The Big Story

Big earnings, big AI ambitions

This time last year, the enterprise software industry was bracing for a recession-like environment that was expected to lead to a curb in spending. Last week, Salesforce obliterated those concerns in record fashion, announcing $5.82 billion in revenue for the last quarter, up 20% year-over-year.

• The headlines showed that Salesforce's shares were down after it reported. Chalk that up to investors hoping for even more acceleration from Salesforce in the future.
• But on the earnings call, Marc Benioff simply reiterated that Salesforce would double down on the strategy that's already in motion, which is to focus on industry-specific solutions, a plan that's quickly becoming the norm in the software industry. Why break something that's working, he seemed to say.

One thing Salesforce is really doubling down on: Einstein. It's the company's AI engine and, at least according to Benioff, the key to the organization's future.

• "We continue to see Einstein become the critical enabling capability and differentiation that we can offer," he told investors.
• Not everyone shares that rosy of outlook for Salesforce's AI efforts. C3.ai founder Tom Siebel, who has his own complicated backstory with Benioff and is now a direct competitor, previously said he didn't think there's anyone at Salesforce "who knows what AI is."
• Regardless, the technology is seeing rapid adoption, at least, according to the numbers that Salesforce publishes. Sales of its customer service chatbot, for example, rose 91% last quarter. And overall, Einstein is powering 80 billion predictions each day, though it's difficult to interpret what that figure really means.
• Part of that is due to Salesforce making the product much more accessible. The company is including it for free in most basic licenses, per Marco Casalaina, Einstein's SVP of product management.
• "Einstein is becoming interwoven into the everyday experience of the Salesforce user," he told Protocol.

Casalaina admits Einstein had a rocky road to get to this point. The company started on the journey in 2014 when it released the Einstein precursor Wave Analytics, but there were a lot of problems with that offering. For one, the sales team didn't really know how to sell it. And there weren't robust customer use cases to fall back on. To be fair, it was very early in the maturity of the tech; now, after a few rebranding efforts, Salesforce appears to have its footing.

• "At first, we didn't really know what we were going to be with Einstein. There was a lot of marketing, it was all fun and we had our characters," said Casalaina. "In the last couple of years, we've really come to understand what we are."
• (When Casalaina says characters, he's referring to what you can see in the top image of this story: an Einstein mascot that Salesforce parades around its annual Dreamforce conference. People line up to take pictures with it, no joke.)

So what's next for Einstein? To prove that maturity, the company plans to begin releasing more information on specific client results this year, per Casalaina. But even he acknowledges it's never going to be a general purpose AI engine.

• "You're not going to do everything with Einstein," Casalaina said.
• Instead, the company is designing the offering around a simple concept: cater to your user base. For Salesforce, that's its administrators. And many of those individuals are perfectly fine operating on a more simple platform, using the vast amount of information already stored in the CRM, per Casalaina.
• "Being new and novel is not always the most wonderful thing. You want it to be familiar," said Casalaina. "Everybody's always talking about the model. Nobody is ever talking about the user."

It's clear there is a major desire among companies to use Einstein; at least, according to the numbers Salesforce releases. And unlike other, more complex applications, Salesforce makes it pretty easy for non-technologists to begin to play around with it — something the Slack acquisition and integration could play into. But Salesforce is far from the only company tackling this space. And with new competitors like C3.ai bound to emerge, Salesforce's innovation engine needs to work at a much faster speed to stay ahead.

-- Joe Williams

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Coming up this week

Last earnings cycle, Zoom CEO Eric Yuan addressed Wall Street in a pre-recorded message, so I'm sure investors are hoping to hear him live when the company reports 4Q results this evening. Here's what else to look out for this week.

March 1: Zoom reports earnings. Salesforce CFO Amy Weaver and SAP CFO Luka Mucic speak at the Raymond James Institutional Investors Conference.

March 2: HPE reports earnings. Microsoft Ignite kicks off; expect Nadella (of course) and a focus on mixed reality. Bill McDermott speaks at Morgan Stanley's tech, media and telecom conference.

March 3: Snowflake reports earnings; it's only the second for the company since going public, which somehow feels like an age ago. Ericsson begins its Reinforce Conference. Salesforce COO Bret Taylor speaks at the Morgan Stanley conference.

March 4: Ignite wraps up.

Around the Enterprise

• Oracle hasn't told its employees much about the company's HQ move to Texas. But then maybe there isn't much to tell: One employee called it "just a ceremony," while another said "there's no move of people to Austin."
• It's very clear Mailchimp has serious problems with its culture. The big question now becomes how CEO Ben Chestnut fixes them.
• Autodesk paid $1 billion to acquire Innovyze, the company's largest purchase to date, and one that will give it a big foothold in the world of water infrastructure software.
• The tech industry will love Biden's new executive order to begin reissuing visas like the sector-favorite H-1B.
• Dronemaker Skydio just raised $170 million. The company is ramping up sales to enterprises,
• IBM released Cloud Satellite, a hybrid-cloud offering targeted at industries like banking and health care. It's a key step in executing on Arvind Krishna's vision for the struggling vendor.
• That unbelievable "solarwinds123" password? It was apparently the work of a SolarWinds intern.
• MongoDB and Google Cloud are deepening their ties with an expanded five-year partnership.

A MESSAGE FROM SEAGATE

Could Your Business Use 1PB of Free Cloud Storage?

Register now and attend Seagate Datasphere 2021 Virtual Event for a chance to win a massive 1PB of Seagate Lyve Cloud storage for your business.

We've got an incredible lineup of industry experts who will discuss the most formidable challenges regarding enterprise data storage.

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