Transcription
I can't think of two bigger heavyweights when it comes to investors and builders and the economy: Mark Bennyoff and Ray Dalio. Some of you may be wondering how they ended up on stage together. So it goes back to this dinner we had—three of us, actually four, including Ray's wife—in Davos, Switzerland, in January. I thought these two, first of all, it would be explosive in terms of just ideas and brilliance. So I want to have a discussion with you guys about the changing world order.
I think there are loads of things we can talk about, from the politics to the geopolitics to the economics. But Ray, it might be helpful if you could just tell us where you sit and how you're coming into the discussion from a historical perspective, and then we could talk about where we think we're going. There's a monetary order; there is an internal political order—what this an order is, a system, system of operating—and there's an international geopolitical order. All of those orders end, and then there's a transition to a new order. All types of governments, everything. So, so they typically end with great conflicts, uh, wars, typically an internal civil war, changes in order, monetary order, and so on.
And there are five forces that drive that over that period of time. Those forces are: there's a debt money force, economic force, and how that works. So there's a big cycle of increasing debt relative to incomes until you can't do that anymore, and we have a big monetary issue that is going to lead to a big change in the monetary order that we're now facing. The second is that there's an internal political order, and then that cycle there, there's the left and the right, and when it gets to the point where there are irreconcilable differences over money and values, then there is a fight, and that is the internal order. So we are about, we are changing internal orders. The third is, uh, the geopolitical order; in other words, how does the world work? What are the rules of the world, of how countries interact, and who determines that? It's determined by the winners of the last war; they set out the rules, and they have the system. But there's a change in the world order as rising powers challenge existing, declining powers, and so we are seeing that change in the world order from one that was unilaterally, really largely controlled by the United States to something that's very different. So that's the third force. Throughout history, the fourth force is, um, actually having a bigger impact, killed more people than wars and so on, is climate and act of nature: droughts, floods, and pandemics have killed more P people than wars and toppled more orders, and certainly that's a big force and through history. The fifth force is, um, man's inventiveness, particularly of new technologies. And so when we think about this force, what an enormous force through AI and so on, and they inter, interrelate to each other to create big cycles that go from one order to another. And so we are now in that transition to new orders of all of those forms.
Mark, how do you take that and then position a company like yours, Salesforce, for the future? Yeah, where you're trying to build the AI, the agentic future. How do you think about, how do you process the debt cycle and the changing political order internally and externally and position for success?
Well, I think technology is part of it. So technology is a continuum; it's constantly getting lower cost and easier to use. And I think that when you hear about Ray's vision of changing world orders and all the different systems and how they are resolving and how they all will end up in conflict, and then a new order will emerge, I think you have to look at it also that technology is the continuum that slices through all of that. The next wave is the biggest, most exciting wave of technology in the history of technology; it is the shift to digital labor; it is the three, 3 to 12 trillion global shift where we are going to see digital labor take over. In Singapore, I've already seen it; I was in a restaurant which was had incredible robot workers. That's an example of digital labor. So digital labor is part of what is going on in the world today, and at Salesforce that also means agents, an agentic layer, which is that these robots are manifestations of software, and our big customers here in Singapore are deploying agents.
Does that, Ray, make you optimistic? Because a lot of the other trends and and forces that you describe I think are somewhat pessimistic, right, in terms of the debt, the debt cycle and everything else, but what's happening with technology, does that make you more optimistic about the future?
The question in all of these things is how are we going to deal with each, each other, okay? Because like great new technologies, they, they can be used for wars; um, they're going to create great displacements of people. You know, we have a, we have a b, we have a big issue in terms of when we look at the United States or a country, we look at it as a whole; we don't realize the differences and what in a country of 330 million people, 1%, 3 million people are responsible for most of the changes. If you were to look at that, they are the ones who go to the great universities, and they're innovators, and they make the unicorns and so on. Then the other top 10% is those around them who then do well; that next 30% is doing okay; and the bottom 60% has a reading level that's below sixth grade and is not productive. There are many unproductive people, and because they're unproductive, then they don't have the income and so on, and we have an issue, and that big social issue is important. So I think the question is above all else, you know, I don't know if we, it's always better to have better health care and better all the things that are going to come about that, but so much depends on how we're going to be with each other. Are we going to fight, for example, the new technologies, AI, um, technologies are going to me be able to be used for weapons, and those decisions are going to have to take place in a speed that's faster than human's capacity to think. So these things are going to be let loose on each other.
Talking overall about technology, you know, Mark, it's, it's hard not to be excited about the future you paint, but there's a lot of hype around it as well, and just want to bring in, you know, we're CNBC, we've been watching the markets lately; it's been brutal for some of these technology companies out there, and I just wonder how you think about the hype versus the reality, yeah, in the market and and within Corporate America.
Well, you're, you're right. I mean, when we look at the last few years, the hype, I mean, honestly, Microsoft has really disappointed so many companies; they kind of started with, you know, co-pilot, but they've really not found the value that they want to get to with AI. But now we're really seeing that happen with the agentic, uh, vision of the world, the idea that, uh, AI and agents can really be an opportunity for an incredible level of productivity, employee augmentation, another level of customer intimacy with customers. And I see when, when I see our large customers deploying these technologies, it, it's very exciting to me because, you know, what we like to do is really go from the hype cycle and then deliver the value cycle and really show, okay, this is how you're really going to deliver.
I was going to ask you if we're in a bubble. If you just look at history, what happens is one, when we call hype throughout the industrial revolutions, throughout history, through the dot-com bub period and the dot-com bubble, there are new technologies that are remarkable and reshaping the world, and then people get excited about those, and they don't pay attention to prices; that they think that because it's a great new technology, I have to own it, and everybody else owns it, and because of that, they don't pay attention to price. And so this looks very much like 1998, 99 to me, in a sense of, think about that digital revolution, wow, that was fantastic, and it continues on, but it's, it's better to buy a bad company stock in a bad company at a cheap price than it is to buy stock in a great company at an expensive price, and be, and so that's the cycle. Now you have a situation where interest rates can go up because we have a supply demand situation; the pricing of equities in many of these cases is, um, high relative to bonds expected to, you have a rise in interest rates. So when we're looking at it also, uh, let's say the hype, the super scalers, it's not going to be the super scalers I think that are going to make all that money; they just think I need a better on AI; it's the usage. Are there any companies? So you have this, you have this bubble developing in a precarious world economy that has the effects that you're seeing; it doesn't mean that technology is bad; it just means we have the other four forces that are bad, and we have high prices. Uh, another way to look at that is we've all heard about these multi-hundred-billion-dollar data center investments; every week there's another, another multi-hundred-billion-dollar data center investment happening, and, um, we have not been doing that; we're, we're a software company, so we're all about building that software over the last 26 years to run on those data centers, and we've just never seen prices this low for deployment because it is a huge level of investment, and when you get this huge level of investment, it drops prices, and that means that for us, we're able to run and deploy at a very low cost, and it's a commodity product, you know, data center against a data center against the data center, a chipset against G chipset against the chip SEC; these are fundamental, you know, commodities. So whether we're running on Alibaba in China or Amazon or Google or maybe somebody else in the future, these are just commodity centers, and the prices have never been lower. So you have this opportunity to take advantage of companies who are, are competing with each other to be the next generation hyperscaler.
Broadly speaking, Ray, we have seen a bit of an unwind in the in the US market; there's this idea, and President Trump said it himself, that he wasn't specifically trying to avoid recession, and he seemed cool with the idea; they're rebalancing everything when it comes to trade, potentially the US government deficit. Does it make you think differently about the US stock market and our prospects for recession in the US?
I think the first thing is, uh, the debt issue; we, we have a very severe supply demand problem, so that they have to sell a quantity of debt that the world is not going to want to buy, and that's a set of circumstances that is imminent, okay? That's, that's, that's paramount importance; the deficit must go from what will be projected now, uh, to be about 7.2% of GDP to about 3% % of GDP; otherwise, there will be a supply demand problem, okay? That's a big deal; you are going to see shocking developments in terms of how that's going to be dealt with, things that may not have happened in our lifetimes, but things that have happened throughout history. So that, that's an immediate consideration. The interest rate, what do you mean austerity like that? There may be restructurings of debt; there may be exerting pressures on countries to own the debt, to buy the debt, political pressures on countries; there may be cutting the payments of to some creditor countries off for political reasons and so on. So there may be monetizations of debt. If you look at history and see the repeating of what do countries do when they're in this kind of situation, there are lessons from history that repeat. It's correct that if we can eliminate waste, there's terrible waste in the government, and there's terrible waste in our society, and it's a reality that 60% of the population is relatively unproductive and living on this society. So many of the actions that are taken now have these second-order consequences. The state of Connecticut, which, um, is the richest, second richest state in the country, 22% of the high school students have either dropped out of high school or or are, um, um, failing with absentee rates of greater than, uh, 25%. So you have a situation, and, and now we're going to cut off food programs, school of lunch programs and so on in very big movements. How do you deal with such a complex mess of unproductive activities and all of these things in the first 100 days of an administration? Because you have to make the changes in the first 100 days, or you're not going to make it, and so that's, these are the questions I think.
Well, Mark, you bring in Elon Musk, I guess is one, one way to do it.
Well, I, I was going to ask Ray, what has been your biggest surprise in the last 90 days in terms of what has happened, uh, in terms of the series of announcements and changes? Has there been anything that's been shocking or surprising to you?
They're getting at it fast, and so this movement to a confrontational, um, big changes in the world order, I think has been baked; it's going to happen, and the fact that they're operating so quickly to that, and that'll lead to change questions: how does the legal system work and so on. So, but if you have to read history and you see these things, so would I be surprised if the legal system didn't hold up? Well, no, I wouldn't be very surprised.
Has anything surprised you, Mark? What do you think, what's been the biggest surprise?
We can't just be spending like drunken sailors for the rest of our lives, and that what is something that has been addressed in certain administrations; we were talking about the Clinton Administration delivered a balanced budget. That's the, what the, how is a different point of view, and the how can be, um, you know, presented in different ways, and the how can also be about speed; the how can be also about oratory, about narrative, and some aspects of the how are definitely surprising; some of them are entertaining, but I say that from the first Trump Administration, we know you can't expect or under know what the how is going to be.
That's exactly right. Um, I, I just want to say it's very simple: 3% of GDP. If they don't get to 3% of GDP, a budget deficit of 3% of GDP, we're going to have a problem, okay? Now, how they do it, that, that's a different question; they have political problems. I think every member of Congress and the President should say 3% of GDP, and we have a pledge, one way or another, we're going to get the 3% of GDP. Can they do that without taking us into recession, uh, yes, if you look at how that happened in the 1992 to 98 period and so on, there were three influences on this; there's the, there's the spending; there's the taxes, and taxes means tax revenue, not tax rates, and then there's also interest rates, and what'll happen if they do that right program, you're going to have lower interest rates. One of the biggest effects on their budget deficit is the interest rate; the interest rate cost is about a trillion dollars a year, okay? So interest rates have a big effect; if you improve the supply demand balance, you will lower the interest rates, and you'll also build a confidence and so on; it's very doable.
Well, the question is, is a trade war healthy? Because the market's also going down on that. I mean, Mark, you sell to so many enterprise customers, talk to so many CEOs; I wonder what you think of the latest tariffs, they're coming from left, right, Canada, Mexico, China, reciprocals coming on April 2nd. What are the CEOs you're talking to saying about it, and is that uncertainty leading to action, lower enterprise spending for inance?
It's about the the what and the how, you know, and the what is, yes, do I believe reciprocity is good? Reciprocity can be very good, you know, so you have like clarity, like if one country is treating you this way, you're treating that country with the same reciprocity, so you're on board, but, but it's the how also, and the how is very important, and you've got to put the what and the how together, and if you can't put the what and the how in a consistent, clear and meaningful way, then you could end up with high levels of volatility and conflict, and I think that that plays into then Ray, you know, worldview, yeah, where, where does the the trade tensions and tariffs ratcheting it up fit into whether it's the external order or or what you ultimately think will happen as a result of all this?
It's just an extension of the patterns of history. So if it, like, for example, if you looked at, um, European countries in the 30s, uh, like Germany in the 30s, and take an economic policy there was, um, write down the debts, um, create tariff, tariff revenue because you can get a lot of money from tariff revenue, and then build up your domestic, be nationalistic, be protectionist, be militaristic; that is the way these things operate. So I would say lessons from the past of what that looks like, and the the issue is really the confrontation of all of this, the the fighting of all of this. So tariffs are going to cause fighting between countries; I'm not what type of fighting, I'm not going to, maybe it's military, but I'm not necessarily talking about military, but think about us, Canada, Mexico, China, and all of those types of fighting; there will be fighting, and that will have consequences, and I think that's the main thing to pay attention to.
Do you worry about what it'll do to the global economy?
Do I worry about the global economy? The global economy as a result of all the trade barriers, um, of course, I worry about the global economy and our global well-being because of the sensitivity of interest rates, the debt situation, how we're dealing with the each other, but I also should emphasize that in history you can see that, um, there are the major countries, and then there are the neutral countries, and the neutral countries do extremely well during these periods of time; they get, um, people and capital that go to them; they are able to navigate in a certain way, the making of great prosperity and so on; it doesn't affect the whole world; it's, and there are beneficiaries of this too, like Singapore. If, if it remains a neutral country, and it's a very difficult thing to do, and it operates this way, then there becomes great opportunities, and so the world will vary when we make it; there, there will be a world situation that I'm concerned about; yes, I'm clear on that, but there's also this other world, these other worlds that, um, you know, get through it and are not involved because of where we're located.
Thinking about us versus China on where we're going when it comes to trade, where we're going on technology, does the US have a leading edge on AI against China, Mark?
I think that both have different approaches right now because, you know, I, I wouldn't say that the United States has a significant leading edge; you just saw one of the leading, uh, models which was DeepSeek emerge, but also now as I mentioned Alibaba's model as well, and there's other models as well, and there's different approaches with chips. So while there are US chips that are very good and very competitive, as we saw in the training of the DeepSeek model, there's different approaches with chips, and that there is nobody has a monopoly on training chips or on inference trips.
Where do you think this is going, Ray? We just took up tariffs 20% on China from the United States; how do you think they're going to deal with that, and also the coming technology battle?
Well, the United States is uniquely competitive in inventing the best chips; it's not uniquely competitive; it's uniquely uncompetitive in producing them. China, China is behind, but not by a lot in the in the best chips, and they try to get the best chips, but they're ahead in making more chips and making those chips, producing those chips, and having those chips work together in applications, and they're integrating chips with robots, robotics, so, and, and way ahead on that. So the application and the usage, I mean, there's going to be a big competition, but that's what it really looks like today. We're moving into the digital labor revolution; it's this 3 to 12 trillion opportunity; it involves agents and digital agents in an agentic age, but it also beholds a robotic age, and in the robotic age, who is going to make the robots? I think that that's very impressive what the Chinese have been able to do with this robotic age. So the robots, the agents, AI, this is all part and parcel of the future.
Mark, what does the robotic age mean for the workforce?
Robotic age means for the workforce that we are going to work hand-in-hand with agents and robots. I've told my employees, my customers, I'll be the last COO of Salesforce who only managed humans.
We'll leave it there. Thank you guys. I'm, I'm so glad we did this and very honored that you are both here for this discussion. Thank you. Thanks for inviting us.