One of the most talked-about (260+ comments!) posts of the past year was published by Fred Wilson of Union Square Ventures on his popular AVC blog. Titled “What a CEO Does,” the article relays a pearl of wisdom Wilson received from a more experienced colleague early in his career. A CEO, Wilson learned, does only three things:
- He or she sets/communicates the company’s vision and strategy
- He or she hires/retains the best talent
- He or she makes sure there is always enough cash in the bank
Today, Act-on Software announced it has acquired the assets of Marketbright, one of the original players in the marketing automation space (and truly some of the nicest people in this industry). But this isn’t a story on the success of Act-on or the failure of Marketbright. Instead, it’s a commentary on the state of the marketing automation and revenue performance management industries following a recent surge in M&A activity.
As anyone who follows this blog knows, major players have made acquisitions in this space recently. Teradata, Oracle and IBM all have a horse in the race. When massive companies make acquisitions in an industry, it creates a two-tier system: companies with the resources needed to innovate… and everyone else.
This is why Wilson’s point that a CEO must make sure there is always cash available is such a vital one. When big players enter a category, VCs grow reluctant to back the smaller, lesser-known companies. At the same time, considerably more capital is needed to compete on this new level. For example, as we cement our lead in the enterprise sector, Eloqua has had to build out our professional services team to meet the unique demands of global businesses. As mobile becomes a larger part of our clients’ professional lives, we’ve invested in our HTML5 development team to create iPad content and apps. There are also technology costs associated with scaling to the point of 5 billion daily transactions … and this doesn’t even touch on sales and marketing costs.
Without a healthy revenue stream or outside capital, it’s difficult to keep pace in a market as hot as ours. My sense is this is precisely the crossroads at which Marketbright found itself recently.
Just how hot is this category, and just how much has changed over the past year or so? Check out this interactive timeline we cooked up. The amount of activity is nothing short of remarkable.