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Does Salesforce Take on Microsoft and Google with Quip?

Salesforce has entered into an agreement to acquire Quip, a startup developer of a team-based productivity platform that competes in the same space as Microsoft Word and Google Docs, for $582 million, plus the value of Salesforce's previous investments in the company. 

"Salesforce and Quip share the same philosophy about software: it should be in the cloud, built for the mobile era, and be inherently social. Salesforce pioneered the shift to enterprise cloud computing—and Quip has been working since 2012 to reimagine a productivity platform for teams that allows them to be more connected, more collaborative and get more work done,” said Bret Taylor and Kevin Gibbs, two former Google engineers and the co-founders of Quip. “As part of Salesforce, we will be able to expand our service more quickly and reach millions of people all over the world — which has been our mission since day one. And, we’ll be able to extend the Salesforce Customer Success Platform in powerful new ways with our next-generation productivity capabilities. The possibilities of mixing data, content, and communication are amazing.”

For those who aren’t acquainted with Quip, the company develops a platform that incorporates communication and content. Teams can collaborate directly without the need for email or other communication tools due to a built-in chat feature which comes with documents and spreadsheets created on Quip. Users can add comments, images and other information directly to a document or spreadsheet, and receive notifications about changes. The platform also enables one-to-one direct messaging chats between team members through its cloud-based technology. Quip provides a variety of management tools as well, including the ability to share documents and spreadsheets; develop task lists; import and export Microsoft Office, Google, Evernote and other documents; maintain edit history; do searches; and more. Those documents and spreadsheets can be encrypted and can be organized in folders and groups with their own permissions.
 

Quip claims that it has 30,000 customers and millions of users globally, including Facebook, Electronic Arts, CNN, and New Relic. It offers a free version and premium versions for small companies at $12 per user per month and larger enterprises at $25 per user per month.

Is Microsoft Friend or Foe?


Having its own word processing tool will allow Salesforce to rival Microsoft Word and Excel, and Google Docs. Although It’s not clear how much revenue Quip brings to the table, the three-year-old startup claims to have more than a million users and boasts that “thousands” of teams have adopted its services.

As you may recall, Salesforce went head-to-head with Microsoft recently in bidding wars over LinkedIn. Salesforce lost as Microsoft acquired the social network in an all-cash transaction for a jaw-dropping price of $26.2 billion. Many ask if the acquisition of Quip is a response to the failed attempt to purchase LinkedIn as the platform is a competitor of Microsoft Office and Alphabet’s Google Docs. It may be a coincidence but if it was the motivation behind the acquisition, nobody would be surprised as Microsoft has also been building and acquiring more products to compete with Salesforce on the CRM front. 

On the other hand, Salesforce has in place a “strategic partnership” with Microsoft as Software-as-a-Service CRM provider has rolled out a new integration with Microsoft designed to give business users the ability to search, view, and update all Salesforce CRM entries associated with their email contacts from Outlook. Therefore it’s hard to tell that Salesforce would use the acquisition to take on Microsoft, but no doubt that Quip will be used to enhance existing offerings. 

Regardless, one of the things that prompted CEO Marc Benioff to spend a hefty price on a startup with only 45 employees is Quip CEO Bret Taylor, as he was the co-creator of Google Maps, founder of social network FriendFeed (which was acquired by Facebook in 2009) and later the chief technology officer of Facebook, where he created the "Like" button. Taylor also joined Twitter's board last month. In addition, Co-founder Kevin Gibbs also hails from Google, where he created Google Suggest. He is now Quip's head of engineering. This tells us that Salesforce’s acquisitions are not just about the product, but the talent that comes with it.

This year alone, Salesforce has acquired seven companies, including Demandware, which cost $2.8 billion. Salesforce hasn’t commented on whether Benioff will continue his buying spree.

"A platform has to be universal and all-encompassing because its mission is to be a complete one-stop shop for customers," said Denis Pombriant, Managing Principal at Beagle Research Group. “Competitors Microsoft and Google both have similar products, so Salesforce "had to be able to check off that box. While Microsoft Word is ‘fine for shorter documents’, it's tough to wrestle with when you want to do more,” he added. "I am betting they think Word is long in the tooth and document creation needs to be reimagined."

Macquarie Research Analyst Sarah Hindlian stated: “While there are many directions Salesforce can take Quip, we believe this acquisition positions Salesforce, should it choose, to offer some business productivity tools (a market historically dominated by Microsoft's Office), while the collaboration, communication, and workflow management tools may address growing enterprise demand for centralized collaboration tools demonstrated by the rapid rise of collaboration start-up Slack. For example, Quip can enable sales teams/managers to collaborate on sales pitches, deals and more. We find the purchase of a vendor that fits nicely with business process tools - the market where Microsoft leads with Office - particularly interesting following the competitive bid between the two companies over LinkedIn, which we believe was motivated by the need for more sophisticated/machine learning empowered lead generation tools for both Salesforce and Dynamics CRM Online. It begs the question: is Microsoft friend or foe? We can see either, and while it remains to be seen, we are certainly seeing some early signs of cross-pollination.”

"Quip makes sense as an addition to the Salesforce product suite, filling in the office productivity tools niche, which Salesforce did not already have covered in a meaningful way," said Susan Kimberlin, a Tech Investor and Former Salesforce Director of Product Management.

However, the acquisition also begs these questions: Is there any value in getting into the Microsoft Office and Google Docs scrum? Can this deal differentiate Salesforce? Will Quip add beyond incremental functionality into Salesforce's real-time collaboration vision? Although what Benioff intends to do with Quip remains uncertain, we will shed light on what it means for Salesforce’s existing stakeholders and competitors more in subsequent posts as events unfold. 

 

Venus Tamturk

Venus Tamturk

Venus is the Media Reporter for CMS-Connected, with one of her tasks to write thorough articles by creating the most up-to-date and engaging content using B2B digital marketing. She enjoys increasing brand equity and conversion through the strategic use of social media channels and integrated media marketing plans.