General Consultant Discussion

More headscratching about the real business viability of SaaS. salesforce.com bought Exact Target for $2.5. Exact Target is 13 yrs old and projects 2013 revenue (not profit) of $317. So sf.com is paying 8x REVENUE for a teen-aged company. And a 53% premium to ET's stock price. Granted, ET is quite successful in the large-firm segment that it plays in. But I don't see how this explodes to justify this. If you own sf.com stock, this might be the time to sell ... http://ubm.io/18MaB4U

Seems like a bet on selling more to existing customers. One thing that I think SFDC does brilliantly (and other SaaS) is get you locked in. Heck most ERP does that too. Once you're in it is not an easy task to quickly switch to another system without much pain.

Maybe. But ET customers are not small and already have CRM of some sort, and there are a number of 3rd party integrations (I know the guy who did the SLX one). So current ET customers would have to change CRM -- I doubt this would be a stampede. ET already has integrations to sfdc, so I don't see a huge uptake among sfdc customers unless those customers change their marketing automation needs. Again, I don't see the stampede. sfdc used $1 bn in borrowed money for the purchase. It claims to want to grow its marketing revenues 10x to $1 bn. Now, they do have several other MA pieces already, so maybe the synergy of the pieces working together will generate this huge growth. And MA has its own monthly service stream tied to marketing activity, so maybe the growth is there. It just strikes me like a lot of $$$ from a company who is basically B/E, using borrowed $$ to pay huge multiple (8x revenue) on a market that is growing well but not exploding. Sounds like a bubble to me.

All tech valuations seem ludicrous to me. Only a few percent seem to pan out in any way that I can tell. Youtube seems like its been successful from a numbers perspective but I wonder if the true profits generated from it have paid back the original 1.5 billion purchase price including time value of money. And that's the most successful I can think of.

So glad I dumped my Salesforce stock last week. :)

So you are 100% in Sage, LTD?

Mostly cash right now. And Berkshire Hathaway.