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The beauty of the strategy

By December 15, 2010One Comment3 min read

The other day it was announced that was buying, an application hosting company. This was the fourth public acquisition in the last six months of a tech company by If you look at the pieces you’ll start to see the pattern emerging in what seems to be Marc Benioff & co’s strategy.

Let’s backtrack a bit though and take a super brief overview of where Salesforce has come from, which should help illustrate where they are going. Founded back in 1999 before the era of software as a service, by a former Oracle exec, one could say that Salesforce pioneered SaaS as a business model with their initial CRM tools being subscription and web based. Many years later the pivot started, with the introduction of the AppExchange marketplace, and Salesforce shifting to provide a platform for external developers vs building it all within their silos. This first step in the move to be a business platform more than just a CRM platform is an important one, as it is paving the way for what is likely to come in the next 12-18 months.

After AppExchange, Salesforce launched which is essentially a set of APIs for Salesforce, thus creating the business tool equivalent of itunes Marketplace for small business widgets/mini applications. This is the key here though, as there are millions of users in their marketplace already.

So now we have a few key acquisitions that recently took place: SiteMasher (June), Activa (September), Dimdim (November), and Heroku (December). Sitemasher’s product brings complex project management of web sites and applications online. Activa brings live chat tools for application support. Dimdim brings online sharing/presentation tools for meetings (think webEx). Heroku brings simple tools for deploying applications built in Ruby on Rails (and other languages) quickly to the web.

So while they were busy buying these companies, they were also rolling out which provides auto-scaling database hosting (also in the cloud). The idea here is that if they are giving you their customers, they need you to have databases that scale with your salesforce customers.

They now have the tools in place for you to build, host, and support your business applications in their cloud. This effectively completes the value proposition cycle for smaller developers and application providers: come to our platform and we take care of everything that you don’t want to worry about, and in exchange you get immediate access to tons of customers whose credit cards we have on file (similar to iTunes).

Salesforce is going to try to be to business functions on the web as facebook is to social connections. All they need is to pickup someone like shopify next to integrate shopping carts.

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