Salesforce in a gambling mode; if not Twitter it will soon be something else

Tom Paine

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MegaChangeAgent

As Salesforce (CRM) is <a href="http://www.bloomberg.com/news/articles/2016-09-25/twitter-bidders-vying-for-data-would-inherit-the-doldrums-too"> evidently pondering a possible bid for Twitter</a>, one wonders where its share price has been over the past year (see chart).

Its 52 week range has been $52.60 - $84.48, though that's been up and down - not really growth, and it currently sits at $70.39 as of Friday's close. CRM's market cap has seemingly been stuck in the $50-55 billion range (until its recent drop). It was down almost 6% on word of its Twitter interest Friday. Market cap is important not only
because it reflects aggregate shareholder value, but because its the relative currency used to make acquisitions.

Factors that have influenced the stagnation of CRM shares include an ongoing correction of SaaS valuations, Salesforce customer and partner pipeline surveys by analysts showing hints of weakness in demand, and the potential dilutve effects and integration issues around Salesforce's rapid M&A expansion, which has led some to question its organic growth potential. Salesforce had beaten off the bears until its last earnings report at the end of August, when it barely met estimates and fell on weak future guidance. The revelation that Benioff aggressively pursued LinkedIn prior to the latter linking up with Microsoft, although making strategic sense at some price, further worried some investors.

With Salesforce's current market value under $50 million, buying Twitter could cost it up to half that amount or more. That's a risky strategy given an integration that would be trickier than for LinkedIn, unless someone at Salesforce thinks they've found the secret sauce in terms of leveraging Twitter data (they've been working with it).

I've had the sense from some of Benioff's comments and actions over the past year or so that he wants to do something really big to transform Salesforce and the enterprise SaaS business, that he's not happy standing pat. He's a bright guy who's been successful to this point, so I'm not going to quibble much with his judgment, but he's in a risk-taking mode and if Twitter doesn't happen something else eventually will.

Today's links 8/8: Walmart Agrees to Acquire Jet.com; Dentsu acquires marketing agency Merkle in a $1 billion+ deal

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Valuations are funny things; they can go up and down like YoYos Theranos, SevOne, Jet.com, Birchbox, RJMetrics

Tom Paine

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Valuations of privately held ventures are very fluid, much more so than for publicly traded firms.

Take Theranos, for example. The California-based startup, which claimed to have the methodology and technology to revolutionize blood testing with a simple, low cost solution, soared to a valuation of $9 billion, one of the mightiest of Unicorns.

But reports last Fall questioned the validity of its lab test results, implying that Theranos wasn't being straightforward, at the very least.

Early this week Theranos founder Elizabeth Holmes made a rare public speaking appearance in front of the American Association for Clinical Chemistry convention (a lively crowd) in Philadelphia, and the audience had an expectation that Holmes would address the controversy surrounding the blood test results. Whether those expectations were realistic, I can't say.

But Holmes instead decided to present the beleaguered start-up’s new 'miniLab' diagnostic tool,  a completely different product not facing the same regulatory issues.

Some in the audience felt used, taken in by a pretext to hear a pitch.

Then there's SevOne, Delaware's latest, greatest startup hope.

In 2013, Bain Capital, which doesn't usually make bad bets, poured in $150 million to buy out the founders and investors of the fast-growing network monitoring startup founded by Vess and Tanya Bakalov. Bain also installed its own guy as CEO.

Another round of $50 million followed in late 2015, at a valuation the Wall Street Journal described as bordering on $1 billion. At that time it became apparent, though never officially announced, that SevOne's headquarters were moving from Delaware to Boston. This created an extra management layer far from the largest concentration of its engineering talent in Newark.

The first layoffs at SevOne came in March, probably less than 10% of a workforce of more than 500.

The layoffs that began this week were described by ex-employees interviewed by the Wilmington News Journal as possibly running into the hundreds. A request by Philly Tech News to SevOne for clarification has not been responded to.

What caused SevOne's problems? Was the headquarters shift to Boston disruptive? Did it staff up too quickly? SevOne is still well-positioned on the most recent Gartner Magic Quadrant. Also see 451 Research's new report.

My guess is that SevOne's product is complex and not as simple as rolling out more boxes to a new account. Serving a small number of large accounts, such as Comcast or Amazon, is different from reaching a broader customer base. Or maybe it simply wasn't that unique from its competitors. In any event, its unlikely that SevOne could now raise funds at anywhere near a billion dollar valuation now.

Update 8/21: Still haven't seen or heard anything more specific about SevOne's reported layoffs.

Marc Lore / ( LinkedIn)

To the upside, the Wall Street Journal reported that Jet.com is in buyout talks with Walmart at a valuation that could near $3 billion. Jet has raised at least $700 million to date, with its most recent valuation being in the $1.3 billion range.

Penn-related MentorTech Ventures, which was also on board with Marc Lore's previous startup, Quidsi (sold to Amazon for $545 million) was an early investor in Jet, his latest.

Recode suggests a match could be made between Walmart, which is desperately playing catchup to Amazon in ecommerce, and Jet.com, which may face a tougher road if it needs to raise more capital on its own. Jet.com's ecommerce team is considered one of the best, so in a sense a buyout might be a kind of acquihire.




Birchbox, founded by a pair of Harvard MBAs, was seen as a model for the emerging subscription economy, offering a monthly delivery of a collection of health & beauty aid samples, with the idea that a percentage of subscribers would order full-sized items. Early backers included First Round Capital. In 2014, it raised $60 million in a round that valued it at around $500 million

Birchbox has also had two layoff rounds this year, totaling more than 25% of staff. Although its said to be doing around $200 million in revenue, it was still facing a cash crunch. (You go to Harvard to learn how to make a buck off of $200 million in sales).

So this week Birchbox announced it had received a $15 million infusion from its existing investors, including First Round, which is hopefully intended to carry it to positive cashflow.

One of Birchbox' co-founders, Hayley Barna, is now a venture partner with First Round.




Lastly, there's RJMetrics, which exited last week through a sale to ecommerce software firm Magento, previously an RJMetrics partner. I know nothing about its numbers, but considering the extent of its layoffs earlier this year it seems unlikely that it provided a return equal the the valuation implied by the $23 million in VC funding it received .

Not to take anything away from Bob Moore and Jake Stein, who built the business absolutely from scratch with nothing but their combined brainpower, before taking VC money when RJMetrics was firmly established.

No word on how its spinoff, data transfer tool provider Stitch, is financed.

Cloud Security Innovator Avanan Opens D.C. and Philadelphia Sales & Marketing Offices to Support Rapid Growth

Cloud Security Innovator Avanan Opens D.C. and Philadelphia Sales & Marketing Offices to Support Rapid Growth

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July 14, 2016 10:19 ET | Source: Avanan

NEW YORK, July 14, 2016 (GLOBE NEWSWIRE) -- Avanan, the cloud security platform, today announced the opening of its new sales and marketing offices in Reston, Virginia, a D.C.-area hot spot for some of the world’s leading security companies, and emerging tech startup hub Philadelphia.

Following a May 2016 venture round of $14.9 million from Greenfield Cities Holdings, L.P., Avanan is expanding its sales and marketing team to accelerate the company's rapid growth in bringing innovative, next-generation cloud security solutions to the enterprise IT security market worldwide.

Avanan’s Cloud Security Platform is an entirely new way to secure highly vulnerable SaaS mail applications such as Office 365 Mail and Google Mail. With a single click, enterprises of all sizes can protect from malware such as ransomware and phishing, using preconfigured cloud-based versions of security technology from more than 60 leading vendors such as Check Point, Symantec, McAfee, Palo Alto Networks, Sophos and Kaspersky.

The office expansion is just the latest move demonstrating Avanan’s market success and expanding customer base. Just last month, Avanan named Steven Toole chief marketing officer. Toole was previously the vice president of Marketing for Reston-based semantic indexing technology provider Content Analyst Company, acquired by kCura Corporation in March 2016, and brings 26 years of experience to the Avanan team.

Avanan plans to hire at least 10 more sales and marketing personnel to work out of the company’s Reston and Philadelphia locations, and others throughout the U.S., this year.

“The Herndon/Reston area serves as the D.C. office location for several of Avanan’s partners, including Microsoft, Symantec, Amazon and Palo Alto Networks, and Philadelphia is quickly becoming a startup haven as well,” said Gil Friedrich, Avanan founder and CEO. “Government agencies and enterprises want the benefits of SaaS mail, and we let them use the on-premise security solutions that they trust and apply them to the cloud mail applications. We’re the only company that can do this.”

Avanan has been named a 2016 Gartner Cool Vendor, a Red Herring Top 100 North American Tech Startup and one of CRN’s 20 Coolest Cloud Security Vendors of 2016. The company is headquartered in New York City with Research & Development in Tel-Aviv, Israel.

About Avanan, the Cloud Security Platform
Avanan secures SaaS mail programs such as Office 365 Mail and Google Mail or any cloud application with one click, using security technology from more than 60 industry-leading vendors.

In May 2016, Avanan raised $14.9 million in Series A financing. Greenfield Cities Holdings, L.P. (GFC), a TPG Growth portfolio company, led the round, with participation from Avanan’s existing investors, Magma VC and StageOne Ventures, bringing the company’s total capital raised to $16.4 million.

Avanan is based in New York City with R&D in Tel-Aviv, Israel and sales and marketing in Reston, Virginia and Philadelphia. (http://www.avanan.com)

Vista Equity Partners, not SAP or Microsoft, to acquire Marketo

Tom Paine

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Private Equity firm Vista Equity Partners has reached an agreement to acquire marketing automation firm Marketo for $1.8 billion in cash.

The deal strikes me as being somewhat unusual as Marketo was still in a growth stage typically less amenable to PE financing, and it had considerable percieved value to strategic buyers. In fact, SAP and Microsoft were widely thought to be the two most likely acquirers. Some knowledgable people I follow had already assumed that SAP would be the buyer.

The aquuisition price of $35.25 represents a 64% premium over Marketo's share price on May 9, when the most recent reports that Marketo was being shopped surfaced.

The San Mateo, CA-based company, which went public in 2013, posted revenue of $210 million and a net loss of $71.5 million in 2015. Revenue grew from $150 million in 2014 and $96 million in 2013.

SAP acquired marketing systems vendor Hybris in 2013, and in fact has been trying to position it as a CRM alternative.

Why SaaS Consolidation is Not Happening

Why SaaS Consolidation is Not Happening (Villi Iltchev / August Capital)'

PipelineDeals raises $1 million Series A; HQ now in Seattle, though development still in Wayne

Tom Paine

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PipelineDeals, the SaaS CRM for small to medium sized business-to-business companies which I profiled a couple of years back, has raised its first outside funding, after nine years of bootstrapping. Its received a $1 million Series A from a group of Seattle-based angel investors.

Although it started in the Philadelphia area (Wayne), co-founder and CEO JP Werlin says it is now officially based in Seattle where its long had an office, according to the Seattle tech website GeekWire, although its development office remains in Wayne. PipelineDeals now has 25 employees, GeekWire says, and LinkedIn indicates that slightly less than half are in Wayne.

PipelineDeals team in Yellowstone at Summit 2014 / 
PipelineDeals website

Co-founder Nick Bertolino remains based in Wayne.


PipelineDeals made the 2014 Inc. 5000, as revenue reached $2.6 million in 2013, up from $989,000 in 2010. PipelineDeals offers a relatively low-priced ($24 per month per user), sales-focused CRM to serve a market it says Salesforce has largely abandoned. It says it has over 3000 customers.

Center City-based Cloudamize, helping customers manage Cloud spending, ramps for growth

Tom Paine

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Cloudamize, not to be confused with another Philly startup, Cloudmine (though both are MissionOG portfolio companies), is looking at a large market opportunity.

Amazon Web Services (AWS), Amazon's massive public cloud computing service, is estimated to be closing in on a $5 billion annual run rate, growing at 40%. Many large enterprises, medium-sized companies and startups have migrated all or parts of their information processing to it. But the need to optimize AWS spend, which is usually more complex than one can analyze on a spreadsheet, is becoming greater as the amount spent grows.

Khushboo Shah / Cloudamize website

Cloudamize, founded by Khushboo Shah and out of the 2012 Philly DreamIt class, addresses the preplanning would-be AWS users need to do before deciding to move work to a public cloud, and then measures the cost effeiciency of their AWS usage on a monthly basis by putting actual detailed usage stats through a SaaS application that shows how that workload can be optimized in terms of performance and costs. Measuring AWS usage and performance is not a simple univariable analysis, but often involves measuring a complex mix of resources.

Shah hold a PHD in Electrical Engineering from Southern Cal and was working for a Princeton firm when she began formulating the ideas behind Cloudamize. After completing the DreamIt program, she launched it on a shoestring, and in
September 2013 received $1.2 million in VC funding from Philly-based VC firms MissionOG and Gabriel Ventures. It now has 17 employees, mostly in Philadelphia but a few in India and elsewhere, and plans to add about 5 more over the next couple of months.

In November, Cloudamize added two senior execs, Jonathan Kanarek (HP, Tenduit) as chief operating officer and Gabrielle Smith (Amazon Web Services) as vice president of sales and business development. In October, Cloudamize said it had tripled its customer base over the past six months. It demonstrated the enhancements that have driven its growth at AWS re:Invent, AWS' big user conference, in November.

It also extended its addressable market to cover Microsoft's Azure, which is considered the second largest public cloud provider. Next year it plans to add a couple of more public cloud providers, and then add a private cloud platform (my guess: something related to VMware) into the mix to begin analyzing hybrid cloud issues for customers, Shah told me in a phone interview.

Cloudamize helps customers pre-plan moving workload to the public cloud, then monitors their monthly usage on AWS to optimize workload and costs. "Today when customers think about moving to the cloud they need to first understand the cost prior to moving their infrastructure," Shah said. "They need to figure out their existing infrastructure and application inventory and understand what it will look like and how much it will cost when they move that to the cloud. Today this exercise is done manually and it's pure guesswork. We automate that via a SaaS application. We collect over a half a million data points per workload per day and map existing infrastructure and applications to the cloud. We provide TCO (total cost of ownership) and performance analytics that defines cloud migration roadmap based on their data and hence the guesswork is eliminated."

Cloudamize markets primarily to SMEs (small & medium-sized enterprises) who have a few hundred to thousands of servers. It relies mostly on channel partners for sales. Pricing can range from a few thousand dollars to hundreds of thousands.

There are competitors, several having 'cloud' in their names (Cloudyn, CloudCheckr, Cloudability), and some have raised more money to this point, but Shah believes her product is distinguished by the granularity of the data it collects and bases its analyses on, and the degree to which it is productized in a SaaS application.

When I asked Shah if AWS was receptive to companies like Cloudamize, she responded that under Jeff Bezos' leadership at Amazon delivering value to customers has always been emphasized, and AWS was no different. It has been quite helpful, she said. That is different from some enterprise vendors I know of who aren't known for going out of their way to help customers reduce how much they spend with them.


Shah expects that Cloudamize will be seeking its next round of financing some time during 2015.

On heels of Veeva Systems' mega IPO, a look at its Philly ties and vision for life sciences IT

Tom Paine


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Veeva opening on NYSE / courtesy Veeva Systems

Pleasanton, CA-based Veeva Systems, a cloud computing company serving the life sciences industry, went public Wednesday at $20 per share, raising its offering price twice since its initial S-1 filing. As a result, the company raised $194 million, and after trading opened shares nearly doubled on the first day. On Thursday, Veeva (NYSE: VEEV) closed at $41.60, giving the company a $5 billion market capitalization.

Though based in Silicon Valley, Veeva has many roots and a major portion of its life sciences client base here. Veeva now has about 100 employees in the Philadelphia area, between its Eastern US office in Radnor and also from acquiring AdvantageMS in Fort Washington in June. And Matt Wallach, Veeva co-founder who is a native of Wallingford, is based out of Radnor. Wallach was recently named Veeva's President, reporting to CEO Peter Gassner. He issued the following statement on Wednesday:

“Today marks a very exciting day for Veeva employees, customers and partners. We founded the company to help life sciences companies solve their most strategic business challenges with our industry cloud solutions. Multitenant cloud technology has enabled Veeva to efficiently craft industry-specific solutions to help pharma companies educate physicians on new therapies, bring drugs to market more quickly and maintain compliance with government regulations. These are billion-dollar business challenges, and the IPO validates their importance.”


I had an opportunity to speak with Wallach the morning after the IPO by phone. He said a large part of what Veeva was trying to achieve through its IPO was to firmly establish itself as a life sciences cloud solutions company, as opposed to simply being a life sciences CRM vendor (its original offering). Secondly, although Veeva is already expanding into other sectors of the life sciences space and intends to do so further, Wallach wanted to emphasize that it doesn't intend to go head to head against everyone. Rather, when Veeva can partner with companies who are doing an excellent job of meeting customers needs to provide an integrated, enhanced offering that adds value, it will do so. However, there is a list of areas where Veeva feels customer needs are not being well served and it will consider developing solutions for these from scratch. Beyond products already launched or announced, however (Veeva Vault, Veeva Network), Wallach declined to name any of these.

We discussed areas such as regulatory documentation & submission (where it partners with companies including Accenture and its Wayne-based Octagon Research Solutions unit); clinical trial management systems (CTMS), where its partnering with Medidata Solutions which has a unit in Conshohocken; prescription data and related research, where Veeva is working with Horsham-based Symphony Health Solutions; and quality management, where Veeva recently announced a partnership with Hamilton, NJ-based Sparta Systems. As for ERP and HCM, Wallach said those were fairly generic applications that Veeva would not try to replicate, but that some type of partnership with a major cloud ERP player could be a possibility.

A key tenet of Veeva's strategy is to "crowdsource" (with appropriate permissions) data flowing through its CRM platform from contacts with physicians and other providers to provide feeds that update and improve the quality of other databases, Wallach says. This could have a scale effect if (as Veeva hopes) it continues to increase its share of the life sciences CRM market.

For Veeva Network, Veeva's newest offering built partly around its AdvantantageMS acquisition and running on top of its Network platform, Veeva also opened an office in Toronto for technical development to support ongoing work on the product in Fort Washington. Veeva Network, which seeks to provide an improved provider database and already has some active users, is expected to be formally released before the end of the year.

I also had a chance to speak with J. Bruce Daley, VP and Principal Analyst at Constellation Research, a CRM veteran who has followed Veeva for a while. He compared Veeva's rise (in particular, versus Oracle) to that of Workday, though in a niche rather than a vertical. Of course, principal founders of both firms came from companies Oracle acquired. Daley commented: “The founders of Veeva and Workday are becoming like the Old Masters. Each new success in technology only inspires them to think of the next one.”

There are other details I could cover (and will do so later), but for now I'm just trying to give the broad picture, while also mentioning Veeva's rapid rise since being founded in 2007 and its tremendous capital efficiency and profitable status (unlike many cloud companies).

Veeva's vision for life sciences seems to be to achieve data integration across the enterprise at perhaps a higher level than has has been achieved in the past. Their ability to achieve this vision will depend partly on customers' ability to change and adopt. The cloud is only an enabler, but the functionality that Veeva is aiming for goes beyond a mere change in how you access your data.

Two VC firms, Bessemer & OpenView, offer up analyses of public cloud companies and their valuations

Tom Paine

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Two interesting items from about a month ago which I have meant to mention:

First, VC firm Bessemer Venture Partners released the BVP Cloud Computing Index, and a downloadable chart it says is updated weekly showing the key metrics of 30 leading public cloud computing companies as defined by Bessemer (there is certainly often room for debate about what is or isn't a cloud computing company). No Philly companies are included, although clinical trial software company Medidata Solutions has a fairly large presence dating mostly from its 2008 acquisition of Conshohocken-based Fast Track Systems. Kenexa presumably would have been on it had it not been acquired by IBM, and Radnor-based QlikTech really isn't a cloud computing company at this time; its products are offered primarily through on-premise software. Legacy companies such as SAP AG and Unisys are a long way from being considered pure cloud plays.

One data point in the metrics is the Enterprise Value/Revenue ratio for the 30 companies, which has a median of 6.7x and a mean of 7.9x. So when you hear about SaaS companies doing IPOs with EV/Revenue ratios of 10x or considerably more in some cases, it shouldn't be surprising.

The other item is an article in the Wall Street Journal about Adam Marcus, Managing Director of Boston-based OpenView Venture Partners, the VC firm that has made significant investments in Philly area startups Monetate, NextDocs and Xtium. Marcus compiled a list of 96 public SaaS companies and noted that two-thirds of them are located outside of Silicon Valley.

Marcus finds the Bay Area tech ecosystem expensive, unstable in terms of employee retention and having valuations too high in comparison to other regions, according to the Journal. He said OpenView doesn't invest in San Francisco companies. Perhaps more attractive valuations and less hypercompetition among investors explain in part why OpenView made its trio of investments in the Philadelphia area. Others disagree with Marcus' assessment, pointing out that the most of the more valuable SaaS companies remained clustered in the Bay Area, the article points out.

Daily Links 11/30/2012: More on HP's Autonomy debacle

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Insight: How a desperate HP suspended disbelief for Autonomy deal (Reuters UK)

M&A The HP Way – Why the Autonomy deal was doomed, and what can’t be done to save HP (Josh Greenbaum/Enterprise Irregulars)

SaaS now replacing legacy apps as well as extending them, Gartner says (Computerworld UK)

One-Third Of SAP's Sales Are Now Through The Channel (CRN)

Unisys unveils new cloud application migration service (CloudPro)

NBCU gets some love from Wall Street: Retrans and network turnaround shift sentiment (Variety)


Scoop: Key pricing and launch details of Redbox Instant revealed (Gigaom)

Network Giants Argue In Appeals Court: Aereo Should Be Treated Like A Cable Company (TechCrunch)
First Round Capital was a seed investor in Aereo.

GE Plans Silicon Valley Venture Stakes Along With Hiring (Bloomberg)

MetroPCS Climbs After Analyst Says Sprint May Counterbid (Bloomberg)

Google Acquires Shopping Locker Service BufferBox (All Things D)
Small potatoes, but interesting as a clue to Google's e-commerce ambitions. Competes with Amazon, Conshohocken-based ShopRunner.




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Daily Links 11/26/2012: First Round Capital launches new holiday e-commerce website for portfolio companies

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First Round Capital Rounds Up E-Commerce Deals From Its Portfolio Companies On New Website (TechCrunch)

NBCUniversal and DirecTV near new distribution deal
(LA Times: Company Town)

NBC, Verizon Strike TV Everywhere Deal
Deal covers TV stations, cable nets and the Internet (Broadcasting & Cable)

Why the Cost of Sales Gap is Shrinking between SaaS and Legacy Software Vendors (Sandhill.com)

Michael Hinkelman: Green and powerful (Philadelphia Daily News)
Viridity Energy's Audrey Zibelman.

SAP Moves Upstream (IDC Insights: Intelligent Oil & Gas)

NextGen Healthcare and Microsoft Corp. Join to Deliver Consumer-Based Healthcare Information Technology Solution
New Mobile Application Designed for Windows 8 Platform (Business Wire)


Will Surescripts Become De facto NwHIN? (Chilmark Research)
NextGen Healthcare partners with Surescripts for its open HIE solution.

Bright House Buys Telovations (Multichannel News)

Sprint launches 11 new LTE markets; maintains small-city focus
(Gigaom)
Philly said to be on the list to launch in a few months.

IBM and Google to Discuss the Future of the Cloud at Wharton BizTech Technology Conference (PR Web)



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Wayne-based PipelineDeals takes on Salesforce.com

Tom Paine
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PtpelineDeals co-founder  Nick Bertolino

Some startups try to launch like rockets, either successfully reaching orbit quickly or rapidly crashing to the ground. Others start off more slowly, bootstrapping their way to gradual incremental growth before reaching an inflection point where they gain more scale.

An example of the latter is Wayne-based PipelineDeals, founded in 2006 by two GSI Commerce alums, including South Philly native and Drexel/Carnegie Mellon grad Nick Bertolino. Playing the role of disruptor, Pipeline Deals is taking on competitors such as Saleforce.com, SugarCRM and Zoho starting from the low end, offering a SaaS
app targeted more at the lengthier BtoB professional sales cycle than the routine order taker at $15 per user per month. Built on Rails and using MySQL, with hosting on Amazon Web Services, PipelineDeals has emphasized relative simplicity and specific focus in comparison to the broader functionality of larger CRM vendors.

Although I didn't get specific revenue numbers from a conversation with Bertolino, the company seems to be growing. Headcount is currently about 10, split pretty evenly between offices in Wayne (were Bertolino is located and technology development is centered) and Seattle; Bertolino expects they will add 2 or 3 more in the coming months. Although PipelineDeals started off mostly with single users or small groups as customers, it is seeing more demand from larger customers despite limited dedicated sales resources. Most of its marketing is inbound to this point as the company has focuded its resources on development and customer support. Bertolino says larger customers started reaching out to them, and now they have about 20 accounts with 100 or more users with the largest account having about 400 seats.

Expansion into larger accounts will inevitably pressure PiplineDeals to add more functionality, but Bertolino says the company is holding the line on that. PipelineDeal offers an open source API, and close integration with Google Apps and Google Calendar. They recently added integration with MailChimp and increased customized field capabilities. On the mobile front, an iOS app is on the way soon.

To this point, PipelineDeals has been bootstrapped without outside financing, Bertolino tells me.



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IBM to acquire Wayne-based Kenexa for $1.3 billion

Tom Paine

Wayne-based Kenexa, one of the Philadelphia area's largest software as a service (SaaS) vendors, announced this morning it had agreed to be acquired by IBM for slightly less than $1.3 billion. That represents a 42% premium over its closing price on Friday.

Founded in 1987 by Chairman & CEO Rudy Karsan and others, Kenexa began primarily as a consulting and staffing firm helping its corporate clients manage their recruiting processes. Kenexa did not start off as a technology provider but evolved into one through internal development and numerous acquisitions. Although it later exited the staffing business, consulting services are still an important part of its overall offering. Kenexa completed its IPO in 2005. In 2011 it had revenue of $283 million and a net loss of $7 million. Kenexa has about 2,800 employees and about 8,900 customers.

The IBM-Kenexa deal follows a series of M&A transactions in the Human Capital Management (HCM) SaaS space, as SAP acquired SuccessFactors for $3.4 billion, Oracle acquired Taleo for $1.9 billion, and Salesforce acquired a smaller firm named Rypple, around which it is building its Work.com platform to be introduced next month at Dreamforce. Also, emerging powerhouse Workday is planning an IPO later this year. Kenexa, however, is not the same kind of animal as most of these, as it strengths are still in the talent acquisition (recruitment) and onboarding areas, although it has broadened its portfolio. Taleo is probably its most comparable major competitor.

While IBM emphasized in its announcement the "social business" aspects of Kenexa's platform, and many of the media accounts picked up that theme, I wouldn't really think of Kenexa as being a big social play right now though I'm sure its trying to move in that direction.



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Daily Links 8/3/2012: SAP settles with Oracle; Cable-Verizon deal approval reported near

Comcast, Verizon said to be near deal with regulators on joint marketing agreement, spectrum sale (New York Post)

Comcast/NBCU Will Pay GE $7.8B In 2014, Says Barclays (Investors Business Daily)

SAP Agrees to Pay Oracle $306 Million for Copyright Breach (Bloomberg)
This agreement, if approved, would end the possibility of retrial of the TomorrowNow case, which was scheduled to begin late this month. However, Oracle says it still intends to appeal to the 9th Circuit to have the $1.3 billion award in the jury verdict, which federal trial judge Phyllis Hamilton threw out, restored.
Oracle hasn't exactly been on a winning streak in the legal arena lately.

Publicis and Interpublic – a swan song for Levy? (FT Blogs: Alphaville)
Would further consolidate healthcare marketing business, if it were to happen.

Newtown-based Epam Systems quarterly profit tops estimates (Reuters)

2Q12 Performance for Trident Capital’s SaaS Portfolio; the Importance of Accurate Metrics Prediction (Trident Capital Blog)
Trident Capital's views on the SaaS market always make for an interesting read.



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Daily Links 3/27/2012: More cuts loom at PMN; Comcast to offer new Cloud-based business voice service

35 more jobs in jeopardy at papers, website (Philadelphia Daily News)
Other details on possible deal.

10 years later, two members of the Rigas family that founded Adelphia maintain their innocence (Harrisburg Patriot-News)

Comcast Rolls Business Voice Into the Cloud (Light Reading Cable)

Microsoft Xbox Live to add Comcast, HBO Go today (Gigaom)

Xbox Pipes In Comcast VOD, HBO Go And MLB.TV
Microsoft Claims U.S. Xbox Live Gold Members Spend Average of 84 Hours Monthly With Service (Multichannel News)


EPAM Systems Reports Earnings Results for Fiscal Fourth Quarter and Full Year 2011
Fourth Quarter revenues up 10.1% sequentially and 34.4% year-over-year (Business Wire via MarketWatch)
First quarterly results for Newtown-based EPAM since going public last month. Its shares are up 20% today after beating estimates, issuing guidance.

Gartner: Software as a Service Market to Grow 17.9 Percent to $14.5 Billion (PC World)

One of the Most Powerful People in Silicon Valley? He Lives in Baltimore (PE Hub)

Millennial Media IPO drawing strong buzz(MarketWatch)

Astea International Announces Profitable Fourth Quarter and Full Year 2011 (PR Newswire)



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West Chester-based Hoopla, developing CRM scoreboards, scores funding from Safeguard Scientifics, others

Tom Paine


Though not everyone is aware of it, there is a growing ecosystem in the Philly area around cloud-based SaaS CRM (Customer Relationship Management), the leading player in that space, Salesforce.com, and its Force.com platform. There is a large base of Salesforce.com customers, both for-profit and non-profit, and small companies as well as large enterprises such as Comcast and AmeriSourceBergen. There are also companies that have built their own SaaS offerings on top of the Force.com platform (Higher Ed recruitment tool TargetX of Conshohocken and life sciences CRM vendor Veeva Systems , which has much of its marketing and client side operations in Malvern though it is headquartered in California, are two that come to mind); and Salesforce.com consultants/installation experts such as Malvern-based CRM manager, in which Salesforce.com owns a stake, and Bluewolf, which has a Philadelphia office and provides consulting, training and recruiting. Another part of the ecosystem is for apps that complement and work with the Force.com platform, and can be sold through Salesforce.com's AppExchange.

In the latter category, one area venture that stands out is Hoopla Software Inc. of West Chester, which recently received $2.3 million in VC funding , including $1.3 million from Safeguard Scientifics and the rest from other yet to be named investors. Hoopla was founded in 2009 by Mike Smalls, a veteran of the Philadelphia technology scene. After spending several years with Symantec, he was with Philly startup Destiny WebSolutions, then Josh Kopelman-backed anti-spam software vendor TurnTide, where he headed up sales. After he helped it to achieve a rapid ramp-up in revenue, TurnTide was acquired by Symantec, and Smalls did a second tour of duty with that company for a couple of years. His next stop was as Executive Vice President with SEO software firm ClickEquations (now part of Acquisio) , which he left in 2009 to pursue his startup.

Hoopla Scoreboard Video on Vimeo.

Hoopla is targeted at doing something Smalls knows well how to do from his experience as a sales executive: motivating a sales or customer service organization to achieve its goals and measuring its performance towards them. Its primary product, Scoreboard, provides a visual dashboard generated from CRM sytem data showing how individuals are doing in reaching goals and relative to each other. It also provides a social layer through integration with Saleforce.com's Chatter social media tool, and provides gamification elements to enhance (hopefully) friendly competition among the group members. Scoreboard launched on the AppExchange in late 2010, and Smalls said in a phone interview with Philly Tech News that Hoopla now has more than 40 customers. Although focused on the Force.com platform now, Smalls says Hoopla may look at other CRM platforms or social media tools in the future.

Smalls declined to specify who the other investors are, saying they would be announced within a few weeks. He did say the other investors are not locally based. Hoopla's Form D filing indicates the round is still open for raising another possible $500,000.

Smalls will give a talk on Hoopla, gamification and on being part of Salesforce's Independent Software Vendor (ISV) partner program at the Philly Force.com meetup on the evening of January 18 at LiquidHub in Wayne.

For Safeguard, this investment represents another commitment to an early stage IT venture, something the firm
hadn't done too much of for a while. Early last year it invested in Exton-based "Internet of Things" startup
ThingWorx, and it announced along with the Hoopla funding an investment in another Internet of Things venture, Richmond, VA-based Crimson Informatics.

Salesforce.com reported revenue of $584 million in its most recent quarter, a gain of 36% over the prior year. It has a market value of $14 billion. In a blog post about its investment in Hoopla, Safeguard emphasized booming growth estimates for spending on gamification processes, although that is a very broad category including many different types of things.



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SAP enters Cloud, SaaS markets in big way with $3.4 Billion deal for SuccessFactors

Tom Paine


When, a bit more than two weeks ago, SAP co-CEO Jim Hagemann Snabe started talking about being open to major acquisitions and the need to enter new product categories, I predicted a deal was coming soon because the last time he spoke that way the Sybase deal was announced shortly afterwards.

Well, its happened, as SAP (which has its North American headquarters in Newtown Square) today announced a major deal to strengthen its puny position in the Cloud/SaaS space by acquiring SuccessFactors for $3.4 billion. The deal is probably an admission by SAP that it would not be able to achieve organic growth quickly enough through its existing ByDesign and OnDemand platforms.

SuccessFactors claims to have 15 million subscription seats and more than 3,500 customers, and it posted 77 percent revenue growth year-over-year in the third quarter 2011. Headquartered in San Mateo, CA, it was founded in 2001 by Lars Dalgaard. SuccessFactors focuses on Human Capital Managenment and what it calls "Business Execution Software", helping to align people and their performance to corporate goals. Comcast is one example of a major cutomer.

While SAP's PR mentions the Human Capital Management business, in its entirety it seems to speak of broader applications throughout SAP's business.

The bid is actually being made through SAP's SAP America unit. The bid reflects a 52% premium over SuccessFactors' December 2 closing price and will be financed through SAP's cash on hand and a euro 1 billion term loan facility. The transaction is expected to close during the first quarter of 2012 and be slightly dilutive to EPS in 2012 but accretive afterwards, SAP says.

I would expect Wayne-based Kenexa's stock to get a boost from this, although its a somewhat different animal in the HCM market with more of a focus on talent acquisition, in my view.

More to come.


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Daily Links 7/18/2011: CNN goes to "TV Everywhere" for streaming

Where Canoe Goes From Here
With Exit of CEO Verklin, Industry Reasseses Cable’s Advanced-Ad Venture (Multichannel News)

Rovi Confirms DigiForge Acquisition
Deal Closed June 1, Bringing 45 Employees to Rovi (Multichannel News)

Why Time Warner’s “TV Everywhere” Means “Except For Time Warner Cable” (All Things Digital)

Cisco signs over Mexico manufacturing facility to Foxconn (ZDNet Blogs)
Manufactures set-top boxes and other equipment for the cable industry.

Cisco Slashes Workforce By 11,500, Including 15% Of Execs
(Silicon Alley Insider)


Publicis Adds Big Fuel to Vivaki Wing (ClickZ)

Photonic neuron may compute a billion times faster than brain circuits (News at Princeton)

The succession malaise at Big Enterprise Vendors (ZDNet Blogs)

The elephants not in the SaaS room (ZDNet Blogs)

Blackboard Buyer Providence Equity Acquires Personalized Online Learning Platform From PrepMe (TechCrunch)

Radnor's Cross Atlantic Capital Partners invests in RootStock Software, is raising new fund

Radnor-based VC firm Cross Atlantic Capital Partners, which I profiled last year, announced earlier this month it had invested in RootStock Software, a San Ramon, CA-based developer of SaaS (Software as a service) manufacturing software for the mid-market. The amount of the investment was not disclosed.


Founded in 2008, RootStock's principal go to market strategy to this point has been through a partnership with SaaS Cloud ERP vendor NetSuite. Cross Atlantic was also an investor in NetSuite prior to its going public, although that relationship is not how its investment in RootStock came about, according to Cross Atlantic (XACP for short) Chairman, CEO and founder Donald Caldwell. Rootstock currently has 12 employees and 24 customers, according to Pat Garrehy, its founder & CEO. NetSuite has been actively marketing it as a "white label" solution under the Netsuite umbrella for about six months.


While its relationship with NetSuite has limited the amount of resources RootStock has had to invest so far on client-side activities, Garrehy says the company is definitely looking to expand to other SaaS platforms, including those of Salesforce and possibly Workday. Caldwell says Cross Atlantic probably would not have invested in RootStock if it wasn't for the additional opportunities these other platforms offer.


Rootstock provides applications such as manufacturing requirements planning (MRP) and other functions related to production management for discrete manufacturers. Its principle (more) established competitor in the SaaS manufacturing space is Plex. Other more traditional competitors coming from the on-premise side are trying to make the transition to SaaS, with varying degrees of success. Of course, SAP AG, with its Business ByDesign platform, would like to become a major factor there. But everything I'm hearing about SaaS indicates that the pace of adoption is quickening, even in mission critical applications, despite the skepticism of some (see Is SaaS the key to cloud revenues? ).



Rootstock's value is in its very specific manufacturing expertise (Garrehy previously founded ERP software firm Relevant Business Systems, which was later acquired by Consona). Although Rootstock has been marketed through Netsuite, it built its own proprietary SaaS technology, one that "pushes a lot of data in-memory", Garrehy says. Although many applications probably don't do as much work in-memory as is sometimes implied, he says, in-memory techniques
have helped Rootstalk significantly reduce processing times for many tasks.


Although an article in Forbes early this year had listed Cross Atlantic among "Zombie Venture Capital Firms" because it had not announced a fund raise since 2005, Caldwell is at work on the early stages of raising a new fund. Pension & Investments reported (registration required) this month and Caldwell confirmed that a previous partner, the Pennsylvania State Employees’ Retirement System (PennSERS) has committed up to $20 million to Cross Atlantic Technology Fund III.


Two Philly-area portfolio companies worth watching are Voxware of Hamilton, NJ and InsPro Technologies of Eddystone, PA. Voxware, which provides a voice-picking application for warehouses, had gone public and perhaps expanded too quickly before its market was ready, so Cross Atlantic took it private again late last year, scaled it back and invested an additional $2 million. It remains a promising venture. InsPro Technologies grew out of an insurance agency for health, life, and annuities insurance; the company developed a SaaS platform to manage the sales/service process and eventually jettisoned the agency to focus on marketing the technology.


As for the "bubble" question, Caldwell thinks there may be signs of that in the social media and green tech sectors, but Cross Atlantic focuses mostly on the enterprise sector which has been relatively immune to this point.



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