6 ms·

Salesforce buys Demandware for $2.8B

samfisher83 10y ago
This seems like a lot to pay for company that isn't cashflow positive. Even if we take out 147 million they spend for sales for synergy reasons. Keep the growth rate similar. We end up with FCF of 200 mil. That is paying something like 15x FCF using some crazy assumptions.
- Cieplak 10y ago
  Does seem like quite a lot for a software company. Could hire quite a few devs with a billion dollars. I imagine most of the price could be attributed to Demandware's existing customer relationships and Demandware's employees, although the latter is difficult to value especially considering that most folks worth their salt are out as soon as their options vest.
  - vasaulys 10y ago
    Does Salesforce pursue the same model of customer acquisition as Oracle does? I know Oracle is known to sell to existing customers additional products & services, so Salesforce might be "acquiring" new customers if there is little overlap in current customer base. It seems highly unlikely this sort of acquisition is for the technology alone.
    - kmnc 10y ago
      Most of the Salesforce purchases seem to be about opening up new marketing channels.
- iaw 10y ago
  Perhaps Benioff knows something the rest of us don't about the long-term potential. That or he had the money burning a hole in his pocket and had to spend it on something...
shaqbert 10y ago
- 11.8x 2015 sales - Company was growing around 50%/ year - With -18% opinc margin - Customer base mostly mid tier and less savy ecommerce customers, read: future Amazon victims => Extremely steep price
- origami777 10y ago
  What do you mean by "Customer base mostly mid tier and less savy ecommerce customers, read: future Amazon victims"?
  - JimmyAustin 10y ago
    I think he is talking about organisations that are either: A) likely to fail victim to Amazon beginning to sell Amazon branded products under the "AmazonBasics" brand. B) Increasingly unlikely to be able to compete against the sheer scale of Amazon as a storefront as it expands.
andrewfromx 10y ago
bets on the next big buy from SF: either https://www.onelogin.com https://www.onelogin.com or https://www.bitium.com https://www.bitium.com
- bpicolo 10y ago
  Lots of options in this space, huh? https://www.okta.com/ https://www.okta.com/
  - andrewfromx 10y ago
    well okta raised way too much money for SF to buy them. The other two are much more likely.
JoshGlazebrook 10y ago
Very curious what they will do with this. Demandware is horrible to develop for.
- stanmancan 10y ago
  It can't possibly be any worse than developing for Salesforce.
  - JoshGlazebrook 10y ago
    I've not personally touched Salesforce, but demandware centers around "pipelines" which essentially I would equate them to a visual route handler/middleware combination. Which works in combination with their propriety scripting language (javascript based), templating system, etc. pipelines: http://blog.baha.dk/content/images/2015/12/dwpipeline-1.png http://blog.baha.dk/content/images/2015/12/dwpipeline-1.png general overview: http://blog.baha.dk/2015/12/19/part-2-developing-demandware/ http://blog.baha.dk/2015/12/19/part-2-developing-demandware/
    - stanmancan 10y ago
      Salesforce has its "server" side language APEX which is sort of kinda based on Java, then they have SOQL which is their own, limited and akward version of SQL, and Visualforce which is their front end. So many limitations that make no sense. Documentation rarely tells you the whole picture. The whole thing is full of gotchas that you only learn through experience. Ugh.
      - btgeekboy 10y ago
        Yay multi-tenant apps!
      - Jach 10y ago
        Don't forget Aura/Lightning for one of the weirdest ugh-inducing front end / back end development rides you can find: https://github.com/forcedotcom/aura https://github.com/forcedotcom/aura
Huhty 10y ago
Would have expected an Alexa rank much higher than 66,890 for a business worth 2.8 BILLION dollars.
- bpicolo 10y ago
  Alexa isn't a great indicator for enterprise software. You wouldn't expect them to have any visitors, despite the sites for all their brands having many many visitors.
- microcolonel 10y ago
  The 60k mark is about standard for enterprise solutions and engineering. http://www.alexa.com/siteinfo/http%3A%2F%2Fbaesystems.com http://www.alexa.com/siteinfo/http%3A%2F%2Fbaesystems.com
notmything 10y ago
The comments on this story are really reflective of the kind of people on HN - no idea what's going on with the bigger picture - if it's not completely dev focussed then it's stupid and wrong...... Sad

This seems like a lot to pay for company that isn't cashflow positive. Even if we take out 147 million they spend for sales for synergy reasons. Keep the growth rate similar. We end up with FCF of 200 mil. That is paying something like 15x FCF using some crazy assumptions.

Cieplak 10y ago
Does seem like quite a lot for a software company. Could hire quite a few devs with a billion dollars. I imagine most of the price could be attributed to Demandware's existing customer relationships and Demandware's employees, although the latter is difficult to value especially considering that most folks worth their salt are out as soon as their options vest.
- vasaulys 10y ago
  Does Salesforce pursue the same model of customer acquisition as Oracle does? I know Oracle is known to sell to existing customers additional products & services, so Salesforce might be "acquiring" new customers if there is little overlap in current customer base. It seems highly unlikely this sort of acquisition is for the technology alone.
  - kmnc 10y ago
    Most of the Salesforce purchases seem to be about opening up new marketing channels.
iaw 10y ago
Perhaps Benioff knows something the rest of us don't about the long-term potential. That or he had the money burning a hole in his pocket and had to spend it on something...

shaqbert 10y ago

- 11.8x 2015 sales - Company was growing around 50%/ year - With -18% opinc margin - Customer base mostly mid tier and less savy ecommerce customers, read: future Amazon victims => Extremely steep price

origami777 10y ago
What do you mean by "Customer base mostly mid tier and less savy ecommerce customers, read: future Amazon victims"?
- JimmyAustin 10y ago
  I think he is talking about organisations that are either: A) likely to fail victim to Amazon beginning to sell Amazon branded products under the "AmazonBasics" brand. B) Increasingly unlikely to be able to compete against the sheer scale of Amazon as a storefront as it expands.

andrewfromx 10y ago

bets on the next big buy from SF: either https://www.onelogin.com https://www.onelogin.com or https://www.bitium.com https://www.bitium.com

bpicolo 10y ago
Lots of options in this space, huh? https://www.okta.com/ https://www.okta.com/
- andrewfromx 10y ago
  well okta raised way too much money for SF to buy them. The other two are much more likely.

JoshGlazebrook 10y ago

Very curious what they will do with this. Demandware is horrible to develop for.

stanmancan 10y ago
It can't possibly be any worse than developing for Salesforce.
- JoshGlazebrook 10y ago
  I've not personally touched Salesforce, but demandware centers around "pipelines" which essentially I would equate them to a visual route handler/middleware combination. Which works in combination with their propriety scripting language (javascript based), templating system, etc. pipelines: http://blog.baha.dk/content/images/2015/12/dwpipeline-1.png http://blog.baha.dk/content/images/2015/12/dwpipeline-1.png general overview: http://blog.baha.dk/2015/12/19/part-2-developing-demandware/ http://blog.baha.dk/2015/12/19/part-2-developing-demandware/
  - stanmancan 10y ago
    Salesforce has its "server" side language APEX which is sort of kinda based on Java, then they have SOQL which is their own, limited and akward version of SQL, and Visualforce which is their front end. So many limitations that make no sense. Documentation rarely tells you the whole picture. The whole thing is full of gotchas that you only learn through experience. Ugh.
    - btgeekboy 10y ago
      Yay multi-tenant apps!
    - Jach 10y ago
      Don't forget Aura/Lightning for one of the weirdest ugh-inducing front end / back end development rides you can find: https://github.com/forcedotcom/aura https://github.com/forcedotcom/aura

Huhty 10y ago

Would have expected an Alexa rank much higher than 66,890 for a business worth 2.8 BILLION dollars.

bpicolo 10y ago
Alexa isn't a great indicator for enterprise software. You wouldn't expect them to have any visitors, despite the sites for all their brands having many many visitors.
microcolonel 10y ago
The 60k mark is about standard for enterprise solutions and engineering. http://www.alexa.com/siteinfo/http%3A%2F%2Fbaesystems.com http://www.alexa.com/siteinfo/http%3A%2F%2Fbaesystems.com

notmything 10y ago

The comments on this story are really reflective of the kind of people on HN - no idea what's going on with the bigger picture - if it's not completely dev focussed then it's stupid and wrong...... Sad