Big Data

Why Salesforce needed to buy RelateIQ

Image Credit: Seesmic.com/Flickr

Yesterday, Salesforce.com acquired RelateIQ for $390 million. With Dreamforce right around the corner, this was a significant — and smart — move on the part of Salesforce.com to show the industry that it is finally serious about data intelligence, which it completely lacked in its customer-relationship management (CRM) offerings to date.

Salesforce.com remains king

Some viewed this as a preemptive strike similar to Salesforce.com’s 2011 acquisition of Manymoon. Manymoon had emerged as the No. 1 app on the Google Apps platform. It provided an incredibly simple application for managing tasks, which is a core part of CRM. While it didn’t pose a serious threat, you could see how it might have taken off and eventually drawn interest from Google. There are many parallels with RelateIQ, only in this case LinkedIn might have been the more natural suitor (and a major threat to Salesforce.com’s empire).

But in reality, I don’t think this deal was a defensive one for Salesforce.com.

Playing defense against a LinkedIn acquisition is a very interesting take with wild imaginative possibilities, but I think LinkedIn is a very focused company, and they’re not ready to take on something as big as CRM.

Now, RelateIQ stepped up to the plate and postured themselves from day one as the CRM killer. They’ve got guts, because anyone in sales will tell you that even if you have a great product, it’s going to be a long, uphill battle if you want to take down Salesforce.com. There’s a saying for a reason: No sales vice president gets fired for picking Salesforce.com as their CRM system, but you can certainly get fired for moving off of it.

As such, RelateIQ ended up focusing more on the lower end or gray spaces of the market where CRM maturity didn’t exist — think smaller, early-stage sales and marketing shops and even business development and venture-capital groups. You could make the argument that they could have built an island and served this niche market, but RelateIQ did the right thing by joining forces with Salesforce.com to take their technology to the masses.

Predictive is here

Salesforce.com has been dinged for a while now for not having a big data intelligence story. Now they have one with RelateIQ — backed by a stellar team — with the likes of DJ Patil, one of the top data scientists around, and Heather Phillips, one of the best designer thinkers I know. This is the main reason why I think Salesforce.com ponied up the big dollars for RelateIQ.

The movement to predictive from these big automation players is finally happening. Just look at Marketo, Oracle’s Eloqua, and Salesforce.com. Their experiences and workflows feel ancient and messy. With the rise of innovative companies applying big data intelligence, such as Waze, Amazon.com, Facebook, and many others, considerable interest, expectations and thus pressure has been placed on sales and marketing-automation companies to step up the intelligence of their applications too — to move beyond being just basic data bookkeeping services. There’s just too much hype, demand and real results to shy away from predictive (we at Infer are seeing 100 percent improvements in conversion rates across our customers).

As the world moves to predictive, the big question is if these automation players can integrate predictive properly. Is Salesforce.com ready to make the hard trade-offs to support predictive-first by designing a system around data intelligence? Or will third parties be able to innovate faster outside the core?

Only time will tell, but there’s no space that’s hotter than sales and marketing right now. In the past 18 months, Pardot/ExactTarget was acquired to the tune of $2.5 billion by Salesforce.com, Marketo and Eloqua went public (and shortly thereafter, Eloqua was acquired by Oracle for close to $1 billion) and Oracle’s acquisition of BlueKai occurred. Given these moves and how fast they took place, I think we’ll have answers sooner rather than later.

Thanks to Jamie Grenney for the insightful comments and feedback on this piece.

Vik Singh is a co-founder and chief executive of Infer, a provider of data-powered business applications, with customers such as Tableau, SurveyMonkey, Zendesk, New Relic, AdRoll, Box, and Cloudera. You can follow Vik at @zooie.

More about the companies and people from this article:

With more than 100,000 customers, salesforce.com is the enterprise cloud computing company that is leading the shift to the social enterprise. Social enterprises leverage social, mobile and open cloud technologies to put customers at t... read more »

Infer delivers data-powered business applications that help companies win more customers. Its cloud-based solutions leverage proven data science to rapidly model the untapped data sitting in enterprises, along with hundreds of external... read more »

RelateIQ began in 2011 when co-founders Adam Evans and Steve Loughlin got fed up with manual data entry. In the age of big data, cloud-computing, and mind-blowing consumer electronics, they couldn’t understand why they had to spend h... read more »

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2 comments
Ryan Grush
Ryan Grush

Congrats to RelateIQ, as a competitor in the space (RadiumCRM) we've always admired your product. Definitely one of the better ones.

Raj Bhatt
Raj Bhatt

 Vik: 

What are your thoughts on predictive analytics for B2C email marketing? 


Average industry unsubscribe rates for E-Commerce emails today is 0.13% whereas purchase conversion rates are only 0.07%.


Shameless plug: My team has developed KnolSeed (knolseed.com), a personalization and predictive analytics tool for B2C E-Commerce. We have seen initial traction at Internet Retailer conference (IRCE) and have signed quite a few clients.