How can Salesforce.com continue to pay seemingly high multiples for companies like Radian6 and Heroku?

Taking a closer look at the Radian6 deal, they are paying ~186k per customer! I don’t think Salesforce.com’s business issue is acquiring customers, especially only 1,700 from Radian6. They acquire 4k to 5k customers every quarter already. They need to find away to increase profitability and EPS.

In the Heroku deal, they paid a healthy premium for a company that generates a relatively small amount of revenue. Their strategy here makes sense though, attract developers to build on your platform(s), distribute their applications through multiple channels (AppExchange, direct, partners, etc.), and earn high margin OEM / ISV subscription fees. The question is how long will it take to start earning an ROI on the Heroku acquisition?

Also, how sustainable are Radian6 and its competitor’s revenue streams? There are new players coming into the broadly defined Social CRM market with relative ease and the larger CRM players will start to offer more social media, listening engine, sentiment, and data filtering capabilities with their solutions.

I read through a handful of tweets on the Radian6 acquisition and noticed some responses from Salesforce.com customers who want them to focus more on improving existing CRM features, such as analytics, marketing automation, and workflow.

Clearly consumers don’t particularly want a social relationship with a brand or an organisation – what they want are the BENEFITS that such a relationship might bring them.

Being able to apply brand/customer/competitor and partner social research using tools like Radian6 will provide salesforce customers the ability to better strategize/engage their customers and partners alike.

Keep those POV’s coming! Michael

I’m not sure SFDC was ever a product innovator. Besides chatter (which some would argue is a yammer replica), I can’t think of any recent innovations (and even the original product was a easier/cheaper riff on existing SFA).
I think their strength is in market vision and thought leadership, less so in product innovation.
I think the recent acquisitions are an attempt to bring more product innovation in-house, and both Heroku and Radian6 clearly showed a knack for creativity.

I think an interesting question is whether Salesforce.com will keep a vibrant ecosystem, where third parties have a fair opportunity to bring innovation to Salesforce.com customers even in areas where Salesforce.com has its own offering. If the AppExchange promise remains alive, Salesforce.com customers will continue to have alternatives in case Salesforce.com isn’t able to keep the social media monitoring innovation alive.

Building a Bridge from Chatter to the public social networks looks easy, but bridging the closed enterprise security model with the public model is where the rubber meets the road.

Evolving the security model space, to allow consumer internet scale, will be SFDC’s golden egg.

Lauren Vargas
Director of Community at Radian6
@VargasL