The many winners of Salesforce’s MuleSoft acquisition

Salesforce’s recent acquisition of MuleSoft has generated a lot of well-deserved attention in the technology and investment community.

There were numerous reactions from people trying to find the 6.5 billion reason for Salesforce deciding to pay ~22x the annual revenue of MuleSoft. It’s massive. I would really be pleased to have a peak at the math model behind it. For sure it’s not simple, but somehow I anticipate it’s simpler than what most of us, the spectators, are thinking.

From the investment point of view, there is a rather interesting hint shared by Business Insider that in the US “The new tax law has freed up some $470 billion in overseas cash for the largest tech companies, and many may be looking to spend it on acquisitions”. Sudden availability of large sums of cash definitely makes any investment decision easier, but it does not create a driver for random acquisition.

The importance of the culture and the brand

Being privileged to know both Salesforce & MuleSoft decently (among many other companies, but not all of course), I want to share two aspects that I find important, but which somehow have received low coverage in the media thus far.

There is an unquestionable cultural match between the two companies. I am consciously highlighting the value talk and employees’ sentiment after the deal had been announced. The business & marketing language is incredibly in sync, hence any discussion in the boardrooms, while making and finalising the deal, was most likely proceeding very smoothly. More important for me is the sentiments gathered after talking to a number of Salesforce and MuleSoft employees. All of them, and most of them even speaking for their close associates at work, are super-positive about the deal. This makes the likelihood of a massive MuleSoft employee exodus scenario close to zero.

The second dimension is MuleSoft’s brand value potential. I have had no success in pinpointing any publication done on the brand value potential of the various products/companies living in the hybrid integration space. Based on my personal experience, focused on the European market, I see MuleSoft sitting unchallenged on the throne, in the context of brand value potential, compared to all the companies sitting in the Gartner Magic Quadrant for hybrid integration platforms. This view is to a large extent influenced by talking to many customers, prospects, my personal network, but more importantly by the sentiment within the application integration development community. Leading (likely) the largest practice of integration experts in The Netherlands, I am engaged in the talent management & hiring process on a daily basis. A large percentage of our employees and our imminent joiners have set a personal goal to become MuleSoft AnyPoint experts with the simple objective to increase their personal market value. That is a big win for MuleSoft and a big hint to all others in the hybrid integration platform space.

“A large percentage of our employees and our imminent joiners have set a personal goal to become MuleSoft AnyPoint experts with the simple objective to increase their personal market value.”

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Ratko Popovski

The collateral winners

Addressing some of the observations on why Salesforce decided to acquire MuleSoft and not other “more obvious, cloud-soulmate” targets, I have adapted slightly the famous statement by Hal Abelson to fit today’s world of the digital economy.

“No matter how complex and polished the individual applications are, it is often the quality of the glue that most directly determines the power of the digital application network.”

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Inspired by
Hal Abelson

Let’s address the definition of the glue and the quality of the glue.

The British producer Tim Bevan stated that “It’s very rare–almost never–that a good film gets made from a bad screenplay.” But the opposite is very much true. From a good screenplay you can make a bad movie.

I am sure Salesforce can point to many digital programmes where its software was misused for poor application integration which didn’t deliver the value expected. Salesforce has decided to do something about it and their first step was to buy, using the screenplay/film analogy, a good screenplay. Whatever criteria Salesforce used for selection of a hybrid integration platform, it’s just clear that being “born in the cloud” was not the one that weighed the most. As Massimo Pezzini from Gartner has put it in his post, there are no losers around, as the deal has fashioned that “Integration, the reportedly uncoolest thing in IT, ultimately turns out to be the hottest!”.

I am in full agreement with Massimo that “integration and API technology are foundational enablers for Digital Business”. Fact is that the tooling a.k.a. “the screenplay” itself is simply not enough for building a complex digital ecosystem. In the context of application integration, it’s all about the quality of the application integration implementation. This is where the crew, the true heroes, the application integration and API management experts, and the companies behind those experts like Devoteam Netherlands, excel. Through the acquisition of MuleSoft, Salesforce has in a way validated the 22+ years of Devoteam’s DNA. Does it make me a winner? It sure feels like it.