- Salesforce CEO Marc Benioff has been saying for years that so-called unicorns – tech startups valued at $US1 billion or more – are a bad idea, allowed to grow too big without proper governance.
- But when asked by Business Insider whether WeWork represented all that’s wrong with unicorns after the implosion of its initial public offering, Benioff gave a surprising response.
- Instead he praised WeWork’s former CEO, Adam Neumann, as “one of the greatest entrepreneurs I’ve ever met.”
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For years, the billionaire Salesforce CEO, Marc Benioff, has warned that unicorns are a bad idea, saying that tech startups should raise less money and go public way before a private investor anoints them with a valuation of $US1 billion or more. Two years ago, he even predicted “a lot of dead unicorns.”
The disappointing initial public offerings of Uber and Lyft, and the fiasco that was WeWork’s aborted public offering, have seemingly borne out his warnings.
The problem, he tells Business Insider, is that these large startups grew too big without going through the “spiritual cleanse” that the IPO process provides.
“For a lot of my friends, I tell them the same thing, which is they need to go public earlier, not take so much money,” he told Business Insider, as part of his media tour for his new book about corporate social responsibility, called “Trailblazer.”
“The IPO is a spiritual cleanse. It’s true. It causes everything that’s bad in your company to come out because the governance processes take hold: Sarbanes-Oxley, SEC, GAAP accounting, auditing, all of these, because you’re taking other people’s money,” he said, referring to several of the regulations and requirements around the IPO process.
Yet when asked whether WeWork and its corporate parent, The We Company, were the ultimate example of all things wrong with unicorns, Benioff stood up for WeWork’s cofounder and former CEO, Adam Neumann.
Neumann was forced to resign as CEO of his company last month when his IPO went off the rails after the company released its S-1, the prospectus to go public. In the S-1, the company detailed a long list of items that scared off investors – including its business-model fundamentals as well as Neumann’s unchecked power and self-dealing. We’s bonds are now rated deep into junk territory, and the company is seeking other financing options to keep itself afloat.
But Benioff gave some surprising full-throated support for Neumann, while at the same time seeming to almost acknowledge that We was one of those unicorns he had foretold.
“Adam is a friend of mine,” Benioff said. “I actually think he’s probably one of the greatest entrepreneurs I’ve ever met. He’s an incredible evangelist. He’s an incredible visionary. He’s hired a lot of amazing people. He’s built an amazing brand, right? Unfortunately, there were some things, obviously, in the company that you probably would have preferred to change if he could do it all over again.”
“They have like $US3 billion in revenue, but Salesforce went public when we had $US100 million in revenue,” Benioff added. It used to be common for a startup to go public once it hit the $US100 million mark.
Benioff and Neumann are also sort-of neighbours: WeWork rented three stories in San Francisco’s Salesforce Tower, where Benioff keeps his office, to make its West Coast headquarters. WeWork’s offices there have a grand-scale design, and are connected by a large atrium and a huge staircase, Architectural Digest reported in 2018.
But WeWork is already said to be gearing up of hefty layoffs of its 10,000-plus workforce, plus selling off multiple companies it acquired, putting its need for such large and lavish employee offices in question.