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Salesforce grabs Vlocity for $1.33B, a startup with $1B valuation
It’s been a big news day for Salesforce . It announced that co-CEO Keith Block would be stepping down, and that it had acquired Vlocity for $1.33 billion in an all-cash deal.
It’s no coincidence that Salesforce targeted this startup. It’s a firm that builds six industry-specific CRMs on top of Salesforce — communications, media and entertainment, insurance and financial services, health, energy and utilities and government and nonprofits — and Salesforce Ventures was also an investor. This would appear to have been a deal waiting to happen.
Brent Leary, founder and principal analyst at CRM Essentials, says Salesforce saw this as an important target to keep building the business. “Salesforce has been beefing up their abilities to provide industry-specific solutions by cultivating strategic ISV partnerships with companies like Vlocity and Veeva (which is focused on life sciences). But this move signals the importance of making these industry capabilities even more a part of the platform offerings,” Leary told TechCrunch.
Ray Wang, founder and principal analyst at Constellation Research, also liked the deal for Salesforce. “It’s a great deal. Vlocity gives them the industries platform they need. More importantly, it keeps Google from buying them and [could generate] $10 billion in additional industries revenue growth over next four years,” he said.
Vlocity had raised about $163 million on a valuation of around $1 billion as of its most recent round, a $60 million Series C last March. If $1.33 billion seems a little light, given what Vlocity is providing the company, Wang says it’s because Vlocity needed Salesforce more than the other way around.
“Vlocity on its own doesn’t have as big a future without Salesforce. They have to be together. So Salesforce doesn’t need to buy them. They could keep building out, but it’s better for them to buy them now,” Wang said.
Still, the company was valued at $1 billion just under a year ago, and sold for $1.33 billion after raising $163 million. That means it received 8.2x total invested capital ($1.33 billion/ $163 million invested capital), which isn’t a bad return.
In a blog post on the Vlocity website, founder and CEO David Schmaier put a positive spin on the deal. “Upon the close of the transaction, Vlocity — this wonderful company that we, as a team, have created, built, and grown into a transformational solution for six of the most important industries in the enterprise — will become part of Salesforce,” he wrote.
Per usual, the deal will be predicated on regulatory approval and close some time during Salesforce’s second quarter in fiscal 2021.
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Salesforce co-CEO Keith Block steps down
Salesforce today announced that Keith Block, the company’s co-CEO, is stepping down. This leaves company founder Marc Benioff as the sole CEO and chair of the CRM juggernaut. Block’s bio has already been wiped from Salesforce’s leadership page.
Block stepped into the co-CEO role in 2018, after a long career at the company that saw him become vice chairman, president and director before he took this position. Block spent the early years of his career at Oracle . He left there in 2012 after the release of a number of documents in which he criticized then-Oracle CEO Mark Hurd, who passed away last year.
Industry pundits saw his elevation to the co-CEO role as a sign that Block was next in line as the company’s sole CEO in the future (assuming Benioff would ever step down). After this short tenure as co-CEO, it doesn’t look like that will be the case, but for the time being, Block will stay on as an advisor to Benioff.
“It’s been my greatest honor to lead the team with Marc [Benioff] that has more than quadrupled Salesforce from $4 billion of revenue when I joined in 2013 to over $17 billion last year,” said Block in a canned statement that was surely not written by the Salesforce PR team. “We are now a global enterprise company, focused on industries, and have an ecosystem that is the envy of the industry, and I’m so grateful to our employees, customers, and partners. After a fantastic run I am ready for my next chapter and will stay close to the company as an advisor. Being side-by-side with Marc has been amazing and I’m forever grateful for our friendship and proud of the trajectory the company is on.”
In related news, the company also today announced that it has named former BT Group CEO Gavin Patterson as its president and CEO of Salesforce International.
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Microsoft Dynamics 365 update is focused on harnessing data
Microsoft announced a major update to its Dynamics 365 product line today, which correlates to the growing amount of data in the enterprise and how to collect and understand that data to produce better customer experiences.
This is, in fact, the goal of all vendors in this space, including Salesforce and Adobe, which are also looking to help improve the customer experience. James Philips, who was promoted to president of Microsoft Business Applications just this week, says that Microsoft has also been keenly focused on harnessing the growing amount of data and helping make use of that inside the applications he is in charge of.
“To be frank, every single thing that we’re doing at Microsoft, not just in business applications but across the entire Microsoft Cloud, is on the back of that vision that data is coming out of everything, and that those organizations that can collect that data, harmonize it and reason over it will be in a position to be proactive versus reactive,” Philips told TechCrunch.
New customer engagement tooling
For starters, the company is adding functionality to its customer data platform (CDP), a concept all major vendors (and a growing group of startups) have embraced. It pulls together into one place all of the customer data from various systems, making it easier to understand how the customer interacts with you, with the goal of providing better experiences based on this knowledge. Microsoft’s CDP is called Customer Insights.
The company is adding some new connectors to help complete that picture of the customer. “We’re adding new first and third-party data connections to Customer Insights that allow our customers to understand, for example audience memberships, brand affinities, demographic, psychographic and other characteristics of customers that are stored and then harnessed from Dynamics 365 Customer Insights,” Philips said.
All of this might make you wonder how they can collect this level of data and maintain GDPR/CCPA kind of compliance. Philips says that the company has been working on this for some time. “We did work at the company level to build a system that allows us and our customers to search for and then delete information about customers in each product group within Microsoft, including my organization,” he explained.
The company has also added new sales forecasting tools and Dynamics 365 Sales Engagement Center. The first allows companies to tap into all this data to better predict the customers who sales is engaged with that are most likely to turn into sales. The second gives inside sales teams tools like next best action. These are not revolutionary by any means in the CRM space, but do provide new capabilities for Microsoft customers.
New operations-level tooling
The operations side is related to what happens after the sale, when the company begins to collect money and report revenue. To that end, the company is introducing a new product called Dynamic 365 Finance Insights, which you can think of as Customer Insights, except for money.
“This product is designed to help our customers predict and accelerate their cash flow. It’s designed specifically to identify opportunities where to focus your energy, where you may have the best opportunity to either close accounts payables or receivables or the opportunity to understand where you may have cash shortfalls,” Philips said.
Finally the company is introducing Dynamics 365 Project Operations, which provides a way for project-based business like construction, consulting and law to track the needs of the business.
“Those organizations, who are trying to operate in a project-based way now have with Dynamics 365 Project Operations, what we believe is the most widely used project management capability in Microsoft Project being joined now with all of the back-end capabilities for selling, accounting and planning that Dynamic 365 offers, all built on the same Common Data Platform, so that you can marry your front-end operations and operational planning with your back-end resource planning, workforce planning and operational processes,” he explained.
All of these tools are designed to take advantage of the growing amount of data coming into organizations, and provide ways to run businesses in a more automated and intelligent fashion that removes some of the manual steps involved in running a company.
To be clear, Microsoft is not alone in offering this kind of intelligent functionality. It is part of a growing movement to bring intelligence to all aspects of enterprise software, regardless of vendor.
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Zendesk launches Sell Marketplace to bring app store to CRM product
Zendesk acquired Base CRM in 2018 to give customers a CRM component to go with its core customer service software. After purchasing the company, it changed the name to Sell, and today the company announced the launch of the new Sell Marketplace.
Officially called The Zendesk Marketplace for Sell, it’s a place where companies can share components that extend the capabilities of the core Sell product. Companies like MailChimp, HubSpot and QuickBooks are available at launch.
App directory in Sell Marketplace. Screenshot: Zendesk
Matt Price, SVP and general manager at Zendesk, sees the marketplace as a way to extend Sell into a platform play, something he thinks could be a “game changer.” He likened it to the impact of app stores on mobile phones.
“It’s that platform that accelerated and really suddenly [transformed smart phones] from being just a product to [launching an] industry. And that’s what the marketplace is doing now, taking Sell from being a really great sales tool to being able to handle anything that you want to throw at it because it’s extensible through apps,” Price explained.
Price says that this ability to extend the product could manifest in several ways. For starters, customers can build private apps with a new application development framework. This enables them to customize Sell for their particular environment, such as connecting to an internal system or building functionality that’s unique to them.
In addition, ISVs can build custom apps, something Price points out they have been doing for some time on the Zendesk customer support side. “Interestingly Zendesk obviously has a very large community of independent developers, hundreds of them, who are [developing apps for] our support product, and now we have another product that they can support,” he said.
Finally, industry partners can add connections to their software. For instance, by installing Dropbox for Sell, it gives sales people a way to save documents to Dropbox and associate them with a deal in Sell.
Of course, what Zendesk is doing here with Sell Marketplace isn’t new. Salesforce introduced this kind of app store concept to the CRM world in 2006 when it launched AppExchange, but the Sell Marketplace still gives Sell users a way to extend the product to meet their unique needs, and that could prove to be a powerful addition.
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Revenue train kept rolling all year long for Salesforce
Salesforce turned 20 this year, and the most successful pure enterprise SaaS company ever showed no signs of slowing down. Consider that the company finished the year on an $18 billion run rate, rushing toward its 2022 revenue goal of $20 billion. Oh, and it also spent a tidy $15.7 billion to buy Tableau this year in the most high-profile and expensive acquisition it’s ever made.
Co-founder, chairman and CEO Marc Benioff published a book called Trailblazer about running a socially responsible company, and made the rounds promoting it. In fact, he even stopped by TechCrunch Disrupt in San Francisco in September, telling the audience that capitalism as we know it is dead. Still, the company announced it was building two more towers in Sydney and Dublin.
It also promoted Bret Taylor just last week, who could be in line as heir apparent to Benioff and co-CEO Keith Block whenever they decide to retire. The company closed the year with a bang with a $4.5 billion quarter. Salesforce, for the most part, has somehow been able to balance Benioff’s vision of responsible capitalism while building a company makes money in bunches, one that continues to grow and flourish, and that’s showing no signs of slowing down anytime soon.
All aboard the gravy train
The company just keeps churning out good quarters. Here’s what this year looked like:
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Odoo grabs $90M to sell more SMEs on its business app suite
Belgium-based all-in-one business software maker Odoo, which offers an open source version as well as subscription-based enterprise software and SaaS, has taken in $90 million led by a new investor: Global growth equity investor Summit Partners.
The funds have been raised via a secondary share sale. Odoo’s executive management team and existing investor SRIW and its affiliate Noshaq also participated in the share sale by buying stock — with VC firms Sofinnova and XAnge selling part of their shares to Summit Partners and others.
“Odoo is largely profitable and grows at 60% per year with an 83% gross margin product; so, we don’t need to raise money,” a spokeswoman told us. “Our bottleneck is not the cash but the recruitment of new developers, and the development of the partner network.
“What’s unusual in the deal is that existing managers, instead of cashing out, purchased part of the shares using a loan with banks.”
The 2005-founded company — which used to go by the name of OpenERP before transitioning to its current open core model in 2015 — last took in a $10M Series B back in 2014, per Crunchbase.
Odoo offers some 30 applications via its Enterprise platform — including ERP, accounting, stock, manufacturing, CRM, project management, marketing, human resources, website, eCommerce and point-of-sale apps — while a community of ~20,000 active members has contributed 16,000+ apps to the open source version of its software, addressing a broader swathe of business needs.
It focuses on the SME business apps segment, competing with the likes of Oracle, SAP and Zoho, to name a few. Odoo says it has in excess of 4.5 million users worldwide at this point, and touts revenue growth “consistently above 50% over the last ten years”.
Summit Partners told us funds from the secondary sale will be used to accelerate product development — and for continued global expansion.
“In our experience, traditional ERP is expensive and frequently fails to adapt to the unique needs of dynamic businesses. With its flexible suite of applications and a relentless focus on product, we believe Odoo is ideally positioned to capture this large and compelling market opportunity,” said Antony Clavel, a Summit Partners principal who has joined the Odoo board, in a supporting statement.
Odoo’s spokeswoman added that part of the expansion plan includes opening an office in Mexico in January, and another in Antwerpen, Belgium, in Q3.
This report was updated with additional comment
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Salesforce, Apple partnership begins to come to life
Last year at Dreamforce, Salesforce’s enormous annual customer conference, Apple and Salesforce announced the beginnings of a partnership where the two organizations would work together to enhance Salesforce products running on Apple devices. Today, as this year’s Dreamforce conference begins, the companies announced the fruits of that labor with general availability of two new tools that were first announced at last year’s event.
For starters, Apple has been working with Salesforce to redesign the Salesforce Mobile app to build in Apple iOS features into the app like being able to use Siri shortcuts to get work done faster, using your voice instead of typing, something that’s sometimes awkward to do on a mobile device.
Photo: Salesforce
For instance, you could say, “Hey Siri, next sales meeting,” and Siri can interact with Salesforce CRM to tell you who your meeting is with, the name of his or her company, when you last met and what the Einstein opportunity score is to help you predict how likely it is that you could make a sale today (or eventually).
In addition, the Mobile App takes advantage of Apple’s Handoff feature to reflect changes across devices immediately, and Apple’s Face ID for easy log on to the app.
Salesforce also announced a pilot of Einstein Voice on Salesforce Mobile, allowing reps to enter notes, add tasks and update the CRM database using voice. Einstein is Salesforce’s general artificial intelligence layer, and the voice feature uses natural language understanding to interpret what the rep asks.
The company reports that over 1000 companies participated in piloting the updated app, which constitutes the largest pilot in the history of the organization.
Salesforce also announced its new mobile development platform SDK, built specifically for iOS and iPadOS using the Swift language. The idea is to provide a tool to give Salesforce developers with the ability to build apps for iPad and iPhone, then package them up with a new tool called Swift UI and Package Manager.
Photo: Salesforce
Trailhead Go is the mobile version of the company’s online learning platform designed specifically for iPad and iPhone. It was built using the new Mobile SDK, and allows users to access the same courses they can on the web in a mobile context. The new mobile tool includes the ability to Handoff between devices along with support for picture-in-picture and split view for multi-tasking when it makes sense.
Salesforce Mobile and Trailhead Go are available starting today for free in the iOS App Store. The Salesforce Mobile SDK will be available later this year.
As this partnership continues to develop, both companies should benefit. Salesforce gets direct access to Apple features, and can work with Apple to implement them in an optimized way. Apple gets deeper access to the enterprise with help from Salesforce, one of the biggest enterprise software vendors around.
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Freshworks raises $150M Series H on $3.5B valuation
Freshworks, a company that makes a variety of business software tools, from CRM to help-desk software, announced a $150 million Series H investment today from Sequoia Capital, CapitalG (formerly Google Capital) and Accel on a hefty $3.5 billion valuation. The late-stage startup has raised almost $400 million, according to Crunchbase data.
The company has been building an enterprise SaaS platform to give customers a set of integrated business tools, but CEO and co-founder Girish Mathrubootham says they will be investing part of this money in R&D to keep building out the platform.
To that end, the company also announced today a new unified data platform called the “Customer-for-Life Cloud” that runs across all of its tools. “We are actually investing in really bringing all of this together to create the “Customer-for-Life Cloud,” which is how you take marketing, sales, support and customer success — all of the aspects of a customer across the entire life cycle journey and bring them to a common data model where a business that is using Freshworks can see the entire life cycle of the customer,” Mathrubootham explained.
While Mathrubootham was not ready to commit to an IPO, he said they are in the process of hiring a CFO and are looking ahead to one day becoming a public company. “We don’t have a definite timeline. We want to go public at the right time. We are making sure that as a company that we are ready with the right processes and teams and predictability in the business,” he said.
In addition, he says he will continue to look for good acquisition targets, and having this money in the bank will help the company fill in gaps in the product set should the right opportunity arise. “We don’t generally acquire revenue, but we are looking for good technology teams both in terms of talent, as well as technology that would help give us a jumpstart in terms of go-to-market.” It hasn’t been afraid to target small companies in the past, having acquired 12 already.
Freshworks, which launched in 2010, has almost 2,500 employees, a number that’s sure to go up with this new investment. It has 250,00 customers worldwide, including almost 40,000 paying customers. These including Bridgestone Tires, Honda, Hugo Boss, Toshiba and Cisco.
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Veteran enterprise exec Bob Stutz is heading back to SAP
Bob Stutz has had a storied career with enterprise software companies, including stints at Siebel Systems, SAP, Microsoft and Salesforce. He announced on Facebook last week that he’s leaving his job as head of the Salesforce Marketing Cloud and heading back to SAP as president of customer experience.
Bob Stutz Facebook announcement
Constellation Research founder and principal analyst Ray Wang says that Stutz has a reputation for taking companies to the next level. He helped put Microsoft CRM on the map (although it still had just 2.7% market share in 2018, according to Gartner) and he helped move the needle at Salesforce Marketing Cloud.
Bob Stutz, SAP’s new president of customer experience (Photo: Salesforce)
“Stutz was the reason Salesforce could grow in the Marketing Cloud and analytics areas. He fixed a lot of the fundamental architectural and development issues at Salesforce, and he did most of the big work in the first 12 months. He got the acquisitions going, as well,” Wang told TechCrunch. He added, “SAP has a big portfolio, from CallidusCloud to Hybris to Qualtrics, to put together. Bob is the guy you bring in to take a team to the next level.”
Brent Leary, who is a long-time CRM industry watcher, says the move makes a lot of sense for SAP. “Having Bob return to head up their Customer Experience business is a huge win for SAP. He’s been everywhere, and everywhere he’s been was better for it. And going back to SAP at this particular time may be his biggest challenge, but he’s the right person for this particular challenge,” Leary said.
The move comes against the backdrop of lots of changes going on at the German software giant. Long-time CEO Bill McDermott recently announced he was stepping down, and that Jennifer Morgan and Christian Klein would be replacing him as co-CEOs. Earlier this year, the company saw a line of other long-time executives and board members head out the door, including SAP SuccessFactors COO Brigette McInnis-Day; Robert Enslin, president of its cloud business and a board member; CTO Björn Goerke; and Bernd Leukert, a member of the executive board.
Having Stutz on board could help stabilize the situation somewhat, as he brings more than 25 years of solid software company experience to bear on the company.
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Marc Benioff will discuss building a socially responsible and successful startup at TechCrunch Disrupt
Salesforce chairman, co-founder and CEO Marc Benioff took a lot of big chances when he launched the company 20 years ago. For starters, his was one of the earliest enterprise SaaS companies, but he wasn’t just developing a company on top of a new platform, he was building one from scratch with social responsibility built-in.
Fast-forward 20 years and that company is wildly successful. In its most recent earnings report, it announced a $4 billion quarter, putting it on a $16 billion run rate, and making it by far the most successful SaaS company ever.
But at the heart of the company’s DNA is a charitable streak, and it’s not something they bolted on after getting successful. Even before the company had a working product, in the earliest planning documents, Salesforce wanted to be a different kind of company. Early on, it designed the 1-1-1 philanthropic model that set aside 1% of Salesforce’s equity, and 1% of its product and 1% of its employees’ time to the community. As the company has grown, that model has serious financial teeth now, and other startups over the years have also adopted the same approach using Salesforce as a model.
In our coverage of Dreamforce, the company’s enormous annual customer conference, in 2016, Benioff outlined his personal philosophy around giving back:
You are at work, and you have great leadership skills. You can isolate yourselves and say I’m going to put those skills to use in a box at work, or you can say I’m going to have an integrated life. The way I look at the world, I’m going to put those skills to work to make the world a better place.
This year Benioff is coming to TechCrunch Disrupt in San Francisco to discuss with TechCrunch editors how to build a highly successful business, while giving back to the community and the society your business is part of. In fact, he has a book coming out in mid-October called Trailblazer: The Power of Business as the Greatest Platform for Change, in which he writes about how businesses can be a positive social force.
Benioff has received numerous awards over the years for his entrepreneurial and charitable spirit, including Innovator of the Decade from Forbes, one of the World’s 25 Greatest Leaders from Fortune, one of the 10 Best-Performing CEOs from Harvard Business Review, GLAAD, the Billie Jean King Leadership Initiative for his work on equality and the Variety Magazine EmPOWerment Award.
It’s worth noting that in 2018, a group of 618 Salesforce employees presented Benioff with a petition protesting the company’s contract with the Customs and Border Patrol (CBP). Benioff in public comments stated that the tools were being used in recruitment and management, and not helping to separate families at the border. While Salesforce did not cancel the contract, at the time, co-CEO Keith Block stated that the company would donate $1 million to organizations helping separated families, as well as match any internal employee contributions through its charitable arm, Salesforce.org.
Disrupt SF runs October 2 to October 4 at the Moscone Center in the heart of San Francisco. Tickets are available here.
Did you know Extra Crunch annual members get 20% off all TechCrunch event tickets? Head over here to get your annual pass, and then email extracrunch@techcrunch.com to get your 20% discount. Please note that it can take up to 24 hours to issue the discount code.
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