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Salesforce.com, ExactTarget: For Once, Maybe No Culture Shock?

6/4/13

By Ken Magill

On paper, Salesforce.com’s just-announced agreement to acquire ExactTarget looks like a great match. But when the integration begins, there’s always that one intangible: culture.

Cloud computing giant Salesforce.com announced today it has agreed to buy ExactTarget—a firm that helps brands connect to consumers through email and social media—in a deal valued at $2.5 billion.

“Salesforce.com’s acquisition of ExactTarget will further its mission of being the world’s leading CRM platform—one that enables companies to transform how they connect with their customers across sales, service, and marketing,” Salesforce.com said in a release. “By combining ExactTarget’s leading digital marketing capabilities with salesforce.com’s leading sales, service and social marketing solutions, salesforce.com will create a world-class marketing platform across email, social, mobile and the web.”

Of course, it’s all champagne and streamers now, but long-time email industry veterans know these deals can get seriously painful and when they do it’s usually a case of culture clash.

e-Dialog immediately comes to mind. The email service provider was acquired by GSI Commerce in 2008. Then GSI Commerce was acquired by eBay in 2011.

Just days before the eBay deal was announced, GSI reportedly fired dozens of e-Dialog’s top executives. According to former employees, the company culture morphed from one of open doors and communications to keep your mouth shut and cover your ass, and the employees who could, left. The firm has since taken steps to right the situation.

Meanwhile, the email-marketing poster child for platform- and cultural-integration troubles is Epsilon. As was the case with e-Dialog, it all worked out in the end, but the process sure wasn’t pretty.

Epsilon acquired email service provider Bigfoot in 2005 for $120 million and DoubleClick’s email unit in 2006 for $90 million. By all accounts the ensuing integration—culturally and technologically—was a nightmare, culminating in an exodus of disgruntled DoubleClick employees and the ouster of Epsilon CEO Al DiGuido.

So what of Salesforce.com’s and ExactTarget’s company cultures? Both have received fawning treatment in the business press. But what matters, of course, is the acquiring company’s culture.

Salesforce.com currently ranks No. 19 on Fortune’s 100 Best Companies to Work For list, up from 27 last year.

“Free yoga classes, 48 hours of paid time to volunteer, a $100 monthly wellness benefit, iPhone reimbursement, and a quarterly companywide forum hosted by founder Marc Benioff help explain the enthusiasm at this cloud computing pioneer,” says the listing for Salesforce.com on CNNMoney.

Salesforce.com’s corporate culture was reportedly a major reason Daniel Debow and David Stein, co-founders of human-resources-app-firm Rypple, turned down a richer offer to be acquired by Salesforce.com in 2011.

"It wasn't only about deal terms, but corporate culture," Debow said, according to Fortune. "We barely met the other CEO."

According to Fortune, Debow said he sensed that Salesforce.com CEO Marc Benioff was the kind of person "we could deliver our company and employees to … that we entrepreneurs could be part of their family.”

If Debow was right, maybe the folks at ExactTarget won’t be subjected to the drama to which other employees of acquired ESPs have been subjected in the past.

Time will tell.

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Terms: Feel free to be as big a jerk as you want, but don't attack anyone other than me personally. And don't criticize people or companies other than me anonymously. Got something crappy to say? Say it under your real name. Anonymous potshots and personal attacks aimed at me, however, are fine.

Posted by: Rob Pratt
Date: 2013-06-07 18:16:11
Subject: "Integration" has evolved

I witnessed the integrations of Digital Impact with Acxiom, and e-Dialog with GSI, as well as integrations made by e-Dialog/GSI with mobile and social solutions. All suffered from political battles and eventual cultural change - it's the nature of the beast. Ultimately it comes down to what Salesforce wants to exert over/into ExactTarget. There is the lip service and then there is what really happens over the next 1-3 years. Culture aside, with web services / APIs I feel the nature of what stands to be technically integrated has evolved and I think with Salesforce and ExactTarget marketplaces for apps and services, they already have a better shot than most have had in the past. The question will be whether they'll prioritize genuine development of integrated features that make the most of their combined technology. I think they're both so big, there is ripe opportunity for disruptive newcomers to challenge their dominance. Zoho has taken to their blog to throw their gauntlet down, but I think there are others that will shake it up even more. IMO, the future is about solutions that can be easily connected or integrated into a client's consumer applications rather than one giant ecosystem to rule it all.
Posted by: Dave Sims
Date: 2013-06-04 16:20:27
Subject: You used great example

But saying that it all worked out in the end for e-Dialog is giving more credit than I think is deserved. If I'm picking an ESP I'm looking for one that does good old fashioned email and does it well. Focuses on things you write so well about - avoiding spamhaus, getting into inboxes, A/B testing, etc. This is what I liked about ExactTarget and what now worries me about them.

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