Protocol | Enterprise

Salesforce COO Bret Taylor on getting back to the Tower, succession and COVID-19 opportunities

"Helping our customers reopen and our own reopening, it's in the context of probably more business complexity than I think any of us have experienced."

Salesforce COO Bret Taylor​

"When I think about the new normal of operating a global business right now, it is characterized by widely varying differences in different industries, different parts of the world," says Salesforce COO Bret Taylor.

Photo: David Paul Morris/Bloomberg via Getty Images

Bret Taylor did not get a lot of time to celebrate his ascension to the upper ranks of Salesforce management.

After being promoted to chief operating officer in December, 2020 greeted Taylor with a pair of challenges: the sudden departure of co-CEO Keith Block, which unofficially made Taylor the heir apparent to Salesforce co-founder and CEO Marc Benioff, and the worst public health disaster in a century. Just about two weeks after Block left the company, Taylor oversaw the sudden shift of Salesforce's operations from the massive Salesforce Tower looming over downtown San Francisco to thousands and thousands of living rooms, dens and kitchen tables.

Almost six months later, the world is still a very uncertain place. Salesforce had hoped to reopen at least some of its offices by now, but employees in the U.S. continue to work from home. Its customers are holding their breath as the money from the first round of stimulus payments starts to dwindle. And after spending the summer with three kids under the age of 10, Taylor is itching to get back to the office.

Still, his trademark confidence leads him to believe that Salesforce is uniquely positioned to handle whatever business conditions emerge from the other side of the pandemic.

The man has quite a pedigree: Fresh out of Stanford, he helped build one of Google's most important and valuable products, Google Maps. With Friendfeed, he showed a ragtag bunch of social media companies what the future of the product would look like, becoming Facebook's chief technology officer in August 2009 after it acquired his company. And he parlayed those product design and development skills into the enterprise software world, creating an influential office productivity app called Quip that Salesforce acquired in 2017.

In a recent interview with Protocol, Taylor discussed how Salesforce customers have had to rebuild their business models almost overnight, why low-code development platforms are right for this moment, and his potential future at Salesforce.

This interview has been edited and condensed for clarity.

Can you give me an update on where Salesforce stands with respect to its reopening strategy?

We're really in the middle of a number of different crises happening at once. We have a global pandemic and a health crisis right now. We have an economic crisis caused by that pandemic. In the U.S., we have a social crisis driven by systemic racism.

As we're thinking about both helping our customers reopen and our own reopening, it's in the context of probably more business complexity than I think any of us have experienced in our lifetime. There's a lot going on in the world right now.

We introduced this platform called work.com, which is a platform to enable communities and businesses to reopen. Every region in the world, every city, every state, every country is sort of [at] a different stage of this crisis and a different level of safety as it relates to reopening.

We're taking advantage of our own platform. Some of our offices are already reopened in parts of Asia, and here in the United States we're still working in a distributed and remote way. I wouldn't say our plans have changed, because I think our plans were intended to be agile.

When I think about the new normal of operating a global business right now, it is characterized by widely varying differences in different industries, different parts of the world.

Salesforce has obviously made a rather large commitment to downtown San Francisco. Do you see that always being the case?

We have learned a lot about what we're capable of in this pandemic. The other side of [the] pandemic is going to be an all-digital, work-from-anywhere world. And that doesn't mean that every employee is going to want to work from home. Certainly I, with three kids under the age of 10, I'm looking forward to being back in a quiet office at some point.

But I do think that every company, including ours, going into this could have been completely [and] reasonably skeptical of your ability to operate as a company in a distributed way, since the pandemic forced the whole economy to go digital overnight. I think a lot of those [new] habits will remain.

A huge percentage of our employees have indicated that they want to work remotely or in a distributed way on an ongoing basis. Maybe it's not every day of the week, but some days of the week. And when I talk to our customers, they're seeing this not only from their employees, but from their customers as well.

As a lot of enterprise software companies get larger, there's a shift from organic product growth to growth via mergers and acquisitions. Obviously your background is in a product role, and I'm curious if you think of yourself as primarily driven by the need to develop organic products within the organization, or if there's just a certain M&A reality that comes along with being a large multinational corporation like Salesforce.

One of the reasons that I was so drawn to Salesforce — and I think you're accurately characterizing me as a product person, it's what makes me excited to get out of bed every morning — [is that] Salesforce has always been defined by being an innovative company and our customers come to us because of that innovation.

When Salesforce started, it hit on a couple of different axes. First it introduced a new business model for software, being subscription based, and also introduced a lot of the concepts of the cloud and software as a service. I think that is a huge part of Salesforce's culture and the scale that comes with our current size is an incredible privilege, because it means that we can partner with almost every company in the world to help them transform.

But it comes with the burden of saying, "OK, how do we remain agile and continue to be innovative, despite that scale?" A risk of every large technology company is, can you maintain the pace of innovation that brought you to where you are? And I would say that it's something we really focus on in our culture.

When it comes to low-code and no-code development, have those been immediate steps that people have been taking to shore up their businesses? Maybe you see that as more of a second order, down-the-road thing?

Particularly in the area of low code, our platform has been really an integral part of a lot of the ways our customers are using Salesforce technology to respond to the crisis. In a time where speed matters more than anything else, low code is more relevant than [it] ever has been.

Organizations are looking within themselves and saying: "How can we set up your new business processes? How can we engage with employees in a different way? How can we engage with our customers in a different way?" These low code platforms like Salesforce [Lightning] are just accessible to a much broader range of your organization, which means you can activate your company to use these platforms in a much broader way. So it's been very, very relevant in this crisis.

About your more-or-less-recent promotion: No one I talked to was surprised that you were elevated to your current position, but I think several people were surprised by the timing, especially with respect to Keith's departure. Is there anything you can tell me more about how that went down?

When I joined Salesforce, I want to say it's about three and a half years ago now, I don't think I imagined myself in this role. But it's been the privilege of my career to be able to work with Marc and form this relationship with this company.

When Marc decides he wants to walk the beaches of Hawaii, do you expect that you'll become CEO of Salesforce?

That's not … no comment on that. And it's obviously not something that's my decision.

Would you want to lead a large multinational enterprise software company?

I'm very happy playing a leadership role at this company right now. And that's really what I'm focused on, is just doing a good job and the role I'm in right now.

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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