Salesforce.com swept through Toronto on Wednesday for its cloud-based social enterprise roadshow, delivering a message aimed squarely at Canadian ears: the acquisitions it’s made north of the border are here to stay.
Salesforce.com acquired Fredericton, N.B.-based social media monitoringfirm Radian6 in March 2011 for $326 million. It bought Toronto-basedRypple, which makes a social enterprise platform for employeeperformance tracking and reviews, for an undisclosed sum in December2011. Yet both firms are still based here in Canada, bucking thetraditional trend of homegrown startups that fly south once anacquisition deal is done.
In fact, San Francisco-based Salesforce.com is looking to entrench itsroots even further in Canada by increasing its 1,000 staff here by 50per cent within the next year, chairman Frank van Veenendaal told the3,200 attendees right off the top of his two-hour presentation.
“We’re very committed to Canada. We’ve had great success here,” vanVeenendaal said. “Some of the most innovative social companies havebeen founded here.”
Both Rypple and Radian6 have become poster children of sortsfor a new generation of Canadian tech startups, held up as proof thatCanadian companies no longer have to move stateside after being snappedup by U.S. firms.
“Marc (Benioff, CEO of Salesforce.com) didn’t want to take all the(Toronto) people and move them to San Francisco,” said Rypplevice-president Dan Debow.
Radian6 has actually increased its Canadian workforce since beingbought, growing from 300 staff before the deal to 500 people now, saidRob Begg, vice-president at Radian6. Rypple has also grown beyond the50 employees it had before it was bought, although Debow wouldn’tdisclose where its exact headcount stands at today.
“We have a 100 per cent retention rate (of Toronto staff since theacquisition),” Debow said. “We’re actively hiring (in Toronto).”
Part of Salesforce.com’s decision to keep both firms in Canada issimply a function of the technology itself.
“This new world of social (enterprise) means you can have innovationanywhere,” said Renny Monaghan, Salesforce.com’s vice-president ofmarketing in Canada. “If you can build amazing companies inFredericton, you can build one anywhere.”
The other reason to keep both companes in Canada is the labour pool here, Debow said.
“It’s very strategic. There’s so much talent here,” Debow said. “Andwe’ve got local access to U of T (University of Toronto), Waterloo andQueen’s,” he said, referring to the pipeline of IT graduates flowingfrom three of Ontario’s biggest universities.
Despite perceptions that cross-border takeovers ‘hollow out’ Canada’s ITindustry, Debow said such deals usually create positive spin-off effectsfor the Canadian tech sector. He noted, for example, that nine newCanadian startups ended up springing forth from Workbrain after it wasbought by Infor Global Solutions Inc. in 2007. Debow also co-foundedWorkbrain, a Toronto workforce management software firm, which was soldto Infor in a stock-based deal worth $227 million.
The upside of staying in Canada is that there’s less competition herefor talent than in Silicon Valley, Debow said. But the flipside of thatis there’s a smaller overall talent pool to pick from in Canada, headded, so “it all balances out.”
About 6,000 of Salesforce.com’s 100,000 global customers are based inCanada.
Salesforce.com started out as a cloud-based CRM provider. Now it wantsto harness the powerful mix of mobile, cloud and social networkingthat’s taken consumers by storm via Facebook and Twitter, and extend itinto the enterprise space to offer business services beyond just CRM,van Veenendaal told the audience. The key, he said, is to translate thesuccess of social media from the consumer market to the enterprise.
To do that, Salesforce.com has added a social component on top of itscloud CRM products to offer new platforms for internal workforcecommunication, staff performance review and motivation (courtesy ofRypple), social media monitoring (by way of Radian6), marketing andcustomer service.
Salesforce.com’s buying spree doesn’t appear to be over: it just pickedup New York-based Buddy Media for $689 million a few days ago. Andrumours are flying that Vancouver’s HootSuite Media Inc. could be itsnext target.
In case HootSuite founder Ryan Holmes is listening, Debow said thereare some nice perks to being bought by Salesforce.com and still stayingin Canada. One was having his mom in the audience for his Cloudforcepresentation on Wednesday. (“Hi Mom,” Debow said from the stage,waving.) Another is that it’s definitely improved the accommodations hestays in when he flies between Toronto and the Salesforce.com office inSan Francisco.
“I’ve always flown back and forth,” Debow said, referring to the factthat Rypple opened an office in California a few years ago even beforeits acquisition. “But now I just get to stay in way better hotels.”