Good afternoon, ladies and gentlemen, and welcome to a virtual fireside with MuleSoft, hosted by Stifel. At this time, all participants have been placed on a listen-only mode, and we'll open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Tom Roderick. Sir, the floor is yours.
Excellent. Thank you, John. I'm Tom Roderick, application software analyst here at Stifel, and want to thank you all for joining us. Today, from Salesforce, we have joining us Mike Reeve, SVP, Investor Relations, and Simon Parmeter, CEO and GM of MuleSoft. As a reminder, what we'll be doing today, I'll be aggregating your questions on my end. If you'd like to email me your questions, send them to me at troderick@stifel.com. That's T-R-O-D-E-R-I-C-K at S-T-I-F-E-L.com. Feel free to send those to me throughout the call. Well, Simon and Mike, thank you very much for joining us. I know it's getting late in the day on the West Coast, which means it's getting very late in the day on the East Coast. Thank you all for sticking with us, and Simon and Mike, thank you for doing this today.
I thought what would be a great way to tackle this without making this the focus of the call, if we could just take a moment and tackle the question of the day. I think we all understand Salesforce is in the last month of its Q1, so I think we all sort of know that you're limited in the details you can share on the matters at hand. If you don't mind sort of tackling, what can you say regarding what MuleSoft is seeing in regards to the current selling in the demand environment in light of the COVID-19 pandemic that's out there? Kind of as a tack-on question to that, tell us a little bit more about what the company's doing to navigate the crisis. How have you been communicating with employees, customers, and partners throughout all this?
The floor is yours, but thank you again for joining us.
Well, thank you for having us. This is a great opportunity, and we're excited to talk about a lot that's going on for the business. On the macro scale, things continue to go significantly beyond expectations as part of Salesforce, which we're quickly coming around the bend to the two-year anniversary of the acquisition, May 2nd, 2018. Tom, to the first part of your question, A, it's a little early to be able to share anything definitive. I think Q1 will be pretty telling, and we'll have more track behind us. When you really look at this thing objectively, behavior in North America and Europe really only started to shift about four to five weeks ago, and the more significant shifts in behavior, shelter in place, et cetera, in many areas are days or even a few weeks old.
What has changed, obviously, is how we engage with our customers, partners, and prospects. The remote nature of that engagement, I think we've pivoted masterfully to be able to support that. We engage very thoughtfully and very effectively. Obviously, we also need to meet the customer where they are today. Depending on what market they're in, they're facing different dynamics, and so we've worked hard to be able to help our frontline people understand, A, how to help understand where the customer is, how to communicate in their language, and how to make sure that we're tuning our message appropriately. I think all of those adjustments, from how we engage using virtual media, for example, to the messages and the value that we bring to the customer, I think we've tuned very effectively and very quickly.
How the market reacts to this and what buying behavior will look like, simply I think the answer is going to be, let's see what the next month or two brings. It's just a bit early to really have our finger hard on what that reaction will be. In the conversations I've had with customers, it again depends very much on the market that they're in. Overall, MuleSoft remains at the center of what they're doing for their business. I mean, interestingly, when you look back at the 2008 to roughly 2011, 2012 financial crisis, organizations behaved obviously very cautiously, very conservatively, and yet still were very excited by and mobilized around their investments in MuleSoft and what MuleSoft does. The ideas of composability, nimbleness, agility, clock speed, time to market, the ability to be responsive, it's essentially all of that.
Those words are simply a representation of how do I remain or become even more nimble and flexible to address changing market conditions, opportunity, and competitive threat. What we do has tended to be pretty versatile in a variety of different economic climates, and I don't want to make any predictions about the future given the unique nature of the COVID crisis, but from what I can see so far, I believe that that resiliency should play out again in this situation.
Excellent. Great overview. Thank you for tackling it. I know it's a tricky topic right now.
Sure
wade through those waters.
Sorry to interrupt, Tom. Did you want me to spend a moment? Pardon me, because I didn't do justice to the second half of your question. Did you want me to spend a moment on the employee, what we're doing to support employees and how they work with customers, or did you feel that was well answered?
Yeah, I think No, if you wouldn't mind spending an extra minute on that, I think that'd be fantastic since we're all learning how to do this work from home thing in real-time here. We'd love to hear what you guys are doing about it.
I think number 1, Marc Benioff and the executive team, I think we've been very thoughtful, as Marc always is, around this type of situation. He very genuinely puts his customers, the employees, and the broader global community that we are all a part of, he absolutely puts that at the top of the list. It's interesting because by being so thoughtful, it allows the employees, frankly, and our partners to be comfortable and confident that they can go play their roles, they can go do their jobs, they can go take care of their families. They can go make sure that their parents are well taken care of, or how are they handling daycare when that's no longer available.
Removing those anxieties by providing the clarity and the confidence that he does, and that the leadership team does, and by being so clear about it, so declarative about it, I believe allows us to be as productive as we can be in this anxiety-driven and uncertain time. I think that there are organizations globally that are also taking up on that leadership and behaving similarly. I can see what a morale booster it is for the Salesforce employees, the 60,000 are so strong to be part of that global message and global set of initiatives. It's strengthening on a variety of fronts.
Understanding. That's great. Okay. We'll move on from COVID-19 talk and go bigger picture here with MuleSoft and the role in Salesforce. I think we've all seen the numbers, Simon, the deal's been a genuine success for Salesforce. You're CEO today, I guess if we go back to when the deal happened, and for a long time before that, you ran worldwide sales, service channels for MuleSoft. Would love to hear your perspective on why you think the revenue synergies worked out as well as they have on the go-to-market front. As you look forward now in your role as CEO, what do you want to change about those go-to-market approaches within the context of being part of broader Salesforce?
Got it. Good question. I don't want to oversimplify the answer, and in any way deprecate the question, so feel free to expand on it. The experience that I've had, the thesis, the investment thesis that Greg Schott and myself and Marc Benioff and Keith Block and others laid out, simply was, A, driven by the voice of the customer. Exactly what the customer was saying to MuleSoft pre-acquisition, the customer was saying post-acquisition, but Salesforce opened up yet another big channel to that market. The customer was saying, "I need this notion of composability," this idea of an API, a simplified example, is a Lego block. The idea that I take my business functionality and I'm able to break it down into these building blocks, expose it as APIs, and then compose it and recompose those business building blocks to meet whatever initiative is going on.
If it's Unilever driving new point-of-sale initiatives where they can drive promotions and upsell customers and cross-sell customers, to UnitedHealthcare, trying to provide a more cohesive experience for the customer in a call center. All of those experiences rely on the idea of being composable, which means quickly reusing existing business functionality and connecting it rapidly and getting to market, whether that's getting to market on the supply chain side or getting to market on the customer side. The big synergies that we've seen are simply being able to take those exact same use cases, the exact same power of that API-driven composable platform, and simply bring it straight into the Salesforce customer base. We've, in no way, deprecated our go-to-market effort and commitment as MuleSoft.
We've, at the same time, been able to expand our distribution and our access to customers and their success by leveraging the tremendous arm of Salesforce distribution. Really, we've been able to just, in the most simplest terms, we've been able to significantly expand distribution, and obviously, we're doing a lot on the product side as well. At the most fundamental level, what shifted was new avenues to market into markets that very, very much need what we do. When we think about customer experiences, which is all about Salesforce, we're uniquely able to power those customer experiences because that's where digital transformation is really, it's most prevalent.
You go back, you mentioned we're on the two-year anniversary of the acquisition now, Simon Parmeter. If we go back to when the deal was done, I remember there certainly have a lot of questions from investors and analysts saying, "Hey, the value of the MuleSoft platform is in neutrality." Why does Salesforce want to own that? I guess in hindsight, we always say, "Of course you want to own that, regardless of neutrality or otherwise." Tell us a little bit about how your customers have thought about that value of neutrality, and what it means to be part of Salesforce.
Great. Neutrality is important, it will remain one of the top questions that customers inquire about. It's very straightforward. They obviously need to believe and need to trust that MuleSoft and Salesforce will allow them to connect any application, any device, obviously those applications and devices represent data. They unlock data. We need to be able to unlock data across the enterprise, across the extended enterprise, any third-party application, any third-party partner. We need to be able to fully access as effectively as we would any Salesforce application. The customer problem, whether we're solving it as part of a joint effort with Salesforce or whether we're working independently with a client that is not a Salesforce client, the customer will always demand that we be able to connect everything. When we meet with a Salesforce client, they are equally as convicted.
I have a lot of Salesforce data, but I also have a lot of data and applications in many other ISVs and vendors that I work with, and I need to be able to be equally as effective in connecting anything, whatever I need to connect it. It's a very natural, logical extension. Salesforce, as I work with Marc and with Taylor and others, from a product strategy perspective, it's also very clear that Salesforce will never be one application for every single piece of the enterprise. We will not solve every problem. What we will do, however, is need to always engage. Whatever applications we bring to bear will demand that we engage all of the data necessary to make those applications effective. Customer 360 will have a certain percentage that is applications and data that is part of the Salesforce estate.
Other, like perhaps a loyalty system or another marketing application, may need to pull other sources of data that are equally as important to the customer's ability to deliver to their customers.
Yeah. Excellent. Okay. I think one of the things that investors also sort of wrestle with is the question of how much of the success from MuleSoft has been just pent-up demand amongst the Salesforce installed base versus use cases are changing, and there's a lot more that they can do with your platform than they could do even just two years ago. This might be a nice opportunity for you to tackle the idea of, or maybe share with us a few anecdotal use cases of how larger enterprises are shifting their usage of MuleSoft. Can you go through that with maybe one or two examples of some of these enterprise customers that have bolted this onto their Salesforce deployments and how those use cases might be changing right now?
Yeah, no problem. A couple of thoughts. There certainly was some pent-up demand, and I believe that year one with Salesforce, so let's just say our first fiscal together, which ended January of 2019. There was certainly pent-up demand, and I think we did a nice job of going to market together and being able to release some of that demand and help those customers. Now with the second year under our belt, that certainly wasn't pent-up demand as much as it was working with clients to help them understand what the power of MuleSoft can do for them and engage them and then prosecute a very complete sales cycle around that. I think year two, because we saw that first-year growth sustained through the second year, I think that we really see this as, and understand from the customers, that this is really a lasting need.
What's interesting is, to your question, the circumference of use cases. One of the things that's neat about MuleSoft is that the circumference of use cases is constantly replenishing. Think of it a bit like a lake. Every time there's a new project or a new initiative within the organization, I now need to think about harmonizing my supply chains for this new product line that I'm bringing to market. I need MuleSoft. I need to think about how I'm going to digitize my extended call centers, because bricks and mortar simply doesn't work. I'm obviously alluding to some of the things that will change with this COVID situation. I need MuleSoft, and I need Salesforce.
There's just this natural replenishment or constant stream of opportunity, where the TAM, as we continue to engage customers and bring them on board, there's another customer or another use case behind them constantly replenishing that TAM for us. In terms of the types of use cases, MuleSoft has always solved reasonably. We can solve the relatively rudimentary problem of connecting, let's say, SAP and Salesforce, or we can solve many more complex problems where we're talking about true application networks across the enterprise, where we are really providing that fiber or fabric across the entirety of the business. I'd say where things are changing is we are moving from maybe that first-year phase, which is I need to get more data into Salesforce. I need to connect more systems like that loyalty system I mentioned.
I need to connect more systems to be able to get the full value and really realize the multiple, the value that I want to realize from my Salesforce implementation. I would say that was stage 1 of the evolution. What we're seeing in the second stage, and I can briefly allude to the third, but what we're seeing in the second stage of that evolution is customers looking at more robust use cases rather than simply thinking of it as data, which is extremely important. I'm not minimizing that piece at all. The data is massive. What also can be done is really orchestrating new experiences for customers, for example.
When we think about that point-of-sale experience that Unilever's thinking about, wouldn't it be interesting at the point of sale if the shopping basket, and I want to think of it as a virtual basket or a physical basket, had certain Unilever SKUs in it, or other SKUs from different brands? Does that then, using AI, automatically provoke certain offers to that customer at point of sale, and perhaps on their iPhone before they've even arrived at the "checkout," where new offers can be made. That orchestrates a series of different applications and experiences, and that's where customers take it next, because that's when I was talking about composability earlier. That really is that notion of the composable enterprise, because you can pull those building blocks together very rapidly and be able to respond to those types of market opportunities.
If I thought about the third, it would start to be what's emerging. While we maintain absolute neutrality in the marketplace and be able to be that connectivity engine for every customer. I think the other half of it is how do we think also about how Salesforce customers, simply by having MuleSoft and Salesforce, can receive even more value. I think that leads us to some opportunities where bringing the solutions closer together, where customers, when they're using both MuleSoft and Salesforce, are yet even faster in their digital transformation efforts. What we see happening in this current market dynamic is, I think, going to be driving customers even further to accelerate their digital transformations, because what that ultimately does is allow them to be more customer intimate, more responsive, more nimble, and faster to market.
That's where we currently are and just a bit of a glimpse into where we're going.
That's great. I'm glad you kind of dove into the deep end of the digital transformation topic, because I think, I promised I'd steer away from the COVID-19 talk. It is interesting to sort of wonder what the world looks like on the back end of what we're going through right now versus what you've seen for the past couple of years on a digital transformation. I guess the question I'd be curious for your take on is, where do you think we are in the nine-inning baseball game of this digital transformation evolution? What do these transformations look like coming out of a potential recession that it looks like we're going into? How do they change?
Yeah. Important questions. I think as humans, at least me, I won't speak for anybody other than me. I often like to overstate where we are in the baseball game analogy that you shared, because I want to believe that I already know how it's all going to play out and I've mastered it. I actually think we're somewhere in the first few innings. It's my opinion. There is so much more. When we look at the estate, I think MuleSoft has a very unique vantage point with which to look into the enterprise. When we look at the estate of the enterprise, CIOs, CEOs, CTOs are talking about digital transformation. They are now in that phase where they're coming to understand what that actually means for their organization. They're in the definition phase. They are in the acting phase.
For example, when we look at some of the Gartner survey data, for example, it is a very high objective. Digital transformation is right at the top of their leadership agendas. They are going from discovery and definition into mobilization. I'd say that's their place, and it's somewhere in the first 2 to 3 innings. What's really interesting is how well what MuleSoft brings to the table around composability and the ability to gain access to data and APIs as a core strategy for the future. You bring that into the digital transformation engine that CRM represents and what, I mean, more broadly, CRM, like the ticker symbol, what Salesforce brings very broadly to the table. I think you have the application array that allows for that digital transformation powered by the data and composability.
When you put Tableau into the mix, now you have the analytic and data-driven insights and visualizations that make that even more powerful. To me, we're in the first few innings, and customers now are gaining stronger understanding of what it is for their organization, and a lot of that led by Salesforce and MuleSoft and Tableau helping them define that. Now we're engaged with them deeply in mobilizing against it. In terms of the what does it look like X number of months down the road? I don't want to be overly bullish given the pretty precarious situation that we're in. That said, I do feel that organizations will be using this time, one, to respond to their own customers and figure out their own path through this crisis.
At the same time, they will be thinking about what does the horizon look like X number of months from now, and how are we positioning our organization for that? In my opinion, we are going to be a very different, this is one man's opinion, we're going to be a very different society X number of months from now. The global community is going to interact and operate in a very different way. Virtual and digital experiences will be, I think, the lion's share of how customers and enterprises engage. I think the way Salesforce and the ecosystem that's part of Salesforce, including MuleSoft, are thinking about that and helping customers think about that, positions us and the customers in a pretty darn good place. Again, I don't want to be overly bullish.
I'm trying to use some of the experiential or some of the experiences I've had in past years, both at MuleSoft, which is now into my 10th year, and prior to that, to say, well, wait, history does repeat itself, and I think we can do pretty good. I certainly hope we come out of this okay, but I think we certainly can predict that the world will be a bit different. Therefore, fungibility and flexibility and agility, I do believe, will be the things that carry the enterprise forward.
I'll incorporate-
A long way of saying, I think we're going to be in a pretty good spot. Sorry about that.
I'll give you a chance to expand on it. I'll incorporate a question from the audience here that I just got in my email, and the question is effectively, what about utilizing MuleSoft as sort of the lead into a digital transformation? Instead of a lot of Salesforce customers and pent-up demand and utilizing their existing applications, what's the opportunity to go into non-Salesforce entities? I'm sure you've had success doing that. Would love to hear a little bit more about it with respect to MuleSoft leading the way for digital transformation, extracting data from legacy applications, pushing that customer into the cloud in a way that they could utilize Salesforce, which perhaps they hadn't already.
Yeah, absolutely. What you just described is what we do. Whether we're doing it into an existing Salesforce client or whether we're communicating that very message into a non-Salesforce client, it is always the same. One, we meet the customer where they are. What are they actually trying to do right now? Often that is a critical initiative of some sort. I'm State Farm, and I'm launching a new channel to market, and I need to be able to bring together these systems and this data in a way in which allows me to digitally transform that experience for my customer. I want a completely digital experience where they can go to any channel and receive the same information and the same service level, and be able to operate as effectively.
Our whole job is to meet them where they are in doing that, then reframe the conversation, help them expand. We call it broadening and elevating the conversation from, we're going to uniquely solve that initiative to help you get that done, to now see what you're building by taking this API-led approach, by thinking of this project, rather than hardwiring things together and hard coding it or using another tool that allows you to stitch it together but not really reuse it and leverage it. Actually thinking about it in this composable way, you're actually creating something broader for your organization. That's why it's important for us to elevate the conversation and engage the C-level.
Once they see that they're building this fabric, they're building this composability, we think of the enterprise of the future, even three to five years from now, I believe 80%-90% of the scale enterprise above that, and I'm talking about $100 million and up. Excuse that noise. $100 million and up, we'll serve the long tail in the market as well. In the larger enterprise, they will be thinking about how do I become the composable enterprise? How do I become the organization that doesn't build code and doesn't spend time stitching everything together, but thinks about 90% of that should be reused, 90% of that should be purely composable, and the other 10% would be truly my unique IT that I need to build for this situation.
Again, I think the straightforward answer on that one is whether we're working with Salesforce or working with a client that's not a Salesforce customer, we're often the tip of the spear in how they think about it. We are often the tip of the spear in how they think about digital transformation, because the first step, in my opinion, to digital transformation is how am I going to create this composability? How am I going to get access to data? How am I going to create an organization, think of it as an operating model, that is not a big monolithic system or set of systems, but rather chunks of business functionality, those Lego pieces, that can be composed so that I can create these digital experiences. When we think about digital also should mean fast, high clock speed.
I don't think we're really a digital enterprise if we've been able to figure out how to create digital experiences, but then can't be rapidly adapting those experiences based on the changing needs of the customer and the market and the competitors. That's exactly what we do. We start with meeting the customer where they are and then elevate the conversation.
Tom, I mentioned earlier, you obviously ran sales for a long time, almost a decade here before taking over your current role. What is the difference in the competition today versus, say, 5-6 years ago? Who are you seeing, and how is that competitive landscape sort of defining itself, whether it's data integration or application integration?
One is we're certainly stronger on the competitive stage than we were five to six years ago. We're the market leader. We're regarded as the thought leader in the space. We're considered the innovator in the space. There are certainly some smaller niche competitors that will always show up on the horizon, and we are very thoughtful about that. We don't take for granted our situation for a minute. Number 1 is the competitive dynamic, it's great to be the leader in the competitive dynamic. I wouldn't call it easier. I think we'd have a lot of salespeople who'd be very upset with me. It's not easier, but it puts us in a position where we have access and have the air time and the forum to be able to share that story that I shared with you a few minutes ago.
In terms of what's changing on the competitive landscape, obviously, players like AWS and Google and Microsoft continue to innovate and continue to think about this space. What's interesting is we've been able to maintain a significant competitive advantage and significant product white space between what we do and what they do. Salesforce has helped us accelerate that. We've continued to increase our investments in R&D and be able to, again, create more and more competitive white space there. One last point. I think what's interesting about those types of platform competitors is. Customers see this notion of composability and integration as something separate, as distinct, as its own unique critical platform from the cloud providers. The reason is because they're not comfortable, and I don't think they will be comfortable single-sourcing with a cloud provider.
I'm going to do everything from very baseline capacity all the way up through my application stack with one provider. I won't name any names. They've been down that road. That was not a great experience. It's just not good business. It's not good strategy. It's not good business. Therefore, they see MuleSoft as what unifies not only the cloud providers, but their data centers, their other third-party-hosted applications and data. Their environments are still very, very heterogeneous and will be, I think, for many, many years to come. MuleSoft allows those heterogeneous environments to be unified. Therefore, I think we're uniquely positioned because I always think that competitive advantage needs to be to the eye of the customer, not the eye of the vendor.
To the eye of the customer, what we do is an equally critical platform that needs to be preserved and able to unify all of the myriad platforms that they currently work with.
Excellent. Wonderful. Okay. Can you just take a second also to chat about the demand for cloud-based data integration versus the on-prem approach to data integration and application integration? I think it was, again, one of the things that took investors some time to understand when Salesforce did the deal of, "Hey, why do we want any of this on-prem technology?" Perhaps you could talk about the usefulness of that and help us understand what the rough mix across deployment strategies for your customers looks like today.
Yeah. Good question as well. The majority of our current customers, meaning customers who are engaging with us, let's just say, in the last year, a significant majority think about deploying our technology in a hybrid fashion, meaning combination of both on-premise and cloud. It's for a couple of reasons. One, oftentimes it's demanded by regulation or compliance reason. It may be required for data residency purposes, or it may be required based on what is the most efficient, productive model for the business, right? You wouldn't want somebody to hit your website and have a two-second delay before they're presented with the offer they're clicking on. Oftentimes, latency can be created by moving from a data center up into the cloud and back down to a data center. Often we think about architecture. Optimizing for architecture is another factor.
What customers are increasingly moving toward is how they manage those applications, what we refer to as our management plane. Customers, the vast majority are cloud-based. There's no longer a trepidation about managing your applications and data from the cloud. However, the runtimes, the actual API and integration engine, sits either on-premise or in the cloud, depending on what's best for that customer. Some, for example, in certain government sectors, might still be completely on-premise in terms of those runtimes or engines. Other organizations are moving as rapidly as they can to all cloud. The march to cloud, I'll leave you with this, the march to cloud certainly has not slowed. If anything, it continues to accelerate. This notion of being able to deploy the MuleSoft application anywhere, irrespective of public cloud, private cloud, data center, it doesn't matter.
That fungibility, where nothing needs to change other than clicking on what you want the deployment environment to be, is a huge differentiator and value prop for the customer because their landscapes are constantly changing as well. I don't want to go back to the COVID thing, but I wonder if this experience we're all going through further changes that. Maybe more, maybe it accelerates in some areas, maybe it requires on-prem in a few other areas. We'll see.
Excellent. Okay. I'm going to take one more here. Well, I'm going to take as many more as you all want from the audience to send me your questions. I did just get one on this topic of kind of the changing pace of technology and the nature of the landscape out there. The question is, how does Simon think about Kafka Confluent and how the integration space is collapsing across ETL, CDC, and streaming? We get the technical question here.
No, I like it. It's a good question. It's a great question, actually. Convergence, yes. Convergence, yes, spaces converge faster than market leaders often want to think they are. I will say Bret Taylor, Mark Dunlap and team, Parker, are fantastic at this. They're very provocative, very thoughtful, never resting. We're always thinking about what does the next horizon look like? What convergence means, we need to be thinking about exactly how we continue to serve a myriad. Think of it as there are concentric circles of personas that simply need to connect and gain access to data, and there are myriad use cases, concentric circles of use cases, going from very complex to much more simplistic API.
There are also many circumferences of organization, moving from the large enterprise down to the small mom-and-pop shop. That convergence is happening in a bunch of areas, and therefore our product suite needs to be able to address those. It's why we think, I don't want to name any particular acquisition topics or even spaces that we're looking at, but I think you can imagine some of the players that are now entering from different angles that you just mentioned. Those all become either organic or inorganic opportunities that we need to be really thoughtful about. Either way, we have to be there first, and we have to be there best.
Outstanding. Thank you. Okay. Let's go back to go-to-market just a little bit, and would love to hear some thoughts on verticals. I guess I'll tackle it briefly by discussing the government vertical. That just seems to be one particular vertical of massive amounts of legacy applications and legacy data. Can you shine a light on what it is you're seeing from the government vertical and perhaps help us to think about other verticals that might not be as well-penetrated as they could be by MuleSoft and Salesforce today?
Sure. On the Fed and gov side, there's a phenomenal amount of opportunity. We've been successful. We're just getting going. We're now FedRAMP certified. We're quickly advancing on the next level of certification. That opens doors that previously were not available to us, at least in our cloud pack. That's one of the nice things about having on-prem as well as cloud is you can also meet the federal and government clients where they are today as well as their move to cloud. That's a nice double-edged opportunity. Specifically, obviously we're investing heavily in the space, both product-wise and distribution and delivery-wise. What's exciting about it is the government and most federal and state local agencies have a massive leapfrog opportunity in front of them. Maybe I should call it a leapfrog challenge. There's a significant amount of tech debt.
They have everything hardwired and tightly coupled, and therefore it's very difficult for them to move and meet customer expectations. The customer is now used to and getting very comfortable with a very digital, very highly available, very customer-centric experience because they're working with Amazon, they're buying groceries or whatever online. They're very familiar with what they expect a digital experience to be like. Then, of course, you hit your state website and try to pay a parking citation or something, and you can imagine what that experience is like. They need to make significant leapfrogs. They need to, A, go virtual, B, digitize, and C, be very nimble and responsive to the customer and create a very different level of customer intimacy. The way that they do that is with MuleSoft at its core.
Obviously, there are clear plays there for Salesforce, and by Salesforce it's seeing great growth in that space as well. Just clearly on the government side, there's just so much potential, and we see the use cases coming from all angles, by the way. You see it from DOD, you see it from Health and Human Services, you see it from New South Wales Health in Australia. It's really from every corner. There's a lot of need there, and so we're trying to ramp that up as rapidly as we can. When we think about other industries or other verticals, just also a quick framework that I find pretty helpful in how to think about that, and we can talk about specific industries if it's helpful.
Really the clients that are best served by what we do are those that have either If I think about it as 2 axes, some degree on 1 axis, some degree of complexity in their business model. For example, someone with multi-tiered distribution, that would be some degree of complexity. On the other axis, some degree of scale. What is their degree of regional or country or global scale? You can have a regional bank that may be serving North and South Carolina that has great scale. They may have a lot of distribution channels. They may be fully digital as well as bricks and mortar, as well as distribution partners. They can have significant scale and still be a relatively small geographic footprint.
The further we move up and to the right on those two axes, the stronger the value proposition is for the customer. If I were to throw a third dimension into it, and I'll name two axes, is the clock speed of their business. If they are in markets with high velocity, I would say financial services, high velocity. Retail, high velocity. When we're in businesses, not just their rate of turnover, but how quickly they need to innovate, introduce new products, respond to the market, that velocity of their business is another big one. If you overlaid that framework onto industries, you'd look at some of the obvious plays, e-commerce, retail, CPG, the gov sector that you just mentioned for the reasons you gave. I think I mentioned, yeah, I mentioned financial services.
Health and life science, healthcare life science is another huge play for us. Again, you can even see we have clients in mining. You wouldn't say mining has sometimes global scale. You wouldn't put up into the right on all three of those axes. You might say, "Come on, they've got two holes in the ground." When you look at discovery is a very dynamic business with tremendous velocity. Time to market is speed is everything. It's huge data sets. They often have many sites, so there's a lot of scale. There's complexity to that model. Therefore, they become a perfect client for us. You might look at heavy equipment manufacturing and think, maybe not as great a fit.
Interestingly, working with a large Japanese company now that is one of the leaders in heavy equipment manufacturing, and there are myriad use cases where they've run a very globally distributed business where all of their operating units kind of did their own thing. They're realizing that they've got massive synergies if they could simply digitize and connect those different enterprises while still allowing them all the autonomy to operate independently. Just to give you a really simple example, inventory management. Does every one of those facilities globally need to manage their own stock of inventory with huge warehouses of really expensive equipment lying around waiting to be used?
Simply by exposing that data and connecting that data to APIs, these notion of building blocks, can I now simply in Chile get my hands on a new tractor tread in Australia and have it shipped over in a matter of a couple of weeks versus having to carry it in my own inventory at huge carrying costs? They're seeing that even relatively simple examples like that yield great benefit in industries that you wouldn't naturally think of as perfect fits for digital transformation.
Outstanding. Okay, Simon Parmeter, what I'm going to do here, I've got a couple of questions, a handful of questions from the audience out there. I'm going to hit these right now, and we'll go through them. The first one I've got here is thinking about the Customer 360 vision. How has that vision evolved for Salesforce, and what is MuleSoft doing to transform that vision? What does Customer 360 look like in two to three years with MuleSoft sort of enhancing that vision?
Great. Customer 360 has evolved to really be the full digital experience for the customer. When I mean the customer, I'm talking the customer's customer. How do I ensure, as a Unilever, for example, that I can see that customer in its entirety, irrespective of what channel I'm engaging them with, no matter what products of mine, when you think about the thousands of products that a Unilever has, for example. When you look across that spectrum, their ability to understand their customer and see their customer for all that they do, for that full circle of engagement, is not only hard to do, but extremely valuable. It's not been solved. The Salesforce vision is that we allow for that absolute 360-degree view of the customer. That is hugely impactful because on one level, I can now see it.
Number 2, and most importantly, I can action it. I can actually address that customer and help them with whatever need they are facing. Hold on a minute. I'm just getting an interruption there, as of course we all do in this new world that we live in. I have a problem. My apologies. 1, at its most basic level, we get data in, and we help the customer further enhance that 360-degree view by being able to bring them the rest of the enterprise information necessary to fully understand the customer, full stop. Not all information will reside in the Salesforce estate of applications that the client is using. They're going to have to pull in myriad systems. In many situations, it's 10 and 10 of systems that need to be connected to really provide that full 360-degree view of the customer.
What we are doing going forward has a lot to do with how seamlessly we make that experience. How quickly can they access that information? How quickly can they bring in data in a plug-and-play way from these other systems? How seamlessly can that be done? Meaning, do I need teams of developers to attack that, or can the existing team of Salesforce trail blazers be able to drive that? Can my existing admins and users be able to very rapidly pull in the information and the application information they need to create yet another 360-degree experience for my customer. That's where we're going. That's going to take some work. That has to be done very thoughtfully, and it has to be done while being very neutral to the market as well, right? We want to be able to connect everything equally as well.
Great. Excellent. Okay, my next question here, kind of another question sort of diving into the market expansion, potential competition arena. Istio with a service mesh approach here, how do you think about Istio versus Anypoint Platform? Does that open up yet another vector for competition or potential TAM expansion for MuleSoft?
I think the second half of the question, that's probably stronger giving you an answer. One, we look at all of them, and they're all viable competitors because this space is so big. I mean, we would still argue that it's now about $800 billion annually is spent by enterprises of all sizes globally on this problem, right? Connecting, gaining access to data, and driving connectivity. It's spent some roughly 60/40 split between doing it myself and employing SIs to do it. The space is massive, and therefore, the nature of the problems, how we solve those problems, there are myriad solves in that space. Therefore, the way we're approaching this is to be very, very forward-thinking. The reason I'm being a little bit thoughtful here is if I share a bit too much, I'm sharing a bit too much.
It's a bit of a careful area for me because we are being very, very proactive and thoughtful about how we solve those concentric circles of challenges that the customer has, not just the super complex, big integration problems. If you think about what are some of the automation solutions, for example, that clients need, and what are some of our big and small customers doing to solve more simplistic use cases? The ones that you've raised so far are good examples. Again, I'm going to be a bit cautious in this area, but please know that we're being very, very forward-thinking.
Thank you. Simon, I've got two more questions from the audience, and then I think we can wrap it up at 15 minutes to the hour. This has been great. The second to last question here is, thinking about the, again, the go-to market, and I think at the time of the acquisition, there was around a 60% customer overlap with Salesforce, so big emphasis on the enterprise. When you think about the future, is there more demand in the mid-market? Is this a solution set that fits well for the mid-market? How do you think about the desire to go after that which is below the sort of classic enterprise?
Good question. Today, we serve the mid-market, and we serve it reasonably well, actually. Again, it takes a client that has today-- I don't want to exaggerate in any way what MuleSoft is all about. It does require some degree of IT expertise. As you move further into the mid-market, different types of organizations that move into SMB, you're starting to work with organizations that do not have that capability and don't intend to have that capability, and shouldn't need that capability. We have a very determined push, and have now for a bit of time, to be able to much better serve that market opportunity, A, very significant market opportunity on its own right. Two, when you think about Salesforce, MuleSoft and Tableau, there are hundreds of thousands of customers that want and need what we do, and that market deserves our attention.
We are very aggressively investing in how do we leverage the technologies that we have? We have to be very, very thoughtful about this because you don't want to take a sledgehammer to a nail, right? How do we make sure that we are leveraging IT and capabilities that we have while being really thoughtful and aggressive about what we don't have, and whether we build that organically or inorganically. What don't we have that allows for an incredibly easy, facile experience for the mid-market? What's neat about that is that as we continue to build out those capabilities, our larger enterprise customers desperately need them as well, because data and integration are rapidly becoming democratized by the types of technologies that we've mentioned in this call.
Therefore, those organizations also need a broader set of capabilities and a facileness from our platform that allows those new personas and new use cases to be addressed without a flood of new technologies coming into the organization. At the same time, a larger enterprise doesn't want 18 different ways to integrate. That's obviously not serving them, because if they do that, they don't achieve this notion of an application network. They don't actually achieve this idea of we have a fabric, an application network across our enterprise where we can see all of the applications, we can see all of the data, and we can compose those applications and therefore leverage that data very innovatively. If I've got 18 different ways of integrating, I can't do that. I don't have that visibility across the estate.
It would be, another naive example, it would be like buying a home and literally having 18 different currents and voltages running through the home. You wouldn't be able to connect anything. You'd have these little isolated pockets of connectivity, and you can imagine the spaghetti wiring that that would involve. I realize it's a simplistic example, but the enterprise, the CIO, CEO, are much more rapidly understanding that this idea of a fabric, of an application network is long overdue.
Wonderful. All right. Let's go to our last question, and then we will let everyone go off to dinner and time with their families and all of that. Simon, you touched on Tableau briefly, and I guess we'll ask you to come back to it in just a little bit more deeply. When you think about Tableau becoming part of the Salesforce family, how does Tableau fit into the MuleSoft vision? How does MuleSoft fit into the Tableau vision?
Yeah. That's good. It's actually something that we're spending a lot of time on right now. It's going to accelerate through the year. We just had another big working session with the MuleSoft and Tableau folks to go through just that. Most importantly, we want to be able to make it extremely simple and easy for clients to be able to get the data they need to power their Tableau applications, their Tableau business, their Tableau analytics. Tableau has good connectivity today. They have already developed abilities to pipe into that data. Those pipes, they're not as composable, right? We have a connector for this, we have a connector for that, versus having a platform like MuleSoft where irrespective of what the data source is, you can rapidly develop that connectivity and then reuse it in whatever way it needs to be deployed.
That's what we're working on right now, and that helps both organizations as well as Salesforce. Most importantly, really, that even helps the customer. If the customer's getting more value out of Tableau, getting more value out of CRM, getting more value out of MuleSoft, then they're obviously going to be investing more that's commensurate with that value. Right now, the big thrust of our energies, there's some great futures that we think about when it comes to Tableau. Given the recency of that acquisition, as you remember, with the European hold separate agreement, we had to hold off there for a while on how we work together. Now that we're able to start accelerating, job one is access to data.
We're going to be, I think as Dreamforce rolls around, you can expect more specifics around what's going to be launching to actually help those customers make that even more reality.
Outstanding. Well, why don't we wrap it up there? I think on the topic of Dreamforce, we're all probably dreaming of a day in which we get on a plane and go visit you in San Francisco. Hopefully lights will all be on at that point, and away we go. Simon and Mike, thank you for joining us. Great conversation. Really appreciate you doing it. A reminder for everybody out there on the call, a replay will be made available. If you have any further follow-ups, don't hesitate to email me or call me. With that, I'll leave it there. Gentlemen, thank you so much. Really appreciate it.
Tom, thank you very, very much. Keith, thank you for joining, particularly on the East Coast, and elsewhere to work together later. Thank you.
Take care. Have a great night. Good night, everyone.
Thank you, ladies and gentlemen, this does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.