Tech stocks are tumbling as the Federal Reserve wrestles with inflation in what is expected to be the central bank's most aggressive tightening cycle in more than 40 years.
What To Know: On CNBC's "Squawk On The Street" Wednesday, Salesforce Inc (NYSE:CRM) CEO Marc Benioff said his cloud company was born into a recession.
"In 2001, we almost lost our company because of a situation very similar to this," Benioff said. "We had to make fundamental changes to our business model. It made us much stronger."
When the Fed starts raising rates, growth stocks tend to underperform so there are steps that companies need to take to survive the current market environment, he said.
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"Number one, they must move to long-term contracts," Benioff said. "For CEOs who have customers with month-to-month contracts ... it's very scary because you don't know if the customer is going to be around."
It's important for companies to secure relationships with their customers and move to annual contracts to create a sense of certainty amid uncertain market conditions, he said.
"You're looking at a very unusual global situation where you have these rising interest rates here and volatility in foreign exchange, and when you have those two things happening, you have to look at everything," Benioff said.
That includes cost cutting by way of slowing hiring, which several companies have done this year. When asked if Salesforce would be pulling in the reins on its hiring efforts, Benioff responded: "We're certainly going to look at everything."
CRM Price Action: Salesforce shares have traded between $154.55 and $311.75 over a 52-week period.
The stock was up 1.28% at $158.94 at press time, according to data from Benzinga Pro.
Photo: courtesy of Salesforce.
