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Salesforce will lay off 10% of staff as part of restructuring

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Re: Salesforce will lay off 10% of staff as part of restructuring

#31

Post by triceratops »

corry wrote: post #10

I forget which podcast I heard it on (so forgive me if my memory is sloppy), but after their latest quarterly report didn't CAC payback go from 24 months to something wild like 10 years? Meaning their new ARR add rapidly fell off so quickly, before they adjusted their Sales and Marketing salaries and spending, that it immediately put their unit economics way way way way underwater. So I'd expect at least a big chunk…

CAC = Customer Acquisition Cost

ARR = Annual Recurring Revenue

S&M = Sales and Marketing

Is that right?

Re: Salesforce will lay off 10% of staff as part of restructuring

#32

Post by kasey_junk »

makestuff wrote: post #26
xnorswap wrote: post #23

Earlier quoted context omitted.

Sometimes I feel like I live in a parallel universe because 424k revenue per employee sounds like a large amount and should be very profitable. Admittedly I'm not in the USA but even adjusting for that it still sounds large? Are all US salaries so inflated that 424k doesn't more than cover a typical employee even after all overheads?

typically you need 1.5-2x a persons salary in revenue to cover their cost in the US.

Which is why you typically quote that value instead of revenue per employee which without context could be great or terrible.

Re: Salesforce will lay off 10% of staff as part of restructuring

#33

Post by spamizbad »

Scubabear68 wrote: post #27

Whenever I look at client’s Salesforce setups, I always wonder in the back of my mind what they will do if Salesforce has a significant down-turn? The lock-in to the platform appears to be very fierce. Are there viable routes to exit Salesforce if anyone ever needed to? (Note: I’m not saying Salesforce is doomed or anything, just the layoffs got me thinking in that direction theorically).

My company is currently undergoing this and I have the same feeling.

But I think the business model behind it is you hire a "Salesforce consultant" to steer your integration with the understanding that you can replace a small team of developers doing a home-rolled solution with a single developer who runs your SF integration. And Salesforce slurps up 60% of the labor cost savings and you keep the 40% and declare success.

Re: Salesforce will lay off 10% of staff as part of restructuring

#34

Post by dsaavy »

Scubabear68 wrote: post #27

Whenever I look at client’s Salesforce setups, I always wonder in the back of my mind what they will do if Salesforce has a significant down-turn? The lock-in to the platform appears to be very fierce. Are there viable routes to exit Salesforce if anyone ever needed to? (Note: I’m not saying Salesforce is doomed or anything, just the layoffs got me thinking in that direction theorically).

While the lock-in is real, there are other platforms that are catching up fast. My firm does Salesforce to HubSpot migrations as part of our services, and it's getting easier and easier to switch. Still takes time to retrain and shift business processes to a different philosophy, but we almost always see better usage of the platform, better data, and happier users.

HubSpot is not a replacement for hugely complex organizations that needs to dump tens of millions or more into a Salesforce instance (software + labor), but for mid-size and below it's great.

Re: Salesforce will lay off 10% of staff as part of restructuring

#35

Post by bluedino »

makestuff wrote: post #26
xnorswap wrote: post #23

Earlier quoted context omitted.

Sometimes I feel like I live in a parallel universe because 424k revenue per employee sounds like a large amount and should be very profitable. Admittedly I'm not in the USA but even adjusting for that it still sounds large? Are all US salaries so inflated that 424k doesn't more than cover a typical employee even after all overheads?

typically you need 1.5-2x a persons salary in revenue to cover their cost in the US.

According to Google the average Salesforce employee makes $115,000/year, so double that and it's $230,000. By those numbers labor would be almost 50% of their revenue.

Re: Salesforce will lay off 10% of staff as part of restructuring

#36

Post by tr3ntg »

JanSt wrote: post #19
bushbaba wrote: post #9

makes sense given their employee to revenue ratio for Salesforce. They had 73,000 employees with just ~31B/year of revenue. That’s just 424k of revenue per employee. Such a ratio only makes sense with high growth rates.

Am I the only one who thinks $424k/employee is quite a lot? May be a too european perspective?

No, the best startups run healthily at -$424k/employee, so any positive number is really great.

(sarcasm)

Re: Salesforce will lay off 10% of staff as part of restructuring

#37

Post by brookst »

wil421 wrote: post #15
brookst wrote: post #12

Earlier quoted context omitted.

Company makes $2B/year profit with 75k employees. Company lays off 7500 people, saving ~$1.5B / year in payroll / benefits / office space / etc. Company takes one-time ~$1.5B charge for severance and other layoff costs. Investors believe company will see ~$1B more net profit in subsequent years, assuming 10% staff reduction can be absorbed with little profit impact. Share price reflects NPV of future profits, so stoc…

At my first job they would lay off employees, then systems would fail and the person who could fix it was laid off. Eventually a big customer would complain and the company would incur monetary SLA penalties for the systems being down. They would have to hire the laid off guy back as a contractor and pay some company $100+ an hour for a $30 (at the time) an hour salary employee. Eventually someone with a brain would…

Yeah that’s bad management.

The trick is understanding when part of the company is genuinely not contributing, and since things are complicated, what other parts are entangled and need to be adjusted as part of the plan.

Just randomly laying off x% is like randomly removing x% of code to improve performance. It’s going to produce more pain than gain.

Re: Salesforce will lay off 10% of staff as part of restructuring

#38

Post by s1mon »

triceratops wrote: post #31
corry wrote: post #10

I forget which podcast I heard it on (so forgive me if my memory is sloppy), but after their latest quarterly report didn't CAC payback go from 24 months to something wild like 10 years? Meaning their new ARR add rapidly fell off so quickly, before they adjusted their Sales and Marketing salaries and spending, that it immediately put their unit economics way way way way underwater. So I'd expect at least a big chunk…

CAC = Customer Acquisition Cost ARR = Annual Recurring Revenue S&M = Sales and Marketing Is that right?

In San Francisco, "S&M" usually has a different meaning. It's not like Folsom Street Fair and Dreamforce aren't often around the same weekend.

Re: Salesforce will lay off 10% of staff as part of restructuring

#39

Post by nzoschke »

Scubabear68 wrote: post #27

Whenever I look at client’s Salesforce setups, I always wonder in the back of my mind what they will do if Salesforce has a significant down-turn? The lock-in to the platform appears to be very fierce. Are there viable routes to exit Salesforce if anyone ever needed to? (Note: I’m not saying Salesforce is doomed or anything, just the layoffs got me thinking in that direction theorically).

For data in Salesforce my company (GRAX) offers a backup product that will write data to your data lake in standard formats like Parquet.

This offers a strategy to read old SFDC data BI tools or in parallel with using a new CRM.

However the real SFDC lock-in is around business process. If your global Sales or Support team lives in SFDC it’s not easy to retrain them to another system.

Re: Salesforce will lay off 10% of staff as part of restructuring

#40

Post by adamsmith143 »

JanSt wrote: post #19
bushbaba wrote: post #9

makes sense given their employee to revenue ratio for Salesforce. They had 73,000 employees with just ~31B/year of revenue. That’s just 424k of revenue per employee. Such a ratio only makes sense with high growth rates.

Am I the only one who thinks $424k/employee is quite a lot? May be a too european perspective?

Well for comparison revenue per employee at Apple and Google is ~$1,800,000 and $1,200,000 respectively.
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