A screenshot from Mixpanel's retention analysis

Mixpanel CEO Suhail Doshi said he aims for his products to be richer than Google Analytics and easier to grok than Omniture, while measuring modern things like engagement instead of old-school page views. Mixpanel has both Web and mobile products, and is used by companies like Path, Viddy, Socialcam, Jawbone and Airbnb.

Mixpanel’s three key product areas are: 1) segmentation — it’s extremely queriable, due to the way it built its data storage; 2) funnel analysis — it tries to explain where users came from; and 3) cohort analysis and retention — it explains what happens to users after they join. It charges based on amount of data. For example, 500,000 data points are $150.

Mixpanel is now on track to measure seven billion actions every month, up from four billion in February, Doshi said. That’s primarily based on growth in usage of existing customers’ products, but also because of new customers joining.

Along with Andreessen Horowitz, Salesforce CEO Marc Benioff and Yammer CEO David Sacks joined the Series A round.

Doshi said he wanted to let it be known that he’ll use the funding to pay his first 100 employees “way above market” and to “spoil our current employees to retain them.”

Prior to this round, Max Levchin, Michael Birch and Sequoia Capital had provided Mixpanel with $1.75 million in seed funding.

Doshi had been an intern at the social app maker Slide while in college, working on the metrics team at the highly analytically oriented start-up. Former Slide CEO Max Levchin told me he was so impressed by Doshi that he called his mom to try to get him to drop out of school. It didn’t work, but when Mixpanel started, he was there to fund it, and Levchin remains actively involved with the company.

Processing mountains of data and making it understandable is hard stuff. “The goal is always to make things eyeballable,” as Levchin put it. “There’s enormous complexity behind a very simple interface.”

Mixpanel, argued Levchin, is “a very large opportunity, because ultimately it’s not a traffic-analysis opportunity — it’s a data-mining opportunity. They’re building a product that allows humans to leverage algorithms and visualization to grasp the behavioral complexity of their customers.”

When I offered the critique that perhaps Slide — one of the original giants of the Facebook platform that missed the social gaming opportunity while it was continually analyzing and optimizing — was too metrics-driven, Levchin said he thought that was fair.

But Mixpanel doesn’t have that problem, he said — because it’s not producing anything creative, it’s just providing the numbers for other companies to make their own decisions.

When I asked him a similar question, Doshi agreed. “Analytics won’t tell you what product to build,” he said. “It will give you hypotheses, but you still have to have ideas.”

First there was SuccessFactors, which went to SAP for $3.4 billion in December. And last month, Oracle stepped up to take out Taleo for $1.9 billion. These deals took place against the backdrop of the expectation that Workday, another cloud-based HR software outfit that last year raised $85 million at an eye-popping $2 billion valuation, is well on its way to going public this year.

Amid all of this there was a much quieter and smaller deal: Salesforce.com acquired the cloud HR start-up Rypple.

Yesterday, we saw the first fruits of that acquisition, integrated in an impressive six weeks. In one of his heavily produced keynote addresses at Salesforce’s Cloudforce event in San Francisco, CEO Marc Benioff showed off how the Rypple acquisition is being integrated directly into Salesforce’s main service as an add-on app in the company’s App Exchange. He’s something to see in action, and manages to bring together numerous strands as a way of making his arguments for the cloud and the social enterprise.

The video below is about two hours long, but one section caught my attention: Salesforce has landed Hewlett-Packard as probably its biggest customer, and has been talking about it since it last reported earnings. At about the 90-minute mark, Benioff starts talking about Salesforce’s relationship with HP, and chats with HP EVP John Hinshaw. HP will be live on Salesforce.com in May, and will have its entire sales force of 35,000 using it by the end of the year. Look for Salesforce to play up this relationship as often as it can in the coming year.

So what did the critics — and by that I mean the analysts — think of it all?

One key observation came from Karl Keirstead of BMO Capital Markets: “We spoke with HP’s CIO, who said that the recent deal with Salesforce was for sales force automation and partner management modules only and that there was no existing plan to replace Jive Software with Chatter as its employee collaboration platform.” Ouch. Jive: 1. Chatter: Zero. Even so, Keirstead raised his target price on Salesforce shares to $190 from $175, and maintained his “outperform” rating.

Keirstead also said he expects to see Salesforce move into the “social recruiting” space as a natural extension from the Rypple acquisition. I’ve written about one upcoming company in the space, called Jibe (not to be confused with Jive).

Other Wall Street analysts appeared to like what they saw. Brian Schwartz of ThinkEquity Partners conducted a survey of 50 corporate IT managers and found that they plan to increase their spending on Salesforce products by an average of 12 percent this year. That, he argues, could lead to a 30 percent increase in annual billings by the end of the year, when combined with the addition of new customers and gains from other CRM vendors.

Salesforce is winning acceptance in many large enterprises, and that’s a good sign for its business, writes Brendan Barnicle of Pacific Crest Securities in a note to clients today. The social enterprise is real, and Salesforce is playing a pretty big part in making it happen at large companies. “It appears that Salesforce is at a tipping point where deals are getting larger and the product mix is getting more diverse,” Barnicle wrote. Now that Salesforce has 15 million end users at 100,000 customers, it’s starting to upsell those customers on new things beyond its core Customer Relationship Management service, including the new Rypple service, Chatter, and other things. He rates Salesforce a “buy,” with a $200 price target.

Anyhow, here’s Benioff’s keynote from yesterday, if you have two spare hours to watch it:

Video streaming by Ustream

Published reports on Pando Daily had previously suggested that the company was close to landing a round in the $50 million neighborhood, with the implied valuation between $500 million and $1 billion, a range so large you could drive a tank through it. Yammer won’t say one way or another, but it’s pretty safe to say the higher number is the more accurate one.

Prior investors Charles River Ventures, Emergence Capital, Founders Fund, the Social+Capital Partnership and US Venture Partners are all participating again, as are angel investors Bill Lee, Max Levchin and football great Ronnie Lott.

Clearly, the intent here is to raise Yammer’s visibility game a bit, in the face of more visible players in the social enterprise software space — like Jive, which IPO’d late last year, and Chatter, which Salesforce.com CEO Marc Benioff can’t seem to stop telling people will save the world. Social enterprise software is becoming an increasingly popular and thus competitive business. Jive’s IPO gives it some visibility that doesn’t hurt when it goes to win business from new customers. Chatter tends to be less of a rival, though its strength is in places where Salesforce.com is already well-entrenched, which is the sales department.

One thing that’s going to happen is that Yammer will kick off a large advertising campaign, using print and online ads that aim to tell the world about how enterprise social networks are making companies more efficient in their collaboration.

The other thing is that the drumbeat about a Yammer IPO will start to get louder as the year goes on, though if you ask CEO David Sacks about it, as I have on more than a few occasions, he says very little, and you might be tempted to consider this massive round a case of Jive envy.

Lots of people got very rich on that IPO, and there’s absolutely no reason the same thing couldn’t happen with Yammer: Having launched some years back as a “Twitter for business,” it has evolved into more of a Facebook-like service for getting things done across a company.

Yammer has more than four million corporate users, including employees at more than 85 percent of the Fortune 500. Most of those are simply people inside a company, who signed up for Yammer and may or may not be using it on regular basis. The company has said in the past that it has a 20 percent conversion rate, which works out to about 800,000 paid seats. Part of the advertising campaign may involve trying to kick the conversion rate up a few notches.

Also? Yammer signaled in its press release that it plans on making some strategic acquisitions. This could go two ways. First, Yammer could try and roll up some smaller, lesser-known players in the business and take their customers. Or it could be eyeing some interesting “acqhire” cases, where there are some smart people running early-stage companies that could add some capabilities to Yammer’s. We saw Jive do precisely this, when it acquired OffiSync in May.

The funding comes less than a week after Yammer said it had integrated SAP into its activity streams, making it the first among the social enterprise companies to do so. Sacks has described Yammer as something of a “Switzerland of collaboration,” and has added the ability of something like 15 different enterprise software applications to talk to Yammer, some of them more important than others. That may be so, but given how hot the social enterprise business is getting by the day, it’s starting to look a lot more like the hypercompetitive Coke and Pepsi.

What’s so confusing, though, is that Salesforce is still growing like crazy and adding new employees at a relatively fast pace. Faster than ever before, in fact, and yet it still doesn’t need the new building? Apparently, Salesforce can satisfy its office-space needs by sticking with the traditional leases upon which it has relied so far. As Salesforce chief messaging officer Bruce Francis told Reuters: “We are growing now faster than we were growing at the time when we originally made the decision to build the campus. We are going to need space faster than we could build it.”

But the decision is going to add another log on the fire for Salesforce’s critics, who have argued that its shares are too expensive, and that its CEO, Marc Benioff, has no discipline when it comes to controlling expenses.

And they are growing at an alarming clip: Salesforce’s combined annual operating expenses grew 46 percent year over year to $1.8 billion in 2011, or about 80 percent of sales; up from $1.2 billion, or about 74 percent of sales, in 2010. That’s notably faster that the growth in annual sales, which grew 37 percent from $1.7 billion to $2.3 billion. And let’s not forget that Salesforce finished the year with a $35 million operating loss, versus a $97 million operating profit in 2010.

Salesforce defenders would say that deferred billings are really where you look for indications of growth in a cloud-computing company, and that’s fair: Future billings say more about the uptake of a subscription product like Salesforce.com’s primary cloud-based customer-relations management software than revenue that’s already been booked. And to that point, deferred revenue grew 48 percent, or ever so slightly faster than expenses.

Still, none of that helps explain why Salesforce management felt it was: A) justified in spending $278 million on 14 acres of real estate, and going to the expense of hiring architects and contractors; and B) why it no longer thinks it needs it. The purchase felt like a rash decision then, and backing away from the project feels just as rash now.

Anyhow, the news comes on the heels of Salesforce reporting quarterly results that blew by the expectations of analysts and undid much of the negative buzz that emerged in the quarter before that. Benioff made his regular appearance on CNBC’s “Mad Money” with Jim Cramer to talk about it. Cramer is apparently still liking the taste of the Salesforce Kool-Aid. In his remarks, Benioff discloses that Salesforce just closed a big deal with Hewlett-Packard, along with some other monstrously large transactions with other companies. What neither one of them bothers to talk about is the growth in expenses.

(Image courtesy of I Can Has Cheezburger)

Today the opposite is true. Let’s put it simply: Salesforce killed it this quarter, and the shares are soaring after hours. As of 5:40 pm ET, Salesforce shares are trading at $146 even, up $14.23 or nearly 11 percent. That is what we call a bullish pattern.

So what happened? Results beat the consensus, for one thing. Earnings per share were 43 cents on a non-GAAP basis, beating the consensus of 40 cents. Sales were $632 million, knocking the consensus of $624 million on its hindquarters.

Then came the guidance, which was in truth a mixed bag. The revenue forecast stomped on the consensus: Salesforce said it expects revenue of $673 million to $678 million, well ahead of the $663 million consensus. But? The EPS forecast is a bit off at 33 to 34 cents, below the 36 cent consensus.

So what’s got investors so giddy? Maybe billings? Remember, Salesforce lives on subscription revenue, so while revenue on the topline is a good thing to have grow, the key metric is in the area of billings, which is a strong indicator of future business. And they’re up: Current deferred revenue is up by 41 percent to $1.3 billion. Unbilled deferred revenue, which represents sales for which there’s a contract but no billing relationship yet, is similarly up, to $2.2 billion up from $1.5 billion at the end of 2011.

Salesforce also raised its guidance for the full year (it’s now in its fiscal year 2013) to as high as $2.95 billion. It was just a few years ago that Salesforce had its first billion-dollar year. Now it’s knocking on the door of its first $3 billion year. If that seems like it should have some sort of significance, it probably does. This cloud can float.

Earlier today, Salesforce’s stock price was up by more than 3 percent, though it has now settled a bit, and is up a more modest 1.3 percent, to $127.24 as of 11:30 am ET.

In a note to clients today, Mark Murphy of Piper Jaffray said that Salesforce closed on a deal worth $140 million with a customer in the financial services and insurance industry. Additionally, social network giant Facebook has made what is being described as a “material commitment” to Salesforce recently. “We simply do not observe any Cloud competitors closing $140M transactions, drawing in 10,000 attendees at regional conferences, and winning as much crucial platform business with internet leaders,” Murphy wrote.

Analyst Brendan Barnicle of Pacific Crest Securities, writing in a research note issued to clients today, said he saw similar trends. “Salesforce.com had a very strong finish to its fiscal year,” he writes, adding that it “closed several very large deals with major corporate accounts, including its largest deals ever in the U.S. and Europe. In some cases, these large deals were only Sales Cloud deals, and we see further opportunity for upsell. More importantly, the strength of the corporate business refutes the bear claim that Salesforce has penetrated its opportunity.”

One point of weakness, Barnicle says, were the small and medium businesses, who pushed back against a Salesforce move to transition them to an annual billing cycle. “It sounds like Salesforce was somewhat flexible on billings terms after stating its initial goal of putting most SMB customers on annual billing,” he wrote. “However, the drive to annual billings certainly made it more difficult to close and renew SMB deals.”

And while the strong finish to the quarter is great to have now, it’s going to set up a tough compare with the quarter ending in April, Barnicle writes. In the April quarter last year, billings — a heavily watched Salesforce metric that’s tied to future revenue — grew 57 percent. This year, Barnicle expects only 19 percent growth. “We are a bit concerned that the deceleration in billings will be negative for Salesforce,” he writes. “However, the comparisons get easier in Q2 (July) and Q3 (October), and we are concerned that if investors wait to move past the difficult FQ1 comparison, they may miss the opportunity to buy CRM at current levels.”

Barnicle also raised his revenue forecast on Salesforce to $625 million, and his EPS estimate to 42 cents a share, and reiterated a target price of $157. Salesforce reports earnings on Feb. 23.

One highlight, Keirstead writes, appears to be Salesforce’s Service Cloud, the service that companies use to track customer complaints on the Web and social media sites. Meanwhile, the average size of deals is climbing as large companies are buying incrementally more expensive versions of different Salesforce products.

And even though Salesforce missed on billings last quarter, prompting a nasty selloff of its shares the next day, Keirstead is unconvinced that was called for. “While the bear case is rooted in a view that the modest October quarter billings miss was a harbinger of slowing momentum, we just don’t see it,” he wrote. One source told him that Salesforce’s reps pushed the social products like Chatter a little harder to the detriment of other core products.

He expects Salesforce to make up for that billings miss this time around: He looks for unbilled backlog to grow 40 percent to $2.1 billion and for operating cash flow to grow by 20 percent, which is good, but still below the previously forecast range. All things considered, Salesforce, he says, may be undervalued. It’s currently trading at less than six times projected sales in fiscal 2013. He rates it with an “outperform,” and gives it a $150 price target.

Shares are down more than $4, or about 13 percent. The freakout appears to be coming from gross margins that shrank to 51 percent from almost 59 percent in the prior quarter, and despite the fact that sales more than doubled sequentially to $84 million from $31 million before.

CEO David Flynn called me up a little while ago to talk about the results, and he reminded me that Fusion launched its new IO Drive 2. It’s a transition to a new product line that’s proving tricky. New products built on new technologies are always a little more costly to build up front, and that’s compounded by the fact that early adopters, when they buy the new stuff, take the lower-end version and not the more expensive and more profitable one.

Also, enterprise customers who buy the new stuff are always conservative and take longer to decide whether they want to buy it or not, he says. Even so, the company has sold 10,000 of the new drives.

But? There’s a new customer of record: Salesforce.com is now a Fusion-io customer, and has joined the likes of Apple and Facebook, which is using the flash-based chips in the servers running in its data centers around the world.

And Salesforce isn’t buying it directly from Fusion, but rather through one its OEM partners, which include Hewlett-Packard, IBM and Dell, though Flynn wouldn’t tell me which one it is.

Salesforce is one of six customers who bought more than a million dollars worth of Fusion’s stuff this quarter and of those, four were repeat customers, Flynn told me.

The Salesforce win is also important, Flynn says, because some have wondered whether Fusion’s technology, while popular with high-end enterprises like banks and Facebook, would make sense for applications that tend to be used in mid-tier businesses, which Salesforce’s mainline CRM application often is. The lower end of the enterprise software market is moving toward cloud-based software, which is often referred to as Software as a Service, or SAAS. “By helping those companies, we are indirectly driving business in the mid-range of the market. Apple and Facebook are in the SAAS business too, it’s just that their customers are consumers.”

One interesting fact that Flynn shared with me: His first job out of college was working for Oracle. His boss at the time? One-time Oracle exec and now Salesforce CEO Marc Benioff. A small world it is, indeed.

Being a cloud evangelist on the President’s cabinet appears to have made Vivek Kundra an attractive prospect for the private sector. Salesforce.com has just announced that it has hired him as its EVP of emerging markets.

When we last saw Kundra, he had stepped down from his position as Chief Information Officer of the United States, to which he was appointed by President Barack Obama. Having proposed between $5 billion and $20 billion in savings from the federal information technology budget — which, at $80 billion annually, is the biggest IT budget on the planet — he left government in June for a teaching stint at Harvard University.

Salesforce CEO Marc Benioff praised Kundra in a statement: “Vivek Kundra is an amazing technology visionary who opened the eyes of millions to the transformational power of cloud computing … His disruptive leadership is just what the industry needs to accelerate the social enterprise.”

And, naturally, Kundra had nice things to say about Salesforce: “Salesforce.com is an industry disruptor, helping organizations use the transformative power of technology for change … I am excited to join the most innovative company in the world that is pioneering social, mobile and open cloud computing technologies for the enterprise.”

The statement is a little short on what Kundra’s job will actually entail. And emerging markets, at least geographically, aren’t exactly Salesforce’s strength.

For the year ended last Jan. 31, Salesforce reported sales of $1.7 billion, of which nearly $1.2 billion, or almost 70 percent, was derived from customers in the Americas; Europe and Asia accounted for 17 percent and 13 percent of sales, respectively. So, perhaps his brief will be to boost those numbers a bit.

Sources tell me that Yammer will officially announce on Monday that Samantha Loveland (pictured), VP for customer success at Salesforce.com, has joined Yammer as vice president for worldwide customer engagement.

Loveland — who, according to her LinkedIn profile, goes by “Sam” — will report to David Obrand, another Salesforce alum who was hired by Yammer in October as vice president for global sales. Her job will be to run the team that consults with customers after a sale to make sure they get what they need out of the product.

Yammer is certainly on the move. It’s going to finish the year with a combined four million end users at 100,000 companies, and in September it closed a $17 million round of funding led by the Social+Capital Partnership, a new fund established by former Facebook Vice President Chamath Palihapitiya. Prior investors Charles River Ventures, Emergence Capital and US Venture Partners also participated, bringing the total capital raised to $57 million in four rounds.

Yammer is also something of a rival to Salesforce.com, and has been playing that fact up recently, gently jabbing at Salesforce as a “friend with benefits.” It also took advantage of Salesforce’s publicly available API to integrate Salesforce.com’s Chatter within its Yammer. It is fair to say that these companies have something of a history.

Anyhow, Loveland’s first day on the job at Yammer will be Monday.

Large companies like Hewlett-Packard or Microsoft will spend hundreds of millions of dollars every year getting their software, Web content, user manuals, training and sales material translated into Spanish, Portuguese, Chinese, Russian, French and a dozen or more other languages.

Yesterday, I met with another company going after this market: Cloudwords, a cloud-based platform designed to manage translated content. Large companies often have internal teams of people who are in charge of managing it all, and it’s a big job. Most just make do with a big Excel spreadsheet, but who needs that?

“We took a look around and realized there weren’t any tools for this,” CEO Michael Meinhardt told me. He sees the situation as similar to the state of the salesforce automation market a decade ago, when Siebel Systems — now part of Oracle — was at the top of the heap. A decade later, the market is very different, since Salesforce.com shook things up.

The comparison is no accident: Salesforce CEO Marc Benioff led the Series A investment in Cloudwords; its CTO, Scott Yancey, is a Salesforce alum. “When we first demonstrated this to Marc, he got it right away,” Meinhardt told me.

The company will announce today that it has completed an app which will be available in the Salesforce.com AppExchange — essentially, the Salesforce version of the iTunes App Store. Cloudwords is specifically designed to integrate the translation process within the Salesforce.com environment.

One key problem, Meinhardt said, is that companies often forget what has been translated, and into which languages. One thing the service does is keep track of everything that’s been translated, so that if you end up reusing it, you don’t farm it out to be translated again. “So often, people don’t know the translation has already been done,” he says. The hope is to help companies shave their translation costs by as much as half. Among Cloudword’s customers is SuccessFactors, the cloud-based human resources software outfit.

Basically, the argument goes like this: Since the protestors in Egypt organized and collaborated via Facebook and Twitter against a government that didn’t understand the tools, companies that don’t embrace social enterprise and collaboration tools like Chatter will wind up like Mubarak — overthrown, or rather defeated by their competitors.

Yes it’s a stretch, but you certainly can’t fault Benioff on the passion and enthusiasm of his delivery. And since it’s a Salesforce.com event — Cloudforce New York — there’s no one to yank him off the stage.

There will also be news. Benioff will talk about a new mission for Radian6, the social media monitoring outfit that Salesforce acquired in March for $326 million. Expect to hear him talk about the “social marketing cloud” quite a bit.

What does that mean? Radian6 will be getting some new features around engaging and messaging sales leads and contacts on Facebook and Twitter and Web forums, and so on. It will have some powerful tools for filtering all the junk that people post and look for places where people are expressing clear sentiment or intent to buy, asking for guidance, or maybe looking for a deal.

In an example Salesforce showed me in a demo yesterday, if someone is looking for an online stock broker and asks their Twitter friends for a recommendation or about a specific broker they’re thinking of, that company’s social media team will see the message, classify it as a sales lead, and can reach out with special offers. The same thing goes for customer service messages. When someone is unhappy about something — say, their cable service — those posts can be automatically assigned to the right person for a follow-up, a special offer, or whatever the case may be.

People so often turn to Twitter and Facebook to give feedback or to express outrage about products these days, and companies are still figuring out how to respond and work with those platforms. It’s all about protecting brands.

Benioff’s talk takes place against the backdrop of a lot of uncertainty around Salesforce’s share price, valuation and growth prospects. Salesforce stock has been slapped around a bit following an earnings report that analysts didn’t exactly love, yet you can’t deny its revenue growth rates are impressive: Salesforce is on its way to being a $3 billion company next year.

The problem with Salesforce is how the market should calibrate its valuation. The shares have traded as high as $160 and as low as $109 this year, and closed yesterday at $110.58. Premarket sentiment this morning shows Salesforce stock headed up about 3 percent as of 8:08 am ET. Some people — namely hedge fund manager Whitney Tilson — have argued that Salesforce is fairly valued at about 75 percent lower than where it’s trading now. Expect Benioff’s comments today to give the shares a lift. But given how volatile the shares have been, don’t expect it to last.

That represents a drop in value of nearly 10 percent from the start of the year, but it has been an up-and-down-and-up-again ride. During the year, the shares have traded as high as $160 and as low as $109. In a word, it’s a volatile stock. The reason is that investors can’t seem to settle on what Salesforce is, and how to value it. The stock was killed yesterday — especially in after-hours trading, when it fell by as much as 10 percent — on disappointing quarterly results. And, frankly, management isn’t helping to clear up the picture one bit. More on that in a minute.

There was good news and bad news, but confusion appeared to reign over the minds of Salesforce investors, who couldn’t seem to get their heads around what’s going on with the company, and so assumed the picture must be bad. Because if it was good, it would clearly be unambiguously good, right? Today, they’re shaking it off: Credit Suisse lowered its price target on Salesforce from $140 to $135, but maintained a “Buy” rating. Deutsche Bank also maintained a Buy rating, and raised its target to $205, from $200. “Buy on the weakness,” argues RBC Capital Markets.

The Salesforce story is tricky. Revenue is growing, forward guidance is up; yet billings growth is slowing and cash flow from operations was down. As Brian Schwartz of ThinkEquity put it:

Salesforce reported mixed Q3 results as revenue, EPS, cash flow beat Consensus while billings growth of 29 percent missed both Consensus and our prediction for accelerating growth. The good news is that FY13 revenue guidance and Q4 billings guidance are well-above Consensus, which suggests strong business momentum, in our view, and should reverse a two-quarter slide of decelerating billings growth. However, billings grew slower than revenue for the second consecutive quarter and Q4′s guidance assumes this trend could continue for at least another quarter, with tougher comparisons ahead.

So, what is a Salesforce investor to think?

CEO Marc Benioff took to CNBC after yesterday’s results, appearing, as he often does, on Jim Cramer’s investor-tainment show “Mad Money.” Cramer — who has been known to admit on the air that, where Salesforce is concerned, he’s “drinking the Kool-Aid and likes how it tastes” — did his best to pepper Benioff with reasonable questions, which Benioff tended to dodge. Kicking into “master salesman” mode, he stuck to his well-worn argument that Salesforce is a company that has to spend money to keep growing. “We’re trying to aggregate market share and revenue, and we’re totally focused on top-line growth,” he told Cramer. “If we were a company focused only on earnings, we wouldn’t be growing as much as we are.” That, he said, would be “the wrong thing to do in our life cycle.”

Benioff also managed to lob a little grenade at his former boss, Larry Ellison, the CEO of Oracle. Cramer mentioned the September kerfuffle, during which Benioff was pulled from giving a speech at an Oracle customer event in San Francisco. Benioff instead crowed about winning videogame concern Electronic Arts as a new Salesforce.com customer, replacing Oracle.

So, then, how should investors evaluate Salesforce’s prospects going forward, using, say, a once-reliable metric like the number of customers, Cramer asks. That’s no longer a good indication, Benioff says. After all those acquisitions that Salesforce has made in the last year — Heroku, Radian6 and Manymoon — Salesforce’s base of customers is vastly different. Instead, he says to rely on the company’s guidance.

And that guidance is pretty good. Salesforce expects to bring in $3 billion in sales next year. Impressive, for sure. But with that sales growth comes growth in operational expenses, and a lot of effort and muscle are being put behind products with uncertain prospects — like Chatter, which Benioff routinely portrays as strategically important, but which has many competitors, including Yammer and Jive Software, to name but two.

Trust the guidance, Benioff says. Okay, but that’s another way of saying “trust me.” If that makes you feel a little uncertain, you’re probably not alone. The video clip of Benioff’s 10-minute TV appearance is below:

Excluding charges for compensation and other items, Salesforce reported earnings of 34 cents on sales of $584 million, up 36 percent. The problem was the quarter’s billings — the sum of revenue plus the change in deferred revenue was $567 million; 3 percent, or nearly $20 million, off the consensus.

But never fear, says CEO Marc Benioff. The company is well on its way to breaking the $2.3 billion revenue barrier, and it would be the first cloud software company to do so. The company also said it expects fourth-quarter sales in the range of $620 million to $624 million, which would be ahead of the consensus of $610 million. And it said that its expects earnings of 39 to 40 cents, which is lower than analysts had expected by a penny. One the brighter side, guidance for the 2013 fiscal year, which starts in February, was ahead of the consensus by 4 percent.

The larger question is the size of the cloud opportunity, for which Benioff is the ultimate salesman, spokesman and advocate. As successful as Salesforce has been in disrupting the traditional software model and giving companies like Oracle and SAP the occasional headache, what remains unclear is how much new services like Chatter.com — the social enterprise and collaboration features that Benioff can’t seem to stop talking about — are contributing to the top line, and whether they will justify the cost to build them.

Then there’s the valuation. Salesforce finished the regular session trading at a valuation of 615 times its trailing earnings, and it has been in sky-high territory for some time. Last month, Salesforce stock nose-dived after comments from hedge fund manager Whitney Tilson on CNBC that Salesforce might be due for a 75 percent drop, a la Netflix. Salesforce shares fell nearly 5 percent that day, to $123.

As I write these words, it’s trading six dollars lower than that, at $117. Tough day.

“A good company but an unrealistic valuation” is how Tilson, the founder and managing partner of T2 Partners and the Tilson Mutual Funds, summed it up in an appearance on CNBC today (video below), arguing that Salesforce could be the next company to fall by 75 percent, a la Netflix.

Hype about the cloud, pushed by CEO Marc Benioff, whom Tilson called a “world-class salesman,” is giving way to the fact that Salesforce has what he calls “a nice app to help mid-market companies manage their sales force.” Its other lines of business — including Chatter, its social application, and its plans for pushing into larger-sized enterprise companies — just don’t justify its huge market cap, which was until today north of $17.5 billion. Today, Salesforce’s market cap was about $800 million smaller as the shares fell by $6, or 4.6 percent, to $123.56.

Tilson is betting that Salesforce’s fair value is about 75 percent lower than its current trading range, which, based on Tuesday’s closing price of $129.56, would put it at about $33 a share.

It’s been hard not to wonder when the Salesforce valuation rocket was going to run out of fuel. Two years ago, Salesforce was trading at $59 a share, and in July peaked just above $159 a share, amounting to a surge of about 170 percent. But since the start of 2011 the shares are down 7 percent (which in fairness includes today’s drop), while it has traded at a seemingly ridiculous 600-plus times trailing year’s earnings.

Benioff and Salesforce have usually had a friendly platform at CNBC. Jim Cramer, the exuberant two-fisted host of its “Mad Money” investertainment show has hosted Benioff numerous times and even admitted that while Salesforce seemed like “Kool-Aid,” he was not only drinking it, but “liked the taste of it.”

Indeed, Salesforce is growing its sales — Benioff recently said it’s on track do $2 billion in sales this fiscal year — but it has been doing so at a loss. It reported a $4.3 million loss on $546 million in sales in its July quarter. Benioff has argued that Salesforce needs to spend now to grow its customer base and to try to take business away from the likes of Oracle and SAP, that he says “don’t get the the cloud.” We’ll see about that. Salesforce next reports quarterly results on Nov. 18.

Aneel Bhusri

Today, Workday will announce that it has just raised $85 million in new financing, bringing its total amount of capital raised to $250 million. Sources familiar with the terms of the deal tell me that the investments value Workday at $2 billion.

The funding round isn’t coming from traditional venture capital players, but from institutional investors who will want to be shareholders of Workday when it goes public in the second half of next year. The round, which is being described as a Series F, includes T. Rowe Price, Morgan Stanley Investment Management, Janus, and Bezos Expeditions, the personal investment entity of Amazon CEO and founder Jeff Bezos.

I’m also told, by sources familiar with the deal, that William Danoff, the manager of Fidelity’s $80 billion Contrafund, the mutual fund giant’s largest stock-based fund, has participated in this funding round. This would be the Contrafund’s third recent investment in a privately held Internet company, the other two being Facebook and Zynga. In fact, it’s the same group of funds that took part in a huge round with social gaming force Zynga in February; in Groupon in January; and which earlier this year bought nearly three million shares of Facebook for $25 each.

Previous investors include Dave Duffield and Greylock Partners, who are in for $90 million across four rounds; and New Enterprise Associates, which joined a $75 million Series E round in 2009.

Why raise from institutionals and not VCs? “Because Workday is going to go public, and probably before the end of next year,” Bhusri told me. “Rather than do a round that adds an overhang to the existing capital structure, this is a group of investors who will likely buy more in the IPO,” he said. “In some ways, it’s an early debut of an IPO.”

And while there’s no S-1 filing from Workday to peruse just yet, Bhusri told me that Workday is growing plenty fast. Having disclosed $160 million in billings in 2010, Workday, he says, is on track to do twice that — or about $320 million in 2011 — and that it’s close to breaking even. So this round of capital is insurance. With the world economy so out of joint, if no logical window for an IPO emerges in 2012 — a reasonable worry — then Workday won’t be forced, should the need arise, to raise more capital in a difficult market.

So what is Workday, exactly? For the answer, you have to turn the clock back to 2004, when the software giant Oracle made its initial hostile bid to take over PeopleSoft. Bhusri was a senior executive and co-chairman of PeopleSoft’s board. After losing the battle to resist Oracle, he and co-founder Dave Duffield decided that the next battle for enterprise software would be in the cloud. Workday was born within months of their departure from PeopleSoft.

The plan, Bhusri says, was to create the next generation of PeopleSoft’s software, or the next generation of SAP’s Human Resources and Enterprise Resource planning software — essentially, software that businesses need to run day to day. But rather than deliver it in the traditional manner — run it on machines at the customer’s location — it’s all delivered via the cloud. “It’s as if you were going to start over with a clean sheet of paper and design this kind of software all over again,” Bhusri says.

And Workday’s customers aren’t exactly small players. Its average customer has between 10,000 and 15,000 employees. Among its 250-odd customers, the biggest is Flextronics, the huge electronics manufacturing company, which has 200,000 employees. Other customers include Time Warner, Thomson Reuters, Chiquita Brands, and perhaps unsurprisingly, Salesforce.com. There are some two million employees on the system. All that after only four years of actively selling the product.

And what Workday sells is a system that tends not to get replaced very often in large companies — perhaps once a decade. That gives the company an advantage when it asks for contract commitments that last three years; most cloud companies offer their services on a pay-as-you-go basis.

Workday’s targets are Bhusri’s old customers who bought PeopleSoft software to run their businesses one product generation back, and also those who run SAP software. So when a new customer signs on it’s usually one or the other being displaced. Other rivals include Lawson, Infor and, occasionally, the payroll giant ADP.

The typical new customer, Bhusri said, is using one of those other platforms and is ready to upgrade. “To upgrade to the newest version, they get a price quote that’s so high they start looking for a better way,” he says. “That’s when they find us.”

And Workday isn’t sitting still with HR software. Its next battle will be in financial planning software that companies rely on to handle money — accounting, expenses, procurement. Workday already has 50 customers running the financial stuff. Once they try Workday’s HR, they like what they see, making for an easy upsell. Others just swap out both the HR and financial parts in one go, Bhusri said. And the competitive targets are the same as well: Oracle and SAP. One wonders if they aren’t just a little worried.

Asked about the ceaseless speculation that Oracle might take advantage of HP’s current weakened state and make what would be its biggest acquisition ever — an ill-advised one, if you really think about it — Ellison didn’t give a definitive yes or no answer, but took a shot at HP chairman Ray Lane, which you can see in the 80-second video clip below. (You can see the full video of the meeting here, but only if you need some help getting to sleep.)

There is, of course, no love lost between Ellison and HP’s newly elected executive chairman. Lane is a onetime Oracle president and COO pushed out by Ellison in 2000, and his election as chairman of HP’s board last year had been, in Ellison’s eyes, apparently overshadowed only by Léo Apotheker’s selection as HP’s CEO. Now that Apotheker is gone, Lane will likely remain Ellison’s favorite punching bag, with Salesforce.com CEO Marc Benioff running a close second.

Anyhow, the shareholder’s question suggests that the “Oracle in hostile bid for HP” chatter hasn’t died yet, no matter how many ways analysts and others can dismiss it as nonsense. As you can see from Ellison’s initial reaction to the question today, he is, if nothing else, entertained by the speculation.

Update, Oct. 13: HP has just sent a statement from Lane: “I’m focused on HP, not on statements like this.”

Why walk away from a company that by all accounts is humming on all cylinders, with stock that has, since its 2004 IPO, zoomed from $13 a share to $120?

“I wanted to see if I could build my own company” was the reason he gave Salesforce CEO Marc Benioff. Having been on the ground floor in an engineering capacity at two companies over 16 years — the first was E.piphany — he wanted to build something of his own. “I’m a builder of things,” he says.

Today he’s taking the first step in that direction: Weissman has joined Benchmark Capital as its Entrepreneur in Residence.

Benchmark makes sense for Weissman, given its investments in enterprise and data-focused start-ups like Domo; Hortonworks, the former Yahoo team devoted to Hadoop; and Engine Yard.

That’s a pretty good indication of the kind of company he’d like to get involved with by way of Benchmark. Weissman describes himself as a “data guy,” and he was deeply involved in building out the architecture of Salesforce.com. As such, he’s a big believer in the Salesforce state religion of a “multitenant, shared computers, shared everything” view of the cloud, and the way data — and services around it — gets delivered.

There are obviously lots of things happening around ways to handle data and databases.

“There’s lots of new ways of doing things — Hadoop and NoSQL and things like that. Basically, there’s a lot of new companies and young developers who, because of the scale of data they’re working with, the relational database just wasn’t cutting it,” he says. “And while I love the relational database, I’m really intrigued by some of the new technologies. Many aren’t ready for prime time, but a lot of enterprises are interested in them, just the same.”

That’s the version of events Benioff offered during a Q&A session that followed the speech he gave at the St. Regis hotel, following Oracle’s cancellation of his previously scheduled appearance at Oracle OpenWorld.

Benioff says he’s sorry for this but on Sunday he posted on Facebook that Ellison’s keynote address at the event Sunday night had set a “low bar” for the other speakers to follow. Benioff offered this explanation in response to a question. He also said he’s apologized in an email note to Ellison, but that it was also an example of the kind of hardball be learned at Ellison’s knee during his years at Oracle. See? It wasn’t complicated at all!

It also makes it sound like the explanation one might offer in the principal’s office for fighting in the cafeteria. Hear it in the audio below.

For its part, Oracle had no comment.

How else to explain the weird kerfuffle that exploded like a firecracker last night at Oracle’s OpenWorld conference in San Francisco? Benioff has delivered keynotes at OpenWorld before, in 2009 and 2010 and probably earlier than that, though I didn’t conduct an exhaustive search.

As we all know, Ellison ordered Benioff yanked from the OpenWorld speaker’s roster yesterday. Officially, his talk was moved from 10:30 am today to 8:30 am Thursday, the final day of the conference, when no one but the stragglers are likely to be in attendance.

“At 3:30 today [Tuesday] we were notified we were cancelled,” Benioff told me by email last night. “Then we were told we were moved to Thursday morning when there are no other presentations. We view this as a cancellation.”

His response was to schedule a speech at an alternative venue, the Ame restaurant inside San Francisco’s St. Regis hotel, for the same time slot. (See the press release here.)

So what’s the wrangle really about? On the surface, it’s a difference of vision, a geeky technical debate. What exactly is cloud computing? To Benioff, the cloud is something that can’t be delivered to the customer on a forklift because it’s a service delivered via the pipes of the Internet. Everything that makes it go lives in one or more remote data centers that the customer never touches and rarely, if ever, thinks about. Just like Salesforce.com, where the customer needs nothing more than a browser running on an Internet-connected computer or iPad or smartphone to get started. Or Amazon Web Services. Or Google Apps. Customers pay for what they use, have nothing to manage, install, maintain or upgrade, and stop using it when they no longer need it. Easy, economical, cheap and accessible to everyone.

To Ellison, the cloud can be a hybrid. Certain customers — like the many large companies that are Oracle’s stock in trade — fundamentally distrust the notion of handing their data off to a third party. They run software applications on hardware that’s installed on their own property, or in combination with hardware that Oracle runs for them. On this side of the debate you’ll find not only Oracle, but also other companies with established IT hardware businesses, IBM and Hewlett-Packard among them. Expensive and time-consuming it may be, but real companies doing real things traditionally own their own assets, the argument goes.

As Benioff tells it, this is the “false cloud.” He’s been using that phrase incessantly for some time, and he seems in recent weeks to have deliberately stoked the controversy. At a follow-up panel to his OpenWorld keynote in 2010, he was more direct. Hardware of the type that Oracle sells can be eliminated entirely in the age of the cloud. Fighting word for Oracle, especially when uttered in front of Oracle customers.

And Benioff isn’t the only one throwing punches. In 2009, Ellison described Salesforce as an “itty bitty application” that happens to run on Oracle databases.

But as is always the case with public grudges, it’s more complicated than it seems. There is a personal element to it all. Before starting Salesforce in 1999, Benioff was Oracle’s star employee. He spent 13 years at Oracle. At 23 he was named the company’s Rookie of the Year, and at 26 was the youngest person promoted into the VP ranks. He was in many ways Ellison’s star student. Charles Babcock, writing in Information Week, remembers an Oracle event where Ellison tapped Benioff to address a customer question, and he commanded the stage in a manner one could describe as Ellison-esque.

When Benioff left to start Salesforce, Ellison was an early investor and sat on the Salesforce board until a falling out — spurred largely by Ellison’s backing of Netsuite, another cloud outfit started by two other Oracle alums, Evan Goldberg and Zach Nelson, whose offerings overlap competitively with those of Salesforce.

Obviously Benioff learned well from the master. A classic tactic from the Ellison business playbook is to prod or cajole your quarry into a public PR fight. Look at all the times where Ellison has been brazenly outspoken: Defending, then hiring Mark Hurd after his sudden resignation from HP last year; publicly chasing Hurd’s replacement Léo Apotheker out of his office on his first official day on the job by attempting to serve him with a subpoena; squabbling with Autonomy CEO Mike Lynch.

So who won this round? The conventional wisdom has to give this one to Benioff. With the cancellation of his speaking gig, he’s attracted more attention than he would have otherwise saying whatever he wanted from Oracle’s stage, a fact about which Benioff crowed to the New York Times last night, calling it the “best possible outcome.” It does look like Benioff planned for this result.

However, this long-simmering feud, now that it has boiled over so publicly, is far from over.

Benioff tweeted tonight that he’s been bounced from the speakers roster at the Oracle OpenWorld conference in San Francisco, and he’s blaming the decision directly on Ellison.

Larry just cancelled my keynote tomorrow! Sorry #oow11! Join me @ St. Regis AME Restaurant at 10:30AM! The show must go on! Sorry Larry!

October 4, 2011 5:52 pm via Twitter for BlackBerry®ReplyRetweetFavorite

@Benioff

Marc Benioff

I just got a statement from Oracle’s Deborah Hellinger, who says the move was simply a change in schedule, and had more to do with the heavy attendance at the conference than anything else.

“Due to the overwhelming attendance at Oracle OpenWorld we had to make several session changes,” Hellinger wrote. “The Salesforce.com Executive Solution Session was moved to Thursday at 8:00am in the Novellus Theatre.”

Thursday is, notably, the last day of the conference — there are no other speaker sessions on the roster for that day, and this change to Thursday’s schedule hasn’t been made to the Oracle OpenWorld Web site. However, it has been updated: There’s no longer any mention of Benioff’s once-scheduled Wednesday keynote.

Benioff, who is a former Oracle employee, had been scheduled to speak at the Novellus Theater at the Yerba Buena Center for the Arts on Wednesday at 10:30 am. He has since set up an alternate venue — a restaurant at San Francisco’s St. Regis Hotel.

Here’s one possible reason: Benioff’s recent Dreamforce conferences, held in San Francisco and elsewhere, have contained a lot of references to the “false cloud,” and have included Oracle in that description.

Also, it wasn’t for nothing that Oracle, which does a significant business in Customer Relationship Management (CRM) software, advertised heavily around the time of Salesforce’s recent Dreamforce conference. Salesforce, as we all know, does CRM in the cloud, and has a lot of momentum behind it of late. This could just be Larry Ellison’s way of expressing his unhappiness with Benioff.

Chances are there will be more of a backstory to this new round of Oracle mishegas in the morning. For now, here’s an excerpt of a recent Benioff speech in Boston, in a video shot by IDG’s Computerworld. The final slide shows an Oracle Exadata machine with its logo barely obscured. Makes you wonder why Oracle offered Benioff a speaking slot in the first place — and why Benioff accepted it.

Update: Well, here’s an interesting wrinkle. It seems that when CEOs speak at these conferences, often, but not always, they pay a fee for the privilege to do so. In this case, as Benioff has told Quentin Hardy at the New York Times, Benioff had paid Oracle $1 million for stage time at Oracle’s conference, and would have likely delivered some variation of the “false cloud” speech he’s been giving of late. Someone at Oracle may not vetted speakers carefully enough and gave Benioff a slot — he did have one last year. Ellison, I’m told, got wind of it, and being aware that Benioff has been slamming Oracle in his speeches lately, canceled the date.

Still, Benioff can declare victory — and he is doing just that. Taking a page from Ellison’s own playbook, he’s managed to pick a fight, and is scoring some publicity points from having drawn Ellison’s ire. As Benioff told the Times: “This is the best possible outcome … “It’s free publicity, and it is clear that Oracle is threatened by us.”

Also? He gets his money back.

Founder and CEO Marc Benioff outlined a simple social vision in his opening keynote that ties corporate success to the ability to connect with consumers.

“We were born cloud, but today we’re reborn social,” thundered Benioff.

He noted that customers are far outpacing businesses in adopting social technologies.

“Our customers and employees are being social,” he said. “What about our companies? Are our enterprises social? Am I doing enough to listen to customers and employees? It’s more important to listen than ever before.”

How important?

“We’ve seen Mubarak fall, we’ve seen Gadhafi fall,” he pronounced. “When will we see the first corporate CEO fall for the same reasons, because his or her customers are rising up or because they’re not listening to their employees?”

Many hailed Benioff’s speech as the start of a revolution in how businesses operate, with Salesforce.com as the social enterprise operating system.

One such convert was Susan Scrupski, the founder of the Social Business Council, who blogged about doubts she was starting to have about the ability for social to transform a business. Those doubts were shattered by Benioff.

“My crisis of faith ended on the morning of August 31, 2011,” she wrote shortly after Benioff’s keynote, in a blog post titled “A Social Baptism for the Enterprise. Hallelujah and Amen.” “[Benioff] killed it in his opening keynote for Dreamforce 2011 with the messaging I (and many others) have been consistently preaching for the past five years.”

Anyone who says Benioff’s speech wasn’t awesome is just flat out lying (or didn’t see it)! The content was dead on. His tone was upbeat. He worked the room AS HE TALKED, saying hello to at least a dozen people by name, including the CTO of Coca-Cola.

The supporting visual effects were flawless.

While dramatic and filled with pomp and prose, Benioff’s ideas were far from new.

His “vision” is my yesterday, today and tomorrow. He announced his company’s social rebirth in 2011 as if it were 2007 and the social enterprise movement was just starting. Meanwhile, far away from San Francisco, many of the largest corporations in the world, with whom I work and speak to regularly, are leaving social adolescence behind.

Even his comment about the Egyptian uprising was almost verbatim of what I said at my SXSW panel last year, “How Brands Respond to Facebook Attacks.”

Despite being somewhat short on new ideas, Benioff’s keynote was indeed a tipping point. It was a defining moment, as the most successful and philanthropic person in business software in the last decade warmed up for Metallica by confirming and validating the work we’ve done since 2007 that social will impact the enterprise in a big way. And just like he ushered in a new era of computing (cloud versus on premise), he has ushered in a new era of connecting.

It’s an era where customers, vendors and partners are no longer anonymous segments that you “source,” “manage” and “market to.” They are people. People you connect with. Talk to. Advocate for. Listen to. And if you’re lucky, they sell for you, solve problems for you, defend you, listen to you and build your business for you, one conversation at a time, while you sleep.

What another Mark (Facebook’s Zuckerberg) calls “social design,” Benioff now calls “Social Enterprise” — a term many in the industry have been using for years, and which still means many different things to many different people.

It’s been used since at least 2008, to be exact. Jeffrey Dachis, the co-founder of Razorfish, used the term in a headline to launch his company in April of that year — “Austin Ventures Announces Partnership With Jeffrey Dachis to Create Social Enterprise.”

“I believe there is enormous opportunity in helping companies devise and implement a strategy to engage their constituents in a meaningful dialog throughout the enterprise,” Dachis wrote three years ago. “As companies begin to see the benefits of utilizing ‘social’ technology to engage their customers, employees, suppliers, shareholders, and communities in an active and transparent dialog, they will need a trusted partner to help them navigate the opportunities.”

In a 2007 interview with Inside Facebook, Clara Shih, who wrote the book “The Facebook Era” while she was employed by Salesforce, stated, “The next generation of CRM won’t be about software. It will be about relationships, and social networking sites by design are 100 percent about relationships.”

This is exactly what Benioff outlined at Dreamforce (four years later!). We were a software company (“cloud”). We are now a relationship company (“social”). If Clara had stayed at Salesforce, maybe Benioff’s vision would have become a reality years ago.

Much of my focus at Buddy Media over the past four years has been building software that many of the world’s largest brands use to help them connect to their consumers, partners and employees. I’ve been the direct beneficiary of exactly what Benioff and Salesforce.com is now trying to plug in to — pent-up demand from very large businesses that want technology to let them directly connect with their customers and fans, and engage them at scale.

Fueled by $90 million in funding and a team of software engineers that have grown up using social tools like chat, IM, text, Facebook and LinkedIn as their primary communication modes both at home and at work, we have posted 300 percent annual revenue growth by building easy-to-use but powerful enterprise social software. We went from 40 people a year ago to 200 today living Benioff’s dream.

In a blog post after our last round of financing, I wrote about the exact shift Benioff highlighted at Dreamforce: “We are in the midst of a massive shift online from a search and intent-based world to a social, people-based world. The last three years were about the consumer side of social platforms, as we watched Facebook, Zynga and Twitter grow exponentially. The next three years will about the enterprise side of social, and how companies engage and grow their businesses by tapping into these massive platforms.”

The record is now clear. All legacy software companies missed the first four years of the social wave and are trying to play catch up. They continued to focus on business problems — sales force and marketing automation, HR management, financial compliance, expense management, content management, analytics and CRM systems. They ignored most of what happened outside the walls of the company, with customer actions and reactions, thoughts and wants, needs and desires at the top of that list.

Saleforce.com started its effort last week to move from software systems to human systems. My bet is that the company gets there. But most software companies will not.

In the advertising and communications space, which I am most familiar with, companies don’t just want to shout. One-way marketing and blasting of messages is no longer the only tool in their box. They want to listen, engage, learn and communicate. They yearn to be more human, even though humanity and corporate America has a long history of mutual exclusivity.

This means that we have had to put people first, and then build features the businesses need, not the other way around. Consumers don’t care about work-flow, permissions, analytics, auditing, compliance and security features. Businesses do.

Burberry is a prime example, highlighted at Dreamforce, of a company that transformed itself, evolving its 155-year-old British luxury brand into a connected organization. (For an idea of how far they needed to go, one of the only people I knew who wore Burberry growing up in the suburbs of Washington, D.C., was my grandmother, Betty Myerberg, who swore by their scarves. Burberry was synonymous with British, plaid and boring, far from where they are today. I now often see lines to get in outside their store on Columbus Avenue in New York.)

Burberry CEO Angela Ahrendts gave advice to skeptical CEOs at Dreamforce, saying “you have to create a social enterprise today, you have to be totally connected with everyone who touches your brand. If you don’t do that, I don’t know what your business model is in five years.”

The irony here is that Burberry in many ways “got” social long before Salesforce. Did you know that the company has more than eight million fans on Facebook, more than four times the largest fashion magazine’s Facebook page (Vogue). Vogue no longer controls Burberry’s access to people.

Burberry’s stock price has increased in lockstep with its social investments in the last two years, rising close to threefold in the time period. Social media fluency is a leading indicator for stock price today.

In the future, all businesses will reorganize around people, as failure to connect is not an option. It’s a corporate death sentence.

Much of my next year will be spent with our customers, talking about how they can put people at the center of their business. Companies have always had their own social networks of customers, potential customers, friends of customers, partners, vendors, employees and more. The difference today is that tools and strategies now exist to create a virtual representation of these graphs, to uncover them and enlighten them, much like Facebook has done with each of our real-life social graphs.

It’s the ability to efficiently increase shareholder value — the ultimate ROI! — that makes me so excited about the next phase of social media, social marketing, the social enterprise or whatever you want to call it.

On behalf of Buddy Media, Dachis Group and other social enterprise leaders, I wanted to be one of the first to welcome Marc and his company, the self-proclaimed social media baby, to the social revolution. While you’re new to the party, I have no doubt that you will help companies move further and faster along the social adoption curve and have a long and prosperous social life ahead.

Thank you for bringing much-needed attention to our space, and together we can help companies engage in a two-way dialogue, wherever their customers live, work and play online.

Michael is currently Chairman and CEO of Buddy Media, Inc., a New York-based company whose social enterprise software is used by eight out of the top 10 global advertisers.

There are three big announcements coming in Benioff’s remarks, and they’re all connected to Chatter, the social enterprise service that Salesforce promoted in a pair of TV ads that aired during the Super Bowl; Chatter will appear as part of the next upgrade to Salesforce.com, called Winter ’12. The whole idea is to deliver a Facebook- or Twitter-like experience that supplants traditional collaboration methods like email and meetings. Salesforce says its clients who use Chatter are seeing email volume decline by 30 percent; meetings decline by 27 percent.

The first is Chatter Now, which will deliver real-time collaboration within Chatter itself. You’ll be able to see if your colleagues are signed in and available in real time — kinda like on AOL instant messenger or Skype — and you’ll be able to chat and share your screen without leaving your Chatter feed.

The second is Chatter Customer Groups. You don’t need to collaborate just internally, but also with people you do business with. You’ll be able to invite people from outside your company into your Chatter network, and can set rules on what they’re allowed to see and do.

Third is Chatter Connect, which is intended to entice software developers to work Chatter into other enterprise applications — many people think this is where the real action is in the social enterprise field. Ask the soon-to-be-public Jive Software, which can add social features to, among other applications, Microsoft Office. There’s also Yammer, which grabs social feeds from any application that has them, including, uh, Chatter. It’s not the newest idea under the sun, but Salesforce is off to a respectable start: Its first conquest is Microsoft’s collaboration software, SharePoint.

Finally, Benioff will talk about mobile devices. He’s a big fan of Apple’s iPad and has regularly talked about its popularity among enterprise customers. And while Salesforce.com has been available as a dedicated app through the iTunes App store for some time now, it’s about to get a lot more flexible through the iPad browser. Salesforce will announce touch.salesforce.com, which it says will bring the power of HTML5 to enterprise applications.

If HTML5 doesn’t mean anything to you, then you missed one of the more significant controversies about Apple’s iOS devices. They don’t support Adobe Flash, because Apple argues that Flash — which is used widely for Web video and animation — is clunky on mobile devices and drains batteries too fast. When it comes to multimedia and rich experiences on the Web, Apple prefers HTML. So touch.salesforce.com will be the place where users of iPads, iPhones and scores of other mobile devices will be able to go and get an experience that’s geared to their device without having to compromise on the Salesforce features they’re accustomed to on their desktops. Additionally, developers will be able to build their own apps, and all 220,000 apps built using Salesforce’s Force.com development platform will work with HTML5, as well.

That’s an awful lot for one CEO to talk about, and Benioff is a busy man. But, as in the past, he’s not too busy to give TV interviews that coincide with the Dreamforce conference. While he’s regularly found on CNBC’s “Mad Money,” on Monday he showed up on Bloomberg West for a chat with Emily Chang.

The highlight comes early in the interview, when Benioff links the Arab Spring — which has been propelled in part by Facebook- and Twitter-using protesters who have toppled a couple of dictators, most notably Hosni Mubarak in Egypt and now apparently Muammar Gaddafi in Libya. Companies are falling, too, Benioff says, but they have a fighting chance to survive if they get a little more social. Get it? Chang, to her credit, doesn’t let this pass without calling it an “extreme analogy.” She then goes on to quiz him about Salesforce landing Groupon as a customer. (And revealing that Groupon CEO Andrew Mason went to Davos. Who knew?)

What else about Salesforce is extreme? Its price-to-earnings ratio is insane, at 602 times trailing earnings; which, of course, leads to the question of whether or not Salesforce is overpriced. Benioff, true to form, dodges the question. It’s all about growing the topline and gaining market share now, he says. No change there. Enjoy the video:

Today, Yammer is boldly touting this fact at Saleforce’s Dreamforce conference, which gets under way in San Francisco today, with a new campaign Yammer is cheekily calling “Friends with Benefits.” The idea, says Yammer CEO David Sacks, is to try to highlight the fact that Salesforce’s Chatter.com — which it launched to great fanfare and at great expense with a pair of ads that aired during the Super Bowl — is really just a “social network inside your sales app.”

Yammer, on the other hand, is intended to integrate social feeds from numerous different business applications. Sacks calls it “social network sprawl.”

Yammer "Friends with Benefits" campaign

So what will Yammer be doing? A pair of mascots — one dressed as a Yammer logo; one that looks suspiciously like the Salesforce.com “no software” slash — will be handing out swag at the Moscone Center. They’ll also be sponsoring free coffee for Dreamforce attendees at two nearby Starbucks locations. Yammer has also unveiled a billboard, touting the campaign, outside its offices.

Things weren’t always so, er, friendly between the two companies. Earlier this year, Yammer made its irritation rather public with the video below, wherein Yammer essentially called Salesforce CEO Marc Benioff — who was a judge at the 2008 TechCrunch at which Yammer first launched — a copycat.

See? Frenemies!

One of the social enterprise companies getting a fair amount of buzz is Yammer. Initially known as a “Twitter for work,” it’s now transforming itself into something of a catchall for updates generated by numerous workplace applications.

Today, Yammer will announce that it will work with another application, and it’s a big one: Salesforce.com. The folks at Yammer used Force.com — Salesforce’s development platform — and Yammer’s own API to grab activity stream data from within Salesforce. Sales leads, deals, marketing campaigns and all sorts of other activity that gets entered into Salesforce.com become objects that can appear directly within a Yammer stream, which is essentially as easy to keep track of and interact with as a Facebook stream.

In fact, a Facebook stream is exactly what Yammer CEO David Sacks compares it to. “A few months ago we released an activity stream API that lets any application push activity stories into Yammer, the same way that Zynga can push items like the latest Mafia Wars score into your Facebook stream,” he says.

Yammer did the integration with help from Appirio, a cloud apps developer that gets tapped to do a lot of third-party integration work.

But doesn’t Salesforce already have its own social software? Why, yes it does. Its Chatter.com service launched to much fanfare with a pair of expensive TV ads that aired during the Super Bowl, which in turn kicked off a bit of a skirmish within Google search results that Yammer took part in.

It’s not as if Yammer were partnering with Salesforce here. Sacks says that Yammer just, well, did it. “The nice thing about the open API world that we live in is that you don’t necessarily have to seek permission to use these APIs.”

The wider point of Yammer, Sacks says, is to pull social data not just from one application, but from many. Not everyone in a company is going to be using Salesforce.com in the first place. The sales department might, and senior management might, but it’s of little use to, say, the human resources department or the accounting department. So Yammer talks to other applications, too. Case in point: Netsuite. Yammer announced an integration with that cloud-based business management suite of applications in May. It also works with Microsoft’s SharePoint and Active Directory.

And there will be more, Sacks says. “We’re seeing a trend with all these various line-of-business applications to build their own social networks into what they do,” he says. “And we’re already seeing customers and potential customers complaining about this, because they wind up with a dozen different social networks in their company and that defeats the whole purpose.” Yammer, he says, will be the middleman application that brings all those social streams into one place for everyone in a company. The comparison to Facebook is no accident: Yammer’s technology is based on Facebook’s Open Graph protocol.

So what happened to Chatter? Well, ask Salesforce and you’ll see some impressive stats and customer wins. Salesforce says that Chatter is used by 100,000 companies, among them Dell, Qualcomm and Lenovo.

But Yammer’s got 100,000 customers of its own, boasts three million corporate end users, and is adding them at a rate of about 200,000 a month. And there are some pretty impressive names among them, including chipmaker Advanced Micro Devices, LG Electronics, eBay and Thomson Reuters. And it got those without having to spend tens of millions on Super Bowl ads. A half-million of those customers are using the paid version of Yammer.

It’s a fast-moving business and there are numerous players. Another big one to watch is Jive Software, which was said last week to have hired bankers for a pending IPO, and which is being valued at $1 billion.

No wonder Yammer has done so well in raising funding. It has brought in a combined $40 million, which was topped off last November by a $25 million round led by US Venture Partners, with Emergence Capital, Charles River Ventures and the Founders Fund also participating. Ron Conway’s SV Angel was an early investor as well.