Are AI Agents the Future of Business? Salesforce Is Betting $8 Billion on It

0:00How are the U.S. businesses of Philip Morris International invested in America? We're invested in advancing science, giving adults who smoke better options. We're invested in American manufacturing, helping local economies thrive. We're invested in community, supporting military veterans and their families, disaster relief, and economic empowerment. Because we're proud to be invested in America. See how at USPMI.com. Mims, so many companies, even surprising ones like Clorox and McDonald's, they're using AI for things like customer service and product innovation. But how does that actually work?

0:42Based on what I've heard, I've got one word for you. Agents. Like secret agents, talent agents, who I need to call about this job, travel agents, what do you mean by agents? I'm talking about AI agents. AI agents are advanced computer programs that can do tasks for you. And we talked about this with Salesforce CEO Mark Benioff last year. But we're about to hear from a CEO who is actually selling his company to Benioff and Salesforce for$8 billion in order to take this technology to the next level. That's next.

1:22Informatica is a company that's been around since 1993. It's not a household name, but many of its clients are. And CEO Amit Walia helps them manage the mountain of data that modern companies generate. That data is even more important than ever, as it is helping companies fuel their ambition in artificial intelligence. AI, after all, is powerful when it runs on proprietary information. It allows companies to set up AI as customer service representatives or to glean new business insights from their operations. But it takes work to make that data usable. And businesses like a pharmaceutical company doing drug discovery can't afford to get the wrong answers.

2:08In the enterprise world, everybody's ready for AI, except their data. So I think we expect the same for the world because on the World Wide Web, the data is free available. And by the way, if your answer is 95 % accurate or 90 % accurate, you're not going to have a wrong drug or you're not going to have a wrong product that will bring down a particular infrastructure. You can't afford to do that in enterprise, right? That puts Wally in position to understand how everyday businesses are preparing and thinking about how to use AI. It also makes Informatica an appealing acquisition target. Earlier this year, Salesforce announced it had reached a deal valued at$8 billion to acquire Informatica.

2:49It's just one of the many big moves in Silicon Valley to gobble up AI talent, which has become so precious. AI is not created by AI. People are creating AI, and I really hope it stays that way and we control that. Talent matters. From the Wall Street Journal, I'm Tim Higgins. And I'm Christopher Mims. This is Bold Names, where you'll hear from the leaders of the bold-named companies featured in the pages of the Wall Street Journal. Today we ask, how are businesses preparing themselves for AI?

3:24Welcome. Before we talk about this blockbuster deal for Salesforce to buy your company, Let's set the table and explain what Informatica is all about. For a lot of listeners, this isn't going to be a household name, though many household names such as Toyota, PayPal, Unilever use your services. So in the most basic sense, what do you do? Great question. Well, I think in another way, it's sort of blockbuster. Maybe you call it the Netflix. It's the next gen, the streaming world, the AI world. Absolutely. It's not blockbuster. It's the Netflix. It's Hulu. It's Hulu, yes, yes. Well, look, Informatica, like you said, we are clearly not a consumer name.

4:06We serve consumers. Step back. I mean, Informatica actually is a data management company. What does that mean? I mean, look, we help enterprises create value from that data, help them bring data from all kinds of places within an organization. It sits in many places, Tim, in a very disorganized way, in bad quality. We bring it all together for them to do productive work with them, like, you know, do analytics, help understand how their business is doing or figure out what the next best offer would be for their customers or figure out how to create new products based on the data they have or govern all the data they have so that they can continue to make sure everybody within the organization has the right way to interact with the data and do other value added things on top of that data, like understanding your customer better, understanding your supplier better.

4:53All of those things are called data management, and we serve any of the Fortune 1000 names that you see across the globe, making them better companies to serve their end customers. Yeah, I think it's one of those things when you hear about the power of data is if all data is like maybe water and it can just be used for greater purposes. It's never quite that simple, right? You've got to pull it from all the different places. You've got to make sure it can work across the organization. It's very complex. And companies like yourself are kind of, if you think about ChatGPT, as everybody knows, the other end of that kind of world is a company like yours helping companies get their data ready to be used in however they need to do it.

5:34Totally. And I think ChatGPT is a great example, right? ChatGPT leverages the whole internet, right? And we index the whole internet so you can go out and search for any kind of data out there. We do that exactly the same thing for enterprises. In fact, we have our own GPT called ClearGPT. If we index the entire enterprise data so you can search the data and you can do something productive with it versus just writing essays as my teenagers have done with chat GPT. Right. But to be clear, you, I mean, this company was founded in 1993 and you've had kind of a twisty history along the way, right?

6:06Like you went private in 2015, public again in 2021. and you know meanwhile you've been rising up the ranks since 2013 what was your priority since you became CEO was it was it an acquisition like this I mean kind of think of it informatica as like one of your great Netflix series that's going on and it's like what season three season four pick your whichever favorite we're like season seven I think 10 whatever it is right This is like the law and order SVU of companies. 1993, you were founded. So we've seen many technology curves, and that's what makes this company very unique, that we've seen many technology innovations and trends come by and go.

6:50And what a state constant for us is that our North Star, that A, we have become, we've continued to innovate. And each technology curve, data has just become more important. We create more data, and we make a mess of the data we create. Somebody has to go out and make that more usable. So you're like the data janitors. Well, I don't like that. I would call it the data genie. We basically come out there and make, truly magic happens. Because you today in today's world, with a few clicks, you can actually do the stuff that 20 years ago was total serious amount of program, right? So whether it was the days of transactional databases, we saw the world of the internet, the world of big data, the world of mobile, and now the world of AI.

7:34And, you know, it's not just the same technology. Not only do technology curves have changed, technology trends have changed. We've also added many, many, many more capabilities. We were a single product company. Today, we are a platform with all things that encompasses data management. You know, it's integration, quality, governance, mastering, cataloging. 30 years ago, we started as a tiny single product company that did a small slice of data integration. So many of things have changed. But to your point, we have seen it all. And we've come out winners, bigger company, more innovative company.

8:06And that's what's very unique about us. I got to ask, if we create a pie chart of your customers, what kind of companies tend to be your customers? All large companies. So we serve enterprises. So pick names like Uber in the next-gen company world. By the way, Salesforce themselves are a customer. You know, you pick many of the airlines, JetBlue, you pick Royal Caribbean, you go out across the globe, NTT. Any country, large enterprise customers, government customers, the IRS, so on and so forth, end up being our customers because that's where the most complexity is and we help them. You're helping companies kind of make the transition in a fast-moving tech world, but you're also making the transition yourself as a company, right?

8:45I think earlier this year, Informatica stock dropped dramatically, something like 33 % after missing some revenue estimates. And in part, it was because your customers are actually moving their data from on-premise services to cloud too quickly. And so I'm just curious, what is that signal about where the customer is, where your business is this year going forward? Actually, to give that answer, let's take three steps back. We've gone through a tremendous amount of transformation. Actually, we were a public company, like you said before. 2016, we went private and we were a quintessential classic on-prem license software company.

9:21And when we went private, actually, we basically wanted to become a subscription company, with cloud being the driver. When I took over in 2020, I made the significant pivot towards being a cloud company. And within 2020 to 2023, we basically pivoted 100 % towards the cloud. And in 2023, we became a cloud-only company. Literally, there were customers who wanted to buy an on-prem product. And we said, no, we wanted to have the only singular force of going towards the cloud as we had built out the platform there. Along the way in that journey, I took the company public in 21 fall. And we got listed again on NYSE.

9:58So we were public, we went private, we came out as a public company again, and we basically pivoted to the cloud. But if you step back this year, starting from scratch, the company that had zero cloud business, we've guided to a billion dollar of cloud ARR. And that, if you look at many startups, we talk about billion dollar valuation. We built a billion dollar business from scratch within an existing company. Now, what we're doing along the way is that we've taken a legacy business and we're shedding it. We're moving it to the cloud and we are actively not selling it at all. It's kind of there as it moves to cloud or goes away.

10:31And we're okay with that because that's the hardest part. Companies stick to their legacies and hold on to it. And we knew that that's not where the world is going. So we pivoted very bravely and not many can do that, to be very honest. It's a very hard decision to make, to shed your old and build the new. And the new is usually done by startups. Now, along the way, what happens is that if you have basically, you're reducing one growing new, you're going to have a weighted average that goes down. But our cloud business, by the way, was growing mid-30s last year. We've guided to mid-20s this year on a billion-dollar run.

11:01And that weighted average going down. Weighted average because it remains mid-single digits because you have a billion dollar old on-prem business that is reducing. And you have a new business that's growing, so you can do the math. But the reality is that within, we built a startup within the company that is now a billion dollar on guidance revenue. And that's, of course, at scale, your growth rate is going to slow down. Right. But earlier this year, your stock plunged by about a third after you missed revenue estimates. We guided down. Yes, we guided down. and, you know, people want us to keep guiding up and we took a hit on that one and that's fine.

11:35I mean, you know, the stock was on a high up too, you know. And I think if we all look at the day the stock goes down, we can all look at the day the stock goes up and at the end of the day, life normalizes in the long term and you've got to be careful on that one. When we come back, we ask Walia why Informatica was worth so much money and what it means for the future. Why then were you worth$8 billion to Salesforce? Simple. Jenny I. Like I said, everybody's ready for AI except the data. They see it. We see it. They talk to the same customers we do. Stay with us.

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12:48You're experiencing the challenges of the next generation of technology just like your customers are. And in your role, I mean, you have great insight into what normal businesses, and I say normal, not just tech companies, how they're making these transitions in tech. And I'm just curious, you know, what you're seeing with businesses these days when it comes to AI. If you live in Silicon Valley or in San Francisco, where I do, you think everybody's gaga for AI. But what's your sense outside of the bubble that we're in? where are CTO's minds and the IT department's minds on this new technology?

13:28Yeah, no, I think you do the right word, the bubble we live in. Like I live in Silicon Valley too, right? I have startup friends, I have VC friends. And I think if you look at one part of the narrative, the whole world is being run on AI today. And the reality is that I always say when you lead Silicon Valley, you're in, let's say, Wichita, Kansas, and you have a customer over there. That's what the reality is. And then the answer is like anything, by the way, in some ways, it's not different than any other technology. in the enterprise world, the adoption takes time. Not for any wrong reasons, but the reality is that if I use this phrase that in the enterprise world, everybody's ready for AI except their data.

14:04So I think we expect the same for the world because on the World Wide Web, the data is free, available. And by the way, if your answer is, Tim, you know, 95 % accurate or 90 % accurate, you're not going to have a wrong drug come out or you're not going to have a wrong person passing through the immigration counter, or you're not going to have a wrong product that will bring down a particular infrastructure. You can't afford to do that in enterprise, right? So in enterprise, classically takes time and every cycle has taken time. And what happens is we hype it up and then we say, well, it's going to take over tomorrow.

14:35And then we say, well, it hasn't taken over yesterday. So what's wrong with it? Nothing's wrong with it. You know, think of the things like, first of all, your data has to be like, that takes work. Skillsets have to be there. You have to figure out the right use cases, blah, blah, blah, all that stuff you add up and it takes time so wherever enterprises are is that everybody's doing something with the eye make no mistake absolutely yes it's not a matter of if it's a matter of it and there are a lot of them are in what i call pilot pre-prod experimenting some have done production stuff but on the margin and where you are seeing is that everybody is laddering up because what we see in our in our corners of customer we are now getting ready we're doing the plumbing work to get the data ready because for example even if i got a use case ready.

15:16Now I got to make sure that I have the right governance on top of it, right? You don't want wrong decisions to come out. You don't want wrong answers to come out. You don't want wrong person accessing your data. If you're a pharmaceutical company, let's say doing drug discovery, you want to use AI. Even 99.5 % won't be very good for you. So they're all going through that. And I totally see that the risk is very high, right? Right for you. So that's where enterprises are. So why then were you worth$8 billion to Salesforce? Simple. Jenny, Like I said, everybody's ready for AI except the data. They see it.

15:50We see it. They talk to the same customers we do. They are users of our technology. They see it. And when you look at that, getting the data estate ready is the hardest problem right now. So wait, wait, wait. To translate that into just layperson's terms, you mean getting this unstructured data, which supposedly Gen AI can just chew through on its own. Even so, there's a lot of data preparation that needs to be done. The models have to be fed something. A model by itself. Can I just feed them everything that I'm storing in my Microsoft or BoxCloud or whatever? They'll hallucinate like hell. And hallucinate means they come up with crazy answers.

16:27They say that Bold Names is the best podcast ever. Oh, actually it is. So exactly, right? And then, you know, where do you go? How do you find the data, right? So, and by the way, the other one is that in any organization, not everybody's accessing all the data, right? You want to make sure that there is a model ready for doing, let's say, drug discovery. There's a model doing go-to-market campaigns. You got to have two different people accessing those. Models have to be trained for that. And by the way, nobody's looking to put all the data into some worldwide web for the model to be fed over there.

16:56They want the models to be working within the four walls. There's a lot of prep work to be done for that, right? So clearly, Salesforce being a customer of Informatica, they had some visibility into not just what you do, but the necessity of what you do. Could you take us inside that courtship? Did you get flowers from Mark Benioff? Did you go to the island in Hawaii? Please tell, give us a little bit of a TikTok of what happened. Just so you know, Mark has been a guest on Bold Names, and he dialed in from Hawaii, and we saw his dogs in the background. So it seems like a pretty nice place. Yeah, we know what's going on.

17:28Yeah. Well, look, I mean, I think Mark's an amazing guy. And obviously, he's got a vision. I mean, he's built something terrific at scale, and he's looking at the next big thing, which is all around where the agentic world is going. So when Mark and I chatted, and I think his vision was really bold. Wait, but how did that conversation start? Did he just hit you up on Signal? Were you guys already talking? How did this happen? Hit me up on Signal? No, I don't think we use Signal. I'm not a Signal kind of guy. They're not doing anything. That's secretive, to be very honest. Everything is fine. It's all public.

18:02We disclose everything. You'll see all the, you know, through the regulatory compliance process, everything being published. I've been looking at it this way in all simplicity, right? Mark and I chatted, and I think his vision was very bold. that agent force where he's taking the agentic world and the world is going to go agentic we all know that and he realized that the stumbling block everybody will face is at the data layer and this is what he wanted to hear from me first is like what's your vision and when i took him through our vision of ai which is our ai called clear and we were going with gpt and our vision for agent it just harmonized very well and he's talking to his customers his customers are telling him where the stumbling blocks for data is or stumbling for for ai to be successful is and And they are our customers.

18:38And they're telling him that, hey, in a lot of places, they use us. By the way, the other thing that was very important for both sides was also that, obviously, look, there are two things that matter at the end of the day. It's the innovation you build, ultimately, in tech. It's all about innovation. Second is people. Ultimately, people are still building innovation. So he wanted your talent to some extent. Absolutely. And the values on both sides matched a lot. In fact, we have our values data. Do good, act as one team, think customer first, and aspire to innovate. And they have their values.

19:07And it was literally a match. I mean, different words, how they phrase it, but literally a match. And that matters a lot to us. Well, let's take a step back here because really what Salesforce vision for AI is that they use these things called agents. So essentially the AI can go maybe perhaps do customer service for a company. The idea being the customer will come and plug in their data in a way that will allow that to work. And so that's why I would imagine he was interested in your company because you need help cleaning up that data. But one thing I wonder here is Informatica has been called the Switzerland of data because you work with everybody.

19:43How does this change the game once this deal goes through? It's, I believe, on track to close in early 2026. Is that correct? It does not change. Absolutely. They were very clear in saying that. And that was one of the big discussions we had. In fact, I think people sometimes confuse. They have no desire to change it for all the right reasons. that ultimately the Switzerland of data, the metadata that we collect, all of those things become extremely important the wider they are, the bigger they are in the context of the agentic world for agent force in particular. So they want that and they were very clear, Mark was very clear that that doesn't change.

20:17So that does not change. And by the way, we talked to all of our partners and give them and they all see that. So none of that changes. That's important. That's important to us. That's important to them. And that's important to our joint customers. I guess one of the things I'm curious as we talk about this deal, it seems like, okay, you know, we can understand why you would want to do it. Why did the talks break down last year? I'm looking at Bavia today and Bavia going with that. And I think, so I believe in generally in life, there's always things happen and things happen. The right things happen at the right time for all the right reasons.

20:50I'm a big believer in those. And I think we can always try to always piece part thing, but in life, things happen when they have to happen. You can try as much as you want to. We're all analytical people. Sometimes we can put our head against the banger against the wall, even when we're developing products. Sometimes we're ahead of the market, by the way. And I've thought there was a product that we were ahead of the market and we, you know, we did take off. It took off much later. I'm like, why? It made so much sense. But sometimes things have to happen when they have to happen. So you just couldn't come to terms in 2024?

21:19for? You know, I think I look at it where we are today. I mean, I think we'll do all the right reasons. We love the drama. Give us the drama. I think, what is it? We can create drama. For the lack of not having drama, we can create drama. Unfortunately, remember, we are the boring enterprise B2B software company. We believe in reducing drama. Well, you're not so boring because there have been some critics of this deal. I think some worry that Salesforce acquired MuleSoft in 2018, essentially kind of one of your rivals. So don't they already have some of this in-house? And then one of the co-founders of Informatica was telling MarketWatch before this was announced that he thought it would take five years to integrate Salesforce in your company, and that this was really about Salesforce trying to bulk up its revenue and its engineering.

22:17What do you think of those criticisms? So on NewSort, first of all, look, first of all, our business is much broader. We do data integration, app integration, and data quality, blah, blah, blah. It is a very, very broad suite of data management. From the outside, some of the worlds look very similar. From the inside, that's not very true. In some cases, very complimentary. They do a bunch of API related stuff that we don't do. We do a lot of AI. So I think how people perceive that to be on paper is actually not true. I mean, I can't comment on what people have to say. You really want me to comment on that?

22:54I don't know the guy, never met the guy, no clue what he does, where he is. Anybody can have it if it's a free world, remember, right? So I'll leave it at that. It's still a free world, I guess. But you are, I mean, especially in AI, there is this incredible, incredible arms race for talent right now. I mean, reportedly$100 million deals. It's like people are signing LeBron James to a five-year contract, but it's AI engineers. You and I have to go find those deals. We're looking, trust us, trust me, we're looking for it every day. Here's the thing though, right? So, you know, Meta has been spending money like it's water.

23:32and presumably that was part of why Benioff wanted your company, right? You have experienced seasoned talent. What do you think is driving this talent arms race? Well, no doubt talent matters. Absolutely talent matters. AI is not created by AI. I mean, maybe someday it'll be like some AI will write its own AI and AI will deploy its AI and all of us will be sitting there watching this whole show happen. That's a creepy world. I don't want to be in that world. people are creating AI and as long and I really hope it stays that way and we control that talent matters and and and very clear like and and when Marco's okay this company has amazing talent we make the best products because we have the best people in the world making the best products it matters at the end of the day so no doubt that's very true and and we're proud of that one and and like I go back I mean without talent where are we gonna go it's true in our case and it's gonna be true in any tech curve, right?

24:25But there have been, I mean, to date, there have been tens of thousands of net job losses in tech in, I believe, the past 12, 18 months. So it's not about any kind of talent right now. It's about AI talent. Why is AI talent so special right now when, you know, Microsoft is announcing thousands of layoffs and the like? I mean, look, in some ways, it's why is AI talent? Because it's the next gen thing. Not many people know about it. And to be honest, whenever a new technology has come, and there's always been a few people at the beginning who know that technology, right? I mean, and then, of course, as and when the technology becomes more mature, more and more people know that technology and that talent war eases out.