When Salesforce launched Force.com in 2007, it was the culmination of years of work to bring together a way to customize Salesforce and eventually to build applications on top of the platform. By using a set of Salesforce services, companies could take advantage of work that SFDC had already done, speeding up building time and reducing time to market. Today, the successor of Force.com is called Salesforce Platform.
But going that route didn’t come without some risk, because back in 2007 building atop a Platform as a Service (PaaS) wasn’t a common way of developing software. Even by 2012 when nCino launched its banking software solutions on Force.com, it likely raised some eyebrows by using a cloud platform as the backbone of its fintech offering.
Even though it probably took resolve, the approach worked, as evidenced this week when nCino went public — a debut that was met with a strong investor response. And nCino is notably not the first time that a company built atop Salesforce’s PaaS has gone public; nCino’s own IPO follows Veeva’s 2013 debut.
But astute observers for the Salesforce ecosystem will note that other successful companies have been built on the Salesforce cloud. As you will see, many successful companies have benefited from building on top of Salesforce.
nCino’s debut
nCino’s march to the public markets began eight years ago when the banking software company was founded. At the time, nCino’s CEO Pierre Naudé told TechCrunch in a call that there were worries its banking customers would not trust a cloud-powered solution.
The company’s IPO this week should be the final stake in the heart of that concern.
nCino’s IPO was met with sufficient investor demand — predicated on its financial results, which in turn depend on customer trust — to not only raise its IPO price range somewhat dramatically, but then price above that raised interval. That investors then bid its shares higher after they began to trade makes the point yet again: Building on the platforms of others is workable in the cloud era.
Leyla Seka, a principal at Operator Capital, who formerly ran Salesforce’s AppExchange, the marketplace set up to distribute software like nCino, has known the company from its earliest days. She says that nCino succeeded by taking a slow and steady approach.
“nCino really focused on the loan process to begin with, and in doing that was able to quickly sell into a large number of regional banks. [That] focus allowed them to extend their product in the right directions at the right times to ensure that they captured an even wider section of the market. In short, they didn’t try to boil the ocean with features, and instead built the right stuff at the right time to capture the market,” Seka told TechCrunch.
Over time nCino added more and more products, now offering what it calls a banking OS.
Changing rules
It nearly feels uncontroversial today that a cloud company built on someone else’s platform can succeed. This is doubly true if we widen our lens to not only look at PaaS offerings like Salesforce Platform, but infrastructure service offerings like AWS, Azure and similar products from Google, Alibaba and others.
Indeed, name a startup that isn’t using one of the main public clouds. Thinking longitudinally, it makes sense that as public clouds have become more acceptable to the business world, solutions built atop more specific clouds like Salesforce have become palatable as well; in the cloud era, the stuff that underpins your service matters less to consumers than whether the resulting product is fast, secure and available everywhere.
The situation is good news for Salesforce, a company that wants lots of business to happen on its platform. Naudé told TechCrunch that when speaking with Salesforce President Bret Taylor, the executive said that without companies like nCino, Salesforce’s platform would be like an iPhone without apps.
The Salesforce Platform family
That is an apt description on Taylor’s part. By building the Salesforce Platform and combining it with a marketplace like the AppExchange, it really created a powerful combination, giving companies a way to not only build software more efficiently, but access a market where they could also expose the product and sell it.
Among the companies that have used the platform to build successful companies aside from Veeva and nCino are companies like Propel, a startup built on Salesforce that helps companies with product lifecycle management. The company, which launched in 2015 has raised over $28 million, according to Crunchbase data. The most recent round, an $18 million Series B came at the end of 2018.
Meanwhile ServiceMax, a cloud field service provider, which launched in 2007, was originally built on the Salesforce mobile Platform, known as Salesforce 1. The company was sold to GE Digital in 2016 for $915 million after raising $285 million, according to Crunchbase. GE turned around and sold a majority stake in the company to private equity firm Silver Lake two years later.
Just last year, Salesforce itself bought Vlocity, a company that built industry-specific CRMs on top of Salesforce. It seemed a perfect match and Salesforce paid $1.3 billion for the firm.
There are countless other examples. FinancialForce, an accounting software company built on Salesforce raised over $193 million. Apttus, a quote-to-cash solution that seemed headed for a big exit after raising over $400 million ended up being sold to private equity firm Thoma Bravo last year for an undisclosed amount.
You win some, you lose some
Like any platform, you’re going to have winners and losers, but building on top of Salesforce means that these companies don’t have to build all pieces of their products themselves. Instead, they’ll stand on the shoulders of a big company like Salesforce, possibly allowing them to move more quickly.
What’s more, they can take advantage of the Salesforce ecosystem to bring the product to market. While most companies don’t rely completely on the AppExchange as their only sales tool, it is an excellent starting point for a young startup.
Building your business on top of Salesforce doesn’t guarantee you success, but as we have seen, quite a few successful companies have done just that.