Salesforce Buys ExactTarget for $2.5 Billion • Hacker News Board

Re: Salesforce Buys ExactTarget for $2.5 Billion

#31

Post by notahacker » Tue, Jun 04, 2013, 5:18 PM UTC

inthewoods wrote: post #22

Jd wrote: post #3

Here's some perspective from someone deep within the Salesforce ecosystem: Salesforce has very concretely and deliberately pursued the "imperial" approach in the B2B/Enterprise market, which is to do a careful survey of existing products in a particular space, the potential revenue to be gained from expanding into that space, and what is needed to get a heads up on existing products. As is generally the case in the e…

"Salesforce has done this extremely effectively, from salesforce automation, to customer relations management, to customer service, etc. In many cases now it is virtually unimaginable not to use Salesforce, since the feature set is so extensive." This is the same strategy that Microsoft has pursued for years - and it sometimes works and sometimes doesn't - MSFT going after Intuit comes to mind, as does their own Sale…

Provided Salesforce's internal sales teams and enterprise consultants can effectively promote ExactTarget as a new addition to the product platform to Salesforce customers that hitherto hadn't considered it, the actual details of the level of integration are of secondary importance.

Re: Salesforce Buys ExactTarget for $2.5 Billion

#32

Post by tpiddy » Tue, Jun 04, 2013, 5:19 PM UTC

mikecuesta wrote: post #26

inthewoods wrote: post #22

Earlier quoted context omitted.

"Salesforce has done this extremely effectively, from salesforce automation, to customer relations management, to customer service, etc. In many cases now it is virtually unimaginable not to use Salesforce, since the feature set is so extensive." This is the same strategy that Microsoft has pursued for years - and it sometimes works and sometimes doesn't - MSFT going after Intuit comes to mind, as does their own Sale…

Not sure I agree that Marketo's business is unsustainable - clearly they want to make more headway in the B2C space; the B2B Marketing Automation market would seem to be saturated, but I would argue that there's still plenty of growth for them for the next 3-5 years, at a minimum. As far as I can tell, ExactTarget's marketing automation capabilities vastly pale in comparison to Marketo or Eloqua, I could be wrong tho…

something like 90%+ of Marketo's customers integrate it with Salesforce. Of course Salesforce won't just cut them off if they have a competitor tool, due to anti-trust issues, but it doesn't necessarily bode well for Marketo now that Salesforce owns a competitor. Pardot is a fairly small piece of Exacttarget though so potentially Marketo could still be a target at some point.

Larger scale B2C marketing automation is generally much more complex than b2b. Ecommerce databases are generally less normalized across businesses, aren't hosted by an intermediary like salesforce and contain more data. Cross-channel retailers with physical stores track a ton of transactions and customers. I really don't think that any b2b marketing automation platform will make much headway trying to go b2c. Hubspot has some success only because they focus on local and small businesses.

Re: Salesforce Buys ExactTarget for $2.5 Billion

#33

Post by ergest » Tue, Jun 04, 2013, 5:26 PM UTC

jhull wrote: post #17

jeremymcanally wrote: post #2

I would comment on this, but DHH has captured my thoughts nearly exactly on Twitter today: http://twitter.com/dhh This is insane. $2.5b for a company that has lost money through its existence, has a very small set of (likely not-so-diverse) clients (6,000ish), and makes 10% of what they paid for them in revenue ? Strikes me as a crazy purchase, but perhaps there's something else afoot that I don't see. I've been prov…

Buying ExactTarget adds 6000 more prospects/customers that Salesforce can sell to. Assuming that it signs up a fraction of those to use Salesforce Service Cloud or Data.com or any of the other Salesforce products, that's more money and helps justify the price. Oracle has been doing this for years (and probably where Benioff got his playbook) They buy up a company, fold in their customers and cross-sell their other pr…

It's funny, we currently use ExactTarget and are working to move to SalesForce in a year

Re: Salesforce Buys ExactTarget for $2.5 Billion

#34

Post by tpiddy » Tue, Jun 04, 2013, 5:31 PM UTC

jeremymcanally wrote: post #2

I would comment on this, but DHH has captured my thoughts nearly exactly on Twitter today: http://twitter.com/dhh This is insane. $2.5b for a company that has lost money through its existence, has a very small set of (likely not-so-diverse) clients (6,000ish), and makes 10% of what they paid for them in revenue ? Strikes me as a crazy purchase, but perhaps there's something else afoot that I don't see. I've been prov…

I generally agree with DHH's assessment of CRM and think it is ridiculous it trades such a high p/e compared to similar companies like Adobe.

That said, moving email providers is likely a huge pain in the ass for those 6000 customers. They are basically locked in for years and years. There may be potential to raise prices and gain profit from those customers. Internal investment to move vendors is likely in the hundreds of thousands.

Salesforce already has a few of these same clients through BuddyMedia and other B2C offerings, but the cross sell of a marketing suite is what they are envisioning. I expect that outside of a potential Marketo purchase, they will purchase companies with more b2c or general marketing offerings, potentially search, display or other ad related products to compliment Social.com.

Re: Salesforce Buys ExactTarget for $2.5 Billion

#35

Post by RobGR » Tue, Jun 04, 2013, 5:34 PM UTC

sudonim wrote: post #14

We're the little guy competing against ExactTarget. I had no idea their business wasn't profitable. From their customers who have reached out to me, it seems that for web businesses to integrate with them there are huge complexities (like mirroring your production database, and having ET engineers write custom code for you). Even with all this they've clearly been successful on the revenue front. With an acquisition…

The ability to set up a dev or test environment to test integration has been a problem with ET in past, maybe it still is (I did Drupal to ET integration several years ago).

However, from what I have seen of Salesforce, which is not direct experience but in watching demos over people's shoulders, their test environment setup is very smooth. I think you have to pay more for it, but you can get a copy of your environment, if you are writing custom plugins it checks that you wrote tests, that those tests pass, and that those tests aren't stubs, before it lets you put anything live. It seemed a legit best practices operation.

Maybe Salesforce can implement that setup for the ET service and APIs. In the meantime I will checkout customer.io for the next project that needs email campaigns.

Re: Salesforce Buys ExactTarget for $2.5 Billion

#36

Post by inthewoods » Tue, Jun 04, 2013, 5:38 PM UTC

notahacker wrote: post #31

inthewoods wrote: post #22

Earlier quoted context omitted.

"Salesforce has done this extremely effectively, from salesforce automation, to customer relations management, to customer service, etc. In many cases now it is virtually unimaginable not to use Salesforce, since the feature set is so extensive." This is the same strategy that Microsoft has pursued for years - and it sometimes works and sometimes doesn't - MSFT going after Intuit comes to mind, as does their own Sale…

Provided Salesforce's internal sales teams and enterprise consultants can effectively promote ExactTarget as a new addition to the product platform to Salesforce customers that hitherto hadn't considered it, the actual details of the level of integration are of secondary importance.

My own experience is that their internal sales teams and enterprise consultants are separate islands based on the product and they are very poor at cross-selling. We're a pretty decent size Salesforce.com customer and they have never even attempted to sell us other services. Not Radian6, not Buddy Media - hell, we had to ask them about Data.com.

So I'm doubting their ability to cross-sell. And then the integration is absolutely important - if you looked at the integration between Salesforce and ExactTarget, you'd be shocked by how primitive it is. Now, they might try and then sell them Pardot.

Re: Salesforce Buys ExactTarget for $2.5 Billion

#37

Post by ripter » Tue, Jun 04, 2013, 5:45 PM UTC

reddit_clone wrote: post #29

Jgrubb wrote: post #15

Earlier quoted context omitted.

ESP - Email service provider. Sort of like Constant Contact, but for enterprise. We send about a million email newsletters a day through them.

So, spammers then.

You could call us that, but we try really hard to make sure you only get emails you actually want. We helped to write the CAN-SPAM Act so you can get valuable emails but not spam.

Re: Salesforce Buys ExactTarget for $2.5 Billion

#38

Post by Pxtl » Tue, Jun 04, 2013, 5:46 PM UTC

johnvschmitt wrote: post #21

It's a natural fit. Startups use Mailchimp & Sendgrid, etc. for email marketing, but then as they mature & grow, they see the need for more mature (although, yes, more expensive, complex, & slower) tools like ExactTarget. Very similarly, how do startups track their customers & leads? Often, with no CRM other than spreadsheets or in-house tools. When they scale & have >10 sales staff, they realize they need a more mat…

I used to work at a place that happily used SugarCRM (which is open-source) for both email marketing and for CRM, so there are better CRM solutions for small businesses than simply doing spreadsheets/in-house.

Re: Salesforce Buys ExactTarget for $2.5 Billion

#39

Post by NiK0laI » Tue, Jun 04, 2013, 5:48 PM UTC

tommccabe wrote: post #6

I use Exact Target, every day, and I'm very happy with their product and their service. I won't speak to the valuation, but their technology and application is great.

Using their application makes my internet connection feel like a dial up modem. Backend integration is horrible, API calls can take up to 5 minutes to get a response back.

Re: Salesforce Buys ExactTarget for $2.5 Billion

#40

Post by meterplech » Tue, Jun 04, 2013, 5:56 PM UTC

jeremymcanally wrote: post #20

jhull wrote: post #17

Earlier quoted context omitted.

Buying ExactTarget adds 6000 more prospects/customers that Salesforce can sell to. Assuming that it signs up a fraction of those to use Salesforce Service Cloud or Data.com or any of the other Salesforce products, that's more money and helps justify the price. Oracle has been doing this for years (and probably where Benioff got his playbook) They buy up a company, fold in their customers and cross-sell their other pr…

Yeah but assuming that works out as profitable, those customers (assuming they all stay with them) would have to start spending 10x the money they're spending with ExactTarget now on Salesforce products. That's a big stretch and risk, but again, maybe it'll work out for them. :)

Well, the purchase is a onetime cost, and revenue is recurring. If they spend 2x what they are paying now they'd recoup the cost (in terms of revenue) in 5 years. Plus, that's not counting new customers for ExactTarget's services. If you are a heavy SFDC user and were previously deciding between Marketo, Hubspot, and ExactTarget, you may go with ExactTarget because you know it'll be fully supported by SFDC.