When Salesforce announced it was buying quote-to-cash vendor SteelBrick for $360 million at the end of last year, it came as a surprise. CEO Marc Benioff offered some insight into why he made the purchase at today’s Salesforce Lightning CRM launch event.
The move has to be seen in the context of comments made at a Dreamforce press event last fall with Keith Block, who was named COO today. Block was specifically asked at the press event about Salesforce’s interest in quote-to-cash vendors like SteelBrick and Apttus, and he said that these types of companies, which serviced the back office part of a sale weren’t part of the company’s overall vision to build (or buy) products that service the customer. It’s worth noting that both companies were built on the Salesforce platform, and the company contributed funding to both through its Salesforce Ventures arm.
Today, Benioff shed some light on why he bought SteelBrick in spite of that line of thinking. He said the company approached him and offered to give a presentation. Now, there are lots of companies built on the Salesforce platform, and I have to think that many of them would like an audience with Benioff. For some reason, SteelBrick was granted one and he said at the event today when asked about the purchase that he was impressed and he had to buy the company. “I thought it was the best example of an ISV had of building [this type of] application on this platform,” Benioff said today.
But making a statement like that had to be a blow to other vendors, who built similar applications on the Salesforce platform and are competing in the same market. He tried to soften that a bit by adding that it was a big market and he felt there was plenty of room for other vendors in the Salesforce ecosystem.
It’s worth noting that Apttus got in touch with us shortly after the SteelBrick deal was announced and CEO Kirk Krappe talked candidly about his company’s future in the quote-to-cash market. While Apttus sells in the same market, it’s focused on the enterprise, and SteelBrick aimed more at the small to medium market. Still, the move clearly had him thinking about how his company would exit:
We will be IPOing this year. That may be a function to figure what Salesforce wants to do and they may think about that [after purchasing SteelBrick at the end of last year]. There’s no reason they can’t buy us too. For me, I have to run the business, and we’re growing 100 percent year on year. If Salesforce came to the table, that would be great if the numbers work. If not, we have an amazingly strong business,” Krappe said.
Regardless, Salesforce bought SteelBrick and announced today that it had already incorporated the SteelBrick technology into the Salesforce Lightning CRM platform. It had been able to achieve this in a remarkably short time between the announcement at the end of December and today’s launch because of the fact it had been built on the Salesforce platform. That made integration fairly trivial for the cloud software giant, and that would likely be the case with any company it chooses to buy that has been built on its platform.