At today’s Dreamforce show the big news was that salesforce.com has acquired Heroku for $212 million in cash. Heroku is a Platform-as-a-Service offering for Ruby on top of Amazon Web Services. This is salesforce.com’s largest acquisition ever, and is more dramatic considering that it is estimated that Heroku has less than $10 million in revenue.
Here are a few thoughts on the acquisition:
- salesforce.com has the Force.com platform for building apps but it requires a non-standard Java-like language that hasn’t had much adoption.
- salesforce.com has the VMForce.com initiative in private beta which will run Java apps but Java apps are much more cumbersome to write compared to Ruby, PHP, and Python.
- salesforce.com just launched database.com for a true cloud database offering but has a $10/user/month pricing in addition to storage costs which make it unlikely to catch on.
- Heroku offers a true PaaS with pricing inline with the normal hosting industry making it the first real initiative that will grow salesforce.com outside their current core uses.
- Heroku is built on Amazon Web Services which offers virtual private servers in the cloud. Heroku takes the Amazon cloud instances and sub-divides them further into even smaller instances as well as takes away much of the complexity. It is brilliant.
My take is that this is a credible move requiring at least three years to prove worthwhile. It is super risky and brilliant at the same time.
David Cummings on Startups 
Sorry to be anonymous on this, but as a small correction, they are doing WELL over $10MM in rev (based on run rate).
Note: run rate is the revenue attained if you took last’s month revenues and extrapolated that over the next 12 months. Revenues are generally trailing twelve months revenue. You could have nine million in trailing twelve months revenue on a $20 million run rate and still be under $10 million in revenue.