Salesforce and Radian6: What does it all mean?

Focusing relentlessly on growth produces great results for investors, but it doesn’t produce a great product when the market and technology landscape is evolving so rapidly.

March 30, 2011 // Chris Kenton
what does it all mean - Salesforce and Radian6

what does it all mean – spiritual and philosophical question in vintage wooden letterpress prinitng blocks isolated on white

My email account overflowed yesterday with exclamations and inquiries about SalesForce’s acquisition of Radian6. What does it mean for SocialRep? What does it mean for the industry? $326M? OMG!!! I didn’t expect this would be the event that would draw us out of our 6-month public silence—especially after our experience in Japan last month—but here it is.

Let me start by saying that Susan Etlinger at Altimeter has the best analysis of this move—or, I should say, she has the angle that resonates for me. (HT Jeff Auker.)

The acquisitions of Radian6 by Salesforce, Scout Labs by Lithium Technologies, and Sysomos by Marketwire creates a power vacuum among independent social monitoring vendors. This is actually mixed news for the market, which is still extremely immature.

The whole post is well worth reading, and I don’t have much to add from the general industry perspective.

From the subjective viewpoint of SocialRep, this is a fantastic market event. One of our competitors has made a stunning exit, and in the process elevated the visibility not only of our space, but of the opportunities and challenges yet to be addressed. As Susan points out, and which I can confirm based on the work SocialRep has been doing in the field the past 6 months, this is still an immature market—in fact, I don’t even think this is the market it will be a few years from now, but that’s another story.

Susan’s colleague at Altimeter, Jeremiah Owyang, poked a little fun at Radian6’s competitors last night:

Jowyang: Enjoying the FUD from SFDC’s and Radian6’s competitors downplaying the announcement, which of course means only one thing.

I’m not sure if the conclusion is that we’re jealous, or frightened—and to be fair, I’m not sure who Jeremiah’s been hearing from and what they’re saying. For my part, either conclusion is misguided. Would I like to reach a $300M exit? Hell yes. Is that the primary driver for SocialRep’s existence? Hell no. We’ve consistently made decisions not to play the silicon valley venture game, to focus on building for the long run by delivering real value for our customers and to find a new path in our industry.

I wholeheartedly applaud Radian6 on their success, and honestly, I admire what they’ve achieved. But their path has never been our path. They’re a marketing leader in our field; they are not a technology leader, nor a methodological innovator. They’ve executed very well on the classic venture model–deliver the minimum product that will produce the maximum customer growth. In the process, they’ve done more to educate the market about our industry than anyone, and they’ve shortened the sales cycle for all of us. Thank you, Radian6!

SalesForce, for it’s part, has been a prolific and authentic innovator of the SaaS business model, and we constantly analyze their moves for ideas about how to tune our market approach. But while this marriage has all the thrill of industry maneuvering that excites analysts and makes every VC’s palms itch, the vast majority of our inbound sales calls, and every one of our inbound partner inquiries, are customers or partners of Radian6 looking for an alternative. Why? Because focusing relentlessly on growth produces great results for investors, but it doesn’t produce a great product when the market and technology landscape is evolving so rapidly. The faster you grow, the more you have to make decisions that limit your ability to innovate your product.

SocialRep’s decision to forego venture investment and focus instead on building our business off revenue has been a conscious choice to maintain our focus on innovation at the expense of growth. It requires us to be constantly working directly with customers to develop new strategies and new technologies to solve real business problems. That’s our R&D lab, which venture backed companies don’t have the luxury to sustain. What we don’t have the luxury to sustain is non-stop marketing and market presence, which is why we’ve gone silent over the past few months. We’re not here to trawl for customers. We’re not here to primp for investors. We’re not here to grab our slice of the guru echo chamber. We’re here to build the best products we can deliver for customers who want powerful tools. Nothing about the Radian6 deal changes that, nor does it diminish my appreciation for what Radian6 has done for our space.


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