content management
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Box looks to balance growth and profitability as it matures
Prevailing wisdom states that as an enterprise SaaS company evolves, there’s a tendency to sacrifice profitability for growth — understandably so, especially in the early days of the company. At some point, however, a company needs to become profitable.
Box has struggled to reach that goal since going public in 2015, but yesterday, it delivered a mostly positive earnings report. Wall Street seemed to approve, with the stock up 6.75% as we published this article.
Box CEO Aaron Levie says the goal moving forward is to find better balance between growth and profitability. In his post-report call with analysts, Levie pointed to some positive numbers.
“As we shared in October [at BoxWorks], we are focused on driving a balance of long-term growth and improved profitability as measured by the combination of revenue growth plus free cash flow margin. On this combined metric, we expect to deliver a significant increase in FY ’21 to at least 25% and eventually reaching at least 35% in FY ’23,” Levie said.
Growing the platform
Part of the maturation and drive to profitability is spurred by the fact that Box now has a more complete product platform. While many struggle to understand the company’s business model, it provides content management in the cloud and modernizing that aspect of enterprise software. As a result, there are few pure-play content management vendors that can do what Box does in a cloud context.
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Salesforce Ventures invested $300M in Automattic while Salesforce was building a CMS
In September, Salesforce Ventures, the venture of arm of Salesforce, announced a hefty $300 million investment in Automattic, the company behind WordPress, the ubiquitous content management system (CMS). At the same time, the company was putting the finishing touches on Salesforce CMS, an in-house project it released last week.
The question is, why did it choose to do both?
One reason could be that WordPress isn’t just well-liked; it’s also the world’s most popular content management system, running 34 percent of the world’s 10 billion websites — including this one — according to the company. With Automattic valued at $3 billion, that gives Salesforce Ventures a 10 percent stake.
Given the substantial investment, you wouldn’t have been irrational to at least consider the idea that Salesforce may have had its eye on this company as an acquisition target. In fact, at the time of the funding, Automattic CEO Matt Mullenweg told TechCrunch’s Romain Dillet that there could be some partnerships and integrations with Salesforce in the future.
Now we have a Salesforce CMS, and a potential partnership with one of the world’s largest web content management (WCM) tools, and it’s possible that the two aren’t necessarily mutually exclusive.
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Salesforce announces new content management system
Salesforce has its fingers in a lot of parts of the customer experience, so why not content management? Today, the company announced a brand new tool called Salesforce Content Management System, which it says is designed from the ground up to deliver a quality customer experience across multiple channels.
The idea is to provide a way for customers to create, manage and deliver more meaningful content across multiple channels from within the Salesforce family of products. The company claims it doesn’t require any kind of deep technical knowledge to do it, meaning marketers and product people should be able to create and deliver content without the help of IT, once the system is properly set up.
Anna Rosenman, Salesforce’s VP of product marketing for Community Cloud, Commerce Cloud and Salesforce CMS, says the company created the new CMS to answer a customer demand. “Our customers have been asking for a dedicated CMS. The systems that they’ve been relying on so far tend to be legacy tools that are hard to use and built for a single-channel or site,” she said.
Photo: Salesforce
While users can create more personalized content based on what they know about the customer based on Salesforce data, Rosenman says the key differentiator here is the ability to connect to third-party systems. “A hybrid CMS provides a native experience channel or touchpoint, but also gives you the flexibility to present content to any touchpoint built on a third-party system,” she explained.
Tony Byrne, founder and principal analyst at Real Story Group, who has followed the Web CMS space for two decades, says this isn’t the first time that Salesforce has tried content management. The previous iteration was called Salesforce Sites. “They made big promises around that platform, got some major customers on board and then dropped it,” Byrne said.
He says it’s a major challenge to build a sophisticated multi-channel CMS. “It’s easy to build a simple CMS. It’s much harder to build an extensible, enterprise platform,” he said. He added, “There’s a lot of work they still need to do to feed other platforms around things like connectors, simulation, tracking, very advanced asset management (e.g., compound assets), object-oriented storage, etc.”
But Rosenman says the system’s built-in flexibility is designed to provide that, and even be used in conjunction with existing legacy tools if need be.
What’s interesting here is that Salesforce decided to build this tool, rather than buying a company and integrating it into the Salesforce family, an approach it has not been afraid to take in the past. In fact, the company pursues an aggressive acquisition strategy. This year alone it spent more than $15 billion to buy Tableau and another $1.35 billion to buy ClickSoftware.
In this case, in the tension between building and buying, it decided to build instead. Time will tell if that was a good decision or not.
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The next service marketplace wave: Vertical market-networks
Ivan Smolnikov
Contributor
Contributor
Ivan Smolnikov is the CEO and founder of Smartcat, the market network platform for the translation industry.
The last few decades have produced many successful marketplaces. We went from goods marketplace pioneers such as eBay and Amazon to simple service marketplaces such as Uber, Lyft, Doordash, Upwork, Thumbtack, TaskRabbit, and Fiverr. But why haven’t we seen many successful B2B service marketplaces?
Table of Contents
- Why Many B2B Service Marketplaces Failed
- What Makes A Successful Service Marketplace?
- Summary: Figure Out How to Unlock Value for All
Why Many B2B Service Marketplaces Failed
Some would argue that companies such as Upwork, Thumbtack, Fiverr, or TaskRabbit are horizontal B2B marketplaces in the sense that they provide access to suppliers of different services. But while businesses do indeed transact with freelancers on such “horizontal” marketplaces, for most service verticals these are limited-value, one-off transactions. They fail to enable long-term business collaborations.
So, such marketplaces haven’t delivered more valuable services nor introduced a new paradigm for how businesses buy specific services at scale and on an on-going basis. Why is that?
Horizontal marketplaces are stuck at the discovery process
Horizontal services marketplaces don’t provide much value beyond matching clients with quality service providers. In other words, they don’t facilitate collaboration between buyers and suppliers, never mind provide ways for the two parties to collaborate more efficiently over time as they engage in follow-on projects.
In essence, the model these marketplaces were built around is not much different from the likes of Craigslist, which put a convenient UX on traditional classified advertisements.
Complex B2B services require workflow and collaboration tools
In their article “What’s Next for Marketplace Startups?,” Andrew Chen and Li Jin found that there aren’t many successful service marketplaces because those offerings are complex, diverse, and difficult to evaluate. It’s challenging to define a successful transaction in a service marketplace because it’s harder to quantify success.
One reason is that several service providers must often work together to complete a single job for a buyer, requiring a complex workflow from end to end. As a result, it’s difficult for marketplaces to not only mediate service delivery but also make it significantly more efficient for buyers and suppliers. If both the buyer and suppliers don’t see a significant efficiency gain other than being initially matched, why would they continue using the marketplace?
(Image via Getty Images / Lidiia Moor)
The $50 billion translation industry is a prime example of complex B2B services marketplaces. On the supply side are roughly 50,000 small agencies around the globe responsible for more than 85% of this $50 billion industry. (Note we are referring to agencies here as suppliers, though they play on both sides.)
On the demand side are businesses that need to translate text from one language into another. Plus about 1,500,000 freelance linguists work in this industry, many of whom are more specialized than professionals in other industries.
Anyone can find and hire a translator on Fiverr or Upwork. Both provide a vast selection of language translators. However, the quality and cost of the translation depends on the translation tools available to the translator as well as their subject expertise.
Neither Fiverr nor Upwork provide computer-aided translation (CAT) and collaborative workflow solutions for users of their platforms. Additionally, neither provides an effective way for all parties to collaborate and continuously improve the efficiency and quality.
But the problem with traditional marketplaces goes even further: Multiple translators and reviewers are usually needed to complete a single job for a customer. Multi-language translation projects are even more complicated. Such projects require multiple service providers and cost estimates, in addition to project management tools.
This is why building a B2B service marketplace is difficult. Service marketplaces must not only connect buyers and suppliers, but also provide tools to enable an efficient and collaborative workflow that reduces wasted time and effort.
Horizontal marketplaces suffer high attrition
In addition to the problems already outlined, traditional marketplaces experience another issue that prevents them from growing and retaining market participants: Buyer and supplier attrition.
Many business services are based on regularly recurring engagements. In some cases, a buyer and a service provider interact daily, requiring a different workflow than gig-marketplaces are built around.
Buyers and suppliers have little motivation to continue interacting on a platform with no workflow automation solutions. They lack a way to improve service efficiency and quality, automate collaboration, payment, paperwork, and other basic processes required for a business.
This is why many traditional marketplaces suffer from slow network effects and high attrition. (A network effect is what happens when a platform, product, or service delivers more value the more it is used.
Think Facebook, eBay, WhatsApp.) Why wouldn’t companies work directly with service providers outside of a marketplace after they were introduced? What incentives keep the service transaction on the marketplace? These are critical questions to answer when building a marketplace.
Traditional marketplaces target broad services, making it nearly impossible to provide workflow solutions for buyers and suppliers. Going forward, successful service marketplaces will be developed relying on an industry-specific SaaS workflow. This will focus buyers and suppliers on longer-term projects and interactions that serve the unique needs of collaborations and transactions in a specific vertical.
Image via Getty Images / OstapenkoOlena
What makes a successful service marketplace?
In “The next 10 Years Will Be About Market Networks,” James Currier, Managing Partner at NFX Ventures, defines a new era of service marketplaces, which he calls market networks.
A market network is a platform that combines elements of an n-sided marketplace, a network, and workflow solutions. An n-sided marketplace is one that requires coordination of multiple supply-side parties to provide a complex service for a single buyer.
Market networks enable multiple buyers and suppliers to interact, collaborate, and transact on the same platform. They provide users with industry-specific workflow solutions that enable efficient, ongoing collaboration on long-term projects. This reduces costs and leads to a higher quality of services and increased overall value for all users.
But how do you actually build a successful market-network platform? While the answer to that varies from company to company, here is our approach. We were able to build a market network for the translation industry that combines the components: network, marketplace, and workflow solution.
STEP 1: SaaS workflow platform unlocks high-value collaboration
The first step to building an effective complex market network is to develop a workflow that is easy for users to embrace. It might not seem like much, but this increases productivity by enabling teams to perform tasks that were previously impossible.
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Google Docs gets an API for task automation
Google today announced the general availability of a new API for Google Docs that will allow developers to automate many of the tasks that users typically do manually in the company’s online office suite. The API has been in developer preview since last April’s Google Cloud Next 2018 and is now available to all developers.
As Google notes, the REST API was designed to help developers build workflow automation services for their users, build content management services and create documents in bulk. Using the API, developers can also set up processes that manipulate documents after the fact to update them, and the API also features the ability to insert, delete, move, merge and format text, insert inline images and work with lists, among other things.
The canonical use case here is invoicing, where you need to regularly create similar documents with ever-changing order numbers and line items based on information from third-party systems (or maybe even just a Google Sheet). Google also notes that the API’s import/export abilities allow you to use Docs for internal content management systems.
Some of the companies that built solutions based on the new API during the preview period include Zapier, Netflix, Mailchimp and Final Draft. Zapier integrated the Docs API into its own workflow automation tool to help its users create offer letters based on a template, for example, while Netflix used it to build an internal tool that helps its engineers gather data and automate its documentation workflow.
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Box hires former SAP exec as chief information security officer
Box announced today that it has hired Lakshmi Hanspal to be the company’s new chief information security officer (CISO). She boasts 20 years of security experience, including holding executive security roles at SAP Ariba and Bank of America. She also spent time in a senior role at PayPal.
In a blog post announcing the hire, the company defined her role this way: “In the role of CISO, Lakshmi will be responsible for Box’s cyber security practice, security operations and data and platform protection.”
Hanspal sees similarities in Box from her time at SAP Ariba, but she recognizes that she will face a different set of challenges. “My role at Box is similar to what I focused on at SAP Ariba with the biggest difference being Box’s geographical footprint. Box is a born in the cloud company and expanding rapidly globally, so my focus will also include securing public cloud operations (future stack) and risk transparency for our customers,” she told TechCrunch.
She said that will involve improving service maturity and sustainability through automation, while continuing to ensure the highest level of security of both Box corporate and product platforms.
Box CEO Aaron Levie indicated that security is central to everything Box does, so finding the right chief information security officer was absolutely critical. “Not only does Lakshmi bring with her an impressive and diverse leadership experience from her time at SAP, PayPal and Bank of America, but she’s an incredible team builder and culture add for Box that will take our security team to the next level,” Levie said.
Hanspal is the third woman on Box’s executive team, joining Stephanie Carullo, who was hired as chief operating officer in 2017 and chief people officer, Christie Lake.
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Box releases Skills, which lets developers apply AI and machine learning to Box content
When you have as much data under management as Box does, you have the key ingredient for artificial intelligence and machine learning, which feeds on copious amounts of data. Box is giving developers access to this data, while letting them choose the AI and machine learning algorithms they want to use. Today, the company announced the general availability of the Box Skills SDK, originally announced at BoxWorks a year ago.
Jeetu Patel, Box’s chief product officer and chief strategy officer, says beta customers have been focusing on use cases specific to each company. They have been pulling information from different classes of content that matter most to them to bring an element of automation to their content management. “If there’s a way to bring a level of automation with machine learning, rather than doing it manually, that would meaningfully change the way that business processes can function,” Patel told TechCrunch.
Among the use cases Box has been seeing with the 300 beta testers is using artificial intelligence to recognize the contents of a photo for the purpose of auto tagging, thereby eliminating the need for humans to do that tagging. Another example is in contract management, where the terms are pulled automatically from the contract, saving the legal team from having to do this.
Where this can get really powerful though is that the Skills SDK can drive a more complex automated workflow inside of Box. If, for example, Skills is driving the creation of automated metadata, that can in turn drive a workflow, Patel said.
Box is providing the means to ingest Box data into a given AI or machine learning algorithm, but instead of trying to create those on its own, it’s been relying on partners that have more specific expertise, such as IBM Watson, Microsoft Azure, Google Cloud Platform and Amazon Web Services. In fact, Box says it is working with dozens of AI and machine learning partners.
For customers that aren’t comfortable doing any of this on their own, Box is also providing a consulting service, where it can come into a customer and help work through a set of requirements and choose the best algorithm for the job.
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Seismic scores $100 million Series E investment on $1 billion valuation
Seismic has been helping companies create and manage their sales and marketing collateral since 2010. Today the company announced a $100 million Series E investment on a $1 billion valuation.
The round was led by Lightspeed Venture Partners and T. Rowe Price. Existing investors General Atlantic, JMI Equity and Jackson Square Ventures also participated in the round. The company has now raised $179 million since inception.
What is attracting this level of investment is Seismic’s sales enablement tools, a kind of content management for sales and marketing. “What we’re trying to do with our technology is to help marketers who are striving to create the right content to help the sellers, and help sellers navigate all of the content out there and put together the right pieces and the right materials that are going to help them move the sales cycle along,” Seismic CEO and co-founder Doug Winter explained.
The inclusion of an investor like T. Rowe Price often is a signal of IPO ambitions, and Winter acknowledged the connection, while pointing out that T. Rowe Price is also a customer. “We do have a goal to be public-ready as a company that we are aiming for. We are the leader of the space, and we do feel like striving to be a public company and to be the first one in our space to go public. It’s a goal we are going to push for,” Winter told TechCrunch.
But he says taking this investment is more about taking advantage of market opportunity. The money gives Seismic the ability to expand to meet growing sales. Today, the company has more than 600 customers averaging more than $200,000 in spending, according to Winter.
The company acquired the Savo Group in May to help expand its market position. Seismic is based in San Diego with offices in Boston and Chicago (from the acquisition). It also opened offices in the U.K. and Australia earlier this year and plans further international expansion with the new investment. The company currently has more than 600 employees, including 185 engineers and project managers, and plans to keep hiring as it puts this money to work.
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Contentful raises $33.5M for its headless CMS platform
Contentful, a Berlin- and San Francisco-based startup that provides content management infrastructure for companies like Spotify, Nike, Lyft and others, today announced that it has raised a $33.5 million Series D funding round led by Sapphire Ventures, with participation from OMERS Ventures and Salesforce Ventures, as well as existing investors General Catalyst, Benchmark, Balderton Capital and Hercules. In total, the company has now raised $78.3 million.
It’s been less than a year since the company raised its Series C round and, as Contentful co-founder and CEO Sascha Konietzke told me, the company didn’t really need to raise right now. “We had just raised our last round about a year ago. We still had plenty of cash in our bank account and we didn’t need to raise as of now,” said Konietzke. “But we saw a lot of economic uncertainty, so we thought it might be a good moment in time to recharge. And at the same time, we already had some interesting conversations ongoing with Sapphire [formerly SAP Ventures] and Salesforce. So we saw the opportunity to add more funding and also start getting into a tight relationship with both of these players.”
The original plan for Contentful was to focus almost explicitly on mobile. As it turns out, though, the company’s customers also wanted to use the service to handle its web-based applications and these days, Contentful happily supports both. “What we’re seeing is that everything is becoming an application,” he told me. “We started with native mobile application, but even the websites nowadays are often an application.”
In its early days, Contentful focused only on developers. Now, however, that’s changing, and having these connections to large enterprise players like SAP and Salesforce surely isn’t going to hurt the company as it looks to bring on larger enterprise accounts.
Currently, the company’s focus is very much on Europe and North America, which account for about 80 percent of its customers. For now, Contentful plans to continue to focus on these regions, though it obviously supports customers anywhere in the world.
Contentful only exists as a hosted platform. As of now, the company doesn’t have any plans for offering a self-hosted version, though Konietzke noted that he does occasionally get requests for this.
What the company is planning to do in the near future, though, is to enable more integrations with existing enterprise tools. “Customers are asking for deeper integrations into their enterprise stack,” Konietzke said. “And that’s what we’re beginning to focus on and where we’re building a lot of capabilities around that.” In addition, support for GraphQL and an expanded rich text editing experience is coming up. The company also recently launched a new editing experience.
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After its acquisition, Magento starts integrating Adobe’s personalization and analytics tools
It’s been less than six months since Adobe acquired commerce platform Magento for $1.68 billion and today, at Magento’s annual conference, the company announced the first set of integrations that bring the analytics and personalization features of Adobe’s Experience Cloud to Magento’s Commerce Cloud.
In many ways, the acquisition of Magento helps Adobe close the loop in its marketing story by giving its customers a full spectrum of services that go from analytics, marketing and customer acquisition all the way to closing the transaction. It’s no surprise then that the Experience Cloud and Commerce Cloud are growing closer to, in Adobe’s words, “make every experience shoppable.”
“From the time that this company started to today, our focus has been pretty much exactly the same,” Adobe’s SVP of Strategic Marketing Aseem Chandra told me. “This is, how do we deliver better experiences across any channel in which our customers are interacting with a brand? If you think about the way that customers interact today, every experience is valuable and important. […] It’s no longer just about the product, it’s more about the experience that we deliver around that product that really counts.”
So with these new integrations, Magento Commerce Cloud users will get access to an integration with Adobe Target, for example, the company’s machine learning-based tool for personalizing shopping experiences. Similarly, they’ll get easy access to predictive analytics from Adobe Analytics to analyze their customers’ data and predict future churn and purchasing behavior, among other things.
These kinds of AI/ML capabilities were something Magento had long been thinking about, Magento’s former CEO and new Adobe SVP fo Commerce Mark Lavelle told me, but it took the acquisition by Adobe to really be able to push ahead with this. “Where the world’s going for Magento clients — and really for all of Adobe’s clients — is you can’t do this yourself,” he said. “you need to be associated with a platform that has not just technology and feature functionality, but actually has this living and breathing data environment that that learns and delivers intelligence back into the product so that your job is easier. That’s what Amazon and Google and all of the big companies that we’re all increasingly competing against or cooperating with have. They have that type of scale.” He also noted that at least part of this match-up of Adobe and Magento is to give their clients that kind of scale, even if they are small- or medium-sized merchants.
The other new Adobe-powered feature that’s now available is an integration with the Adobe Experience Manager. That’s Adobe’s content management tool that itself integrates many of these AI technologies for building personalized mobile and web content and shopping experiences.
“The goal here is really in unifying that profile, where we have a lot of behavioral information about our consumers,” said Aseem. “And what Magento allows us to do is bring in the transactional information and put those together so we get a much richer view of who the consumers are and how we personalize that experience with the next interaction that they have with a Magento-based commerce site.”
It’s worth noting that Magento is also launching a number of other new features to its Commerce Cloud that include a new drag-and-drop editing tool for site content, support for building Progressive Web Applications, a streamlined payment tool with improved risk management capabilities, as well as a new integration with the Amazon Sales Channel so Magento stores can sync their inventory with Amazon’s platform. Magneto is also announcing integrations with Google’s Merchant Center and Advertising Channels for Google Smart Shopping Campaigns.
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