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Salesforce Buys Business Directory Jigsaw For $142 Million In Cash Plus Earn-Out

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Daily Crunch: Hot Off The Griddle Edition

Salesforce.com has just announced that it has entered into a definitive agreement to acquire Jigsaw, which provides crowd-sourced data services in the cloud, for approximately $142 million in cash, plus a performance-based earn out of up to 10% of the purchase price.

The deal is expected to close in the second quarter of fiscal year 2011, subject to customary closing conditions.

The enterprise cloud computing company in a statement touts Jigsaw’s Wikipedia-style crowd-sourcing model, which it says delivers the world’s most complete, accurate and up-to-date business contact data (e.g. check out Salesforce’s profile on there).

When we first reviewed the company back in 2006, Michael Arrington deemed it a really, really bad idea because Jigsaw would pay people simply to upload other people’s contact information (a privacy nightmare).

Jigsaw has changed its model since then: people can now see if their personal information has been uploaded, and there is a process to have it removed, at least temporarily. And users are no longer paid cash to upload contacts. Instead they receive points that can be used to download contact other people’s contact information. Revenue was rumored to be around $30 million per year at the end of 2009.

As for Arrington, he went from calling the company evil to simply amoral. The question is now if the new owner will be inclined to modify its questionable business practices.

Going back to the acquisition: Salesforce says the deal will allow the company to combine its suite of CRM applications and enterprise cloud platform with Jigsaw’s model for the automation of acquiring and keeping up-to-date business contact data. Jigsaw’s data cloud platform, it adds, also creates an opportunity for developers and ISVs to deliver new applications that leverage the business contact data found in Jigsaw.

Looking ahead, Salesforce seeks the creation of new partnerships with information services companies like D&B, Hoover’s and LexisNexis.

Jigsaw’s community is said to consist of more than 1.2 million members. Over the last six years, community members have built and maintained a contact database of more than 21 million professionals at nearly 4 million companies, according to the press release. Jigsaw currently has 800 corporate customers.

The company had raised $18 million in venture capital to date.

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