Marketo and Demandware are Getting Acquired. What Next?

There must be meaning to this madness. There always is.

Marketo is going out of the public markets — acquired for $1.8B. Salesforce is buying Demandware for $2.8B.

The huge dip in market prices for SaaS companies in February now seems like a distant memory — and a regretably missed opportunity for the investors misguided by a vast section of the investment press that has been propagating the myth of a tech bubble. At Storm Ventures, as investors in Marketo, we are celebrating the exit.

But, as a founder of a SaaS company in the marketing and commerce space, what does all this mean?

Workflow SaaS Opportunity is Gone

The first generation of SaaS companies — Marketo, Demandware, Workday, Salesforce, NetSuite are all based on a relatively simple idea: automate the workflow, do it in the cloud.

Machine Learning SaaS is Next

Marc Benioff is spot on when he predicts that the opportunity going forward is in applying machine learning and AI to the business problems.

Marketo is a great company that effectively became the hub for all B2B marketing automation in a company but its not predictive and it doesn’t help you figure out whom to market to and when. Same for all its peers — ExactTarget Salesforce Marketing Cloud to Oracle.

Companies like our portfolio company BlueShift are solving the hard problem of using machine learning to your customer data so you can market to a segment of one in real time.

B2B and B2C are Merging

B2B marketing was about customer journey’s, lead nurturing and lifecycle marketing while B2C was about sending timely messages to right segments. The two are now merging as B2C marketers want to be able to treat each of their millions of individual customers as unique.

The only way for B2C to act like B2B is by tapping big data and machine learning.

Account Based Marketing is Exploding

For a very large number of companies, the most important accounts account for the vast majority of reveune and often an even bigger fraction of profits.

Today’s marketing tools are good at talking to one person on your website but are ill equipped to help you talk to an account — which means many different individuals who are influencers and decision makers.

YesPath is taking this on with a content-driven strategy for ABM. Engagio is building a rich set of applications for account based marketing, sales and even customer success. These are both portfolio companies and in fact, Engagio was started by co-founder of Marketo.

Mobile Commerce & Sales

Demandware did a great job helping brands sell direct. A new generation of products is enabling the same for a mobile-first world.

Mobile commerce is exploding and most retailers had wrongly bought into the idea that apps don’t work. That you could just mobilize your website and do the minimal work.

The mobile as “just another channel” approach is deeply flawed. With exploding app numbers, brands and retailers are taking a second look.

We are seeing some very interesting companies like PredictSpring built by ex-Googler’s.

Next

In 2009, several analysts told us at Salesforce that the CRM market was not big enough for us to keep growing beyond the $1B in ARR. They were wrong. With Salesforce about to do $10B in ARR, the market keeps expanding.

Don’t let anyone tell you that all the problems have been solved. Today is as good a day to start a company in marketing and commerce as ever — just go to your Inbox or a retailer’s website and you will see how horrifyingly terrible the state of the art is. The work is not yet done.

Marketing, commerce, sales, success, — nothing is ever done. Not when Siebel sold out, and not when Marketo and Demandware did either.

We look forward to meeting the next Marketo, the next Demandware, and the next Salesforce.