A String of SaaS Pearls

A month ago someone mentioned to me that Citrix’s acquisition of seemingly random Software-as-a-Service (SaaS) was their “string of pearls” strategy. The idea is that it’s a collection of fast growing businesses that operate on their own. Citrix has acquired GoToMeeting (it has grown into one of the largest SaaS businesses in the world), ShareFile (founded by a Duke ’99 grad), and Cloud.com, among others. VMWare, in a similar fashion, has acquired seemingly unrelated SaaS companies like SlideRocket, SocialCast, and more. A string of SaaS pearls.

While driving home tonight there was a commercial on the radio for South Walton beaches in Northwest Florida. The area, known as 30A for the highway it’s on, has a number of cute little communities with Seaside being the most famous. In a similar fashion, the voice on the commercial used the same phrase “string of pearls” to describe the adjacent communities.

SaaS represents such a great business model with strong recurring revenue, high gross margins, and an efficient delivery method. The string of pearls approach makes perfect sense precisely because of the business model and value brought to the customer. Next time you see a series of seemingly unrelated acquisitions, ask yourself if it is a string of pearls.

What else? What are your thoughts on the string of SaaS pearls approach?