Personal blog of Yzmir Ramirez

Mailgun, an email API delivery service, announced today that it was selling a majority stake in the company to private equity firm Thoma Bravo. The companies did not share terms, but this is the second owner in the company’s eight-year history.

Mailgun provides API services for building email functionality into applications. It has more than 150,000 customers using its APIs, according to data provided by the company.

In a blog post announcing the investment, CEO William Conway said the new money should help the company expand its capabilities and accelerate the product roadmap, a common refrain from companies about to be acquired.

“We will be investing millions in the development of products you can use to enhance your deliverability, gain more insights into your emails and deliver an unparalleled experience for your customers. We’re also doubling down on customer success and enablement to ensure our customers have exactly what they need to scale their communications,” Conway wrote in the blog post.

The company, which was founded in 2010 and was a part of the Y Combinator Winter 2011 cohort, has had a complex history. Rackspace acquired it in 2012 and held onto it until 2017, when it spun out into a private company. At that point, Turn/River, another private equity firm, invested $50 million in the company. After today’s deal, Turn/River will maintain a minority ownership stake in Mailgun.

Mailgun typically competes with companies like Mailchimp and SendGrid. Thoma Bravo has a history of buying enterprise software companies. Most recently, it bought a majority stake in enterprise software company Apttus. It also has investments in SolarWinds, SailPoint and Blue Point Systems.

Thoma Bravo did not respond to a request for comment before publishing.

SAP CEO Bill McDermott was jacked up today about his company’s $8 billion Qualtrics acquisition over the weekend. You would expect no less for such a big deal. McDermott believes the data Qualtrics provides could bridge the gap between his company’s operational data and customer, data wherever that resides.

The idea behind Qualtrics is to understand customer sentiment as it happens. McDermott sees this as a key piece to the company’s customer management puzzle, one that could propel it into being not only a big player in customer experience, but also drive the company’s underlying cloud business. That’s because it provides a means of constant feedback from the customer, one that is hard to ascertain otherwise.

In that context, he saw the deal as transformative. “By combining this experience data with operations, we can combine this through Qualtrics and SAP in a way that the world has never done before, and I fundamentally believe it will change this world as we know it today,” McDermott told TechCrunch on Monday.

Others who follow the industry closely were not so convinced. While they liked the deal and saw the potential of combining these types of data, it might not be the game changer that McDermott is hoping for after spending his company’s $8 billion.

Paul Greenberg, who is managing principal at The 56 Group and author of the seminal CRM book, CRM at the Speed of Light, says it’s definitely a big acquisition for the company, but he says it takes more than an acquisition or two to challenge the market leaders. “This will be a beneficial acquisition for SAP’s desire to continue to pivot the company to the customer-facing side, but it isn’t a decisive one by any means,” Greenberg told TechCrunch.

Customer experience is a broad term that involves understanding your customer at a granular level, anticipating what they want, understanding who they are, what they have bought and what they are looking for right now. These are harder problems to solve than you might imagine, especially since they involve gathering data across systems from a variety of vendors that deal with different pieces of the puzzle.

Companies like Adobe and Salesforce have made this their primary business focus. SAP is at its heart an ERP company, which gathers data by managing key internal operational systems like finance, procurement and HR.

Tony Byrne, founder and principal analyst at Real Story Group, says he likes what Qualtrics brings to SAP, but he is not sure it’s quite as big a deal as McDermott suggests. “Qualtrics enables you to do more sophisticated forms of research which marketers certainly want, but the double benefit is that — unlike SurveyMonkey and others — Qualtrics has experience on the digital workplace side, which could complement some of SAP’s HR tooling.” But he adds that it’s not really the central CEM piece, and that his company’s research has found that SAP still has holes, particularly when it comes to marketing tools and technologies (MarTech).

Brent Leary, who is founder at CRM Essentials, agrees that SAP got a nice company, especially when combined with the $2.4 billion CallidusCloud purchase from earlier this year, but it has a ways to go to catch up with Salesforce and Adobe. “Qualtrics does provide a more broad perspective of customers because of operational data from back and front office systems. The Callidus acquisition helps to turn insights into certain B2B-focused customer experiences. But I think more pieces may be needed in terms of B2C experience creation tools that companies like Adobe and Salesforce are focusing on with the marketing/experience clouds,” he explained.

Whether this is an actual game changer as McDermott suggested remains to be seen, but the industry experts we spoke to believe it will be more of an incremental piece that helps move the company’s customer experience initiative forward. If they’re right, McDermott might not be finished shopping just yet.

It seems that Sunday has become a popular day to announce large deals involving enterprise companies. IBM announced the $34 billion Red Hat deal two weeks ago. SAP announced its intent to buy Qualtrics for $8 billion last night, and Vista Equity Partners got into the act too, announcing a deal to buy Apptio for $1.94 billion, representing a 53 percent premium for stockholders.

Vista paid $38 per share for Apptio, a Seattle company that helps companies manage and understand their cloud spending inside a hybrid IT environment that has assets on-prem and in the cloud. The company was founded in 2007 right as the cloud was beginning to take off, and grew as the cloud did. It recognized that companies would have trouble understanding their cloud assets along side on-prem ones. It turned out to be a company in the right place at the right time with the right idea.

Investors like Andreessen Horowitz, Greylock and Madrona certainly liked the concept, showering the company with $261 million before it went public in 2016. The stock price has been up and down since, peaking in August at $41.23 a share before dropping down to $24.85 on Friday. The $38 a share Vista paid comes close to the high water mark for the stock.

Stock Chart: Google

Sunny Gupta, co-founder and CEO at Apptio liked the idea of giving his shareholders a good return while providing a good landing spot to take his company private. Vista has a reputation for continuing to invest in the companies it acquires and that prospect clearly excited him. “Vista’s investment and deep expertise in growing world-class SaaS businesses and the flexibility we will have as a private company will help us accelerate our growth…,” Gupta said in a statement.

The deal was approved by Apptio’s board of directors, which will recommend shareholders accept it. With such a high premium, it’s hard to imagine them turning it down. If it passes all of the regulatory hurdles, the acquisition is expected to close in Q1 2019.

It’s worth noting that the company has a 30-day “go shop” provision, which would allow it to look for a better price. Given how hot the enterprise market is right now and how popular hybrid cloud tools are, it is possible it could find another buyer, but it could be hard to find one willing to pay such a high premium.

Vista clearly likes to buy enterprise tech companies having snagged Ping Identity for $600 million and Marketo for $1.8 billion in 2016. It grabbed Jamf, an Apple enterprise device management company and Datto, a disaster recovery company last year. It turned Marketo around for $4.75 billion in a deal with Adobe just two months ago.

In a DevOps world, the operations part of the equation needs to be on call to deal with issues as they come up 24/7. We used to use pagers. Today’s solutions like PagerDuty and VictorOps have been created to place this kind of requirement in a modern digital context. Today, Splunk bought VictorOps for $120 million in cash and Splunk securities.

It’s a company that makes a lot of sense for Splunk, a log management tool that has been helping customers deal with oodles of information being generated from back-end systems for many years. With VictorOps, the company gets a system to alert the operations team when something from that muddle of data actually requires their attention.

Splunk has been making moves in recent years to use artificial intelligence and machine learning to help make sense of the data and provide a level of automation required when the sheer volume of data makes it next to impossible for humans to keep up. VictorOps fits within that approach.

“The combination of machine data analytics and artificial intelligence from Splunk with incident management from VictorOps creates a ‘Platform of Engagement’ that will help modern development teams innovate faster and deliver better customer experiences,” Doug Merritt, president and CEO at Splunk said in a statement.

In a blog post announcing the deal, VictorOps founder and CEO Todd Vernon said the two companies’ missions are aligned. “Upon close, VictorOps will join Splunk’s IT Markets group and together will provide on-call technical staff an analytics and AI-driven approach for addressing the incident lifecycle, from monitoring to response to incident management to continuous learning and improvement,” Vernon wrote.

It should come as no surprise that the two companies have been working together even before the acquisition. “Splunk has been an important technical partner of ours for some time, and through our work together, we discovered that we share a common viewpoint that Modern Incident Management is in a period of strategic change where data is king, and insights from that data are key to maintaining a market leading strategy,” Vernon wrote in the blog post.

VictorOps was founded 2012 and has raised over $33 million, according to data on Crunchbase. The most recent investment was a $15 million Series B in December 2016.

The deal is expected to close in Splunk’s fiscal second quarter subject to customary closing conditions, according to a statement from Splunk.

Customer Relationship Management (CRM) is a mature market with a clear market leader in Salesforce. It has a bunch other enterprise players like Microsoft, Oracle and SAP vying for position. SAP decided to take another shot today when it released a new business products suite called SAP C/4HANA. (Ya, catchy I know.)

SAP C/4HANA pulls together several acquisitions from the last several years. It started in 2013 when it bought Hybris for around a billion dollars. That gave them a logistics tracking piece. Then last year it got Gigya for $350 million, giving them a way to track customer identity. This year it bought the final piece when it paid $2.4 billion for CallidusCloud for a configure, price quote (CPQ) piece.

SAP has taken these three pieces and packaged them together into a customer relationship management package. They see this term much more broadly than simply tracking a database of names and vital information on customers. They hope with these products to give their customers a way to provide consumer data protection, marketing, commerce, sales and customer service.

They see this approach as different, but it’s really more of what the other players are doing by packaging sales, service and marketing into a single platform. “The legacy CRM systems are all about sales; SAP C/4HANA is all about the consumer. We recognize that every part of a business needs to be focused on a single view of the consumer. When you connect all SAP applications together in an intelligent cloud suite, the demand chain directly fuels the behaviors of the supply chain,” CEO Bill McDermott said in a statement.

It’s interesting that McDermott goes after legacy CRM tools because his company has offered its share of them over the years, but its market share has been headed in the wrong direction. This new cloud-based package is designed to change that. If you can’t build it, you can buy it, and that’s what SAP has done here.

Brent Leary, owner at CRM Essentials, who has been watching this market for many years says that while SAP has a big back-office customer base in ERP, it’s going to be tough to pull customers back to SAP as a CRM provider. “I think their huge base of ERP customers provides them with an opportunity to begin making inroads, but it will be tough as mindshare for CRM/Customer Engagement has moved away from SAP,” he told TechCrunch.

He says that it will be important with this new product to find its niche in a defined market. “It will be imperative going forward for SAP find spots to “own” in the minds of corporate buyers in order to optimize their chances of success against their main competitors,” he said.

It’s obviously not going to be easy, but SAP has used its cash to buy some companies and give it another shot. Time will tell if it was money well spent.

Salesforce announced today that it intends to buy MuleSoft in a deal valued at a whopping $6.5 billion. That’s not necessarily the selling price, but the amount the company has been valued at based on stocks, bonds and cash on hand. The exact price was not available yet, but the company did indicate it was paying $44.89 per share for MuleSoft, a price that represents a 36 percent premium over yesterday’s closing price, according to Salesforce .

What’s more, the deal values each MuleSoft share at $36 in cash and 0.0711 shares of Salesforce common stock.

Rumors began swirling this morning after a story broke by Reuters that the CRM giant was interested in MuleSoft, which launched in 2006 and went public almost exactly a year ago. With 1,200 customers, it gives Salesforce a mature company to add to its arsenal. It also gives them an API integration engine that should help the company access data across organizations, regardless of where it lives.

This is particularly important for Salesforce, which tends to come in and work with a company across enterprise systems. As it builds out its artificial intelligence and machine learning layer, which it has branded as Einstein, it needs access to data across the company. A company like MuleSoft gives them that.

But of course Salesforce gets more than tech with this purchase, which it can integrate into its growing family of products. It also gets major customers like Coca-Cola, VMware, GE, Accenture, Airbus, AT&T and Cisco. While Salesforce may have a presence in some of these companies already, MuleSoft gives them entrée into areas they might not have had, and gives them the ability to expand that presence.

What’s more, the company has big revenue goals. Having reached $10 billion in revenue faster than any software company ever has, a point that chairman and co-founder Marc Benioff has been happy to make, they have actually set their sights on $60 billion by 2034. That’s a long way away, of course, but having a company like MuleSoft in the fold, which made almost $300 million in revenue in fiscal 2017, will certainly help.

Ray Wang, founder and principal analyst at Constellation Research, says this about building a microservices future, “This is the heart of Salesforce’s M&A strategy. They have to integrate, orchestrate, and manage microservices in their future roadmap,” he said. “The AI-driven world ahead needs contextual microservices.”

Microservices are a way of building applications made up of small, distinct pieces, rather than the single, monolithic application we tended to build in the past. This makes changing and updating easier and more efficient.

Brent Leary, owner and principal at CRM Essentials, a CRM consulting firm, sees the deal through a customer prism. “Well, it shows just how crucial [Internet of Things] and [Artificial Intelligence] is to the future of Salesforce‘s ability to create the customer success platform of the future,” he said.

“It also reinforces that they feel investing deeper into customer success is a better ROI and growth play then extending to other enterprise app areas outside of their core focus,” Leary added.

As with all deals of this ilk, it needs to pass regulatory muster first, but if it does, it is expected to close at the end July.

 Iron Mountain announced today that it’s acquiring the U.S. data center assets of IO Data Centers for a cool $1.3 billion — and the price tag could potentially go higher. With today’s purchase, Iron Mountain gets some serious assets, including four state-of-the-art data centers in Phoenix and Scottsdale, Arizona; Edison, New Jersey; and Columbus, Ohio. Read More

 One thing is clear, Cisco is not afraid to use its considerable cash on hand to fill in holes in its product portfolio. Today it wrote out a big fat check for $1.9 billion to acquire BroadSoft, a Maryland company that delivers unified communications via service providers. The purchase gives Cisco a new way to sell its communications tools as it shifts its focus from a pure networking… Read More

 Cisco has been rather acquisitive in recent years, buying 19 companies since 2015; today it announced it was acquiring cloud-based SD-WAN vendor Viptela for $610 million in cash. Viptela was founded in 2012 and had raised more than $108 million, including its most recent $75 million round just last May. The $610 million price tag appears to be a nice return for investors. Read More

 OneLogin, a company that provides identity management in the cloud, has become rather acquisitive over the last year buying CafeSoft last December and Portadi in June. Today it announced it was acquiring Sphere Secure Workspace to add mobile device management to their identity-driven security model.
“We are getting the hang of acquiring companies and propelling our roadmap very… Read More