Salesforce as a Risk Factor?

I started to form this question reading this board, so I’m asking here because you are the Fools that know:

How many of the fast growers are sitting on Salesforce’s PaaS platform?

That can be thought about in two directions: CRM stands to gain from any/all companies running on/in its platform. Is Salesforce PaaS a liability to us, to the degree that if the platform were compromised, multiple companies we are invested in would simultaneously be affected?

When I read about Salesforce’s offerings a lot of what they offer is designed to leverage “co-mingled” data running all together in one application suite? Is this true? Doesn’t that make Salesforce the ransomware target of the century?

When I read VEEV’s 10-K they mention Salesforce in the Risk factors and 80 times throughout their own 10-K

When I read NCNO’s S-1, they mention Salesforce 98 times.

Can someone explain how/why this isn’t a serious risk, for us to be aware of?

-Another Rob

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I’m glad you asked this as it has been on my mind too. I shrugged off VEEV primarily because they are entirely built on (dependant on) Salesforce and they pay Salesforce for the privilege. Granted a lot of companies are built on AWS products (or Microsoft, or Google, etc), so perhaps my understanding of Salesforce is the issue here, but it doesn’t feel like an AWS to me. It feels more like a store built totally on Amazon.com, which is quite dangerous for that store’s future, which is one reason why I like SHOP. I know I’m drawing some wide-ranging parallels here, so have at it!

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Salesforce I believe was the largest investor in NCINO. The actual number is unknown.
https://finovate.com/ncino-reels-investment-salesforce-ventu…

The analogy to AWS is probably good. Although some may disagree. Salesforce acts as the sales CRM database for many businesses and once you’re using it, you can’t switch easily. So that’s obviously a risk for anyone that uses any core software that’s mission-critical. Theoretically, you can use a competitor to Salesforce, like Pegasus or Zoho, but every business I know that tried them eventually upgraded to Salesforce.

I don’t know the full relationship with NCINO but it’s tightly integrated and doesn’t work with our Salesforce. So yes, they need Salesforce, but Salesforce does not need NCINO. And it would appear that NCINO can’t move to Zoho or Pegasus at all. Therefore it’s identified as a risk factor.

My take is it not a concern.

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Interesting question: can CRM be a help or a hindrance for NCINO or VEEV? If they are owners of a significant percentage of each company, then it may be to their benefit to allow easy terms to promote a rise in stock price through better margins. If they choose to become onerous in terms of cost of doing business on their platform, then it might help CRMs cash flow but hurt their equity holding by negative affecting the stock price. Or is this too simplistic an interpretation?

  • Brian

Over the weekend Hastan said this about the relationship:

“NCNO will never have the margins of Veeva as they have a much worse deal with Salesforce. Salesforce gave Veeva a total sweetheart deal which they will never repeat. NCNO are required to pay 20% of revenues to Salesforce so gross margins will never be comparable to other software names except those with some of kind of resource intensive model.”

https://discussion.fool.com/ncno-will-never-have-the-margins-of-…

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