Our Letter to Salesforce
Via email, U.S. mail, and Strive.com
Chairman of the Board
February 27th, 2023
RE: Strive Asset Management Engagement with Salesforce
Dear Mr. Benioff,
I write on behalf of Strive Asset Management, which is a shareholder of Salesforce. On behalf of our clients, we seek to deliver a simple message to your board: stop using your business as a “platform for social change” and focus on serving your customers alone.
There is little doubt that Salesforce makes cutting edge sales software, and that its business has thrived as a result. For those efforts, we commend your success.
But the company is now in turmoil. Salesforce has been rocked by the recent departure of several high-level execs, including co-CEO Bret Taylor, which has left the company with no clear succession plan. Its shares lost about half their value between their late 2021 high and late last year, tumbling more than many of its tech counterparts. In January, Salesforce announced it would lay off 10 percent of its staff. Sales are slowing.
The activists smell blood in the water, and they are swarming. As of this letter, five activist investors have taken large stakes in the company. Their thinking is clear: Years of unpopular and unprofitable acquisitions, like the $28 billion acquisition of Slack at the height of the work-from- home era, are finally catching up. Salesforce is also grappling with “bloated cost structures,” and “subpar mix of growth and profitability.” Looking forward, these activists seek one thing: “Investors clearly want Salesforce to be more profitable.”
As fellow investors in Salesforce, we agree. But we are concerned that Salesforce’s problems run deeper than mismanaged costs and mistimed acquisitions. In 2019, you wrote that “capitalism, as we know it, is dead.” You decried capitalism’s “obsession on maximizing profits for shareholders,” and called on companies like Salesforce to serve all “stakeholders”—including “employees, customers, communities and the planet”—instead. We respectfully disagree. So-called “stakeholder capitalism” is nothing more than an ethos that allows its CEO to anoint himself a “hero” who is “sav[ing] the world” as he rubs elbows with fellow billionaires in Davos, while leaving Salesforce shareholders holding the bag.
It chooses politics over profits, race baiting over revenue, and virtue signaling over value, harming the millions of Americans who have invested in Salesforce to help secure their financial future and meet their retirement goals. Examples of this behavior abound:
|Salesforce’s Conduct||Strive’s Concerns|
|Sponsoring “Woke Wednesdays” and similar events: |
• Fighting “white supremacy” and asking audience to “see your own whiteness—and the privilege in that— to dismantle systemic racism.”
• “Admit[ting] this nation is deeply racist.”
• Ending police killings via “Campaign Zero”
• Recognizing “white privilege” in trainings
|Inflammatory, one-sided advocacy alienates customers and employees that hold differing views or prefer that companies stay out of politics. Race-based training and advocacy can also lead to discrimination and hostile work environment lawsuits. At a minimum, it is distracting and unrelated to Salesforce’s business. There is no evidence that such social activism improves value, particularly given the risks involved.|
|Adopting race and sex-based quotas to: |
• “double the U.S. representation of Black leaders,”
• increase “Black, Indigenous, Latinx, and Multiracial leaders by 50%” by 2023, and
• increase “women identifying and non-binary
employees” to 40% by 2026.
|Title VII bars hiring or promoting based on race or gender, even to rectify societal harms. Policies like Salesforce’s, which intend to systematically reduce the proportion of jobs held by whites and Asians, have resulted in multiple lawsuits, including against Google and Starbucks. Such policies are also opposed by most Americans, and so likely lead to further divisions within the workforce and customer base.|
|Censoring disfavored customers’ political speech, i.e., “tak[ing] action” against the Republican National Committee “to prevent its use of our [email] services in any way that could lead to violence.”||Taking politically motivated steps to censor, penalize or de-platform disfavored speakers generates negative press and may expose the company to political backlash or even lawsuits, none of which appears to serve shareholders.|
|Lobbying for and donating to controversial causes. |
• opposing Georgia voting rights bill
• lobbying for police reform bill in Washington State
• donating to climate alarmists that have previously made unsubstantiated climate claims
• threatening to pull business from Republican-led states unless they repeal abortion and religious freedom laws
|Politicization is polarizing and has exposed Salesforce to embarrassment and criticism from all sides. A pro- immigration group refused a Salesforce donation because of its contract with Border Patrol; Republican politicians have called Salesforce a “corporate bully”; the New York Times accused Salesforce of hypocrisy for lobbying to fight homelessness while “master[ing] legal forms of tax evasion that starved the system of resources.” The costs of such advocacy are clear; the benefits are not.|
|Fighting “micro-aggressions” including replacing standard, decades-old computer programming language like “blacklist” with “blocklist” because “blacklist” equates “black” with “bad” and thus is “culturally insensitive” and “may unintentionally reinforce historical and institutional racism.”||Apologizing for normal, everyday language “bewilders and alienates”; it “creates an in-group of educated elites fluent in terms like BIPOC and AAPI and a larger out-group of baffled [people].” It also emboldens disgruntled employees to rail against “countless micro-aggressions” at Salesforce. Adding a trigger warning only further legitimizes the worldview that using a command like “blacklist” in mostly invisible, back-end coding is somehow “emotionally challenging” and contributes to an “[un]safe” workplace. None of this helps shareholders.|
Salesforce’s mission is to “build bridges between companies and customers.” But by using its corporate bullhorn to wade into the divisive social issues de jour, Salesforce is burning down the very bridges it is purporting to build. Such corporate advocacy is thus uniquely damaging to Salesforce, whose very purpose is to help businesses develop deep and longstanding relationships with customers of all political stripes.
We also remind Salesforce that, as a Delaware corporation, its board of directors’ fiduciary duties run to shareholders alone. As the former Chief Justice of the Delaware Supreme Court explained: “directors must make stockholder welfare their sole end, and  other interests may be taken into consideration only as a means of promoting stockholder welfare.”
As shareholders of Salesforce, we must therefore ask: How does any of this social activism help Salesforces’ shareholders? What financial analysis was performed to assess the projected costs and benefits of these programs? How have these programs performed, in financial terms, since implementation? And what steps will the board take, going forward, to limit nonbusiness programs to those that will enhance shareholder value?
So far, it appears that Salesforce’s use of company money to promote nonbusiness goals has largely gone unchecked. “Mr. Benioff’s corporate bully pulpit is enabled by company results that keep most investors from questioning his extracurricular activities,” the Wall Street Journal has explained. Those results are now in jeopardy; the questions are coming.
We understand that changing the company’s culture will likely be no easy task. But as you, yourself, have recognized, “Salesforce is not a political organization.” For that reason, it is critically important that Salesforce not only avoid endorsing specific political candidates, but steer clear of broader, politically charged, value-destroying social activism as well.
Speaking on behalf of Strive’s clients, who are shareholders in Salesforce, we respectfully urge the company to answer our questions above, as well as:
- Rescind memberships and partnerships with organizations like the Business Roundtable and the World Economic Forum, which promote the use of corporate power for social and political ends, or, at a minimum, explain what safeguards Salesforce has in place to ensure that its CEO’s involvement in such groups does not conflict with his fiduciary duties;
- Commit to making all decisions based on unbiased financial analyses alone, including those regarding the creation, expansion, continuation or cessation of any diversity, equity, inclusion, gender, climate, lobbying, charitable, political or social program;
- Revise corporate employment policy to make all employment decisions based on merit, without regard to race, sex, or political beliefs; and
- Remove all references to “stakeholder capitalism” from your website, policies and corporate materials, and commit to serving the long-term interests of shareholders alone.
We look forward to your responses and to engaging with your company’s board and management on these issues.
With best regards,
President, Strive Asset Management