Marc Benioff to Tech Industry: Give Back to San Francisco

For one week every fall, San Francisco turns into a gridlocked mess. About 135,000 guests of the cloud computing company (CRM) flood into downtown for its annual user conference, the ebulliently named Dreamforce. Hotels are sold out, sidewalks become practically unnavigable, and the city closes a major street in the tech startup-packed South of Market district, jamming the Bay Bridge even more than usual. While this year’s Dreamforce attendees heard a keynote from Hillary Clinton and partied at outdoor concerts by Bruno Mars and, the rest of San Francisco sat in traffic.

Strangely enough, the ringmaster of this annual circus, Marc Benioff, is doing more than any other American chief executive to rethink the obligations companies have toward the cities where they operate. In the past few years, Benioff and his wife Lynne have helped build a state-of-the-art children’s hospital in San Francisco, funded a variety of initiatives to help the hungry and homeless, and, via his company’s Salesforce Foundation, parceled out $73 million in grants to nonprofits. At the same time he’s done something even more audacious: publicly urged other tech leaders to do their part. “Now is the time to give a strong message to entrepreneurs that this is a city and an industry that expects you to give back,” he says.

Photo illustrator: Justin Metz; Photographers: Alamy (camel and needle); Getty Images (hoof)<br /> <br />Behind this week’s coverPhoto illustrator: Justin Metz; Photographers: Alamy (camel and needle); Getty Images (hoof)
Behind this week’s cover

Benioff’s exhortations to his peers couldn’t come at a better time. The industry’s reputation has taken a beating, particularly in progressive San Francisco, home to the gay rights movement, the Summer of Love, and an historic mistrust of big business. Because of the tech boom and an influx of young, wealthy workaholics, housing prices and rents are way up, and lower- and middle-class residents are getting pushed out. In January 2014, venture capitalist Tom Perkins elicited a wave of condemnation by comparing attacks against the wealthy elite to Nazism. In October a video went viral of workers for the cloud storage company Dropbox waving a city park permit and trying to kick residents off their neighborhood soccer field. (The company later apologized.) And of course there’s Uber, the company with the popular taxi-hailing app and an accompanying image problem, which hasn’t met a bullet it couldn’t shoot into its own foot.

Benioff has waded right into this mire of urban transformation and socioeconomic anxiety. He’s 50 years old and 6 foot 5, with a cherubic face, thinning hair, and the tech industry’s customary inclination toward displays of arrogance and grandiosity. He also has an uncanny talent for drawing attention to deeply unsexy subjects—first it was business software, now it’s corporate philanthropy. “Our industry has a history of stinginess,” he says from one end of a 20-foot-long conference table in his colonial-style home in San Francisco. “We have done a phenomenal job creating value for the world through our technology, but we are not really an industry known for giving that wealth back.”

“Our industry by nature is disruptive—that’s what technology is—but we are being disruptive to the city also”

In March, worried about growing frictions between the local tech community and its neighbors, he organized an initiative called SF Gives to raise $10 million for regional antipoverty programs. Benioff got on the phone himself and successfully pushed executives at Box, Google (GOOG), Jawbone, Zynga (ZNGA), and 15 other tech companies to join Salesforce in the cause. “During the severe backlash, there was a willingness by some companies that weren’t as involved to do something,” says Daniel Lurie of the nonprofit Tipping Point Community, which Benioff conscripted to run the program.

“Our big message is that we live in this nirvana,” Benioff says of the campaign, which he hopes to expand to 100 tech companies in the year ahead. “But don’t think we’re not going to ask you to give. We want you to give, and we want you to make it part of your company.”

Benioff began weaving this philosophy into Salesforce’s culture when he founded the company in 1999. He called it the 1-1-1 model of corporate philanthropy, in which the company would send 1 percent of its stock, products, and employees’ working time to the company foundation. Since then, companies such as reviews website Yelp (YELP), enterprise software maker NetSuite (N), and Google have adopted variations of the program. “Marc has been pounding the table getting everyone to pay attention and come up with their own philanthropic strategy,” says Jeremy Stoppelman, Yelp’s CEO.

Benioff is even trying to rebrand his traffic-paralyzing Dreamforce conference as an exercise in disruptive altruism. This year attendees spent part of each day volunteering with military veterans, stocking meals for local food banks, and raising $9 million for a local hospital. He says it’s “awesome” that the event shuts down the city each year and gives commuters a migraine. “I know some people have trouble getting to work on those days, I do,” he says. “But it doesn’t matter. It’s a net good for the city.”
Benioff’s name has been unavoidable in Silicon Valley since the late ’90s, when he left Oracle (ORCL) and the side of his longtime mentor, Larry Ellison. Salesforce, which makes technology that lets companies keep track of customers, was conceived as an anti-Oracle: Instead of selling prepackaged software that was expensive to maintain and hard to update, Salesforce rents its products over the Internet—in the cloud, as it’s now called. He also thought up his 1-1-1 model after running Oracle’s foundation for Ellison and finding it difficult to get employees’ attention. “It was a struggle, because it was not cultural,” he says.

Salesforce went public in 2004 and now has a market capitalization of $33 billion. Benioff is worth an estimated $3.3 billion. Over the past five years he and Lynne have donated $200 million to area children’s hospitals, with most of that going to fund a new University of California at San Francisco facility in Mission Bay, formerly a destitute, postindustrial part of the city. The facility, which opens in February, greets patients in the lobby with a 30-foot-high interactive wall; rooms are furnished with Dell tablets and smart televisions. Small green spaces encircle the facility, there’s a helipad on the roof, and special classrooms are available for long-term patients. Parents never want their kids to end up there, but if they do, they’ll be impressed.

Benioff wasn’t early only to cloud computing. He was early to downtown San Francisco, then a backwater to the action in Silicon Valley. Now it’s home to a generation of startups—Airbnb, Uber, and Yelp are all there—that pay up to $70 a square foot for office space.

Salesforce has been gobbling up space in the city faster than anyone. In April it announced plans to become the major tenant in what will be called Salesforce Tower, which will briefly become the biggest skyscraper west of the Mississippi when it opens in 2017. “This is like the gold rush,” Benioff says. “The ships are all pulling into harbor here. Everybody is kind of jumping off and setting up camps around town. It’s like they’ve all got their pans and their Levi’s, and they’re all heading out to make it rich.”

Unlike the other prospectors, Benioff has deep roots and a caretaker’s fondness for the city. His grandfather, Marvin Lewis, was a longtime city supervisor known for handing out $20 bills to constituents on the street. A plaque dedicated to Lewis hangs in the BART station underneath Salesforce’s main offices. Lynne says that family history has partly inspired their philanthropy, but that her husband gives mostly because he finds it both personally rewarding and a competitive advantage for Salesforce: Doing well by doing good is an effective recruiting tool.

The Benioffs got inspired to challenge other tech entrepreneurs to give after the couple was walking late in 2013 to a party in the Mission District, an historically Latino neighborhood known for its night life and Mexican food. That’s when they caught sight of the monolithic, lane-hogging Google buses, which class warriors (always plentiful in San Francisco) were deriding as symbols of entitlement. The Benioffs thought they had a point. “We were like, ‘Those companies should be charged, and they can damn well afford it,’ ” Lynne says.

Marc decided to try to, as he puts it, “change the narrative.” “Yes, San Francisco has issues of gentrification,” he says. “They have these crazy buses that need to be regulated. People are being Ellis Acted out of their house.” (The Ellis Act is a California law that lets landlords evict tenants if the property is converted to personal use.) In his view, the problem is a lack of empathy and civic-mindedness, and that starts with tech CEOs. “I think they’ve gotten off way too easily, actually,” he says, comparing the rather mild protests over Silicon Valley shuttle buses to the ongoing protests around the country over the police killings of Michael Brown and Eric Garner. “The tech industry is setting up shop here, and it’s creating a lot of change in the city, and we should all be making sure that we are doing this in the right way. Our industry by nature is disruptive—that’s what technology is—but we are being disruptive to the city also.”

“You know what, Marc? You make your philanthropic decisions, and I’ll make mine”

The SF Gives campaign rallied tech leaders into the giving spirit. Not all joined right away. Benioff quotes a well-known CEO (he won’t name names) who asked, “What have I been given?” before declining to join SF Gives. And in an interview with San Francisco magazine in April, Benioff bashed a $1 billion donation by Facebook (FB) honcho Mark Zuckerberg to the Silicon Valley Community Foundation, a so-called donor-advised fund that allows the contributor to take an immediate tax write-off but figure out later how the money will be spent. “Where’s it gone? What good is it doing now?” he told the magazine. “We need to see that money get distributed.”

Benioff got some angry phone calls after those comments and says he’ll try not to say judgmental things about other people’s generosity. Then he plows ahead anyway. He says Zuckerberg has earned his respect as a philanthropist, but that he’s young, and “I just don’t think we can expect too much at this point, but I’m sure more is coming.” He also takes a shot at the Giving Pledge, initiated by Warren Buffett and Bill Gates and adopted by other wealthy individuals, which dedicates a majority of their wealth to philanthropy either by the end of their lives or after they die. “I understand the Giving Pledge,” he says. But “I think we have to give now. I think we have a lot of problems right now that need direct attention, and I don’t want to give any air cover to people who are putting money away to give later.”

Benioff seems to enjoy badgering his fellow billionaires about their philanthropic priorities. He says he recently lunched with Nobel Prize-winning stem cell researcher Shinya Yamanaka in Kyoto. Yamanaka told him that Hiroshi Mikitani, the co-founder and CEO of Japanese Internet giant Rakuten (4755:JP), presented him an award for his research that didn’t include any significant financial support. Benioff fired off an e-mail to Mikitani on the spot, saying he would give $5 million to Yamanaka’s lab at UCSF if Mikitani matched.

Benioff chuckles recalling what happened next. Mikitani “sent me a note back saying, ‘You know what, Marc? You make your philanthropic decisions, and I’ll make mine.’ ”

Mikitani wrote again the next day, agreeing to give $2.5 million to UCSF if Benioff donated $2.5 million to Kyoto University. Benioff quickly replied, “Done,” to which Mikitani simply answered, “You’re crazy.” Mikitani did not reply to a request for comment.

Lynne acknowledges that her husband’s approach may rub some people the wrong way, but she thinks it’s worth it. “I’m sure there’s an element of some people going, ‘Uh-oh, there he goes again,’ ” she says. “But we’re also getting a lot of people thanking us for taking a stand. Part of Marc’s message and my message is just, do something. A lot of these people are very smart and analytical and want to take a step back and analyze the best route to give, to maximize their donation. It’s not always like that. Sometimes you need to take a risk to give money and not expect a typical return.”
By many measures, San Francisco’s tech boom has been great for the city. Unemployment has fallen from 10 percent to less than 4.7 percent in the last five years. The city has an operating surplus of $22 million after the fiscal year that ended in June. Times are good, but not for everyone.

For those who can’t afford $5,000 a month for a three-bedroom apartment in the Mission or an average median home price that recently hit $1 million, San Francisco has become unwelcoming and scary. Evictions are at their highest levels in more than a decade, according to a report from the city’s rent board. The have-nots include teachers, policemen, and nurses, not to mention an estimated 7,000 homeless people, including 2,200 students who attend San Francisco public schools.

Tommi Avicolli Mecca, director for counseling programs at the Housing Rights Committee, sees the displaced every day and can’t summon much gratitude for Benioff. “The reality is the amount of money he’s giving is small,” Mecca says. Giving a few million to put families in subsidized housing, as Benioff and his wife started doing in 2011, is a drop in the bucket. “The city is no longer affordable to the folks who made the city what it is.”

Benioff agrees he can’t solve intractable urban problems quickly or by himself. His goal is to inspire other companies and tech impresarios and to change their attitude while defusing the adversarial tension between the industry and community. “One person at a time, one company at a time. I really see this now as kind of core to my mission,” he says.

“Marc has really started the ball rolling here, and the rest of the tech community has gotten into it,” says Ron Conway, a prominent angel investor. You can actually see the Benioff doctrine infecting other tech companies in the city. Every Friday employees of the payments company Square don rubber gloves and head out to pick up trash in their mid-Market neighborhood, near City Hall. Google recently donated $2 million to help aid the local homeless population, part of what it says is $100 million in donations to Bay Area nonprofits over the last four years. Employees of the Danish customer service firm Zendesk fan out into the poverty-stricken Tenderloin neighborhood to help in area schools and work in food kitchens, though it’s part of a deal with the city that earns the company a break in payroll taxes.

Benioff has even sparked a campaign to help San Francisco’s chronically underperforming public schools. Over the last two years the Salesforce Foundation has given $7.7 million to put Wi-Fi and tablets in the district’s 12 middle schools. That’s been followed by other efforts, such as the recently unveiled Circle the Schools, an initiative of the Conway-backed The program gets local tech companies to “adopt” individual schools and meet each principal’s funding and volunteer needs. San Francisco Mayor Ed Lee says Benioff’s “impact has been tremendous. He is unabashed when he says that tech companies have to do the right things.”

As Benioff speaks from the long conference table in his home, the Benioff doctrine starts to sound like a full-fledged critique of the economic status quo. “We no longer live in a world that can tolerate maximizing shareholder values,” he says of the doctrine inculcated into MBAs. In his eyes, that narrow pursuit ends with companies that drive so many costs out of the system that they’ll have workers living beneath the poverty line, relying on the government for food stamps and health care. Instead, he wants companies to pursue “stakeholder” value—balancing the interests of their investors with the welfare of their employees, the people in the community, and the city’s children.

Benioff wants to have given away more than $1 billion of his personal fortune by 2024—then make that a benchmark that other tech executives will take as a challenge. His own version of the Giving Pledge: “Now every CEO is going to have in their pocket a story about something that they are doing both personally and organizationally to make this city better,” he says. “That is my goal. I think I can achieve it.”

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23 December 2014 | 10:29 pm – Source:


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