Salesforce (tkr: CRM) president and Chief Operating Officer Bret Taylor may soon succeed company founder Marc Benioff as Chief Executive Officer. That’s the rumor as reported by a number of news outlets this week. If true, Taylor’s operating experience – particularly on the product side (Taylor was Salesforce’s Chief Product Officer prior to becoming COO in December 2019) – would make him a fine choice in our view.

Our primary Salesforce critique over the past few years has been what appears from the outside to be a lack of focus. The firm’s M&A track record speaks to this. For example, it is not clear how the acquisitions of Tableau and Slack will enhance Salesforce’s customer value proposition while driving long-term ROIC. I like Tableau, but was it imperative that Salesforce spend $16 billion to acquire the firm in order to sell customers data visualization tools? How would doing so strengthen Salesforce’s core business? Similarly with the pending Slack acquisition. Sure, it will help Salesforce beef up its collaboration capability and better compete with Microsoft in the productivity space. However, is ramming heads with Microsoft in a core area a recipe for long-term Salesforce customer success? Why not invest more heavily in Machine Learning in order to drive advanced analytic capability? Why not build robust Robotic Process Automation (“RPA”) capability and drive further automation of low value-added tasks within Salesforce’s core customer cohort?

Our view is that Taylor will take a more thoughtful, strategic approach to Salesforce’s product roadmap in order to carve out a few strategic, defensible areas where Salesforce is uniquely qualified to drive long-term customer success. This approach will leverage organic product development and opportunistic M&A to drive value while efficiently deploying capital.

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