Adobe gets its company, snaring Marketo for $4.75 billion

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A week ago rumors were flying that Adobe would be buying Marketo, and lo and behold it announced today that it was acquiring the marketing automation company for $4.75 billion.

It was a pretty nice return for Vista Equity partners, which purchased Marketo in May 2016 for $1.8 billion in cash. They held onto it for two years and hauled in a hefty $2.95 billion in profit.

We published a story last week, speculating that such a deal would make sense for Adobe, which just bought Magento in May for $1.6 billion. The deal gives Adobe a strong position in enterprise marketing as it competes with Salesforce, Microsoft, Oracle and SAP. Put together with Magento, it gives them marketing and ecommerce, and all it cost was over $6 billion to get there.

“The acquisition of Marketo widens Adobe’s lead in customer experience across B2C and B2B and puts Adobe Experience Cloud at the heart of all marketing,” Brad Rencher, executive vice president and general manager, Digital Experience at Adobe said in a statement.

Ray Wang, principal analyst and founder at Constellation Research sees it as a way for Adobe to compete harder with Salesforce in this space. “If Adobe takes a stand on Marketo, it means they are serious about B2B and furthering the Microsoft-Adobe vs Salesforce-Google battle ahead,” he told TechCrunch. He’s referring to the deepening relationships between these companies.

Brent Leary, senior analyst and founder at CRM Essentials agrees, seeing Microsoft as also getting positive results from this deal. “This is not only a big deal for Adobe, but another potential winner with this one is Microsoft due to the two companies growing partnership,” he said.

Adobe reported its earnings last Thursday announcing $2.29 billion for the third quarter, which represented a 24 percent year over year increase and a new record for the company. While Adobe is well on its way to being a $10 billion company, the majority of its income continues to come from Creative Cloud, which includes Photoshop, InDesign and Illustrator, among other Adobe software stalwarts.

But for a long time, the company has wanted to be much more than a creative software company. It’s wanted a piece of the enterprise marketing pie. Up until now, that part of the company, which includes marketing and analytics software, has lagged well behind the Creative Cloud business. In its last report, Digital Experience revenue, which is where Adobe counts this revenue represented $614 million of total revenue. While it continues to grow, up 21 percent year over year, there is much greater potential here for more. – Read More

 

The 10th Sale is The Hardest Sale to Make in SaaS

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Is the first customer sale the hardest?  It’s hard — but not usually the hardest in SaaS.

The 7th or 10th or so sale is usually the hardest to make.

Why? The first few tend to be from highly unscaleable techniques. An ex-boss or friend that runs a company. A crazy cold call that would never work again. A random meeting or happenstance. And if you are crazy driven enough to be a founder, you often somehow find a pilot “customer” or two from your own extended ecosystem.

Put differently, in my SaaS ecosystem at least, I’ve met with tons of founders with 2 or 3 customers (and especially, 2 or 3 “beta” customers or unpaid trials) … that then end up really struggling to get to 10. But I’ve almost never met anyone that got to 10 unaffiliated, paying customers that dropped to 0.

Once you get to 10, you’ve generally found some way to get more customers. This is the hardest part to me, the breakthrough moment.

By 10, you’ve generally found some way to do marketing that at least works a tiny bit. To do outbound repeatably, at least to break through to a few customers. To do trade shows that create real leads, not just scans. To do something that will repeatedly get you more customers. Not repeatedly enough — 10 is almost never enough. But by the time you get to 10, you generally know how at least to get to 12, 13, 18, etc.

In some ways, the “hardest” sale to make is the one that finally comes in through the ether. That just signs up and pays for your product without you having met them or known why. Once you close that “customer from the ether” — you can find and close 10 more.

The first few sales can be a chutzpah illusion, however. Hard yes, but sometimes just a force of sheer will. That matters, and gets you going. But it isn’t the seed of an engine. – Read more

Are consumption-based SaaS business models becoming more prevalent?

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They are, and it’s worth thinking about.

We actually sort of started there. The first big SaaS success wasn’t Salesforce, it was WebEx before that. Salesforce learned from WebEx, just like many of us learned from Salesforce.

And WebEx started off with a consumption-based model. It made sense, because back then, “minutes” had a high variable cost.

From 2003:

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$0.45 a minute for video, plus $43.20 just for the audio portion of a one-hour meeting with 6 participants! Woah!

It took falling network prices (and competitive pressures) for WebEx to gain the confidence to move to semi-consumption and then flat-rate pricing. – Read more

Winning by Design Expands to Canada and Adds Customer Success to Its Repertoire

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As Canada’s Tech Scene continues to heat up, creators of the SaaS Sales Method launch its seventh global office in Toronto with its newest partner Julie Weill Persofsky.

MENLO PARK, Calif.–(BUSINESS WIRE)–Winning By Design, the founders of the SaaS Sales Method and Sales as a Science today announce bringing on Julie Weill Persofsky as its newest partner to support continued growth.

“We are thrilled to launch our Toronto office and welcome Julie. Her passion for SaaS start-ups and strategic mind in Sales, Customer Success and Growth will be a great asset to our clients. The tech scene in Toronto is booming and we wanted to have a local office to support the growing demand,” said Jacco van Der Kooij, founder of Winning By Design.

“The Winning by Design team has proven methodologies for SaaS growth strategy and training. I am proud to be representing Winning by Design in Toronto and to continue to support the tech scene that I’ve been immersed in for so many years,” said Persofsky.

The SaaS Sales Method is a science-based approach to building out revenue teams that span the entire customer lifecycle. With it, Winning By Design is able to impact revenue and implement company-wide change in process, behavior, technology, and strategy. – Read more

Harmonic Unleashes Innovative New SaaS Features for Video Streaming and Broadcast Delivery

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SAN JOSE, Calif., Sept. 13, 2018 /PRNewswire/ — At IBC2018, Harmonic (NASDAQ : HLIT ) announced the launch of dynamic ad insertion (DAI) capabilities and will provide a sneak peek of disruptive disaster recovery scenarios enabled by its VOS®360 Video software-as-a-service (SaaS) as part of the company’s continued commitment to SaaS innovation. With these advanced capabilities available in the cloud, VOS360 Video SaaS opens up new cost savings and monetization opportunities for content owners and video service providers.

“VOS360 Video SaaS is gaining tremendous momentum globally with new deployments for live and on-demand OTT channels,” said Tim Warren, senior vice president and chief technology officer, video business at Harmonic. “Beyond managing their end-to-end OTT workflow on the cloud, broadcasters, content owners and service providers can support an expanded range of business cases using SaaS, including dynamic ad insertion and disaster recovery. These new capabilities will help our customers get the most out of VOS360 Video SaaS to increase efficiencies and reduce capex.”

VOS360 Video SaaS now enables operators to deliver advanced targeted advertisements and replace content during blackouts, increasing monetization for OTT content and improving the end-user experience. Content is replaced during blackouts based on end-user location and device, leveraging SCTE-224. This new Harmonic technology has already been successfully deployed by a major broadcaster in the U.S. for the insertion of unique station data for OTT rights management, blackouts and local ad insertion. – Read more

Zendesk expands into CRM with Base acquisition

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Zendesk has mostly confined itself to customer service scenarios, but it seems that’s not enough anymore. If you want to truly know the customer behind the interaction, you need a customer system of record to go with the customer service component. To fill that need, Zendesk  announced it was acquiring Base, a startup that has raised over $50 million.

The companies did not share the purchase price, but Zendesk did report that the acquisition should not have a significant impact on revenue.

While Base  might not be as well known as Salesforce, Microsoft or Oracle in the CRM game, it has created a sophisticated sales force automation platform, complete with its own artificial intelligence underpinnings. CEO Uzi Shmilovici claimed his company’s AI could compete with its more well-heeled competitors when it was released in 2016 to provide salespeople with meaningful prescriptive advice on how to be more successful.

Zendesk CEO Mikkel Svane  certainly sees the value of adding a company like Base to his platform. “We want to do for sales what Zendesk has already done for customer service: give salespeople tools built around them and the customers they serve,” he said in a statement.

If the core of customer data includes customer service, CRM and marketing, Base gives Zendesk one more of those missing components, says Brent Leary, owner at CRM Essentials, a firm that keeps close watch on this market. – Read more

How to Invest in Software-as-a-Service (SaaS)

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Back in 2000, if you were filing your taxes with Intuit’s TurboTax, you would buy its software on a compact disc, download the software onto your computer, and input your data into the program. With changes to the tax code every year, you had to cycle through the process annually.

The advent of cloud computing has changed all of that. These days, you can use TurboTax software without downloading anything, updates to the company’s systems are made in real time, and all of your data is stored for you on Intuit’s servers.

This is an example of software-as-a-service — or SaaS. The model has transformed the relationship between a customer and a company’s software: where once owning the software on site was key, it is now the ability to access the software that truly matters. As more companies, both new entrants and existing software providers, gravitate toward the SaaS model, it’s also becoming an increasingly popular area of focus for investors.

Below, we’ll dive into SaaS and discuss why it’s so advantageous — to companies, to their customers, and to their investors. We’ll also tackle the unique metrics that will help you measure the strength of an SaaS company’s business and discuss the risks any potential investors ought to be aware of.

What is software-as-a-service or SaaS?

Perhaps the best way to start is to define software. Put simply, it is any program that can be run on a computer. That online calculator, the Word document you’re working on, and the weather app you check daily are all examples of software. In order for those to work, someone had to create the computer code to make them function.

If that still seems fuzzy, think of it this way: software is usually juxtaposed against hardware. Hardware is the physical computer or smartphone that you own. You can hold hardware in your hands. Software includes all the programs or apps that you use on a device — no physical product to speak of.

Software-as-a-Service (SaaS) companies have taken advantage of cloud computing in order to provide access to software and stored data from any device with an Internet connection. Cloud computing, which makes SaaS possible, is the practice of using offsite servers to house and handle large computing tasks and making all of the relevant information available on demand via the internet.  – Read more

Software-As-A-Service Market Boom: A Blessing in Disguise for Salesforce

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If the history of customer relationship management (CRM) had to be revisited, Salesforce would definitely be a chapter which one cannot afford to miss. The contribution of the organization and most importantly, its CRM product amplifying the abilities of back offices in enterprises across the globe deserves a special mention. The platform can be seamlessly integrated with existing processes and can elevate their capabilities. The introduction of the product was a huge respite for payroll team members for the convenience it ushered in their routine activities. The software platform is touted as the best in the world and embraced by many organizations worldwide for their customer relationship management activities. Several media reports have stated that the CRM platform has been largely embraced by organizations looking to get rid of the inefficiencies of the age-old pen-and-paper system. The recent times have seen an increase in the adoption of Salesforce due to the rising awareness of the advantages of Software-as-a-service (SaaS) platforms. Salesforce continues to be the go-to name among organizations transitioning from a legacy environment to the cloud. In the current climate of digitization and data explosion, which has been occurring at an exponential rate, adoption of cloud infrastructure has become inevitable for most businesses. Thus, SaaS has become a term that has got techies worldwide raving today.

A report published by research giant Gartner stated that SaaS is the largest segment of the cloud market today and industry veterans and experts predict that sales are expected to rise by 22 percent to around $73.6 Billion later this year. In the past couple of years, Microsoft had a large role to play in the rapid growth of the SaaS market, with its suite of collaboration, CRM and enterprise application software contributing to this significant change. Adobe, SAP, IBM, and Cisco are other organizations that are largely responsible for this change, or rather the large fluctuation in numbers. The rising popularity of the cloud model and the SaaS approach has undoubtedly been a catalyst in enhancing the growth of Salesforce and increasing the number of users of its CRM tool. – Read more

 

Blissfully grabs $3.5 million seed investment to help companies get their SaaS in gear

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Blissfully, a New York City startup that helps companies understand their SaaS usage inside their organizations, announced it has received a $3.5 million seed round.

The investment was led by Hummer Winblad Venture Partners. Hubspot, Founder Collective, and several unnamed pre-seed investors also participated. They got a $1.5 million pre-seed investment, bringing the total so far to $5 million, according the company.

Company co-founder and CEO Ariel Diaz says Blissfully actually helped him and his co-founder solve a problem they were having tracking the SaaS usage at their previous startups. Like many companies, they were using spreadsheets to track this information and they found it was untenable as the company grew beyond 30 or 40 people. They figured there had to be a better way, so they built one.

Their product is much more than simply a database of the SaaS products in use inside an organization. It can integrate with existing company systems like single sign-on tools such as Okta and OneLogIn, financial reporting systems and G Suite login information. “We are trying to automate as much of the data collection as possible to discover what you’re using, who’s using it and how much you are spending,” he said. – Read More

Does prospecting really work?

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Across 30+ SaaS investments, I can say the answer is Always, as least in SaaS.

But how much, and when to phase it in, varies.

Prospecting and outbound is an art. What is hard is it to get outbound and prospecting going with (x) a founder with no passion for it, and/or (y) with sales reps that have only done inbound.

If you have only done in-bound, then prospecting and outbound will seem incredibly tedious, very slow, and frustrating. You’ll likely never close anything.

But I’ve yet to find a category, from contact centers to search to voice to software testing to fleet management to recruiting to training and more, where outbound didn’t work — at least once you had someone doing it with some experience and passion around it.

The next question then is, if it works, will it work enough?

Certainly, the lower your price point, the harder it is to make traditional prospecting work. With bigger deals, it’s easier to target named accounts, take the time you need to personalize the outreach, and invest what it takes to get there.

Second, the % of revenue from outbound can vary widely. In some start-ups, it’s an “extra layer”, another 10%-20% growth. In others, it’s the primary acquisition channel, at least until the brand really takes off. There’s always more revenue to be had through outbound.

But in the early days, you do need to stick to what you are good at, or at least, the least bad at. If you are scared to do prospecting and/or can’t bring yourself to it, find a way to otherwise generate demand. Then hire someone later to own it. – Read More