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Salesforce Buys Heroku (YC W08) For $212 Million In Cash

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Re: Salesforce Buys Heroku (YC W08) For $212 Million In Cash

#161

Post by doyoulikeworms »

Nrsolis wrote: post #52

I interviewed with Salesforce and I have to tell you that I found their culture a bit ....weird. It's something I couldn't put my finger on but I just had the feeling that they were all in some sort of cult or something. I didn't get the job. Probably a good thing.

Could you explain what you mean a bit? I find the salesforce culture to be pretty cool.

Disclosure: I am an engineer at salesforce.com. That said, I'm thrilled about Heroku. It has been my favorite startup since I heard about it.

Re: Salesforce Buys Heroku (YC W08) For $212 Million In Cash

#162

Post by mlinsey »

cuchoperl wrote: post #19

heroku 94% pg 6% (early 2008) --- $3M Series A (mid 2008) Assuming a $2M pre-money: heroku 37.6% pg 2.4% series A 60% --- $10M Series B (2010) Assuming a $5M pre-money: heroku 12.5% pg 0.8% series A 20% series B 66.6% --- $212M Exit: heroku $26.5M pg $1.7M series A $42.4 series B $141.3 --- result: series A $3M -> $42.4M // 14X in 2.5 years series B $10M -> $141M // 14X in 1 year pg $17K -> $1.7M // 100X in 3 years A…

A 33% per-round dilution would be much more sensible (and more common). In the right fundraising environment this might even be 20% or 25%, but 33% is the right default assumption if you have no information.

Another hidden variable is the presence of liquidation preferences for VCs. Some funding agreements allow VC's to "double-dip", ie take their liquidation preference and then also take their full percentage of the leftover amount. However, with YC advising them and with the Heroku founders having a reputation inside YC as being good fundraisers, I think there's no way Heroku's VC's got this.

If you assume no double-dipping, a 33% dilution per round, a YC-average 6% stake in Heroku, and an average amount per YC startup of $20K, YC's share of Heroku is enough to pay for their investment in every YC company ever up until this point, and also all the companies in the next two batches assuming they are the same size as the most recent (and largest ever) batch. Anything they eventually get from Dropbox, AirBnB, etc would be pure profit.

Re: Salesforce Buys Heroku (YC W08) For $212 Million In Cash

#163

Post by jackowayed »

swombat wrote: post #24
plinkplonk wrote: post #18

This is great news for Heroku and YC (congratulations folks!). That said, does anyone have any insights on why exactly SalesForce would buy Heroku? What is the business rationale? "This is Salesforce’s fifth acquisition this year. Earlier purchases include Activa Live, Sitemasher and Jigsaw. Salesforce.com also spent $170 million to fully acquire its Japanese subsidiary, Salesforce Japan." Anyone see a pattern? I don…

My guess as to why is here: http://swombat.com/2010/12/8/salesforce-buys-heroku (in short, Salesforce is looking to make a credible entry into the "public IT cloud provider" sector - much like they signalled with database.com yesterday)

As I recall, VMWare's new IaaS will give you the option to run in Salesforce's cloud.

Re: Salesforce Buys Heroku (YC W08) For $212 Million In Cash

#164

Post by wtallis »

yesno wrote: post #145
notyourwork wrote: post #112

Earlier quoted context omitted.

Google? I do not recall them being "acquired".

Google is 1 in a [insert the number of startups from 1998 to 2010] 1:xyz

I think you've got the date range wrong there. For many recent startups, it's too soon to tell if they'll avoid death and acquisition and survive as independent companies. You need to look at the companies that have been around long enough to hit it big on their own (most of the current giants) or stay small and friendly but in a sustainable way (harder to find, but by no means unheard of).

Re: Salesforce Buys Heroku (YC W08) For $212 Million In Cash

#165

Post by vegashacker »

wildmXranat wrote: post #84
dawson wrote: post #79

Earlier quoted context omitted.

I can see Linode opening a bottle to celebrate too :)

Are they related or linked to this deal?

I'm guessing dawson meant that now that Heroku has been acquired by Big Company it will start to suck and so people will be looking for new hosting options.

Not saying that's what I think, but that's my interpretation of the comment.

Re: Salesforce Buys Heroku (YC W08) For $212 Million In Cash

#166

Post by dabeeeenster »

pwim wrote: post #80

I'm happy for Heroku that they got such a great deal, but I have to say I'm disappointed by this. Heroku seemed like they were in a great position to do amazing things. I thought they had a solid revenue model. I had hoped Heroku would be the one doing the acquiring.

Say "solid revenue model" to yourself whilst someone is waving $200M in our face.

Re: Salesforce Buys Heroku (YC W08) For $212 Million In Cash

#167

Post by sedachv »

hopeless wrote: post #28

This sounds like stellar news for Heroku employees and investors. I'm not sure how it's going to be good for Heroku customers (like me) in the long-term. There will be the inevitable brain drain over the course of 1-2years when key staff move away as their contract clauses run out and then we'll be left with Heroku being run by SalesForce :(

From what I understand SalesForce totally shafted Sitemasher's customers by shutting the service down a month of so after the acquisition. At least with Heroku you can move to another hosting provider. Sitemasher was a closed-system "build a web application without programming!" type of service. So I'd actually start worrying about the short-term right now.

Re: Salesforce Buys Heroku (YC W08) For $212 Million In Cash

#168

Post by jacoblyles »

ig1 wrote: post #71
vidar wrote: post #41

This should put a hop in the step of all those Heroku-for-Django startups.

Except that Heroku for Django in the long term is likely to be Heroku (given they've said in the past they plan to expand to other languages).

Unlikely. Development speed is an inverse function of company size after a certain point. Startups will eat Salesforce's lunch at developing something new.

Then Salesforce can just buy them.

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