Salesforce: Embrace AI or perish

AI is sweeping across industries, revolutionizing work models, and giving rise to startups... Embracing AI is Salesforce's survival strategy in the AI era.

Recently, American cloud computing software giant Salesforce has shown unprecedented emphasis on AI agents. From Agentforce 1.0 to 2.0, in just three months, Salesforce has achieved rapid iteration and significant upgrades in the AI field.

Since the launch of the AI agent product Agentforce in September, Salesforce CEO Benioff has issued a "death order," demanding the sales team incorporate the software into every deal. The company also plans to hire 2,000 people to sell its AI software.

According to a report by Information on Thursday, while reviewing products with Salesforce executives, Benioff emphasized:

This is the most important thing for the entire company: everything must prioritize agents. We want to become a company that is completely agent-first. Every deal we make or every product we create should prioritize agents.

The ultimate goal Benioff aims to achieve is for AI agents to replace Salesforce software, such as its sales and customer service software, as well as its business model of charging subscription fees to customers based on the number of employees.

The urgency of going all-in on AI agents stems from the threat AI poses to Salesforce's traditional business model. For Salesforce, it is either embrace AI or face "extinction."

The Threat of Rising Startups

In fact, as early as 2016, Salesforce joined the AI development wave by launching the Einstein product, integrating AI into its sales software.

Despite having a first-mover advantage, Salesforce has not maintained its lead, as its AI products have fallen behind some newer startups. Salesforce cannot execute as many operations as the new products—especially in the customer service field.

This has led to customer attrition for Salesforce, with mattress manufacturer Casper purchasing AI agent software from Sierra, a startup founded by Salesforce's former co-CEO Bret Taylor. Despite Salesforce's efforts to dissuade the customer, Casper made this decision.

Insiders say that Casper's executives were initially reluctant to use Sierra's platform and chose to use it only for customer support. However, Sierra's AI agent delivered excellent results for Casper, prompting the company to start trying it for sales.

Zeya Yang, a partner at venture capital firm IVP, which invests in enterprise software companies, stated:

Startups like Attio and Day.ai are challenging Salesforce by building customer relationship management software that uses AI to capture information not included by Salesforce. **

Even the collaboration between Salesforce and OpenAI has not brought it any advantages.

At the beginning of 2023, shortly after OpenAI released ChatGPT, Salesforce announced a partnership with OpenAI to integrate the AI company's technology with Einstein. However, this partnership has not shielded Salesforce from the threats posed by AI companies, as some firms are already testing OpenAI and other companies' LLMs to see if they can replace Salesforce software.

All in AI Agents

Recently, Salesforce has begun to fully focus on AI.

In September, Salesforce launched a new AI agent called Agentforce (a software tool that can automatically execute business tasks). In December, Agentforce 2.0 introduced several groundbreaking features, with its core improvement being its enhanced reasoning engine.

In just three months from Agentforce 1.0 to 2.0, Salesforce has demonstrated its rapid iteration and significant upgrades in the AI field. The new version has better reasoning capabilities, allowing it to provide more detailed answers to investment or hiring questions.

Regarding product sales, Benioff stated in a recent interview:

Salesforce has been selling the product for less than two months, and more than half of the 15,000 sales team members have at least one Agentforce deal in progress.

Benioff mentioned in last month's earnings call that since Salesforce began selling Agentforce at the end of October, it has closed approximately 200 deals to date and is negotiating thousands of deals, although these transactions have not yet had a significant impact on its revenue.

Salesforce's AI chief Adam Evans even compared the AI agent to a new app to highlight its importance:

AI agents are "the foundational support technology of the robotic era" and will permeate various industries in the future. In healthcare, AI agents can serve as instant care assistants; in retail, they can become personal shopping advisors; in finance, they can provide personalized services to clients as on-demand consultants.

"Need a Switch"

Looking ahead, achieving the ultimate goal may be more complex in reality.

A person with business dealings with Salesforce stated, for any new enterprise software product, customers typically need 12 to 18 months to move from trial to running it in critical business systems.

Cost is another issue; to use Agentforce, Salesforce recommends that customers rent Data Cloud, a service that stores the files used by Agentforce in decision-making processes. The pricing for Data Cloud is based on the amount of data stored by the customer, and even for smaller companies, the annual cost can easily exceed $100,000 Salesforce charges $2 for each conversation on the Agentforce customer service version, which is significantly higher than the prices of similar products from customer service competitors Zendesk and Intercom