News today comes from Vlocity (as an aside, every editor on Earth gets stressed at that intentionally misspelt name), the company powering Salesforce into a host of new vertical markets. The company, already performing admirably, has just picked up $50 million in funding led by Sutter Hill Ventures and Salesforce Ventures.
That this announcement is occurring on the eve of Salesforce’s DreamForce conference is no coincidence -- Vlocity is touted by many as being the company that could launch the next Veeva. For those unaware, Veeva is a pharmaceutical and life sciences tech company that IPO’d a couple of years ago.
What was special about Veeva, however, was that their product was built completely on top of Salesforce’s platform. It was seen as very much of a proof point that vendors could build large and successful businesses completely on the back of someone else’s technology stack.
Vlocity is trying to do similarly; the company is the embodiment of Salesforce’s stated aim to deliver more industry-specific offerings. Specifically Vlocity is offering vertical solutions in the communications and media, insurance, health insurance and public sector industries. It seems to have seen some real success in its short life -- customers deploying Vlocity Industry Cloud applications include communications companies such as Sky Italia, TELUS, Fastweb, KPN and CellCom Israel; Insurance companies such as New York Life, MetLife and Principal Financial; Health Insurers such as Anthem, Harvard Pilgrim and CaliforniaChoice; and government agencies in localities including New York City, Washington D.C., Toronto and Vancouver.
Vlocity's entire business is built around the premise that there is value in building specific vertical solutions built on top of Salesforce. And that the vendors that deliver those vertical solutions will, like Veeva, build real and sustaining value for themselves, outside of the value they build for Salesforce.
The company has something of a storied history. It is actually chock full of people who were integral to the success of Siebel, another CRM player (now owned, and largely forgotten, by Oracle). Siebel was a company that had extensive success-building vertical-specific offerings, and the Vlocity founders decided to replicate this on a cloud platform. Craig Ramsey, the co-founder of Vlocity, was ex-Siebel and actually spent 12 years on the board of Salesforce. This is a company that has deep ties with Salesforce and a deep history in vertical enterprise solutions.
Anyway, back to the funding round. Interestingly Accenture, a company that, after all, earns huge revenue from helping organizations leverage Salesfroce products, participated in the round. Joining them were New York Life, Kennet Partners, TDF Ventures and Wildcat Venture Partners.
Verticals are a total and utter no-brainer for cloud companies. Having a broad flexible platform is useful and all, but to really move the needle en masse, vendors need to think about contextualizing their platforms for different industry groups.
Normally I’d be a bit hesitant about a third party doing this since, after all, verticalization is the bread and butter of the platform vendor itself. But this is no random vendor -- Vlocity has strong and deep ties into Salesforce and I am certain some very high-level discussions have been had regarding Salesforce’s intentions within these verticals. The fact that Salesforce is an investor in Vlocity is one giveaway, but the shared history up to and including the board of directors level is another.
I’d be confident to suggest that we’ll see great things from Vlocity, the only question is how they maintain focus on multiple distinct verticals that all have huge potential. Perhaps a spin out is in the future?
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