cloud
Auto Added by WPeMatico
Would the math work if Databricks were valued at $38B?
Databricks, the open-source data lake and data management powerhouse has been on quite a financial run lately. Today Bloomberg reported the company could be raising a new round worth at least $1.5 billion at an otherworldly $38 billion valuation. That price tag is up $10 billion from its last fundraise in February when it snagged $1 billion at a $28 billion valuation.
Databricks declined to comment on the Bloomberg post and its possible new valuation.
The company has been growing like gangbusters, giving credence to the investor thesis that the more your startup makes, the more it is likely to make. Consider that Databricks closed 2020 with $425 million in annual recurring revenue, which in itself was up 75% from the previous year.
As revenue goes up so does valuation, and Databricks is a great example of that rule in action. In October 2019, the company raised $400 million at a seemingly modest $6.2 billion valuation (if a valuation like that can be called modest). By February 2021, that had ballooned to $28 billion, and today it could be up to $38 billion if that rumor turns out to be true.
One of the reasons that Databricks is doing so well is it operates on a consumption model. The more data you move through the Databricks product family, the more money it makes, and with data exploding, it’s doing quite well, thank you very much.
It’s worth noting that Databricks’s primary competitor, Snowflake went public last year and has a market cap of almost $83 billion. In that context, the new figure doesn’t feel quite so outrageous, But what does it mean in terms of revenue to warrant a valuation like that. Let’s find out.
Valuation math
Let’s rewind the clock and observe the company’s recent valuation marks and various revenue results at different points in time:
- Q3 2019: $200 million run rate, $6.2 billion valuation.
- Q3 2020: $350 million run rate, no known valuation change.
- EoY 2020: $425 million run rate, $28 billion valuation (Q1 valuation).
- Q3 2021: Unclear run rate, possible $38 billion valuation.
The company’s 2019 venture round gave Databricks a 31x run rate multiple. By the first quarter of 2021, that had swelled to a roughly 66x multiple if we compare its final 2020 revenue pace to its then-fresh valuation. Certainly software multiples were higher at the start of 2021 than they were in late 2019, but Databricks’s $28 billion valuation was still more than impressive; investors were betting on the company like it was going to be a key breakout winner, and a technology company that would go public eventually in a big way.
To see the company possibly raise more funds would therefore not be surprising. Presumably the company has had a good few quarters since its last round, given its history of revenue accretion. And there’s only more money available today for growing software companies than before.
But what to make of the $38 billion figure? If Databricks merely held onto its early 2021 run rate multiple, the company would need to have reached a roughly $575 million run rate, give or take. That would work out to around 36% growth in the last two-and-a-bit quarters. That works out to less than $75 million in new run rate per quarter since the end of 2020.
Is that possible? Yeah. The company added $75 million in run rate between Q3 2020 and the end of the year. So you can back-of-the-envelope the company’s growth to make a $38 billion valuation somewhat reasonable at a flat multiple. (There’s some fuzz in all of our numbers, as we are discussing rough timelines from the company; we’ll be able to go back and do more precise math once we get the Databricks S-1 filing in due time.)
All this raises the question of whether Databricks should be able to command such a high multiple. There’s some precedent. Recently, public software company Monday.com has a run rate multiple north of 50x, for example. It earned that mark on the back of a strong first quarter as a public company.
Databricks securing a higher multiple while private is not crazy, though we wonder if the data-focused company is managing a similar growth rate. Monday.com grew 94% on a year-over-year basis in its most recent quarter.
All this is to say that you can make the math shake out for Databricks to raise at a $38 billion valuation, but built into that price is quite a lot of anticipated growth. Top quartile public software companies today trade for around 23x their forward revenues, and around 27x their present-day revenues, per Bessemer. To defend its possible new valuation when public, then, leaves quite a lot of work ahead of Databricks.
The company’s CEO, Ali Ghodsi, will join us at TC Sessions: SaaS on October 27th, and we should know by then if this rumor is, indeed true. Either way, you can be sure we are going to ask him about it.
Powered by WPeMatico
Enable bags $45M for B2B rebate management platform
Enable, a startup developing a cloud-based software tool for business-to-business rebate management, announced Wednesday a $45 million Series B funding round.
The round is led by Norwest Venture Partners with participation from existing investors Menlo Ventures and Sierra Ventures, and a group of angel investors. Including the new round, the company has raised a total of $62 million, which includes a $13 million Series A raised in 2020.
The company, which started in the U.K. and moved to San Francisco in 2020, was co-founded by Andrew Butt and Denys Shortt in 2015 but launched fully in 2016. Its technology automates how distributors and manufacturers create, execute and track rebates. These types of trading programs are a common industry practice and are relied on by distributors as a way to turn a profit.
Since raising its Series A last year, Butt, chief executive officer, moved to the Bay Area, grew its North American operations to 60 people, tripled revenue and more than tripled its customer base, he told TechCrunch. The new funding will be used for product innovation and building sales and go-to-market teams.
“The Series A was proving traction in the U.S. and Canada and gave us the ability to hire a U.S. leadership team,” he added. “When we saw that momentum, the market size was large and the opportunity was now getting bigger and bigger, we started scaling up the business.”
As customer needs changed and incentives were growing in terms of revenue and profitability, Enable saw that they were more critical to manage; the incentives needed to be more dynamic and easy to make targeted and personalized. In a sense, incentives have “gone from being blunt instruments to very sharp in size and volume,” Butt said.
Reaching the year over year revenue doubling was a milestone for the company, and his immediate next steps are to get a fully ramped team so Enable can continue on that growth trajectory. The market for incentives is big, but “there is no credible competition,” so the company is also working to build that distribution and sales team now, he added.
It was also over the past year that Butt met Sean Jacobsohn, partner at Norwest Venture Partners, who, as part of the investment, joined Enable’s board of directors.
Jacobsohn had noticed Enable and asked for an introduction to the company when it hired Jerry Brooner as its president of global field operations. Jacobsohn was tracking Brooner’s next moves after leaving Scout, a Workday company, and the hire got his attention.
Enable checks all of the boxes Jacobsohn said he looks for in a company: strong CEO, a good team and good customer feedback — many of them were dissatisfied with the legacy software, he said.
“I also love companies going after a big market where there is no credible competition,” Jacobsohn added. “There is a lot of greenfield space here. What’s great about a player like that is they can come in, create a category and be the new generation cloud player. This isn’t something someone can wake up and start. You need deep domain expertise.”
Powered by WPeMatico
Salesforce announces first integrations with Slack after closing $28B sale
When Salesforce acquired Slack at the end of last year for almost $28 billion, you had to figure they had some big plans for the company. Today the CRM giant announced some initial integrations that should prove useful for Salesforce customers.
Rob Seaman, SVP for Slack at Salesforce sees Slack as the communications platform for Salesforce moving forward. “We really want Slack to be the primary engagement surface for our users, their communications, their work, their workflows and the processes and the apps they support,” he said.
“What we’re announcing are these new capabilities to support that Slack vision for sales, service, marketing and analytics. And for each of those areas what we’re doing is a combination of articulating, both in best practices and codifying, how you can and should model your sales, service and marketing organizations in this new world,” he said.
The hope is that by taking advantage of Slack’s ability to integrate external enterprise apps inside the application, working together they can find ways to speed up and automate various Salesforce tasks, making it faster and easier to use without switching context to make it happen.
For starters, the Sales Cloud gets dedicated deal rooms, where all of the parties involved in a complex sale, whether internal departments like finance and product people or external partners, can come together in Slack throughout the sales cycle and stay on top of the ebb and flow of all the sales activity.
“I think the deal room is an expression of an opportunity from Salesforce into Slack in a way that makes it very simple to connect with everybody to effectively get a deal done, including customers and partners,” Seaman explained. “That’s where Slack Connect is extremely powerful [to connect with external partners]. We think we should be able to dramatically reduce sales cycle lengths as a result of this…” he said. Slack Connect is the service introduced last year that enables Slack users to connect with people outside of a company.
In addition, through integrations, members of the sales team involved in a more complex deal can get daily updates, which are automatically pulled together in Slack and include personalized daily task lists, meetings and priority deals.
Service teams can meet together in a room Salesforce is calling a swarm, a place for the team to help one another with specific questions or problems they may be having. In a company with a large product catalogue, this could be particularly helpful to get an answer quickly. While Einstein recommendations helps with related content, a swarm can come in handy when there is a more specific question involved and a human with that knowledge may be just the ticket. Service team members will also be able to search for experts to invite to the swarm, who may be able to help answer the question or solve the problem more quickly.
Not to be left out, marketing gets intelligent insights delivered with the help of Datorama, the company Salesforce bought in 2018. Marketers also get regular updates inside of Slack when a change is made to a marketing campaign.
Finally, there are integrations with Tableau, the company that Salesforce bought in 2019 for $15.7 billion — Salesforce is a highly acquisitive company. In a similar way that marketers get updates to campaigns, other users can get Slack updates whenever data they consider important gets updated in Tableau, and they also can get daily digests of key metrics that matter to them right in Slack.
Seaman promised that these announcements were just the start, and we will be hearing about more integrations with Slack at the Dreamforce customer conference next month — and in the coming months. “This is just the beginning, and so you’ll continue to see expansion of the integrations between Salesforce and Slack for the four areas that we’re announcing today around sales, service, marketing and analytics, but also every single cloud and industry solution in [the] Salesforce [family of products] is working on this,” he said.
Powered by WPeMatico
Tropic picks up $25M to streamline software procurement experiences
The pandemic was a catalyst for showing companies looking to cut costs just how much they were spending on their software tools. New York-based Tropic’s platform not only uncovers those savings, but also brings a click-and-approve approach to buying software. Today, the company announced a $25 million Series A round of funding.
Canaan Partners led the round, with participation from Founder Collective and Mo Koyfman’s new fund, Shine. It gives Tropic $27.1 million in total funding since the company emerged from stealth in 2020, CEO David Campbell told TechCrunch.
Prior to founding the company with Justin Etkin, Campbell was in technology and sales roles, selling software contracts of every size, and realized how complex and rigid the contracts were getting as companies grew larger and the lack of price transparency increased. The complexity of some contracts can cause companies to overpay, even locking companies into payments they can’t afford, Campbell said.
On top of that, more buyers are younger now and their experience with purchasing software is pulling out their phone to download an app, while buying a customer relationship management tool will take six months to buy and cost thousands of dollars.
“Looking at the space, we are in a mirror maze of software, including companies using software to build products that they then sell back to the software companies,” Campbell said. “Companies are only buying software once a year, yet the process can be so complex.”
Tropic’s SaaS procurement model gathers the whole process under one platform. Unlike some competitors’ approaches, it takes on the heavy lifting so when companies have to buy or renew a contract, users can access Tropic’s one-click purchasing service to outsource the transaction. After the contracts are signed, its platform manages the technology and ensures financing is in order. This approach saves companies 23%, on average, on the software purchases, which Campbell said “moves the needle” for many companies where software is the No. 1 cost after salary.
In recent years, cloud software has become a fast-growing spend category across most businesses. Campbell said the average company can have more than 100 software contracts, while that jumps to over 500 for enterprise organizations. Meanwhile, global spend on enterprise software is forecasted to reach $599 billion by the end of 2021, a 13.2% increase over the previous year, according to Statista.
In the last 12 months, the company added over 60 customers, counting Qualtrics, Vimeo, Zapier and Intercom, surpassed $250 million in managed spend and processed transactions for over 1,200 vendors. The company is seeing 100% quarter over quarter growth, and in the last quarter, doubled its annual recurring revenue, Campbell said.
Tropic will use the funding for R & D and to deepen integrations with existing procurement tools in the cloud software ecosystem. Over the past year, the company’s headcount has grown to 50 and Campbell has “aggressive hiring plans between now and the rest of the year” focused on the tech side with engineering and product management.
Hootan Rashidifard, principal from Canaan Partners, said his firm was tracking the software procurement sector and learned about Tropic through Founder Collective, which led the company’s seed round.
“We’re seeing software and financial services converge and Tropic sits squarely at the intersection of both in a category with massive tailwinds,” Rashidifard said via email. “Software is accelerating the share of expenses while also penetrating every part of an organization, and software purchasing is becoming more decentralized. Tropic’s platform is in a fragmented market with high payment volume, which is ripe for layering on all kinds of adjacent services.”
Powered by WPeMatico
There could be more to the Salesforce+ video streaming service than meets the eye
When Salesforce announced its new business video streaming service called Salesforce+ this week, everyone had a reaction. While not all of it was positive, some company watchers also wondered if there was more to this announcement than meets the eye.
If you look closely, the new initiative suggests that Salesforce wants to take a bite out of LinkedIn and other SaaS content platforms and publishers. The video streaming service could be a launch point for a broader content platform, where its partners are producing their own content and using Salesforce+ infrastructure to help them advertise to and cultivate their own customers.
The video streaming service could be a launch point for a broader content platform, where its partners are producing their own content and using Salesforce+ infrastructure to help them advertise to and cultivate their own customers.
The company has, after all, done exactly this sort of thing with its online marketplaces and industry events to great success. Salesforce generated almost $6 billion in its most recent quarterly earnings report. That mostly comes from selling its sales, marketing and service software, not any kind of content production, but it has lots of experience putting on Dreamforce, its massive annual customer event, as well as smaller events throughout the year around the world.
On its face, Salesforce+ is a giant, ambitious and quite expensive content marketing play. The company reportedly has hired a large professional staff to produce and manage the content, and built a broadcasting and production studio designed to produce quality shows in-house. It believes that by launching with content from Dreamforce, its highly successful customer conference, attended by tens of thousands people every year pre-pandemic, it can prime the viewing pump and build audience momentum that way, perhaps even using celebrities as it often does at its events to drive audience. It is less clear about the long-term business goals.
Powered by WPeMatico
Disaster recovery can be an effective way to ease into the cloud
Operating in the cloud is soon going to be a reality for many businesses whether they like it or not. Points of contention with this shift often arise from unfamiliarity and discomfort with cloud operations. However, cloud migrations don’t have to be a full lift and shift.
Instead, leaders unfamiliar with the cloud should start by moving over their disaster recovery program to the cloud, which helps to gain familiarity and understanding before a full migration of production workloads.
What is DRaaS?
Disaster recovery as a service (DRaaS) is cloud-based disaster recovery delivered as a service to organizations in a self-service, partially managed or fully managed service model. The agility of DR in the cloud affords businesses a geographically diverse location to failover operations and run as close to normal as possible following a disruptive event. DRaaS emphasizes speed of recovery so that this failover is as seamless as possible. Plus, technology teams can offload some of the more burdensome aspects of maintaining and testing their disaster recovery.
When it comes to disaster recovery testing, allow for extra time to let your IT staff learn the ins and outs of the cloud environment.
DRaaS is a perfect candidate for a first step into the cloud for five main reasons:
- Using DRaaS helps leaders get accustomed to the ins and outs of cloud before conducting a full production shift.
- Testing cycles of the DRaaS solution allows IT teams to see firsthand how their applications will operate in a cloud environment, enabling them to identify the applications that will need a full or partial refactor before migrating to the cloud.
- With DRaaS, technology leaders can demonstrate an early win in the cloud without risking full production.
- DRaaS success helps gain full buy-in from stakeholders, board members and executives.
- The replication tools that DRaaS uses are sometimes the same tools used to migrate workloads for production environments — this helps the technology team practice their cloud migration strategy.
Steps to start your DRaaS journey to the cloud
Define your strategy
Do your research to determine if DRaaS is right for you given your long-term organizational goals. You don’t want to start down a path to one cloud environment if that cloud isn’t aligned with your company’s objectives, both for the short and long term. Having cross-functional conversations among business units and with company executives will assist in defining and iterating your strategy.
Powered by WPeMatico
Box reports earnings early to give shareholders time to review financials ahead of board vote
Box has been in an ongoing dispute with activist investors Starboard Value over control of the board, an argument that is expected to come to a head on September 9th at the annual shareholder meeting. In an effort to show shareholders that the numbers are continuing to improve under the current leadership, Box took the unusual move of releasing its earning report this morning, two weeks ahead of the expected August 25th report date.
Companies don’t normally report ahead of schedule, but perhaps Box sees the opportunity to do some lobbying, or conversely, to counter any negative lobbying that Starboard may be doing with its fellow investors ahead of the vote.
It’s also worth noting that in spite of the meeting being on September 9th, like a lot of voting these days, people will be sending in votes throughout this month, ahead of that day. Box wants to get its latest financial information out there sooner rather than later to catch those early voters before they cast their ballots.
Fortunately for Box and CEO Aaron Levie, the numbers look decent.
Earnings
It’s not hard to see why Box released its earnings early, as the numbers provide an argument for keeping the company’s current leadership in place.
In the three-month period ending July 31, 2021 — the second quarter of Box’s fiscal 2022 — the company generated $214 million in revenue, up 11% on a year-over-year basis. And, as Box is quick to point out, its second consecutive quarter of “accelerating revenue growth.” The company bested its own guidance of $211 to $212 million in revenue for the period.
It matters that Box is showing an ability to accelerate its revenue growth. First, because doing so puts wind in the sales of its stock; quickly growing companies are worth more per dollar of revenue than more slowly growing concerns, and accelerating revenue growth over time is investor catnip.
The accelerating pace of growth over the last half year also provides footing for Box’s leadership to argue that their product choices have been sound, directly supporting their positions that they should remain in charge of the company. If they made good product decisions quarters ago, and those choices are leading to accelerating revenue growth, why swap out the CEO?
Box had more quarterly good news apart from its revenue numbers to disclose. It also reported improved GAAP and non-GAAP operating margins — a key measure of profitability — better billings results than it had previously anticipated for the period. Box’s net retention rate also expanded to 106% from 103% in the sequentially preceding period.
And the company boosted its guidance for its fiscal year from “$845 million to $853 million” to “$856 million to $860 million.”
The counter arguments are somewhat easy to generate, however. Yes, Box’s revenue growth is accelerating, but from an admittedly reduced base; it’s not as hard to accelerate revenue expansion from low numbers as it is from higher base levels. And the company’s net retention is lower than what any business-focused SaaS company would want to report.
Will the good news be enough? Shares of Box are up around 1.5% in today’s regular trading, despite a somewhat mixed overall market. Investors now have to vote with more than just their dollars.
Boardroom context
Starboard bought approximately 7.5% of the company in 2019, and actually stayed fairly quiet for the first year, but at the end of 2020 it started making itself heard with rumors of pressure to sell the company. In what appeared to be a defensive move, Box took a $500 million investment from private equity firm KKR and gave the investor a board seat in April.
The activist investor did not take kindly to that move, writing in a letter to investors in early May, “The only viable explanation for this financing is a shameless and utterly transparent attempt to “buy the vote” and shows complete disregard for proper corporate governance and fiscal discipline.” In that same letter, Starboard made it official that it wanted to take over several board seats, outlining a litany of complaints it had about the way the company was being run. It also made clear that it wanted co-founder and CEO Aaron Levie gone or the company sold.
Box pushed back that the letter and another on May 10th did not accurately reflect the progress that the company had made. In July, Box took the battle public in an SEC filing detailing the back and forth dance that had been going between Box and Starboard since it bought its stake in the company
So far, the cloud content management company has staved off all attempts to force its hand and sell the company or fire Levie, but this is all going to culminate with the shareholder’s vote. It’s truly a battle for the soul of the company.
If Starboard convinces shareholders to give it several seats on the Box board, it would probably be able to push out Levie, take control of the company and likely sell it to the highest bidder. The early financial report released today, while not exactly stellar, shows a pattern of increasingly good quarters, and that’s what Box is hoping voters will focus on when they fill out their ballots.
Powered by WPeMatico
Consumer goods software company Aforza bags $22M to open US headquarters
Aforza, developing cloud and mobile apps for consumer goods companies, announced a $22 million Series A round led by DN Capital.
The London-based company’s technology is built on the Salesforce and Google Cloud platforms so that consumer goods companies can digitally transform product distribution and customer engagement to combat issues like unprofitable promotions and declining market share, Aforza co-founder and CEO Dominic Dinardo told TechCrunch. Using artificial intelligence, the company recommends products and can predict the order a retailer can make with promotions and pricing based on factors like locations.
The global market for consumer packaged goods apps is forecasted to reach $15 billion by 2024. However, the industry is still using outdated platforms that, in some cases, lead to a loss of 5% of sales when goods are out of stock, Dinardo said.
Aforza’s trade promotion designer mobile image. Image Credits: Aforza
Dinardo and his co-founders, Ed Butterworth and Nick Eales, started the company in 2019. All veterans of Salesforce, they saw how underserved the consumer goods industry was in terms of moving to digital.
Aforza is Dinardo’s first time leading a company. However, from his time at Salesforce he feels he got an education like going to “Marc Benioff’s School of SaaS.” The company raised an undisclosed seed round in 2019 from Bonfire Ventures, Daher Capital, DN Capital, Next47 and Salesforce Ventures.
Then the pandemic happened, which had many of the investors leaning in, which was validation of what Aforza was doing, Dinardo said.
“Even before the pandemic, the consumer goods industry was challenged with new market entrants and horrible legacy systems, but then the pandemic turned off pathways to customers,” he added. “Our mission is to improve the lives of consumers by bringing forth more sustainable products and packaging, but also helping companies be more agile and handle changes as the biggest change is happening.”
Joining DN Capital in the round were Bonfire Ventures, Daher Capital and Next47.
Brett Queener, partner at Bonfire Ventures, said he helped incubate Aforza with Dinardo and Eales, something his firm doesn’t typically do, but saw a unique opportunity to get in on the ground floor.
Also working at Salesforce, he saw the consumer goods industry as a major industry with a compelling reason to make a technology shift as customers began expecting instant availability and there were tons of emerging startups coming into the direct-to-consumer space.
Those startups don’t have a year or two to pull together the kind of technology it took to scale. With Aforza, they can build a product that works both online and off on any device, Queener said. And rather than planning promotions on a quarterly basis, companies can make changes to their promotional spend in real time.
“It is time for Aforza to tell the world about its technology, time to build out its footprint in the U.S. and in Europe, invest more in R&D and execute the Salesforce playbook,” he said. “That is what this round is about.”
Dinardo intends on using the new funding to continue R&D and to double its employee headcount over the next six months as it establishes its new U.S. headquarters in the Northeast. It is already working with customers in 20 countries.
As to growth, Dinardo said he is using his past experiences at startups like Veeva and Vlocity, which was acquired by Salesforce in 2020, as benchmarks for Aforza’s success.
“We have the money and the expertise — now we need to take a moment to breathe, hire people with the passion to do this and invest in new product tiers, digital assets and even payments,” he said.
Powered by WPeMatico
VCs are betting big on Kubernetes: Here are 5 reasons why
I worked at Google for six years. Internally, you have no choice — you must use Kubernetes if you are deploying microservices and containers (it’s actually not called Kubernetes inside of Google; it’s called Borg). But what was once solely an internal project at Google has since been open-sourced and has become one of the most talked about technologies in software development and operations.
For good reason. One person with a laptop can now accomplish what used to take a large team of engineers. At times, Kubernetes can feel like a superpower, but with all of the benefits of scalability and agility comes immense complexity. The truth is, very few software developers truly understand how Kubernetes works under the hood.
I like to use the analogy of a watch. From the user’s perspective, it’s very straightforward until it breaks. To actually fix a broken watch requires expertise most people simply do not have — and I promise you, Kubernetes is much more complex than your watch.
How are most teams solving this problem? The truth is, many of them aren’t. They often adopt Kubernetes as part of their digital transformation only to find out it’s much more complex than they expected. Then they have to hire more engineers and experts to manage it, which in a way defeats its purpose.
Where you see containers, you see Kubernetes to help with orchestration. According to Datadog’s most recent report about container adoption, nearly 90% of all containers are orchestrated.
All of this means there is a great opportunity for DevOps startups to come in and address the different pain points within the Kubernetes ecosystem. This technology isn’t going anywhere, so any platform or tooling that helps make it more secure, simple to use and easy to troubleshoot will be well appreciated by the software development community.
In that sense, there’s never been a better time for VCs to invest in this ecosystem. It’s my belief that Kubernetes is becoming the new Linux: 96.4% of the top million web servers’ operating systems are Linux. Similarly, Kubernetes is trending to become the de facto operating system for modern, cloud-native applications. It is already the most popular open-source project within the Cloud Native Computing Foundation (CNCF), with 91% of respondents using it — a steady increase from 78% in 2019 and 58% in 2018.
While the technology is proven and adoption is skyrocketing, there are still some fundamental challenges that will undoubtedly be solved by third-party solutions. Let’s go deeper and look at five reasons why we’ll see a surge of startups in this space.
Containers are the go-to method for building modern apps
Docker revolutionized how developers build and ship applications. Container technology has made it easier to move applications and workloads between clouds. It also provides as much resource isolation as a traditional hypervisor, but with considerable opportunities to improve agility, efficiency and speed.
Powered by WPeMatico
Salesforce wants Salesforce+ to be the Netflix of biz content
Salesforce just closed a $28 billion mega-deal to buy Slack, generating significant debt along the way, but it’s not through spending big money.
Today the CRM giant announced it was taking a leap into streaming media with Salesforce+, a forthcoming digital media network with a focus on video that, in the words of the company, “will bring the magic of Dreamforce to viewers across the globe with luminary speakers.” (Whether that’s a good thing or not is in the eye of the beholder.)
Over the last year, Salesforce has watched companies struggle to quickly transform into fully digital entities. The Slack purchase is part of Salesforce’s response to the evolving market, but the company believes it can do even more with an on-demand video service providing business content around the clock.
Salesforce president and CMO Sarah Franklin said in an official post that her company has had to “reimagine how to succeed in the new digital-first world.” The answer apparently involves getting the larger Salesforce community together in a new live, and recorded video push.
In a Q&A with Colin Fleming, Salesforce’s senior vice president of Global Brand Marketing, he sees it as a way to evolve the content the company has been sharing all along. “As a result of the pandemic, we looked at the media landscape, where people are consuming content, and decided the days of white papers in a business-to-business setting were no longer interesting to people. We’re staring at a cookie-less future. And looking at the consumer world, we reflected on that for Salesforce and asked, “Why shouldn’t we be thinking about this too,” he said in the Q&A.
The company’s efforts are not small. Axios reports that there are “50 editorial leads” aboard the project to help it launch, and “hundreds of people at Salesforce currently working on Salesforce+” more broadly.
Notably Salesforce does not have near-term monetization plans for Salesforce+. The service will be free, and will not feature external advertising. Salesforce+ will launch in September in conjunction with Dreamforce and include four channels: Primetime for news and announcements, Trailblazer for training content, Customer 360 for success stories and Industry Channels for industry-specific offerings.
The company hopes that by combining the announcement with Dreamforce, it will help drive interest in what Salesforce has cooked up. After the Dreamforce push, Salesforce+ will enter into interesting territory. How much do Salesforce customers, and the larger business community, really want what the company describes as “compelling live and on-demand content for every role, industry and line of business,” and “engaging stories, thought leadership and expert advice”?
Salesforce is considered the most successful SaaS-first company in history, and as such may have an opinion that people are interested in hearing. In its most recent quarterly earnings report in May, the company disclosed $5.96 billion in revenue, up 23% compared to the year-ago quarter, putting it close to a $25 billion run rate. The company also generates lots of cash. But being cash-rich doesn’t absolve the question of whether this new streaming effort will prove to be a money pit, costing buckets of cash to produce with limited returns.
The service sounds a bit like your LinkedIn feed brought to life, but in video form. At the very least, it’s probably the largest content marketing scheme of all time, but can it ever pay for itself either as a business unit or through some other monetization plans (like advertising) down the road?
Brent Leary, founder and principal analyst at CRM essentials, says that he could see Salesforce eyeing advertising revenue with this venture and having it all tie into the Salesforce platform. “A customer could sponsor a show, advertise a show or possibly collaborate on a show… and have leads generated from the show directly tied to the activity from those options while tracking ROI, and it’s all done on one platform. And the content lives on with ads living on with them,” Leary told TechCrunch.
Whether that’s the ultimate goal of this venture remains to be seen, but Salesforce has proven that there is market appetite for Dreamforce content at least in the physical world, with over a hundred thousand people involved in 2019, the last time the company was able to hold a live event. While the pandemic shifted most traditional conference activity into the digital realm, making Dreamforce and related types of content available year-round in video format makes some sense in that context.
Precisely how the company will justify the sizable addition to its marketing budget will be interesting; measuring ROI from video products is not entirely straightforward when it is not monetized directly. And sooner or later it will have to have some direct or indirect impact on the business or face questions from shareholders on the purpose of the venture.
Powered by WPeMatico