What Companies Can Learn From Salesforce’s Doomed Exploration Into NFTs
Salesforce announced in February its plans to develop NFT Cloud, a virtual marketplace where users can buy and sell non-fungible tokens (NFTs). To the public, the news from the San Francisco, cloud-based software company and customer relationship management (CRM) platform, also a widely used tool in the promotional products industry, was certainly not scandalous; rather, it seemed Salesforce was following suit to other companies breaking into NFTs. But when it was announced internally, Salesforce employees disagreed. Less than a month after the announcement, more than 400 employees had signed an open letter protesting against it.
The letter, which was addressed to Salesforce co-CEOs Marc Benioff and Bret Taylor, cited fraud and environmental concerns as reasons against it, explaining how the NFT Cloud would challenge the company’s five pillars of trust, customer success, innovation, equality and sustainability. One unnamed Salesforce employee told the Thomson Reuters Foundation that he’d quit if the NFT plan follows through and “find a company that lives by its stated values.”
Lesson No. 1 – Align Company Values Today And Into The Future
The sustainability aspect points to the first lesson learned from this, which is the importance of being vigilant to how future plans align with current values. Part of employees’ complaints centered on the advertisement Salesforce debuted during Super Bowl LIII. “The New Frontier” featuring actor Matthew McConaughey, poked fun at the space race and Elon Musk’s investments in space exploration, and promoted Salesforce’s commitment to sustainability. In the 60-second ad, McConaughey states, “It’s time to engage. It’s time to plant more trees,” noting a need to focus on restoring the earth over investing in the metaverse.
The misconception around NFTs is that because they are virtual, they have a gentler environmental impact—that’s simply not true. NFTs have a massive carbon footprint. A recent study by NFT Club, an online community of NFT buyers and sellers, found that each NFT transaction would require the planting of 1.4 trees for a resulting carbon offset.
NFTs have such a large footprint because the many blockchain-based activities associated with NFT transactions, such as minting, bidding, selling and transferring ownership, require high power to operate. A single transaction using Bitcoin, a popular cryptocurrency, is estimated to use about 1,173 kilowatt hours of electricity, or the same amount of energy needed to power the average American home for 42 days according to a recent report from MoneySuperMarket, a UK price-comparison website and financial services firm. One study by the University of Cambridge estimated that Bitcoin mining consumes more energy each year than the country of Argentina, or the amount of energy used by Google, Apple, Facebook and Microsoft combined. When the energy to support these transactions is sourced from non-renewable resources, cryptocurrencies produce a significant amount of greenhouse gases, thus contributing to global warming. Salesforce’s NFT Cloud directly contradicts its sustainability pledge and in the letter, employees describe the financial gains of NFTS as unevenly distributed.
Lesson No. 2 – With Finances, Look Before You Leap
Another concern of Salesforce employees are scams prevalent in the NFT market, which is largely unregulated. The letter says, “The amount of scams and fraud in the NFT space is overwhelming,” and follows with, “We implore you to reconsider.”
Last year, the popularity of NFTs soared as the market topped $24.9 billion worldwide, and simultaneously so did the amount of fraudulent activity. In mid-February, NFT marketplace Cent temporarily suspended most of its NFT activities due to fraud, which primarily involved sellers exchanging NFTs that didn’t belong to them. Diving into NFTs would place Salesforce right in the midst of rampant fraudulent activity, yielding a host of new challenges coupled with the financial concern, and distracting from the company’s core mission.
Lesson No. 3 – Employee Feedback Counts
Inspired by a sabbatical Benioff took to Hawaii in the late ’90s, the company embraces a sales culture of “Ohana,” a Hawaiian term used to describe a person’s friends and close social groups as extended family. However, the oversight of these employees’ perspectives outlines an atmosphere that suggests otherwise. In addition to the employee who expressed plans to quit, the letter shared that moving forward with the NFT Cloud “could result in increased attrition.”
In response to the pushback, Salesforce scheduled a listening session with employees to collect their input. However, there’s no telling, as of now, what direction Salesforce will take.
Salesforce’s decision to pursue NFT Cloud, by the looks of employee reaction, is rushed; a hastened effort to get on board with competitors. Sustainability was recently announced as a core commitment, but with this news it appeared as a mere afterthought, and one that immediately went from a core concept to being out of focus.
Employees were rattled by the switch in focus and wanted Salesforce to reconsider how this investment, from both a financial and operational standpoint, would impact brand perception. With hundreds of employees pushing against the response, and some even threatening to leave the company, it’s a startling enough response to suggest an alternative plan.