Salesforce.com’s (NYSE:CRM) burst of success coinciding with Silicon Valley’s boom in startups is no coincidence. Since it went public in July 2004, Marc Benioff’s cloud computing and social enterprise provider has seen more than 900 percent growth in its stock price, giving investors a rather amazing return on investment.
Salesforce.com, regarded as something of a Software as a Service pioneer, made the most of the startup torrent over the last few years by offering a service that was tailored to the psyche of the new entrepreneur: we’ll help you build the business organization of a large-scale company without the same high cash outlays. This pitch turned salesforce into a behemoth that now boasts a $22.2 billion market capitalization.
Then the recession came along in 2008, and Silicon Valley went into icy hibernation for a short while. Despite the economic climate, the IPO markets have slowly opened up again this year for the first time since 2007. The surge of new public companies has come with a fresh boost for new SaaS companies as well. Newcomers like Freshbooks and Zoho are now following up with similar business plans to what salesforce.com had back in its earlier days.
In fact, the continued watchfulness of VCs is the biggest reason startups need to rely on the cheaper SaaS tools and apps to compete with their larger competitors without sacrificing efficiency. You can’t do away with the need for competent business management, but there is much less scope now to be wasteful while achieving it…and early-stage investors love the leverage these cheaper solutions offer for their small businesses.