For years, the applications were traditional on-premise software — you’d run it on a server or a series of desktop machines wherever the people who used them happened to be. And the biggest players were — or rather, still are — Oracle, by way of its takeover of PeopleSoft, and SAP. But when these apps started to migrate to the cloud and be available on demand, things started getting interesting. Companies that used them started to love the functionality, the ease of use, maintenance and support, and also the lower cost, and they started voting with their purchase orders in favor of the cloud.

That’s when the established on-premise suppliers got grabby. Last year, the race to roll up the cloud players started in earnest when SAP spent $3.4 billion for SuccessFactors. Not long after that, Taleo, another cloud player, went to Oracle for $1.9 billion. And Salesforce.com nabbed Rypple. Meanwhile, a bunch of former PeopleSoft execs are building Workday into a credible threat to all of them.

So this makes today’s news from SilkRoad — yet another player in the cloud-based HR application business — all the more interesting. The company announced a $35 million Series C led by Keating Capital and NTT Finance, joining existing investors Intel Capital, Crosslink Capital, Foundation Capital, Azure Capital and Tenaya Capital. Customers include McAfee and International Paper.

Another reason for all the heat being generated by this low-profile sector: The market research firm IDC reckons that, by 2015, companies will spend north of $8 billion on human-capital management tools.

The company says the funding will support its international expansion plans, especially internationally. Its products currently support 18 languages, and there are plans to add to those.

Research In Motion is in the midst of a major transition, aiming to shift BlackBerry from its current operating system to one based on the QNX operating system that powers its PlayBook tablet.

“We’re taking our time to make sure we get this right,” Heins said of the transition. “We’re making incredible progress on BlackBerry 10.”

Though final products running the new software are not expected until late this year, RIM is handing out prototypes running the new operating system to developers attending this week’s BlackBerry World conference in Orlando.

“We will be there later this year with an exciting device,” Heins said. “This is not the final hardware.”

In the meantime, though, RIM is rapidly losing market share as smartphone owners defect to the iPhone and Android.

Heins began his BlackBerry World talk by outlining what he believes separates BlackBerry users from smartphone owners generally.

He painted the device as, above all, a time-saving device.

“You are people of purpose,” Heins told the audience. “You believe the more you put into life, the more you get out of it. You do more, and you get more done in a day.”

During the demo, Heins and others from RIM tried to paint the new operating system as designed to be more fluid and elegant than current options, which rely on multiple apps and the “back” button in order to get things done.

RIM showed a number of features of the new operating system, including a keyboard that adjusts to the user, and a camera app that lets you go backward in time to make sure you get that perfect smile.

“It’s like Time Machine for photo-taking,” NPD analyst Ross Rubin said on Twitter during the keynote.

In a clear sign that the company is focused on its core business customers, Heins brought out executives from Cisco and Salesforce.com.

“We’re building WebEx for BB10 right now,” Cisco Senior VP Chuck Robbins told the crowd.

The keynote is Heins’s first major address since taking over as CEO during a leadership shakeup three months ago.

“Until this year, I’ve sat in the audience with you,” Heins said.

Below is a short clip from the keynote:

International Business Machines Corp. disclosed it will replace its Oracle/Siebel customer relationship management software with products made by SugarCRM, an eight-year-old San Francisco company backed by Draper Fisher Jurvetson and two other venture funds.

Read the rest of this post on the original site »

The layoffs, which happened on Monday, came as part of a shift away from building enterprise social tools on the Salesforce platform to refocusing on the social posting tools Seesmic already owns.

When reached by phone today, CEO Loic Le Meur said the layoffs were only the latest size reduction Seesmic has seen, as it has reshaped itself many times. Since it launched in 2007, Seesmic has been a video platform, then made Twitter clients and other social tools, and last year tried to make a go with Salesforce CRM products.

“What we’ve been trying for a long time has not worked the way we hoped,” Le Meur said.

In February, the company announced it would be changing and expanding the free Ping.fm social media cross-posting tools it bought in 2010 into a paid service called “Seesmic Ping.”

Seesmic raised $4 million in fresh funding last year from investors including Salesforce and Softbank. Le Meur is well known as the host of the annual LeWeb conference in Paris.

(Screenshot from a much earlier version of Seesmic.)

What’s so confusing, though, is that Salesforce is still growing like crazy and adding new employees at a relatively fast pace. Faster than ever before, in fact, and yet it still doesn’t need the new building? Apparently, Salesforce can satisfy its office-space needs by sticking with the traditional leases upon which it has relied so far. As Salesforce chief messaging officer Bruce Francis told Reuters: “We are growing now faster than we were growing at the time when we originally made the decision to build the campus. We are going to need space faster than we could build it.”

But the decision is going to add another log on the fire for Salesforce’s critics, who have argued that its shares are too expensive, and that its CEO, Marc Benioff, has no discipline when it comes to controlling expenses.

And they are growing at an alarming clip: Salesforce’s combined annual operating expenses grew 46 percent year over year to $1.8 billion in 2011, or about 80 percent of sales; up from $1.2 billion, or about 74 percent of sales, in 2010. That’s notably faster that the growth in annual sales, which grew 37 percent from $1.7 billion to $2.3 billion. And let’s not forget that Salesforce finished the year with a $35 million operating loss, versus a $97 million operating profit in 2010.

Salesforce defenders would say that deferred billings are really where you look for indications of growth in a cloud-computing company, and that’s fair: Future billings say more about the uptake of a subscription product like Salesforce.com’s primary cloud-based customer-relations management software than revenue that’s already been booked. And to that point, deferred revenue grew 48 percent, or ever so slightly faster than expenses.

Still, none of that helps explain why Salesforce management felt it was: A) justified in spending $278 million on 14 acres of real estate, and going to the expense of hiring architects and contractors; and B) why it no longer thinks it needs it. The purchase felt like a rash decision then, and backing away from the project feels just as rash now.

Anyhow, the news comes on the heels of Salesforce reporting quarterly results that blew by the expectations of analysts and undid much of the negative buzz that emerged in the quarter before that. Benioff made his regular appearance on CNBC’s “Mad Money” with Jim Cramer to talk about it. Cramer is apparently still liking the taste of the Salesforce Kool-Aid. In his remarks, Benioff discloses that Salesforce just closed a big deal with Hewlett-Packard, along with some other monstrously large transactions with other companies. What neither one of them bothers to talk about is the growth in expenses.

(Image courtesy of I Can Has Cheezburger)

Today the opposite is true. Let’s put it simply: Salesforce killed it this quarter, and the shares are soaring after hours. As of 5:40 pm ET, Salesforce shares are trading at $146 even, up $14.23 or nearly 11 percent. That is what we call a bullish pattern.

So what happened? Results beat the consensus, for one thing. Earnings per share were 43 cents on a non-GAAP basis, beating the consensus of 40 cents. Sales were $632 million, knocking the consensus of $624 million on its hindquarters.

Then came the guidance, which was in truth a mixed bag. The revenue forecast stomped on the consensus: Salesforce said it expects revenue of $673 million to $678 million, well ahead of the $663 million consensus. But? The EPS forecast is a bit off at 33 to 34 cents, below the 36 cent consensus.

So what’s got investors so giddy? Maybe billings? Remember, Salesforce lives on subscription revenue, so while revenue on the topline is a good thing to have grow, the key metric is in the area of billings, which is a strong indicator of future business. And they’re up: Current deferred revenue is up by 41 percent to $1.3 billion. Unbilled deferred revenue, which represents sales for which there’s a contract but no billing relationship yet, is similarly up, to $2.2 billion up from $1.5 billion at the end of 2011.

Salesforce also raised its guidance for the full year (it’s now in its fiscal year 2013) to as high as $2.95 billion. It was just a few years ago that Salesforce had its first billion-dollar year. Now it’s knocking on the door of its first $3 billion year. If that seems like it should have some sort of significance, it probably does. This cloud can float.

Earlier today, Salesforce’s stock price was up by more than 3 percent, though it has now settled a bit, and is up a more modest 1.3 percent, to $127.24 as of 11:30 am ET.

In a note to clients today, Mark Murphy of Piper Jaffray said that Salesforce closed on a deal worth $140 million with a customer in the financial services and insurance industry. Additionally, social network giant Facebook has made what is being described as a “material commitment” to Salesforce recently. “We simply do not observe any Cloud competitors closing $140M transactions, drawing in 10,000 attendees at regional conferences, and winning as much crucial platform business with internet leaders,” Murphy wrote.

Analyst Brendan Barnicle of Pacific Crest Securities, writing in a research note issued to clients today, said he saw similar trends. “Salesforce.com had a very strong finish to its fiscal year,” he writes, adding that it “closed several very large deals with major corporate accounts, including its largest deals ever in the U.S. and Europe. In some cases, these large deals were only Sales Cloud deals, and we see further opportunity for upsell. More importantly, the strength of the corporate business refutes the bear claim that Salesforce has penetrated its opportunity.”

One point of weakness, Barnicle says, were the small and medium businesses, who pushed back against a Salesforce move to transition them to an annual billing cycle. “It sounds like Salesforce was somewhat flexible on billings terms after stating its initial goal of putting most SMB customers on annual billing,” he wrote. “However, the drive to annual billings certainly made it more difficult to close and renew SMB deals.”

And while the strong finish to the quarter is great to have now, it’s going to set up a tough compare with the quarter ending in April, Barnicle writes. In the April quarter last year, billings — a heavily watched Salesforce metric that’s tied to future revenue — grew 57 percent. This year, Barnicle expects only 19 percent growth. “We are a bit concerned that the deceleration in billings will be negative for Salesforce,” he writes. “However, the comparisons get easier in Q2 (July) and Q3 (October), and we are concerned that if investors wait to move past the difficult FQ1 comparison, they may miss the opportunity to buy CRM at current levels.”

Barnicle also raised his revenue forecast on Salesforce to $625 million, and his EPS estimate to 42 cents a share, and reiterated a target price of $157. Salesforce reports earnings on Feb. 23.

Sales grew by 53 percent over the year-ago period to $22.5 million, which beat the average estimate of analysts by more than $1.5 million, while Q4 billings of $36 million were up 40 percent. Plus, the IPO raised more than $180 million in cash.

And while that’s all good, on an old-school GAAP basis, Jive finished the quarter with a $12.7 million loss that was roughly twice the size of the loss in the year-ago period. While that may seem at first to be kind of a bad thing, it’s not. Since Jive sells subscriptions, it defers a lot of its revenue to later periods, so the revenue it does book doesn’t readily outweigh the costs it incurs to get the sales growth done. This is common with SAAS companies like Salesforce.com and NetSuite, who also tend to run net losses on a GAAP basis, but focus on their non-GAAP results, which are more indicative of the state of the business.

I talked briefly with CEO Tony Zingale about this and other things, after he finished up his conference call with analysts. A summary of our chat is below, and below that is an interesting infographic that Jive’s PR team included with the earnings release. I thought it was a nice touch, so I’m sharing it here.

AllThingsD: Tony, for those who don’t know, walk us through the key metric in your results that, in your mind, made this a good quarter for you.

Zingale: Growth. Growth in revenue. It’s further amplified in a new market where growth is the paramount metric, and of course it’s measured against a path to profitability. And we communicated that in our guidance to the analysts. But it’s all about growth. If you can’t capture market share as measured by deals with large enterprises and paying customers, then the profitability metric comes into greater play. Plus, in SAAS software companies, profitability always lags because of the ratable revenue model.

How are you finding life as the CEO of a public company? I know it’s not new for you, specifically, but it’s new with this company.

I think it is a testament to social becoming viable and real in the enterprise. You’ve been following the story for more than a year. You can’t go public without recurring, substantial growth, and the kind of customers and the kind of growth as measured by the repeatability of the model. All at the same time, you have to continue to innovate, fend off the competition and deliver that value. It feels good to have cleared the bar of going public, but otherwise, it’s back to work.

Let’s talk about the competition. Are you seeing certain people out of deals where they show up against you?

We do exceptionally well in a head-to-head competition, especially when we see a request for proposal. We’re seeing more of those as we go into 2012. It lends credibility to the social business space, as corporations are thinking of social software as a line item in their budgets. The competitive landscape hasn’t changed. It continues to be the large enterprise software players like Microsoft and IBM. And certainly Salesforce.com shows up when we’re competing for business in the sales department, and a little bit in the marketing department. Salesforce is very well-entrenched in these situations. But we coexist with them all the time. But the landscape hasn’t changed much. It’s competitive in the early part of the process. But when it comes to competing inside and outside the enterprise — the flexibility of our delivery model and the strength of our reference customers — the competitors tend to fall away.

Shares are down more than $4, or about 13 percent. The freakout appears to be coming from gross margins that shrank to 51 percent from almost 59 percent in the prior quarter, and despite the fact that sales more than doubled sequentially to $84 million from $31 million before.

CEO David Flynn called me up a little while ago to talk about the results, and he reminded me that Fusion launched its new IO Drive 2. It’s a transition to a new product line that’s proving tricky. New products built on new technologies are always a little more costly to build up front, and that’s compounded by the fact that early adopters, when they buy the new stuff, take the lower-end version and not the more expensive and more profitable one.

Also, enterprise customers who buy the new stuff are always conservative and take longer to decide whether they want to buy it or not, he says. Even so, the company has sold 10,000 of the new drives.

But? There’s a new customer of record: Salesforce.com is now a Fusion-io customer, and has joined the likes of Apple and Facebook, which is using the flash-based chips in the servers running in its data centers around the world.

And Salesforce isn’t buying it directly from Fusion, but rather through one its OEM partners, which include Hewlett-Packard, IBM and Dell, though Flynn wouldn’t tell me which one it is.

Salesforce is one of six customers who bought more than a million dollars worth of Fusion’s stuff this quarter and of those, four were repeat customers, Flynn told me.

The Salesforce win is also important, Flynn says, because some have wondered whether Fusion’s technology, while popular with high-end enterprises like banks and Facebook, would make sense for applications that tend to be used in mid-tier businesses, which Salesforce’s mainline CRM application often is. The lower end of the enterprise software market is moving toward cloud-based software, which is often referred to as Software as a Service, or SAAS. “By helping those companies, we are indirectly driving business in the mid-range of the market. Apple and Facebook are in the SAAS business too, it’s just that their customers are consumers.”

One interesting fact that Flynn shared with me: His first job out of college was working for Oracle. His boss at the time? One-time Oracle exec and now Salesforce CEO Marc Benioff. A small world it is, indeed.

The e-commerce giant (a term typically reserved for Amazon in these woods) is one of the larger examples companies from the Bay Area that are setting up shop here and looking to soak up some of the Northwest’s rich engineering talent.

Other companies with satellite offices in the Seattle area include Google, Facebook, Zynga and Salesforce.

“I’m surprised I ended up at eBay, but the story is compelling,” said Ken Moss, who was hired in November to be eBay’s VP of managed marketplaces technology; Moss is GM of the Redmond office.

A long-time Microsoft employee whose claim to fame includes inventing the Pivot table in Excel, Moss more recently co-founded CrowdEye, a start-up focused on search technology and later on stock market prediction.

He said eBay’s dedication to the region is one of the biggest selling points for recruitment.

Most of the 75 employees that currently work there were hired over the past few months, and a small team has been here for seven years. Among the newbies I met were a number of Microsoft veterans who had been there for 12 to 15 years.

Moss says he will report directly to eBay’s CTO Mark Carges, which is “a signal to the whole company that diversified development is for real.”

“We are first-class citizens,” Moss said, referring to sometimes strained relationship between remote workers and a company’s headquarters.

Eric Brill, VP of eBay’s research labs, is also based in the Redmond office, and has been working part-time there since joining the company in 2009.

Moss said eBay will be looking to hire a range of technologists, from college graduates to senior leaders, including developers, testers, researchers, data miners and other positions.

While I was at the office on Tuesday, the mountains were peeking out from the clouds and were easy to spot from the floor-to-ceiling windows on the fourth floor. It was easy enough for everyone to have a window seat in the open-floor plan.

Although the employees just moved in on Monday, a sign outside the building already announced eBay’s presence. Inside, workers were busy putting the final touches on the space to make it feel like eBay. Primary colors of red, blue, yellow and green highlighted the office walls; with a bit of Seattle flair, conference rooms were named after Northwest tribes such as Puyallup and Quinault (and other names that might be difficult for San Jose-based employees to pronounce).

But missing were some of the perks that some recruits expect these day — no shuttles to and from work or fancy cafeterias, for instance. 

In fact, eBay has a long way to go to compare with what Google has done here. Since entering the market seven years ago, Google has hired more than 900 employees, spread across two locations, a spokesperson confirmed.

One office is in Seattle’s Fremont neighborhood; the other is on the Eastside.

The two offices are geographically divided by Lake Washington, which can be crossed by one of two floating bridges — or by boat, if you are crafty enough. The traffic bottlenecks make for a horrendously notorious commute, so having two locations that straddle both sides is a huge perk — like having offices in both San Francisco and San Jose.

Because of Google’s size here, many of its perks are similar to its Mountain View headquarters, including free meals prepared by chefs, frozen-yogurt bars and other, mostly food-based, luxuries.

In eBay’s case, the new digs are located deep on the Eastside, a couple of miles past Microsoft in Redmond, and roughly 15 miles from Jeff Bezos’s empire in downtown Seattle. Recently, Amazon relocated its headquarters to a brand-new campus in South Lake Union, a neighborhood being revitalized by former Microsoft executive Paul Allen.

Other outside companies that have also established sizable tech centers here include Facebook and Zynga. A couple others have gained offices through acquisitions. Electronic Arts, for instance, now has a large office here, after acquiring PopCap; EMC now has big expansion plans here, after purchasing Isilon.

And Geekwire, a Seattle-based technology blog, is good at keeping an ongoing tally, including recent moves into the area by Jawbone and SweetLabs, a San Diego-based start-up, based by Intel Capital and Google Ventures.

Two years ago, Facebook opened an office in the heart of downtown Seattle. It plans to move soon to a 27,000-square-foot space that will have room for about 135 employees. The 70 or so engineers in the office today have worked on projects such as video calling, the Facebook iPad app and other big issues, such as security.

Last April, social game maker Zynga opened an office in Seattle’s historic Pioneer Square neighborhood, hoping to absorb some of the game talent here, spawned from Xbox and Nintendo, and cloud-computing knowledge from Amazon. It has 50 employees today, but declined to say how many it planned to hire in the near future.

As with most of these companies, eBay believes it can find a diversity of talent here that can’t always be easy to hire in the Bay Area.

As a Seattle native, and having covered tech here for the past 12 years, including an eight-year stint at the Seattle Times, I might not be the most unbiased on the subject. But I’ve seen first-hand the breadth of talent here, from Microsoft, Amazon, Expedia, T-Mobile and many others, including a strong start-up pool.

Despite that, the local tech community often suffers from an inferiority complex when it compares itself with the Bay Area, which is much larger. Still, it seems that Silicon Valley companies are finding a number of excuses to travel north to drink from the area’s plentiful tech waters.

Motive

As the saying goes, people are motivated by either greed or fear. I think for many big companies, it’s more the latter. And Microsoft has a lot to be scared about.

If you poke behind its $71 billion in revenue and 39 percent operating margins, 30 percent of the goldmine comes from multiyear volume licensing agreements, which Microsoft calls Enterprise Agreements (EAs). According to industry analyst firm Forrester Research, “these profitable agreements bring in the kind of regular revenue preferred by financial-market analysts that monitor Microsoft’s performance.”

What motivates a customer to sign up for an Enterprise Agreement instead of simply buying Microsoft products, like Office, off the shelf? Well, historically, Microsoft pitched EAs as a way to ensure you can cover your workforce with Microsoft products at a discounted price level.

With companies investing in post-PC devices like smartphones and tablets, and evaluating alternatives to Microsoft productivity solutions, such as Google Apps or Salesforce.com, CIOs are starting to wonder whether renewing their EA is still a top priority.

In response to this threat, Microsoft is now pushing its Software Assurance (SA) licensing model, which allows customers to upgrade to newer products and also use its cloud services. The reason for the possible shift, Forrester says, is that “the twin revolutions of client mobility and cloud servers will kill device-based licensing, which is Microsoft’s existing model.”

So if Microsoft doesn’t embrace the cloud in a big way, the EA gravy train could come to an end.

Means

Apple is cool. Facebook is friendly. And Google isn’t evil. Yet look across a sea of computers in a typical company, and you’ll still see Microsoft everywhere.

And I’m not just talking about Windows. Microsoft has two key assets that will help it win the enterprise cloud:

• Office: While the Web and Web-based apps are fabulous for consuming content and even collaborating around it, Microsoft Office is still the standard in productivity to create corporate content. Love or hate those PowerPoint presentations, but they are still how most companies run. And for flexible analysis, Excel is unmatched. Heck, the Macintosh Business Unit at Microsoft (which is primarily Office for Mac) is a $350 million business on its own.
• Outlook/Exchange: For many workers, Microsoft Outlook (with Microsoft Exchange Server on the backend) is the first thing they boot up to start their workday, and the program they remain in all day long. According to industry analyst firm Radicati, 301 million corporate mailboxes used Outlook in 2010. Indeed, some companies have switched from Microsoft Outlook/Exchange to Google Apps and back, because users are too addicted to the interface and functionality of Microsoft Outlook.

So Microsoft still owns two of the key ways “knowledge workers” work with knowledge.

Opportunity

Microsoft isn’t working from a standing start. It actually jumped into the cloud relatively early in 2008 with its Business Productivity Online Suite (BPOS), a hosted platform for collaboration. While BPOS suffered from many challenges, mainly because it was based on a platform that wasn’t designed for the cloud, Microsoft made it clear several years ago that they are “all in” as a company in the cloud.

This year, after many delays and much anticipation, Microsoft finally announced its first platform built for the cloud, Office 365. The new version of Exchange is finally on par with its on-premise alternative. Microsoft SharePoint Online is now flexible enough to meet many enterprise use cases. And Microsoft Lync Online, a real-time chat and videoconferencing system, could be a game changer for company productivity.

In parallel, Microsoft is working away on Windows 8, its big bet on the tablet revolution. With all of Microsoft’s failed past attempts at mobility and tablets, some level of cynicism is expected. But some believe Microsoft’s conviction is real. If Microsoft even gets it 80 percent right on tablets, they will likely win in enterprises that are used to the manageability of Windows, and will be attracted to the inevitably deeper Office integration.

Conclusion

Don’t get me wrong: The innovation in the cloud is coming from all over, mainly from start-ups. For many of these start-ups and other non-enterprise organizations, a non-Microsoft approach will likely be the winner. But for the millions of you working in corporate America, Microsoft is probably the one bringing the cloud to a desktop near you.

Nick Mehta is CEO of LiveOffice and has served in senior operating roles in the enterprise and consumer technology markets for much of his career. He spent more than five years at Symantec Corporation and Veritas Software Corporation (now Symantec), where he served as vice president and general manager of the Enterprise Vault information archiving and discovery software business.

Additionally, the San Francisco-based company is announcing this morning that it has acquired Chatterfly, a mobile platform focused on creating loyalty, and DoodleDeals, a deal site focused on the East Coast markets that has distribution deals with Time Out New York Kids, What to Expect and Amazon-owned Diapers.com.

Terms of the deals were not disclosed.

Altogether, Plum District now operates in 27 markets and has a network of 300 salespeople — the company calls them “mom consultants.”

Plum District uses a multilevel marketing sales approach to source its deals, meaning that the same moms who are receiving the deals can also act as its salesforce (a la Mary Kay). The incentive for sourcing deals on anything from spa discounts to family outings is making money, of course.

The third round of funding was led by General Catalyst Partners; new participants in the round include Comcast Ventures and Duke University, with existing investor Kleiner Perkins Caufield & Byers also contributing. To date, the company has raised $30 million.

As part of the funding, Raul Vazquez, former president and CEO of Walmart.com, was named to the board of directors.

The capital will be used for geographic expansion, enhancing customer experiences and investments in technology.

The round also shows that while Groupon and LivingSocial may be the mainstream leaders and are capable of raising hundreds of millions of dollars, including yesterday’s news from LivingSocial that it had raised half of a $400 million round, there is still interest in companies that are focused on a specific niche.

Other more mainstream providers like BuyWithMe were unable to attract more financing. BuyWithMe was ultimately acquired by Gilt City at a massive discount.

Other companies are targeting mothers as well, including FamilyFinds in Los Angeles and even LivingSocial, which has a family-focused vertical.

Basically, the argument goes like this: Since the protestors in Egypt organized and collaborated via Facebook and Twitter against a government that didn’t understand the tools, companies that don’t embrace social enterprise and collaboration tools like Chatter will wind up like Mubarak — overthrown, or rather defeated by their competitors.

Yes it’s a stretch, but you certainly can’t fault Benioff on the passion and enthusiasm of his delivery. And since it’s a Salesforce.com event — Cloudforce New York — there’s no one to yank him off the stage.

There will also be news. Benioff will talk about a new mission for Radian6, the social media monitoring outfit that Salesforce acquired in March for $326 million. Expect to hear him talk about the “social marketing cloud” quite a bit.

What does that mean? Radian6 will be getting some new features around engaging and messaging sales leads and contacts on Facebook and Twitter and Web forums, and so on. It will have some powerful tools for filtering all the junk that people post and look for places where people are expressing clear sentiment or intent to buy, asking for guidance, or maybe looking for a deal.

In an example Salesforce showed me in a demo yesterday, if someone is looking for an online stock broker and asks their Twitter friends for a recommendation or about a specific broker they’re thinking of, that company’s social media team will see the message, classify it as a sales lead, and can reach out with special offers. The same thing goes for customer service messages. When someone is unhappy about something — say, their cable service — those posts can be automatically assigned to the right person for a follow-up, a special offer, or whatever the case may be.

People so often turn to Twitter and Facebook to give feedback or to express outrage about products these days, and companies are still figuring out how to respond and work with those platforms. It’s all about protecting brands.

Benioff’s talk takes place against the backdrop of a lot of uncertainty around Salesforce’s share price, valuation and growth prospects. Salesforce stock has been slapped around a bit following an earnings report that analysts didn’t exactly love, yet you can’t deny its revenue growth rates are impressive: Salesforce is on its way to being a $3 billion company next year.

The problem with Salesforce is how the market should calibrate its valuation. The shares have traded as high as $160 and as low as $109 this year, and closed yesterday at $110.58. Premarket sentiment this morning shows Salesforce stock headed up about 3 percent as of 8:08 am ET. Some people — namely hedge fund manager Whitney Tilson — have argued that Salesforce is fairly valued at about 75 percent lower than where it’s trading now. Expect Benioff’s comments today to give the shares a lift. But given how volatile the shares have been, don’t expect it to last.

That represents a drop in value of nearly 10 percent from the start of the year, but it has been an up-and-down-and-up-again ride. During the year, the shares have traded as high as $160 and as low as $109. In a word, it’s a volatile stock. The reason is that investors can’t seem to settle on what Salesforce is, and how to value it. The stock was killed yesterday — especially in after-hours trading, when it fell by as much as 10 percent — on disappointing quarterly results. And, frankly, management isn’t helping to clear up the picture one bit. More on that in a minute.

There was good news and bad news, but confusion appeared to reign over the minds of Salesforce investors, who couldn’t seem to get their heads around what’s going on with the company, and so assumed the picture must be bad. Because if it was good, it would clearly be unambiguously good, right? Today, they’re shaking it off: Credit Suisse lowered its price target on Salesforce from $140 to $135, but maintained a “Buy” rating. Deutsche Bank also maintained a Buy rating, and raised its target to $205, from $200. “Buy on the weakness,” argues RBC Capital Markets.

The Salesforce story is tricky. Revenue is growing, forward guidance is up; yet billings growth is slowing and cash flow from operations was down. As Brian Schwartz of ThinkEquity put it:

Salesforce reported mixed Q3 results as revenue, EPS, cash flow beat Consensus while billings growth of 29 percent missed both Consensus and our prediction for accelerating growth. The good news is that FY13 revenue guidance and Q4 billings guidance are well-above Consensus, which suggests strong business momentum, in our view, and should reverse a two-quarter slide of decelerating billings growth. However, billings grew slower than revenue for the second consecutive quarter and Q4′s guidance assumes this trend could continue for at least another quarter, with tougher comparisons ahead.

So, what is a Salesforce investor to think?

CEO Marc Benioff took to CNBC after yesterday’s results, appearing, as he often does, on Jim Cramer’s investor-tainment show “Mad Money.” Cramer — who has been known to admit on the air that, where Salesforce is concerned, he’s “drinking the Kool-Aid and likes how it tastes” — did his best to pepper Benioff with reasonable questions, which Benioff tended to dodge. Kicking into “master salesman” mode, he stuck to his well-worn argument that Salesforce is a company that has to spend money to keep growing. “We’re trying to aggregate market share and revenue, and we’re totally focused on top-line growth,” he told Cramer. “If we were a company focused only on earnings, we wouldn’t be growing as much as we are.” That, he said, would be “the wrong thing to do in our life cycle.”

Benioff also managed to lob a little grenade at his former boss, Larry Ellison, the CEO of Oracle. Cramer mentioned the September kerfuffle, during which Benioff was pulled from giving a speech at an Oracle customer event in San Francisco. Benioff instead crowed about winning videogame concern Electronic Arts as a new Salesforce.com customer, replacing Oracle.

So, then, how should investors evaluate Salesforce’s prospects going forward, using, say, a once-reliable metric like the number of customers, Cramer asks. That’s no longer a good indication, Benioff says. After all those acquisitions that Salesforce has made in the last year — Heroku, Radian6 and Manymoon — Salesforce’s base of customers is vastly different. Instead, he says to rely on the company’s guidance.

And that guidance is pretty good. Salesforce expects to bring in $3 billion in sales next year. Impressive, for sure. But with that sales growth comes growth in operational expenses, and a lot of effort and muscle are being put behind products with uncertain prospects — like Chatter, which Benioff routinely portrays as strategically important, but which has many competitors, including Yammer and Jive Software, to name but two.

Trust the guidance, Benioff says. Okay, but that’s another way of saying “trust me.” If that makes you feel a little uncertain, you’re probably not alone. The video clip of Benioff’s 10-minute TV appearance is below:

Excluding charges for compensation and other items, Salesforce reported earnings of 34 cents on sales of $584 million, up 36 percent. The problem was the quarter’s billings — the sum of revenue plus the change in deferred revenue was $567 million; 3 percent, or nearly $20 million, off the consensus.

But never fear, says CEO Marc Benioff. The company is well on its way to breaking the $2.3 billion revenue barrier, and it would be the first cloud software company to do so. The company also said it expects fourth-quarter sales in the range of $620 million to $624 million, which would be ahead of the consensus of $610 million. And it said that its expects earnings of 39 to 40 cents, which is lower than analysts had expected by a penny. One the brighter side, guidance for the 2013 fiscal year, which starts in February, was ahead of the consensus by 4 percent.

The larger question is the size of the cloud opportunity, for which Benioff is the ultimate salesman, spokesman and advocate. As successful as Salesforce has been in disrupting the traditional software model and giving companies like Oracle and SAP the occasional headache, what remains unclear is how much new services like Chatter.com — the social enterprise and collaboration features that Benioff can’t seem to stop talking about — are contributing to the top line, and whether they will justify the cost to build them.

Then there’s the valuation. Salesforce finished the regular session trading at a valuation of 615 times its trailing earnings, and it has been in sky-high territory for some time. Last month, Salesforce stock nose-dived after comments from hedge fund manager Whitney Tilson on CNBC that Salesforce might be due for a 75 percent drop, a la Netflix. Salesforce shares fell nearly 5 percent that day, to $123.

As I write these words, it’s trading six dollars lower than that, at $117. Tough day.

“A good company but an unrealistic valuation” is how Tilson, the founder and managing partner of T2 Partners and the Tilson Mutual Funds, summed it up in an appearance on CNBC today (video below), arguing that Salesforce could be the next company to fall by 75 percent, a la Netflix.

Hype about the cloud, pushed by CEO Marc Benioff, whom Tilson called a “world-class salesman,” is giving way to the fact that Salesforce has what he calls “a nice app to help mid-market companies manage their sales force.” Its other lines of business — including Chatter, its social application, and its plans for pushing into larger-sized enterprise companies — just don’t justify its huge market cap, which was until today north of $17.5 billion. Today, Salesforce’s market cap was about $800 million smaller as the shares fell by $6, or 4.6 percent, to $123.56.

Tilson is betting that Salesforce’s fair value is about 75 percent lower than its current trading range, which, based on Tuesday’s closing price of $129.56, would put it at about $33 a share.

It’s been hard not to wonder when the Salesforce valuation rocket was going to run out of fuel. Two years ago, Salesforce was trading at $59 a share, and in July peaked just above $159 a share, amounting to a surge of about 170 percent. But since the start of 2011 the shares are down 7 percent (which in fairness includes today’s drop), while it has traded at a seemingly ridiculous 600-plus times trailing year’s earnings.

Benioff and Salesforce have usually had a friendly platform at CNBC. Jim Cramer, the exuberant two-fisted host of its “Mad Money” investertainment show has hosted Benioff numerous times and even admitted that while Salesforce seemed like “Kool-Aid,” he was not only drinking it, but “liked the taste of it.”

Indeed, Salesforce is growing its sales — Benioff recently said it’s on track do $2 billion in sales this fiscal year — but it has been doing so at a loss. It reported a $4.3 million loss on $546 million in sales in its July quarter. Benioff has argued that Salesforce needs to spend now to grow its customer base and to try to take business away from the likes of Oracle and SAP, that he says “don’t get the the cloud.” We’ll see about that. Salesforce next reports quarterly results on Nov. 18.

The company’s main app, also called CloudTalk, is a social messaging product like the recently sold GroupMe. But the difference is CloudTalk focuses on threaded conversations of short voice memos, arguing that voice is easier and more meaningful than text. CloudTalk has about 200,000 users.

CloudTalk’s new app, Let’s Talk, will be a private collaboration tool like Yammer or Chatter. Except instead of multiplatform support and integrations, Let’s Talk is mobile-first — and for now, mobile-only.

The Android and iOS Let’s Talk app has similar features to CloudTalk — threaded voice messaging, plus text and multimedia — but it’s about private communication. It’s a much more basic offering than the competition, but perhaps an easier fit for informal and on-the-go conversations.

This version is free, but CloudTalk wants to release Let’s Talk as a private-label app for customers as well. It will also charge for features such as voice transcriptions.

What’s funny is many of these developers (in fact, all the examples I just used) run their own app platforms. So everybody’s an app, and everybody’s a platform.

Xobni’s offering has two distinctive aspects: it offers developers access to the millions of corporate Outlook users, and it is built using the open standard OpenSocial APIs so Web app developers will be able to easily extend their products to the desktop.

Xobni said it plans to bring the Gadget Store to its own Web and mobile products, but did not give a date.

That’s the vision for CapLinked Inc., a new start-up that wants to be the go-to place for setting up and closing deals, as well as managing portfolio companies after the close.

The company has raised $525,000 in angel funding from Peter Thiel, Dave McClure’s 500 Startups; Joe Lonsdale, co-founder of Palantir Technologies; Aman Verjee, chief financial officer at Sonos; and David Anderson, managing partner of 7th Rig. CapLinked previously raised about $400,000 in a financing from individuals in 2010.

CapLinked co-founder and Chief Executive Eric Jackson is a former vice president of marketing at PayPal Inc. and knows investors Thiel, McClure, Lonsdale and Verjee, all formerly of PayPal.

Read the rest of this post on the original site

“We haven’t pushed it real hard in business, and it’s being grabbed out of our hands,” Steve Jobs said last year. “And I talk to people everyday in all kinds of businesses that are using iPads, all the way from boards of directors that are shipping iPads around instead of board books, down to nurses and doctors in hospitals and other large and small businesses.”

If Apple’s not pushing the iPad into the enterprise market, how is it getting there? Carried in by the rank and file–just as smartphones were. Employees are buying iPads, and other mobile devices as well, and enterprise is increasingly supporting them on the back end and sometimes even subsidizing them, or their use.

In other words, the consumer market has evolved into a de facto evangelist for Apple in enterprise, a lucky development for the company, which is uniquely positioned to benefit from it.

“This trend should mean that the key to corporate success over the long term is being strong in consumer devices that you use everyday,” says Barclays analyst Ben Reitzes. “As a result, the purchase pattern is shifting toward laptops, tablets and smart phones being bought by consumers (all key areas of Apple’s strength), while direct sales of corporate products have shorter and smaller upgrade cycles. We call this trend the “Consumerization of IT,” which benefits companies with strong consumer appeal and customer service reputations….We believe Apple has a large lead in terms of driving this trend, while it presents challenges for traditional PC vendors, in our opinion. We believe the iPad’s success in the enterprise will help Apple make further inroads into the corporate market with other products eventually.”

Interesting, this vision of the iPad as Apple’s Trojan Horse for enterprise, particularly since it appears to be a natural evolution of the consumer market. And if it accelerates corporate adoption of the device as well as other Apple hardware over the long term–well then, it truly is magical and revolutionary.

Etacts, which participated in the Y Combinator program earlier this year, offered a free Web app and plug-ins that helped Gmail and IMAP users manage their email relationships by showing information about their contacts’ social Web activity and communication history.

The start-up, co-founded by recent Duke grads Howie Liu and Evan Beard, had raised $650,000 in funding from Ron Conway of SV Angels, Eric Hahn of Inventures Group, Jim Young from Hot or Not, Lorenzo Thione and Barney Pell from Powerset, Joshua Schachter from Delicious, and YouTube co-founder Jawed Karim. And I believe Ashton Kutcher was involved as well.

Etacts will no longer accept user sign-ups as of today and will delete all user data effective January 31, it said in an email sent to users.

Etacts’s product was quite similar to that of another Y Combinator company, Rapportive. Salesforce also just bought another YC company this month, Heroku, for $212 million in cash.

Bessemer has an impressive list of e-commerce bets: It was an investor in Quidsi, the parent company of Diapers.com and Soap.com, as well as in Yelp. And personally Ferrara is involved in other deals, such as Yodle, which helps local businesses market online, and OMGPOP, a social gaming company. Yesterday, it announced an investment in Shopify, which provides tools to help businesses sell products online quickly.

eMoney: So, you’re background is actually in computer programming? Does that help you evaluate deals?

Ferrara: I was a software engineer for many years, using Java and Microsoft languages, and I had the pleasure of authoring an O’Reilly book on Web services [O’Reilly & Associates’ "Programming .NET Web Services"]. I don’t know if it helps me, but it causes me to gravitate toward good technology and product teams.

Your most recent investment is Shopify?

Yes, we just closed last week. I just loved the team and was impressed by the product and the tech DNA that these guys had. It provides a commerce platform that can quickly serve small as well as larger businesses. They have about 10,000 to 11,000 customers as of today–and they’ve watched a lot of small businesses grow into larger enterprises.

My view of this whole small- and medium-sized business space is that they have a lot of the same pain points as large enterprises….Shopify delivers 80 percent of the functionality of larger, more expensive and cumbersome e-commerce software packages at a fraction of the cost. It offers a range of very sophisticated features around inventory management, marketing capabilities, as well as shipping and fulfillment–all of the capabilities you would get in an expensive package. They are democratizing the whole expensive enterprise software functionality.

E-commerce is a mature business that’s been around for a long time. Is there more innovation that’s happening in the space?

I think the market that Shopify is going after is less about taking share from existing players, and more about the next generation of businesses that are getting started today. A lot of those are mainstream local retailers.

Let’s say a trillion-plus has been spent in local retail, and it’s starting to move online, so that’s a big business. It won’t fully move online, but the local retailers need something besides their Main Street shop. Plus, the retailers want to tie in their physical locations, and use phones to manage their store, and take advantage of [Shopify's] technology to manage their business, whether its physical or online.

An Apple store was the first retail experience I had where I could swipe my credit card anywhere in the store–there was no waiting in line at the register.

Why can’t all retail experiences be like that? Shopify is going to do that, by moving everything to the cloud, whether you are going to a physical store, to the Web or on a mobile device. It should be one and the same.

What do you think of the local e-commerce market, especially given Google’s reported $6 billion offer for Groupon?

From what I’ve seen from afar, Groupon seems like a big business. If the rumors are true, it’s interesting to see Google having an interest. I look at them mostly as a self-serve ad company, which is mostly about technology and automation. Groupon has built a big local salesforce–it’s the inverse of Google’s approach.

I think it says a lot about how Google must be thinking about growth opportunities. To get to the local market, you do need the local salesforce. Self-serve works for a portion, but at the end of the day you need a sales channel.

So, you do think Google needs a local salesforce?

I’m guessing, but it strikes me as something that could be very compelling when [Groupon is] combined with [Google's] machinery. You could leverage each other’s data to do better at targeting for serving ads.

What about all the Groupon copycats?

Time will tell. It’s one of the questions I’ve thought about a fair amount. I don’t know. We have not invested, and clearly there’s a lot of smart people who think there are alternatives and a big enough opportunity to support competitors. I wouldn’t be surprised if it’s big enough. There’s a number of players doing quite well. It’s a good time to be No. 2 to 4.

The big question is, how valuable will it be for the end-business over time. There’s not a lot of historical information on that.

What’s the role of mobile in e-commerce going forward?

For a lot of the local businesses, [mobile] fits so perfectly, and it’s got to be a huge part of any local product offering. A lot of the local merchants are mobile, as well. They don’t have large staffs to rely on and are wearing lots of hats. They want to provide service to their customers on the go–the iPhone and Android really enable that. That’s why Shopify made an iPhone version that helps the merchants to do that.

On the consumer side, they’ve also seen an increase in willingness to make purchases on mobile. It’s expected to grow exponentially, and we have some pretty good data on Shopify. Purchases on mobile are starting to grow quickly.

What about virtual goods? You are an investor in OMGPOP, a social gaming company.

They monetize and generate a good portion of revenues from virtual goods….One of our former investments is Playdom and they did a fantastic job. [Yes, they did. In July, the Walt Disney Company acquired Playdom for $763 million.]

We are bullish on digital media and gaming. We are seeing more and more game mechanics being applied to other business models. For instance, companies in financial services or online education are having their products include game mechanics to drive behavior and make the product experience more intuitive.

Still opportunities for start-ups, with giants like Amazon around? What would be your advice?

There’s a tremendous opportunity internationally. I think it would be challenging to go head to head with Amazon in certain categories. You can’t differentiate on price, and you can’t differentiate on customer service because they are impressive. This isn’t my area of expertise, but as a firm, we see that there’s a space for international e-commerce companies. They understand the local market and the nuances of the local market, and can be in an area that has been overlooked. If they can get scale, they have a chance.

Or niche opportunities, like Diapers?:

That’s a team that did a fantastic job. They provided a great level of customer service. Whenever I told people we were investors, strangers or friends would say, “I love it.”