Salesforce to Buy Datorama for a Reported $850 Million

Price makes startup fourth-largest Israeli exit ever

Effie Cohen (L) and Ran Sarig (R),the co-Founders of Datorama
Ofer Vaknin

At 4 P.M. Monday, the staff of Datorama gathered in the startup’s new Tel Aviv offices and were given T-shirts emblazoned with the company’s logo. As it turns out, it won’t be long before it becomes irrelevant: The meeting was called to announce that the company was being acquired by Salesforce.com of the United States.

Datorama’s employees have every reason to be proud: In the six years since the company was founded they have built it into a business that has yielded the fourth biggest exit in the history of Israeli high-tech.

Details of the acquisition were not disclosed, but sources estimated Datorama fetched $850 million in cash and shares. For Datorama’s investors, who put just $50 million into the company, it spells a huge payout.

It will also be a huge payout for the employees, because unlike most startups they are major shareholders, holding about 15% of the shares altogether.

In spite of the news, the atmosphere at Datorama Monday was calm, except for the nearly unbroken sounds of phone calls coming in from people congratulating founders Ran Sarig, Katrin Ribant and Efi Cohen.

Israel's biggest exits (non-public companies)

“When you build a company like ours in the enterprise Saas segment, the best feeling that can be is when the person who wrote the play book, Mark Benioff, CEO and founder of Salesforce, gives you validation,” Sarig told TheMarker, referring to software as a service, licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted.

Cohen added, “They bought a business, not just the technology. What characterizes this deal is that it puts a spotlight on the center in Tel Aviv. Most of Salesforce’s development personnel are in the U.S. while here we have 130 employees, most of whom are developers.”

Founded in 1999, San Francisco-based Salesforce is a cloud-based applications software company used in customer-relationship management. In Israel, it has a 60-person research and development center.

As Salesforce has come to dominate the market, it has been seeking new segments. Datorama’s cloud-based sales and marketing software is used by advertising to gauge the effectiveness of their campaigns on sales revenue.

Datorama answers a growing need in the multi-channel world of digital marketing. Marketing managers typically use a multitude of marketing platforms. They might, for example, advertise simultaneously on YouTube, Google, Facebook, Snapchat, news websites, newspapers and broadcast television.

And if that’s not enough, in each of these channels they may conduct several different campaigns for different brands.

Datorama’s customers include PepsiCo, Ticketmaster, Unilever and Foursquare. Its software has also been integrated into Amazon’s voice-activated assistant Alexa.

Formed in 2012 and based in New York, where Ribant works, Datorama has enjoyed exponential growth and reportedly has annual revenues of the tens of millions of dollars and a global workforce in 17 countries of 400, a number that has doubled in each of the last three years.

Nevertheless, the company received little attention from the Israeli media and few Israelis have heard of it.

In an interview with TheMarker two years ago, Sarig said his company had no plans to be acquired or conduct an initial public offering. What changed, he said Monday, was that Salesforce approached Datorama and the latter was interested.

“We saw a company that has many similarities to us in terms of culture and the type of people in it — it was our role model,” he said.

Sarig and Cohen said they were comfortable with Salesforce CEO Benioff’s reputation for involving the company in social issues, for instance a threat to boycott the U.S. state of Georgia two years ago over a so-called religious freedom bill that would have let businesses refuse service to same-sex couples.

Benioff is also willing to cover the cost of closing wage differentials between male and female employees at the companies Salesforce acquires.

In response, Sarig pointed to Datorama’s “social” assets. “We have one female founder, and the percentage of women in management is 30%. A significant part of the company belongs to the employees, and that’s the thing we’re most proud of here. “