Introducing Trails Podcast – a series that guides you through the dynamic Salesforce ecosystem. Come along as we navigate the paths of innovation, change, and achievement enabled by the Salesforce platform.
This podcast episode is about how the Founder of ISVapp, Max-Michael Mayer, became a serial entrepreneur and what you need to know about the Salesforce ISV landscape.
Follow along as we go through his story, insights, and tips.
The reason why we're both here is that we share something with Salesforce. I know that this (Hutte) is the company you co-founded after you were at your brother's company. You are running Hutte on Salesforce. So, you have two experiences already – same thing for me.
This company, which I founded, was Propertybase. To keep the story short, we've been lucky enough to grow the company in over 66 countries with 450K monthly active users. We did this over a long time with organic growth, but then we partnered with a private equity fund – Providence Equity from Boston.
We did a classical buy and build. We bought a couple of other companies, all in the U.S. And then finally, we were able to sell the whole Propertybase group in 2021 to a strategic buyer from Canada – Lone Wolf. Since then, I've been focusing on things like mountain biking and playing guitars. I also do private equity now and work with a fund. But the main focus is ISVapp.
Most ISV and OEM partners need insights about the usage and adoption of their applications. And this has changed slightly with a new API that Salesforce has developed. It's called AppExchange App Analytics API. It went public in 2020. We at ISVapp have been in the pilot organized by the AppExchange product team.
We've been together with FinancialForce and a couple of other global players. We gave feedback about the API, and then our Co-Founder, Philip, suggested building a plug-and-play application for that API. It was clear that handling the massive raw usage data and compiling it with the right KPIs, statistics, and reports is a massive job for every partner.
So, we thought, "Why don't we build it ourselves and provide it to everyone?" We did this and realized this is the basis for a new venture.
Currently, you take our standard product, which works out of the box and can be implemented in five minutes, or you have a long project with a handful of Developers on your team, and you build something yourself.
It's always good to start a company if you have a great idea. Timing is never good. But before we talk about the current situation, let me give some background on why I can share some experience here.
First of all, I am a private investor in a startup portfolio, which goes from anything between e-commerce platforms, social media, and artificial intelligence.
Those companies have either been in the seed or pre-seed phase. This was a couple of years ago. Now, those companies have done multiple rounds of financing over time. And some of them are in a situation where they have to raise money this year.
Second thing, I have some private equity experience as well. This is because I'm a partner in a private equity fund. And this gives me a lot of insights about the current situation. Last but not least, I have a couple of board seats in scale-up growth companies that have to raise money.
They pay less when it comes to enterprise value. I said that the lag effect is anywhere between nine to 12 months. It turns out it's more like 18 to 24 months – maybe even a little longer. And that means we're coming now precisely in that period.
Towards the beginning of next year, I think we will be in that phase where we could see an impact from those interest rates. So, that's the famous lag effect. If it really happens, this lag effect has a massive impact on financing as you're selective when it comes to investments and so on.
So, if you have to raise money, try keeping the run rate as long as possible. If impossible, you could work with convertibles to avoid low valuations. As existing shareholders, you may also have business angels you bring on board.
But if it's not 100% necessary, or if you are one of the rare companies that are growing, you don't have a problem raising money. I have a company in the artificial intelligence space, and they are currently raising money. We are likely to close that deal in about two weeks.
Companies like theirs are okay with valuations or getting millions of money. But others are struggling. Be prepared if someone thought the difficult period ended last year or the beginning of this year.
I'm not saying that it will happen, but be prepared. It's not over yet. And it could get worse. That means keeping your money together and the run rate as long as possible.
It's important to remember that Salesforce Accelerators, such as the Salesforce Incubator or Salesforce for Startups, aid ISVs by offering them mentorship, resources, and funding to help them scale their businesses and accelerate their product development within the Salesforce ecosystem.
There's absolutely no difference. If you have an AI solution on Salesforce, that will be running like hell. It doesn't matter which platform it is.
I see another issue with many partners because we know that most partners are anywhere between small and medium size. And some of them are currently struggling, especially those companies offering add-ons, because add-ons are not essential.
ISVs that offer unique, innovative, and in-demand solutions tailored to specific industry needs or pain points within the Salesforce ecosystem attract more investor attention and funding opportunities.
You can still do your business as an end customer of Salesforce if you have Sales Cloud, for example. If you have a sales enablement app add-on on top of that, it's not mission-critical. You can turn it off and save some money. And this is what I'm seeing at the moment.
I talk to many ISV and OEM partners daily, and the worst is over. But I'm not saying we're coming up from the valley now. It's just that we have probably reached the bottom. Your question was, "Is it any different than the Salesforce ecosystem?" No, it's not. It doesn't matter which technology you have.