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Salesforce fires tractor beam at RelateIQ, hauls upstart into mothership

If you can't beat it – pay $390m to EAT IT

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Salesforce has announced plans to acquire younger rival RelateIQ, a move that will shore up its core customer relationship management business with some advanced technology.

The software-as-a-service giant said in an SEC filing published on Friday that it had agreed to pay $390m to purchase CRM startup RelateIQ for $350m in stock and $40m in cash.

By acquiring the company, Salesforce has bought a firm whose approach to customer relationship management threatens Salesforce's core business.

"Salesforce.com pioneered the shift to enterprise cloud computing, redefining modern CRM as we know it. As you know, RelateIQ is pioneering the next generation of intelligent computing through data science and machine learning. Looking ahead, salesforce.com’s acquisition of RelateIQ will extend the value of salesforce.com’s #1 CRM apps and platform with a new level of intelligence across sales, service, and marketing," said RelateIQ's chief executive Steve Loughlin in a blog post announcing the acquisition.

RelateIQ's technology uses, sigh, big data and machine learning to identify contacts in users' emails and phone calls, then slurps information from contact books, phones and other data stores to automatically build profiles of people that reflect how and when they've been contacted.

By plugging RelateIQ's software into an organization's various systems, managers can get a clear idea of not only the customers their team is chatting to, but also how their own employees are talking – and working – among themselves.

"Capture customer interactions automatically as you work, eliminating all gaps in your team's records," RelateIQ explains on its website.

"Merge contacts across your team and augment records with data from around the web, like links to LinkedIn and Twitter profiles, to build a shared address book that's always up-to-date.

Its technology is a valuable addition to Salesforce, given the latter's devotion to building software to live at the heart of sales divisions within large organizations.

It also shows how Salesforce, once a young scrappy company, has now grown sufficiently old to need to buy in code and knowhow from outside its own walls. The RelateIQ acquisition is reminiscent of Salesforce's buy of Heroku in 2010, and given that Heroku's platform-as-a-service technology has been slowly integrated into Salesforce's larger "Salesforce1" software suite, we can expect the same of RelateIQ.

"The acquisition is anticipated to close in the Company’s third fiscal quarter ending October 31, 2014," Salesforce wrote in its SEC filing. RelateIQ had previously raised $69m in venture capital funding, according to Crunchbase, and was founded in 2011. ®

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