AS SEEN ON INSIDEINDIANABUSINESS.com PERSPECTIVES
By Mike Langellier – President and CEO, TechPoint – Indiana’s Technology Growth Initiative
Salesforce.com purchased Indianapolis-based cloud marketing platform ExactTarget for $2.5 billion this week. On its face, we are losing an important Indianapolis headquarters, which begets speculation about the impact on local jobs or real estate.
Before we presuppose loss, I challenge us all to consider a very different set of outcomes that could substantively change the future of our city for the better:
  1. More business and startup growth–We saw this after Software Artistry’s IPO and 1998 acquisition. Members of that team went on to start and/or take significant leadership positions in Aprimo, Interactive Intelligence, BidPal, PolicyStat, and even ExactTarget. Former ExactTarget employees have already started Compendium, Marketpath, Right-On Interactive, SmarterRemarketer, and there are more to come.Tech businesses are different than businesses in some other industries in that the company is less important than the people in it. These are human capital businesses so, more significant than the office building and the brand on the sign outside, are the 1,000 employees in downtown Indianapolis with unique industry experience and who have personally experienced uncommon success early in life. That begets a boldness, an abundance mentality and an ambition to pursue uncommon success again in new startups, other businesses and organizations around the city.
  2. More job growth–Kauffman Foundation research concludes that net new job creation comes from startups–young high-growth companies–not corporations. Therefore, the increased startup activity I describe in point #1 actually begets more jobs. Again, consider Software Artistry, which employed 300 people. Of the companies with direct leadership ties (we’ll even exclude ExactTarget) Aprimo, Interactive Intelligence, BidPal and PolicyStat employ 2,300 with generally high-skill, high-wage jobs.Even new startups creation aside, I don’t see a rationale for net job reduction at ExactTarget. Based on public comments made by executives and analysts close to the deal, software developers, marketers and other marketing tech related employees are staying put, and there is no clear case for these jobs to be relocated or eliminated. Salesforce CEO, Marc Benioff, recognized on “Mad Money” this week that Salesforce tops the industry in CRM and service, but they had a gaping hole in marketing, a hole which ExactTarget directly and almost completely fills, thus why they need the ET employees and why Scott Dorsey will report directly to Benioff in running the Indianapolis office.

    Furthermore, we know that talent recruitment and retention are big challenges in Silicon Valley and elsewhere. Considering Indiana’s tremendous pipeline of university talent, cost of living advantage, and substantial base of marketing technology expertise, a case could and hopefully will be made that jobs should disproportionately be added in Salesforce’s new Indianapolis office.

  3. More angel, venture capital and charitable investment–Salesforce bought ExactTarget for $2.5 billion. For those counting at home, that is 2,500 million dollars! That means that an early investor’s $5,000 is now worth close to $1.5 million, and thanks to ET’s stock option incentives, many employees are significantly wealthier, putting them in a position to invest in their own or others’ startups and in community organizations.The Silicon Valley connection could also give us access to more significant venture capital when companies need it.
  4. More national visibility and interconnectedness–Speaking of venture capital, hopefully the acquisition will finally be the catalyst to get us direct flights connecting Indy (judged the best airport in North America) to San Francisco and other key cities. That interconnectedness will lead not only to more outside investment but access to other markets and customer bases.Lastly, the news raises visibility for Indianapolis (the nation’s 13th largest city), particularly as the leader in marketing technology. Not only do we have dozens of marketing tech companies in the area, but of the 8 area tech-company acquisitions and IPO’s in less than 4 years (summing to $4.4 billion in market value), the three largest were marketing tech related, specifically ExactTarget, Angie’s List, and Aprimo (sold for $525 million). That success and experience makes this an attractive place for other similar companies.
There are plenty of good reasons to celebrate Salesforce’s acquisition of ExactTarget. Wealth created will be reinvested here, jobs will be created, new investment dollars will flow into startups from out-of-state, and Indiana will become increasingly attractive for starting and growing businesses.
Mike Langellier, President and CEO of TechPoint – Indiana’s Technology Growth Initiative