FEATURE — Summer 2005

Dave Moellenhoff, B.S./B.S. '92, M.B.A. '94

On Demand Is in Demand

As chief technology officer of Salesforce.com®, alumnus Dave Moellenhoff develops the world's most trusted on-demand customer relationship management services.

By Gretchen Lee

It was an idea that matched perfectly the Zeitgeist of the Internet boom.

In early 1999, Salesforce.com® co-founders Dave Moellenhoff, Marc Benioff, Parker Harris, and Frank Dominguez teamed up to create an on-demand customer relationship management (CRM) utility accessible to companies of all sizes, not just the big businesses that could afford to develop their own customized enterprise software.

Until then, small- and medium-sized companies typically relied on simple contact managers like ACT!® and Outlook® to manage a limited amount of data on their customers—things like client names and phone numbers, along with notes on calls made, etc. With Salesforce.com's revolutionary new product, it was suddenly within the means of any company not only to track more data, but to analyze it and instantly see the "big picture" regarding customer trends—all with no software to update, no finicky servers to maintain, and no costly IT staff to hire.

In just six years' time, Salesforce.com has grown to include 13,900 customers, ranging from AOL to Nokia to Honeywell, for a total of 227,000 users generating (on average) 45.4 million page views per day. Last summer, the company went public—a much-heralded sign of success made all the more meaningful by the fact that it happened after the Internet bubble of the 1990s had already burst.

"It was a real validation point," Moellenhoff, B.S./B.S. '92, M.B.A. '94, says, "to be able to say, 'We took this company through one of the worst markets the technology industry has ever seen, and in five years we went from just having an idea to standing on the podium at the New York Stock Exchange, ringing the bell.'"

Not bad for a self-admitted slacker student who attended only about a quarter of his undergraduate lectures. "I used to joke that the University ought to give me a discount because I wasn't taking up space in the classrooms," he says. All jokes aside, Moellenhoff managed to maintain a GPA of 3.5, earning two undergraduate degrees, one in computer science and the other in electrical engineering. And, after finishing his undergraduate studies, he went on to earn an M.B.A. from the Olin School of Business.

Salesforce.com now has nearly 800 employees worldwide, but it got its start with just three developers working out of a one-bedroom apartment at the top of San Francisco's scenic Telegraph Hill. (Benioff, who bankrolled the project initially, lived next door to the fledgling company headquarters.)

"It was a small apartment," Moellenhoff recalls, "but it was actually a great place to create something because it had these beautiful bridge-to-bridge views."

Salesforce.com grew quickly, and within a few months, 10 people were working out of the cramped apartment. "We had the upstairs area—the living room and the dining room—for the quiet people, the developers," Moellenhoff says. "And the bedroom downstairs was for the talkers: the product manager, our first salesperson, the HR person—anyone who had to be on the phone. One of the developers we hired was living at the time in Portland, Oregon. He would come down for the week, and he would actually sleep on a futon under someone's desk."

These days, Moellenhoff, as chief technology officer, leads a team of 35 developers from a stylish office in a historic building in downtown San Francisco. He also sits on the board of the Salesforce.com Foundation, the company's multi-million-dollar philanthropic initiative focused on bridging the digital divide, and volunteers his own time via the company's signature "1 percent solution," which funnels 1 percent of the company's equity, 1 percent of the company's profits, and 1 percent of employee time toward various charitable efforts. Away from the office, he stays busy "taking care of kids!" He and his wife are parents to a 3-year-old girl and a 17-month-old boy.

Among Moellenhoff's ongoing challenges as CTO is how to develop a scalable, stateless architecture that can accommodate multiple tenancies, a high rate of change, and a great amount of transactions. "I like hard problems," Moellenhoff says.

"From a development perspective, one of the greatest things about our model is that we control the entire infrastructure that it runs on," he says. By comparison, most enterprise software must be developed and tested for multiple platforms, which is a costly and time-intensive endeavor. "We build for one platform only—the one that we run in our data center," Moellenhoff says. "And that's a great thing for us because it lets us keep our costs down, and it also lets us move much faster than companies that are actually shipping software. We don't have that huge quality assurance cycle. We have one stack that we need to test it on, so we can focus our testing much more on the functionality."

In just six years' time, Salesforce.com has grown to include 13,900 customers, ranging from AOL to Nokia to Honeywell, for a total of 227,000 users generating (on average) 45.4 million page views per day.

Chief among Salesforce.com's first customers were the newly minted Internet companies that flooded the San Francisco Bay Area in the late 1990s. Forced to hit the ground running in a highly competitive and fast-paced market, these businesses didn't have the time or resources to develop their own CRM solutions. But they were savvy enough to appreciate the value of an easy-to-use utility that could be accessed anywhere via the Web—and they recognized hosted solutions as the wave of the future.

Companies working in more traditional industries were much more wary of a "no software" approach to CRM and sales force automation (SFA). "It was a matter of trust, and also of understanding the model of utility computing," Moellenhoff says. "The traditional IT viewpoint would be to say, 'You need to have it locked in your own data center because that's the only place that's safe.' But if you actually look at studies, you'll know that the No. 1 source of data lost to companies is not external hackers. It's internal—disgruntled employees.

"We already rely on utilities all the time," he continues. "Nobody except for the CIA thinks that you have to develop your own phone system. You understand there is some risk to using it, yet you use the shared network anyway. You accept the fact that the risk is low relative to the benefits of using the phone utility and not having to build your own.

"Every time we get another bigger company, that seems to bring another company along," he notes. A recent addition to the client roster is payroll giant ADP, with more than 3,000 users on the Salesforce.com system. "They were one of our first multi-thousand users," Moellenhoff says. "That has opened a lot of doors for us."

Gretchen Lee, A.B. '86, is a free-lance writer based in San Francisco.