Salesforce acquisition of Datorama is more important than Google acquiring Waze

This Monday, Salesforce.com announced it agreed to buy Israel-based marketing analytics company Datorama for over $800 million in cash.

Datorama is one of many global mega-acquisitions of SaaS companies this year, but it still stands out given its strong efficiency. The company raised less than $50M throughout its history and grew very efficiently. At the time of acquisition, Datorama was rumored to generate about $100M of annual recurring revenue and still had $30M of cash in the bank. This means that the company used only about $20M to reach such a large revenue scale and an $800M exit. This growth efficiency is (or at least used to be) a major characteristic of Israeli startups.

Datorama is also not the largest acquisition of an Israeli startup. Israel has seen larger acquisitions over the years such as the $15.3B acquisition of Mobileye by Intel last year, and Waze $1.1B acquisition by Google in 2013. But Datorama is the largest acquisition ever of an Israeli SaaS company. And therefore, I believe, is one of the most important acquisitions in the history of the Israeli startup ecosystem. Even more than Waze was at the time.

Waze mega acquisition in 2013 did not generate a wave of new consumer startups in the local ecosystem. We have not seen other Israeli-based consumer startups reach a similar scale ever since, and early employees of Waze have mostly stayed there, and not gone out to build the next generation of consumer startups. The acquisition of Waze was more of a (significant) blip in the history of the local startup ecosystem.

But Datorama is a different story. There are many other fast growing SaaS companies in Israel such as JFrog, SiSense, Zerto, Monday, Appsflyer, Yotpo, and Cloudinary. Datorama’s $800M clearing price sets a new standard for these companies. I am sure many Israeli SaaS startup founders read the news this week and thought to themselves “I can do better”. The same goes for local investors who are going to push their portfolio companies even further, now that there is a clear role model for a large SaaS exit.

But it is not just the shift in mindset, but also the talent. Unlike some of the other mega exits, Datorama is more of a “typical” SaaS company. Its model is more replicable across other SaaS startups. Early employees of Datorama, who have seen the company scale, will eventually leave Salesforce and join other Israeli startups, helping them scale too. Previous companies that had mega exits such as Mobileye, Waze, and Trusteer, were mostly more unique and therefore did not generate a pool of talent that kept enriching the Israeli ecosystem.

Datorama, however, is likely to be the first out of a large wave of successful Israeli SaaS companies in years to come.

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Partner @ Bessemer Venture Partners

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Amit Karp

Amit Karp

Partner @ Bessemer Venture Partners

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