This analysis was first published in SvD Näringsliv, in Swedish, on January 29th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

A philanthropist as owner. World-class artists like Alicia Keys, Foo Fighters, and U2 at the massive company party. Now everything may be about to change — activist funds have set their sights on tech company Salesforce.

In a large grey-blue hulk in San Francisco’s Mission Bay district sits the city’s newest hospital, UCSF Benioff Children’s Hospital. Standing below and looking due north, you see an enormous skyscraper — the tallest in the city — with rounded corners and walls of glass. That’s Salesforce Tower, an office building that also features a landscaped rooftop park with trees and shrubs, and a bus terminal.

The man behind both buildings is one and the same — Salesforce CEO and founder Marc Benioff. He funded the hospital, and the skyscraper is his new office.

Benioff is a well-known philanthropist in San Francisco, and the imprint of both him and his company is visible across the city. Since 2018 he has also been the owner of the storied magazine Time.

A busy man, in other words.

And perhaps a man who no longer has his full focus on delivering value to shareholders. At least that’s what activist funds Elliott Management and Starboard Value appear to believe.

They have recently taken billion-dollar positions in Salesforce because they want to see change. Over the past year the share price has fallen more than 30 percent, and high-profile acquisitions like the communications platform Slack look — in times like these — very expensive.

The equivalent of 283 billion kronor was paid for Slack in January 2021. That purchase can probably be seen as marking the absolute peak before tech stocks began their fall to earth.

Activist funds are nothing new for either the stock market or tech companies. But it’s harder to build momentum for a major change campaign when companies are already doing very well. The low-interest-rate environment during the pandemic benefited tech companies enormously. Stock prices surged and they hired tens of thousands of people.

Google, or Alphabet as the parent company is called, is a clear example. At the end of 2019, Google had around 119,000 employees. Two years later that number had grown to over 156,000. Today it’s around 200,000. The layoffs of 12,000 people last week should be seen in this light. It’s a modest pullback — not a real cut.

Now there’s a different momentum in the tech market, and that creates the potential to come in and drive change at a faster pace. This is where activist funds play a clear role. Unsentimental, numbers-driven, and with an iron grip on corporate governance. There may well be layoffs, a new board, and new management before they’re done.

Salesforce is in many ways a perfect candidate for this. Through a series of acquisitions, Benioff has over the past fifteen years transformed what was otherwise a fairly dull sales-support company into a giant that does everything from internal communications to marketing.

And they’ve done it in grand style. The offices are one thing, but you also can’t forget their annual conference — Dreamforce.

Salesforce books world-class acts and shuts down entire blocks of San Francisco for it. Metallica, Stevie Wonder, and Red Hot Chili Peppers have all performed — as have Alicia Keys, Foo Fighters, and U2.

But grand style often comes at a cost. Something shareholders may accept in a bull run, but which can stick in the eye when things go the other way. This year’s edition of Dreamforce is planned for September, though no artists have been announced yet.

Another thing that points toward change is the ownership structure. Benioff is the public face of Salesforce, but he owns only three percent of the shares. That makes him a large shareholder for an individual, but very small relative to the company as a whole.

Look at Spotify, for example: they have so-called dual-class shares, meaning different voting rights for different classes of stock. That means even though Daniel Ek and Martin Lorentzon own a minority of shares in the company, together they hold a majority of the votes.

The model is familiar from the US. Companies like Snap, Alphabet, and Meta all have a similar structure.

In practice, it means a handful of individuals control the company’s entire future by themselves, despite other large shareholders. Salesforce does not have this structure — and that’s exactly why it’s a strong candidate for activist funds.

The last time Elliott Management was involved in a major tech company that lacked vote control, there was change at the top.

That was Twitter — before Elon Musk bought it — and Elliott Management was a contributing factor in the departure of then-CEO and founder Jack Dorsey.

Now that tech stock prices have been pushed down substantially, many companies — in the US and in Sweden alike — are stuck with habits and a cost structure that feel out of place.

It’s probably only a matter of time before Swedish tech companies also receive a visit from a type of owner they haven’t had to deal with before. Companies like Truecaller have protected themselves by keeping control with the founders. The rest have every reason to keep a close eye on their new shareholders.