnaby, B.C.’s Traction Guest (a visitor management system) and Quebec City’s OSF Commerce (e-commerce experience).
“Our funding has been both local and international and from the U.S. side,” she said. “If the fund was available and we were really partners in it, we would embrace it. I think it’s great that Salesforce has a ventures fund, because it’s really important for entrepreneurs to get off on the right foot. Because you’re really out there to build products for customers.”