WHEN: Today, Tuesday, January 23, 2024
WHERE: “CNBC Leaders: Sergio Ermotti from the World Economic Forum in Davos” and “CNBC Leaders: Marc Benioff from the World Economic Forum in Davos”
Following are excerpts from the unofficial transcripts of interviews with UBS CEO Sergio Ermotti and Salesforce CEO Marc Benioff and CNBC’s Sara Eisen on “CNBC Leaders” specials airing today, Tuesday, January 23 at 8pm and 8:30pm ET. Following is a link to video on CNBC.com:
All references must be sourced to CNBC.
BENIOFF ON ACTIVIST INVESTORS & AI
MARC BENIOFF: I get a lot of calls from my friends who are dealing with activists. It’s an industry, activists, and activist investors are number one investors. They want to make money. They love money. Maybe activist investors make and love money more than anyone I’ve ever met. So they’re just money people. So I think you have to kind of get that set right away. They’re not going to want to hear about all the things that you and I have talked about for decades.
SARA EISEN: Stakeholder and capitalism?
BENIOFF: No, they want to hear about capitalism, but they don’t want to hear about anything else. They only want to hear about money. And I think that’s the first thing you have to kind of get your head around. And that’s fine. You know, you can just say they’re investors, and I think having investors is very important, and making investors money is very important. And then number two is that each one is very different. So each one of these personalities is totally different and you know a lot of them—
EISEN: Yes.
BENIOFF: Like you’re even calling me and telling me about this person and he’s so nice. And—
EISEN: It seems like you, it didn’t seem like—
BENIOFF: You remember that though?
EISEN: Yes. I remember. But it didn’t seem like it got heated or tense.
BENIOFF: No, because I actually like them all. I have a lot of really good stories you know, about, you know, these activists like one funny story is an activist said to me, you know, your hair to be a little better and you know you should call my hair guy. And I’m like, okay, and then another one is like—
EISEN: Wait did you do it?
BENIOFF: I didn’t do it yet. Do you think I should? I don’t know. Does it look bad?
EISEN: I didn’t know it was part of their playbook. No your hair’s great.
BENIOFF: Thank you. Number two is like one of them was super interested in meditation. And you know, I’ve taught meditation and I enjoy meditation and I actually just did a half hour meditation before I got here, is like will you teach me meditation. And I’m like I’ll teach you meditation and so I brought them to my apartment, you know, and I was doing a whole meditation, razzmatazz, about 45 minutes into the meditation, the activist is very teary and crying, emotional—
EISEN: Seriously?
BENIOFF: And I’m like, it could be maybe a movie. And I think for a lot of them, each one is different and they all require something a little different and that was a moment. That was nice. And by the way, that was a beautiful moment. You know that you can kind of go from a hostile situation where the first call is very, they all want to be tough, right? To the point where there’s a tear in somebody’s eye. Hey, that’s what you know how I am. I, you know, I like dealing with somebody’s hurt is the most important thing. If we can bring more love to the activist community then I’m all for it.
EISEN: I mean, this is the story that we needed—
BENIOFF: That’s only two. And—
EISEN: Because like, the story that we saw is that—
BENIOFF: We have like 6 or 8 activists.
EISEN: You improved margins, you boosted the stock price—
BENIOFF: Yeah, yeah, right—
EISEN: You thought some of the strategy. I mean, the one you’re referring to is I interviewed Jeff Smith at Starboard.
BENIOFF: Oh we didn’t just improve margins. Our margins are up like over 1000 basis points over like a year like it’s crazy. Our margin improvement is phenomenal.
EISEN: How much more is there to go on that story?
BENIOFF: Well, I think that you know, there’s no finish line for anybody when it comes to margins. So that’s a huge opportunity and continues to be a huge opportunity. You have to of course, you know, realize we’re in one of the greatest moments of our life with AI. So if you are taking $1 in the margin, you’re taking a $1 out of AI research. So you do want to have the right balance. I think those things are important and by the way, everybody understands that.
EISEN: That’s part of my question, which is how you balance growth, which has been decelerating, and profitability, which are really ramping.
BENIOFF: Well we talked about the celebration but our size and scale. I mean, on the absolute numbers, we’re way bigger than anybody else’s growth. You know, so people say, well, you know, growth is decelerating. Have you seen the numbers? We’re saying that we’re going to hit almost 35 billion in revenue this year and we’re the third largest software company in the world, second largest in Japan and who else is at this size and scale in enterprise software? And I like it when smaller companies go well, you know, we’re growing a lot faster. And I’m like, yeah, you know, we added your entire company onto our company this quarter. So that, you know, growth is relative.
ERMOTTI ON THE MARKETS AND CLIENT BEHAVIOR
SERGIO ERMOTTI: There has been a huge shift in the last 18 months with rates going up. You know, all of a sudden, both the short-term money market but also bond investments has become a more of an attractive asset class than in the past and, and the uncertainties particularly on the geopolitical front has with a little bit of questions around clients’ confidence. We do expect for this year still a fairly challenging environment. So the markets in my point of view, still complacent about the central bank’s cutting rates and still too complacent about inflation coming down and therefore, we will see volatility in financial markets, which may become an opportunity also have to step in and pick up some good opportunities both on the credit front but also on the equity side.
