Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Intuit Just Bought What for $424 Million? Demandforce, That’s What.

To say that Demandforce had been flying under the radar is putting it mildly. As software-as-a-service companies go, I had never heard of Demandforce, so it came as a surprise when the news broke that not only was software firm Intuit buying it, but was paying $424 million for it.

Flying under the radar — and away from the eyes of the tech press that might have otherwise paid it attention — was sort of the plan, Demandforce chief marketing officer Patrick Barry told me in an interview a few minutes ago. “We built this company the old-fashioned way. That meant putting our customers first. PR and other things were not a priority. Our customers don’t read tech sites. We focused our efforts on reaching out to our customers.”

Whatever it was, it worked. Demandforce, launched in 2003, had attracted $11.8 million in venture capital investments, primarily from Benchmark Capital. By the time of the acquisition announced today, the San Francisco-based outfit had 300 employees, a profitable business with a run rate of $60 million in annual sales and — get this — $12 million in the bank.

So what does Demandforce do? Marketing for small businesses: Dentist’s offices and hair salons and auto-repair shops and scores of other types of small businesses that make up the majority of the U.S. economy and need help reaching out to their customers.

Demandforce, Barry told me, built bridges to the data stored in old-school marketing software programs — and there are dozens of them — that would typically run on desktop machines, freeing up the data and moving it into the cloud.

From there, it would apply its own marketing algorithms to the business: managing appointment reminders, asking customers for feedback and publishing customer reviews. So far, Demandforce has syndicated 1.5 million reviews to Google and CitySearch and other sites like them that accept Demandforce content.

Intuit said in a statement that it will make Demandforce into a new division in its Small Business Group; it will continue to be led by Rick Berry, Demandforce’s president and founder. He will report to Kiran Patel, the executive vice president and general manager of that group.

After the deal closes, Intuit said, it expects Demandforce to add one to two points to its revenue growth in fiscal 2013, and to be neutral or slightly dilutive this year. Intuit shares rose 44 cents, or less than 1 percent, to $58.04.

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