NICHOLAS KAMM/AFP via Getty Images
- Marc Benioff was blindsided by the sudden shift in markets and the economy last year, he said.
- The Salesforce CEO was surprised by inflation, flagging demand, and swings in stocks and currencies.
- Benioff is bracing for another recession after weathering the dot-com crash and financial crisis.
Marc Benioff was caught off guard by the dramatic shift in markets and the economy last year. Now, he's bracing for a recession that could rival the dot-com crash and the financial crisis.
"In 2021, it was the best year tech ever had," Salesforce's CEO said at the Upfront Summit this month, in an interview aired during a recent episode of the "On With Kara Swisher" podcast.
"We were all surging employment to get ready for another year like that, because we thought that was the normalized buying environment," the billionaire cofounder of the enterprise-software giant continued.
"But then, we started to see some unusual macro issues," Benioff added. "Currency really started to change aggressively. We saw inflation start to come up. The stock market basically imploded. The buying environment changed, and CEOs, especially, became more measured."
The technology industry boomed during the pandemic. Companies embraced remote-working tools, and a combination of rock-bottom interest rates, stimulus checks, and federal loans and grants boosted demand.
The rosy backdrop darkened last year as inflation spiked to a 40-year high. The Fed responded by raising rates to upwards of 4.5% and penciling in further hikes.
Higher rates encourage saving over spending and liftborrowing costs, which can curb the pace of price increases. Yet they also weigh on asset prices and economic growth, increasing the risk of a recession.
Tech bosses realized they needed to revamp their strategies to reflect the "new normal," Benioff said.
In Salesforce's case, it has scrapped its goal of hitting $50 billion of annual revenue by 2026, and disbanded its mergers-and-acquisitions committee. It has also cut about 8,000 jobs — 10% of its workforce — this year, and plans to widen its operating margin to at least 30% by the first quarter of 2025.
Benioff emphasized that he steered the customer-relationship management (CRM) specialist through both the dot-com crash and the Great Recession. He expects to weather the next downturn in similar fashion.
"The key is that this is not my first recession," he said. "I went through it in 2001 and 2002. That was extremely difficult. We had to have an employment action. We went through 2008 and 2009. We had the same situation. And here we are today."