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Parker Harris, a co-founder of Salesforce, speaks during a keynote at the company’s Dreamforce conference in San Francisco on Sept. 12, 2023.

Marlena Sloss | Bloomberg | Getty Images

Each year, Salesforce updates its V2MOM, a planning document laying out vision, values, methods, obstacles and measures. CEO Marc Benioff has said it’s “been used to guide every decision at Salesforce” since the software company’s founding 25 years ago this week.

But in early 2023, there was a problem. ChatGPT was going viral, and Salesforce’s strategy didn’t account for it.

“The V2MOM had nothing about generative AI,” Parker Harris, who co-founded the company with Benioff, told CNBC in an interview.

It was a first for Salesforce, which had never been caught so off-guard about an emerging technology trend. If Salesforce was to become a leader in generative artificial intelligence, the company would need to quickly revise its guiding document to redirect the company — and its 73,000 employees — toward the technology that’s sweeping across Silicon Valley and making its way into every industry, from manufacturing to medicine.

Salesforce would have to go to battle with tech giants Amazon, Google and Microsoft, as well as red-hot and well-capitalized startups. But following a handful of hefty acquisitions and a run-in with activist investors that led Salesforce to disband its M&A committee, a splashy deal was likely off the table.

Salesforce would have to build. And that’s when Benioff turns to his longtime sidekick, Harris.

Well known in the software industry but largely unfamiliar outside of it, Harris has always been core to the fabric of Salesforce. In the past six years, Benioff has elevated two different top lieutenants to the role of co-CEO, but neither lasted in the job longer than 18 months. Harris, a Salesforce board member and now the technology chief of Slack, which Salesforce bought in 2021, said he’d rather avoid the limelight.

“I don’t like being front and center,” Harris said, in an interview tied to the company’s 25th anniversary, which was officially March 8. “I don’t like the articles necessarily to be written about me. I like being behind the scenes.”

Internally, Harris is in the thick of it. After generative AI made its way into the revised V2MOM last year, Harris supervised its brisk insertion into the company’s sales, customer service, marketing and commerce applications. He studied new techniques such as retrieval-augmented generation, which involves feeding information outside of an AI model’s training set to yield a better answer.

Questions swirled about whether Salesforce should spend billions of dollars to assemble its own general-purpose large language model for spitting out text in response to a few words of human input, Harris said. But the company started seeing clients use multiple LLMs.

Salesforce slashed its investment in some areas while doubling the size of its research group, which was fleshing out its own AI models. At the same time, it started drawing on models from AI startup Anthropic, as well as GPT-4, the model powering OpenAI’s ChatGPT. In September, Benioff brought OpenAI CEO Sam Altman onstage at Salesforce’s annual Dreamforce conference, which takes over a chunk of downtown San Francisco.

At past Dreamforce shows, Harris has appeared in superhero costumes, entertaining the audience of tens of thousands. But 2023 was not a time for jokes. Harris was busy repositioning the company. He chose a professional look: a checked blue suit that matched his glasses with thin blue frames.

Marc Benioff, chairman and CEO of Salesforce, right, and Parker Harris, co-founder of Salesforce, introduce Salesforce 1 Lightning during the company’s Dreamforce conference in San Francisco on Oct. 14, 2014.

Noah Berger | Bloomberg | Getty Images

In his keynote, Harris talked about the Data Cloud, a product originally called Genie that surfaces real-time information. In about 2016 he had decided to push much of Salesforce’s IT infrastructure into the public cloud, enabling tighter integration of many assets the company had acquired over the years. That helped Salesforce launch the Data Cloud.

Without the Data Cloud, Harris told CNBC, “I think we would have been in a much worse place.” It’s such a critical part of the company that Benioff mentioned it 58 times on the company’s earnings call in February.

A Robin for Batman

Despite his status as the most decorated technical leader at one of the world’s largest software companies, Harris was an English major. He earned a bachelor’s degree from Middlebury College in Vermont.

His love of computers came early, though. He told Business Insider in 2015 that he started programming on an Apple II as a kid growing up in North Carolina.

In the early 1990s, he moved to the San Francisco Bay Area and took a software-engineering job at a company called Metropolis Software, where he got to know developers Frank Dominguez and Dave Moellenhoff. The trio founded a Java consulting firm called Left Coast Software.

They were contracting at Saba Software, an online learning company co-founded by former Oracle executive Bobby Yazdani. Benioff, who was still working at Oracle under Larry Ellison at the time, told Yazdani that he had this idea to build web-based sales software. Yazdani told Benioff he needed to meet Harris, Dominguez and Moellenhoff.

“He was a very abstract thinker,” Yazdani said about Harris, in an interview with CNBC. “He had clarity around capability of what’s possible.”

In the fall of 1998, Benioff and Harris met for lunch at Kincaid’s, a seafood and steak restaurant in Burlingame overlooking the San Francisco Bay. It was an uneven match. Benioff is hard to miss at 6 feet, 5 inches tall. He’s loud and loves to talk.

Harris is scrawny and quieter. He said he’s averse to conflict. He defuses the drama, said Brett Queener, a former Salesforce executive who’s now a venture capitalist.

“Every Batman needs their Robin,” Queener said.

After the lunch meeting, Benioff had Harris, Dominguez and Moellenhoff over to his home in San Francisco’s Telegraph Hill neighborhood. They were all in.

Salesforce.com was born on March 8, 1999. Harris was 32. His parents, wife and young daughter came by corporate headquarters — a one-bedroom apartment next to Benioff’s home — to commemorate the moment, which Harris posted to YouTube eight years later.

“We are going to probably work here for six months to a year, and we’re going to just really enjoy it,” he told his father, who was behind the camera. Salesforce played the clip for employees this week during a celebration.

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While Harris shared the title of co-founder with Benioff, his partner held much more of the equity. That’s why Benioff is now worth around $11 billion, with a current stake in Salesforce that exceeds $7 billion, while Harris’ holdings are worth nearly $600 million.

Though he’s relatively soft spoken, Harris has his indulgences. He’s spent money on red wine from France and Italy, works of art by Ruth Asawa and Josef Albers, a home in Nantucket and a renovation of the family home in San Francisco’s Pacific Heights.

“We really shifted it to a focus on sunlight,” Harris said.

In his office at the top of the house, he likes to put on headphones and crank up the music. He listens to the Avett Brothers, Radiohead and Miles Davis. He plays golf and surfs. A coworker said Harris is an “enthusiastic” dancer. He belongs to Middlebury’s board of trustees.

At Salesforce, Harris led the development of the platform that enables companies to build on top of its software, along with an initiative to make Salesforce work well on mobile devices. There was also the push to build the next-generation Salesforce Lightning, as well as Chatter, an enterprise social network.

He talked about AI way back at Dreamforce 2009, suggesting that the technology might one day help Chatter identify in-house experts on different topics. He admitted to his shortcomings.

“I don’t understand that area,” Harris told a group of journalists, regarding AI. “I understand we have to solve it. I have hired some people in that area that do understand it.”

Tough time in social

At the time, social was the big buzzword. Facebook was still private but taking off.

A startup called Yammer was being described as the Facebook for the workplace. A few Salesforce employees started discussing the potential for information to go viral among salespeople and customer-service agents. Benioff was intrigued. He insisted that it become the top priority.

After Harris allocated eight engineers to the new project, Benioff demanded he go bigger. Harris checked in with engineering leaders and secured a headcount of 75.

That wasn’t enough. At a briefing on the updated status, Benioff was dissatisfied, according to a meeting attendee who asked not to be named to speak candidly about the matter. Harris was silent. His face went pale. He told Benioff he’d redo the plan, the person said.

Marc Benioff, co-founder and CEO of Salesforce, sits in the audience ahead of the special address by U.S. President Donald Trump on the opening day of the World Economic Forum in Davos, Switzerland, on Jan. 21, 2020.

Jason Alden | Bloomberg | Getty Images

Harris eventually got 80% of Salesforce’s engineers to start working on Chatter. But the product never took off.

“We didn’t take it far enough,” Harris said. Microsoft was also hot to get into the market, snapping up Yammer in 2012 for $1.2 billion, a huge multiple for a company with a small revenue base.

Salesforce wound up buying the big prize in the space, purchasing Slack in 2021 for $27.1 billion, by far the company’s priciest deal.

But perhaps Harris’ biggest swing in his decades at Salesforce was the push to the public cloud. It wasn’t an easy choice.

“Half the engineers, the brightest people, were like, ‘We’re going to run the company if we do this,'” Harris recalled. “The great fear was that we would ruin our cost model because the cost would be much more expensive on public cloud, and then we would be able to hire less salespeople or less engineers or whatever.”

The other half of the engineering staff, Harris said, was petrified that if Salesforce didn’t move to the cloud, everyone else will “innovate faster than us.'”

Benioff didn’t have much to contribute for a change.

“Marc was like, ‘This is crazy, that these are some of the smartest people I know, and you guys can’t agree,'” Harris said.

Marc Benioff, chairman and CEO of Salesforce, left, speaks as Parker Harris, co-founder of Salesforce, center, and Kara Swisher, executive editor of Re/Code, listen during a keynote address at the Dreamforce conference in San Francisco on Sept. 17, 2015. Salesforce.com Inc. aims to cut the time its customers spend plugging data into its systems by weaving machine-learning technology from acquisition RelateIQ into its software for managing sales accounts.

David Paul Morris | Bloomberg | Getty Images

Harris saw the advantage that startups gained by outsourcing data center needs to Amazon Web Services. And he knew Salesforce had failed to build a viable platform for easily developing apps while partnering with VMware. Harris concluded that not pushing Salesforce to public cloud services like AWS would be an existential threat.

“That was a very lonely decision,” he said. But as it became a part of the V2MOM, it rippled out to thousands.

While Salesforce might have saved money when it ditched its Equinix colocation facilities, leaning more on the cloud hasn’t been cheap. Last year, after activist investors called for more profitability from Salesforce, the company signed up for longer-term cloud commitments. It agreed to spend at least $16.8 billion on infrastructure service providers as of January, up from $6.5 billion in January 2023, according to regulatory filings.

The biggest beneficiary of that spending is AWS, which is run by former Salesforce executive Adam Selipsky. Harris said Salesforce is looking at other providers as additional partners.

“Oracle has done a great job around their platform, so technically, it’s actually quite good,” he said.

‘Try to build something great’

Harris recently gave up the CTO title at Salesforce that he’d held for seven years. The company hasn’t yet named a successor.

Now he’s onto Slack.

In 2022, Slack CEO Stewart Butterfield left the company he founded in 2009. He was replaced by Lidiane Jones. She departed a year later to run dating app developer Bumble. And in January of this year, Slack co-founder and CTO Cal Henderson said he was stepping down.

“I thought, ‘I can have an impact there,'” Harris said. ‘But I can also — I would love to do that job, I would love to go back and run some engineering teams and really try to build something great.'”

Harris visited Benioff’s home in the Sea Cliff neighborhood of San Francisco, and the two co-founders were in agreement that it was the right call.

“I’m excited for this next chapter with Parker as Slack’s CTO, continuing his legacy as one of our industry’s greats,” Benioff said in an email.

Harris flew to New York to hang out with Noah Weiss, Slack’s product chief. Harris moved his desk to the Slack floor in San Francisco’s Salesforce Tower, where he’s near new unit CEO Denise Dresser. He comes in two to four days a week, and attends Monday meetings to review Slack metrics.

“People, probably fairly, had a lot of apprehension,” Weiss said.

Some of Slack’s employees suspected Harris would try to apply the Salesforce approach to Slack. But instead, Harris sought to understand how Slack had become successful.

Weiss said that at Salesforce’s new fiscal year kickoff in Las Vegas last month, Harris talked at an executive meeting about one of Slack’s product principles called prototype the path. And Harris has started writing documents in Slack’s collaborative Canvas tool.

“He’s been showing up extremely well, definitely winning hearts and minds, for sure, including mine,” Weiss said.

Employees sometimes add flair to Slack chats with a Parker Harris emoji, he said.

When it comes to keeping up with Benioff, who spends a healthy amount of time at his palatial estate in Hawaii, Harris uses other services.

“Marc is all mobile and all text and FaceTime,” Harris said.

The men talk once every few weeks. They’ll be talking more frequently, as Harris said they’re about to kick off weekly meetings on Slack and Salesforce integrations.

Harris hopes that his presence can convince Slack employees to stay after the executive exodus.

“I don’t want to talk too much about myself, but I think it is helping,” Harris said.

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China drives EV boom this year amid strong demand for hybrid vehicles

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China drives EV boom this year amid strong demand for hybrid vehicles

New energy vehicles for export at Lianyungang Port, Jiangsu Province, China, on April 25, 2024. 

Nurphoto | Nurphoto | Getty Images

Electric vehicle sales have risen sharply this year, led by growth in China and a strong demand for hybrid vehicles in particular, according to a report from Counterpoint Research. 

The report, released Monday, showed that sales of EV units globally, including fully battery-powered vehicles (BEVs) and hybrids, were up 18% in the first three months of 2024 compared with the same period last year. 

Sales of hybrid vehicles, which have both electric motors and combustion engines, vastly outpaced those of full battery-powered alternatives, rising 46% year over year. BEV sales rose 7%.

“The cheaper upfront cost of [hybrids] when compared to [battery EVs] and the availability of a fuel tank that eliminates range anxiety were among the main reasons for high [hybrid] demand,” Counterpoint research analyst Abhik Mukherjee said in the report. 

The data follows recent reports that suggest hybrid adoption is now outpacing that of fully electric vehicles amid concerns about weak resale values of the former and the possibility of current BEV technology becoming obsolete soon.

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“Buying mid-priced [hybrids] is a more logical choice for consumers since their prices are comparable to or lower than most of [battery electric vehicles],” the report said.

China extends lead 

Chinese companies have been a huge beneficiary of the rise in demand for electric vehicles, especially firms that sell both BEVs as well as hybrids. 

According to Counterpoint, EV sales in China jumped 28% in the first quarter of 2023, amid an ongoing price war that has pushed down costs for consumers. 

The country’s largest EV maker, BYD, saw sales of hybrid vehicles increase by 7% in the first three months of this year, accounting for nearly one-third of the global hybrid market, followed by Geely Holdings and Li Auto. 

Sales of EVs in the United States were second highest globally, followed by Europe. But, while overall EV sales in the U.S. rose 2%, those of battery electric vehicles declined by 3% in the quarter.

Tesla, the leading U.S. EV maker, which only produces BEVs, saw a 9% year-on-year decline in sales in the first quarter. It was still in the top position globally in BEV sales in Q1 2024, commanding a 19% market share. BYD and Volkswagen had a 15% and 6% share, respectively.

Among the top three BEV makers only BYD recorded growth, with sales jumping 13%, while Tesla and Volkswagen’s sales declined 9% and 4% respectively, the report said. 

Competition between European and Chinese electric vehicle makers will intensify, analyst says

BYD’s strong performance comes as the company aggressively expands globally. According to the report, the company exported almost 100,000 EVs last quarter,  a 152% year-on-year growth, driven primarily by shipments to Southeast Asia.

Liz Lee, associate director at Counterpoint, said BYD’s remarkable exports highlight the growing global demand for EVs, including hybrids, with the market “poised for significant growth.”  

“[Y]et signs of a slowdown also loom and the annual growth may dip below 20%,” she added, noting that companies such as Tesla face declining interest in BEVs. 

Gallup poll in April found that less than half of U.S. adults — 44% — said they were seriously considering or might consider buying an EV, down from 55% in 2023. Meanwhile, the proportion of those not looking to buy an EV rose to 48% from 41%.

Other headwinds to the market could include an increase in protectionist measures in 2024, with both the EU and the U.S. reportedly set to enforce new tariffs on EV imports from China. 

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AI boom to keep supply of high-end memory chips tight this year, analysts warn

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AI boom to keep supply of high-end memory chips tight this year, analysts warn

A Samsung Electronics Co. 12-layer HBM3E, top, and other DDR modules arranged in Seoul, South Korea, on Thursday, April 4, 2024. Samsung’s profit rebounded sharply in the first quarter of 2024, reflecting a turnaround in the company’s pivotal semiconductor division and robust sales of Galaxy S24 smartphones. Photographer: SeongJoon Cho/Bloomberg via Getty Images

Bloomberg | Bloomberg | Getty Images

High-performance memory chips are likely to remain in tight supply this year, as explosive AI demand drives a shortage for these chips, according to analysts.

SK Hynix and Micron – two of the world’s largest memory chip suppliers – are out of high-bandwidth memory chips for 2024, while the stock for 2025 is also nearly sold out, according to the firms.

We expect the general memory supply to remain tight throughout 2024,” Kazunori Ito, director of equity research at Morningstar said in a report last week.

The demand for AI chipsets has boosted the high-end memory chip market, hugely benefiting firms such Samsung Electronics and SK Hynix, the top two memory chipmakers in the world. While SK Hynix already supplies chips to Nvidia, the company is reportedly considering Samsung as a potential supplier too.

High-performance memory chips play a crucial role in the training of large language models (LLMs) such as OpenAI’s ChatGPT, which led AI adoption to skyrocket. LLMs need these chips to remember details from past conversations with users and their preferences to generate human-like responses to queries.

“The manufacturing of these chips are more complex and ramping up production has been difficult. This likely sets up shortages through the rest of 2024 and through much of 2025,” said William Bailey, director at Nasdaq IR Intelligence.

HBM’s production cycle is longer by 1.5 to 2 months compared with DDR5 memory chip commonly found in personal computers and servers, market intelligence firm TrendForce said in March.

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To meet soaring demand, SK Hynix plans to expand production capacity by investing in advanced packaging facilities in Indiana, U.S. as well as in the M15X fab in Cheongju and the Yongin semiconductor cluster in South Korea.

Samsung during its first-quarter earnings call in April said its HBM bit supply in 2024 “expanded by more than threefold versus last year.” Chip capacity refers to the number of bits of data a memory chip can store.

“And we have already completed discussions with our customers with that committed supply. In 2025, we will continue to expand supply by at least two times or more year on year, and we’re already in smooth talks with our customers on that supply,” Samsung said.

Micron didn’t respond to CNBC’s request for comment.

Intense competition

Big Tech companies Microsoft, Amazon and Google are spending billions to train their own LLMs to stay competitive, fueling demand for AI chips.

“The big buyers of AI chips – firms like Meta and Microsoft – have signaled they plan to keep pouring resources into building AI infrastructure. This means they will be buying large volumes of AI chips, including HBM, at least through 2024,” said Chris Miller, author of “Chip War,” a book on the semiconductor industry.

Chipmakers are in a fierce race to manufacture the most advanced memory chips in the market to capture the AI boom.

SK Hynix in a press conference earlier this month said that it would begin mass production of its latest generation of HBM chips, the 12-layer HBM3E, in the third quarter, while Samsung Electronics plans to do so within the second quarter, having been the first in the industry to ship samples of the latest chip.

“Currently Samsung is ahead in 12-layer HBM3E sampling process. If they can get qualification earlier than its peers, I assume it can get majority shares in end-2024 and 2025,” said SK Kim, executive director and analyst at Daiwa Securities.

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Early Facebook investor Accel raises $650 million fund to back European and Israeli startups

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Early Facebook investor Accel raises 0 million fund to back European and Israeli startups

From left to right, Accel general partners Harry Nelis, Sonali de Rycker, Andrei Brasoveanu, Luca Bocchio, and Philippe Botteri.

Accel

Venture capital firm Accel said Tuesday it’s raised $650 million for its eighth fund targeted at investing in European and Israeli early-stage startups, in a sign the venture capital market may be showing signs of a recovery.

The firm, which made prolific early bets on the likes of social media app Facebook and music streaming service Spotify, said in a press release it raised the fund to “support ambitious founders building global category-defining companies” in Europe and Israel.

Harry Nelis, general partner at Accel, said the European tech ecosystem in particular has evolved drastically in the nearly 25 years since it opened up its London office as a separate fund in 2001.

“The environment has dramatically changed since then,” Nelis told CNBC. “People would ask us, can Europe generate $1 billion outcomes?”

“Now, there are more than 360 venture-backed unicorns across Europe and Israel, and the whole ecosystem has evolved from one that raised about $1 billion in capital to now $66 billion in 2023.”

Talent ‘flywheel’

Nelis said Europe is producing a more promising talent pool now thanks to a “flywheel” of experienced employees from other companies that have hit unicorn status becoming founders of new companies themselves.

A report released by the firm last year citing Dealroom data showed that employees of 248 venture-funded unicorns in the region have fueled 1,451 new tech startups across Europe and Israel.

Nelis noted that there are emerging geographies in Europe that investors aren’t paying as much attention to, but that are showing huge potential in technology innovation.

He called out Lithuania and Romania as examples of countries where major technology successes are emerging. In Lithuania, for example, secondhand marketplace Vinted is now a $4.5 billion “unicorn” company, while in Romania, UiPath has attracted a $10.9 billion valuation in the public markets.

Accel expects to invest in between 25 and 30 companies from its latest early-stage fund.

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Magnus Grimeland, CEO of seed investor Antler, told CNBC earlier this year that early-stage venture activity and private company valuations have been inching up since the start of this year — and he expects Europe to follow the trend.

“It’s on its way back,” Grimeland said in an interview at Antler’s London office in March. “We see a lot more activity in the portfolio. In New York, we made eight investments in January, and seven of them already have follow-on investments. The U.S. tends to always act quicker.”

Europe’s AI opportunity

Even as startup funding has waned, though, excitement about artificial intelligence has led to a rush of capital flowing into startups focusing on AI.

For example, the likes of OpenAI, Anthropic and Cohere have raised billions of dollars.

Nelis suggested that Accel doesn’t want to get distracted and focus solely on a hyped area like AI with its latest fund.

Instead, he said, the firm will focus on using its “prepared mind” philosophy — which encourages deep focus and a disciplined and informed approach to investing — to approach its next startup bets.

“We’re lucky that with DeepMind here in London and with Fair [Facebook AI Research] in Paris, there’s at least two big centers that have great AI expertise,” Nelis told CNBC.

“Together with smaller centers across Europe, we think that Europe is extremely well-positioned to create some important AI companies, the same way we created important enterprise businesses.”

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Nelis said that the way Accel thinks about AI can be broken up into three layers: the “foundation model” layer, referring to algorithms underpinning advanced AI systems, the “tooling layer,” which helps applications that sit on top of these algorithms run, and the “application layer.”

He added that he thinks Europe will excel when it comes to AI application companies, as opposed to foundation models where U.S. technology giants have a big advantage.

“My expectation is Europe is going to generate some really interesting AI application companies,” Nelis told CNBC. “The foundation layer is a layer where at least for now the U.S. incumbents currently have a real advantage — they have the advantage of compute power, large datasets, and lots of capital.”

The firm has previously invested in Synthesia, a $1 billion generative AI startup backed by U.S. chipmaker Nvidia that helps companies make presentations with AI-generated avatars.

Victor Riparbelli, CEO and co-founder of Synthesia, told CNBC his company partnered with Accel last year as the firm’s team knows “how to strike the right balance between visionary and useful technology.”

“Over the last year, there have been a lot of cool demos and perhaps too much frothiness in the AI industry,” Riparbelli told CNBC via email. “It was really important to us to partner with a fund that is as focussed as we are on delivering real, tangible business value.”

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