{"id":347,"date":"2007-08-01T07:00:21","date_gmt":"2007-08-01T15:00:21","guid":{"rendered":"http:\/\/www.formtek.com\/blog\/?p=347"},"modified":"2007-08-01T07:00:21","modified_gmt":"2007-08-01T15:00:21","slug":"saas-on-demand-goes-public","status":"publish","type":"post","link":"https:\/\/formtek.com\/blog\/saas-on-demand-goes-public\/","title":{"rendered":"SaaS: On-Demand goes Public"},"content":{"rendered":"

Three years ago SaaS leader Salesforce.com went public<\/a>. In early July of this year, Netsuite , <\/a>provider of on-demand ERP software, also filed papers to go public. The IPO NetSuite plans to be done using the Dutch Auction <\/a>technique that Google pioneered in August 2004. NetSuite hopes to raise $75 million.<\/p>\n

While Netsuite was founded in 1998, it wasn’t until the last three years that it really has gone into growth mode. Revenue grew from $17.7 million to $36.4 million to $67.2 million from 2004 to 2006 fiscal years.<\/p>\n

But while revenues at NetSuite are up, operating costs have consistently exceeded revenues. For example, sales and marketing costs alone were $43.9 million in 2006, 53% of revenue. InformationWeek <\/a>makes the interesting comparison between the ratio of sales and marketing costs to revenues for SaaS and those of traditional software vendors. Salesforce has reported numbers in the 50-70% range while traditional software vendors are closer to 20-25%.<\/p>\n

What’s really interesting about this story though centers around Oracle’s CEO, Larry Ellison. NetSuite and Salesforce.com are two of the most successful SaaS ventures, and Larry Ellison is involved in both.<\/p>\n

Ellison is co-founder of NetSuite and owns 61% of the shares, and a trust set up for his adult children control another 13%. He also helped start Salesforce.com and currently controls about 4.5 million shares of Salesforce.<\/p>\n

Some investors are complaining <\/a>that NetSuite and Salesforce companies present a conflict of interest for Ellison. Both NetSuite and Salesforce have significant overlap with some of Oracle products, although Oracle itself has been slow in making its own products available on-Demand.<\/p>\n

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Three years ago SaaS leader Salesforce.com went public. In early July of this year, Netsuite , provider of on-demand ERP software, also filed papers to go public. The IPO NetSuite plans to be done using the Dutch Auction technique that…<\/span><\/p>\n

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