
Salesforce buys word processing app Quip for $750M - rhc2104
https://techcrunch.com/2016/08/01/salesforce-buys-word-processing-app-quip-for-750m/
======
louprado
Mark Benioff, Sales Force CEO, personally invested in the original venture
round that raised $15M [1]. Assuming that round set a $75M valuation, it
implies M.Benioff made at least a 10X with this investment.

I'd assume boards are diligent when it comes to potential conflicts of
interest and the $750M valuation is justifiable. But I don't know that for a
fact. Does anyone have insight on how boards deal might deal with this
scenario ?

[1]
[https://www.crunchbase.com/organization/quip/investors](https://www.crunchbase.com/organization/quip/investors)

edit: grammar

~~~
swampthing
Usually, you would have the transaction approved (or rejected) by the
disinterested members of the board (i.e. the directors with no conflicts of
interest).

~~~
acchow
Suppose the conflicted interest on the board has majority share - would they
still sit out on the vote?

~~~
andrewfong
Yes, what they're looking for is a majority (or 2/3 or whatever threshold is
called for in the bylaws) of the disinterested directors.

If there are no disinterested directors, or it's something like 5 out of 6
directors are conflicted and the 1 director isn't comfortable going it alone,
then the company might ask for approval of a majority of the non-conflicted
shareholders. This isn't strictly required I think, but it's considered the
safe thing to do.

------
pmarreck
There needs to be a thread on "newish online tools that everyone is starting
to depend on or love" because I had never even heard of this domain/product
until this news.

Apparently, neither did the Quip toothbrush people.

How is Quip better than good old Google Docs?

EDIT: Just looking at it, it looks very reminiscent of Apache Wave, which I
was (unfortunately) a fan of. I wonder if it was inspired by it?

EDIT 2: It seems that Quip, unlike Google Docs, is end to end encrypted, which
makes it possible to use on corporate intranets that normally forbid tools
like Google Docs for security reasons. Hrm.

EDIT 3: Might as well plug the newest thing _I_'ve heard of.
[https://discordapp.com/](https://discordapp.com/) is a great voice chat
client, intended for gaming but surely useful for productive ends. It's
Erlang-backed, as well. Seems to have great connection quality and is just a
nice, fun app.

~~~
econophys
Preface: My team has been using quip for the past 6 months (and switched from
google docs). The value is in the collaboration tools.

Quip has inline comments and document level comments, chat rooms, private
chat, and the ability to tag people and documents anywhere. It's a really
powerful collaboration mechanism especially for remote teams, and cuts down on
emails.

It's extremely intuitive for digital natives, but completely turns how one
views documents (as static and entirely separate from the comments on them) on
it's head. It's less friendly to people who are long time MS Office users.

~~~
discardorama
> Quip has inline comments and document level comments, chat rooms, private
> chat, and the ability to tag people and documents anywhere.

I think Google Docs has all of the above.

~~~
duaneb
Yea, its a clone with chat stuck on.

------
beat
Thinking about this just in terms of product...

There are two real competitors on the market - MS Office, and Google Docs.
Office is where it is today through sheer inertia. It's a slow-moving and
often terrible product. Google Docs feels like a "free product", with a lot of
limitations. The market feels like someone could "Slack" it - walk in with a
good enough product and just lay waste to the incumbents very quickly.

The shift to cloud-based tools is happening rapidly, pushed by the ubiquity
and quality of mobile devices. Salesforce practically invented this market,
and they have incredibly deep hooks into the enterprise (and lucrative
enterprise licensing agreements). MS Office feels like a clunky antique
hobbling users to their clunky old PCs, but Google Docs isn't going to satisfy
the corporate power users who are amazingly productive with Word, Excel, and
Powerpoint.

Mark Benioff is ambitious. This isn't about his RoI for some A round
investment. He's already a billionaire. More money is just bouncing the
rubble. What's important is he built a company, Salesforce, at the top of the
_second tier_ of the software industry. It's important enough to have shaped
the industry, and make billions - but it's not Google. It's not Apple. It's
not Oracle. And it's not Microsoft. If he wants to break into that tier, he
needs to level the company up. Taking over the enterprise productivity app
market and consigning Microsoft to the dust bin of history? That might just do
it.

And finally... like all large companies, Salesforce may be facing market
saturation and a tapering off of growth. It's too big to easily develop
breakthrough products in house anymore. Instead, there's growth through
acquisition, buying hot startups with the ample buckets of cash you have, to
break into new markets.

So maybe, just maybe, this buyout is exactly what it looks like.

~~~
douche
Office through Office365 has, IMO, left Google Docs behind. It's actually
quite a nice product - arguably better than the more recent versions of the
desktop clients, for non-power usage.

GoogleDocs hasn't changed appreciably in the ten plus years I've been using
it. I get the impression that Office 365 is eroding their solid foothold in
education, and I've been seeing enterprises go to Office 365 _en masse_ ,
mostly for Exchange, but the whole Office suite comes along with it.

~~~
abrookewood
Have to disagree. Within the last year I tried to get my team to migrate to
Office Online and the lag was terrible to the point where you simply can't
collaborate on documents together. I have no issue with Office 365 in general,
but if you're trying to do online document collaboration, Google Docs is miles
better.

~~~
huac
Have to agree with this comment. Word Online is bad enough, when you start
using Excel or Powerpoint Online it becomes disastrous. I've needed the extra
functionality of Excel/Powerpoint over Google Sheets/Slides at times, but
'collaborating' over Office365 was much, much more painful than working
individually and recombining sheets like the old days

------
swivelmaster
I don't understand this valuation. I've only used Quip a bit but it doesn't
seem like an amazing piece of software. Do they have a massive user base? Did
they do a fantastic job at enterprise sales? Do they have a lot of recurring
revenue?

~~~
ktamura
This makes sense.

1\. Talent: As others say, an all star team. I've interacted with some of them
as a vendor (Quip is our customer) and know a couple of them as friends of
friends, and they have a rockstar team.

2\. Integration: This is going to add collaborative document sharing to
Salesforce's product line. Much like the Chatter acquisition to beef up their
"collaborative, connected customers" story.

3\. DATA: Essentially, Quip's metadata is the intra-organization graph of who
collaborates with who. While Salesforce needs to be careful how they are going
to use it (and definitely need to create the technical infrastructure to take
advantage of this data), this is a deep well of customer knowledge that they
can parlay into selling other Salesforce products.

~~~
entee
Of these I hadn't thought of the data utility, but yeah that's probably pretty
useful. However, as you suggested, it's a little hard to take advantage of
that without creepiness potentially killing the larger customer relationship.

I think the other 2 are nice, but I'm not sure I buy them. I've used the
product and for a rockstar team it was kind of crap. They're trying to build
slack-dropbox-googledocs all in one, and it's substantially less capable at
each of those tasks than the individual products. Maybe now they'll have the
resources to build it out and make it actually good, but I have no idea how
such a product in its current state is worth 750M.

~~~
Jach
Everyone has a star team, you know? Only the best are hired, everywhere.

The data bulletpoint makes the acquisition fit in more storywise with SFDC's
recent ML acquisitions (no one asks about the not-recent ones), but I don't
know if it justifies the price. I also doubt there will be much integration
and would take a bet Quip will be no more in a year. (I'm on the inside but I
have no knowledge of this deal, nor do I really care about it to poke
around...)

------
zaidf
This is an acquisition to get Bret Taylor. I'd expect Salesforce to put him in
charge of slowly improving the core salesforce tech stack.

~~~
confiscate
Doesn't seem like a acqui-hire. Is it really worth hundreds of millions to buy
someone?

~~~
pb
The right person is. How much was Steve Jobs worth to Apple?

Bret is one of the most outrageously talented and productive people I've ever
worked with. In a high-leverage position, such a person can be extremely
valuable.

~~~
segmondy
Why not just hire him directly? Hey, come work for us. Here, salary of $20/mil
a year, guaranteed for the next 5 years.

~~~
pb
Obviously the rest of the team is likely to be very talented as well. Also,
he's the founder, which includes a responsibility to act in the best interest
of the company (plus $20M/yr would be much less money).

~~~
zaidf
Also, someone like Bret is very unlikely to be attracted by purely monetary
gain like a $20/mil year salary(or even $50/mil year.) He probably cares as
much, if not more, in being able to achieve some larger goal--which requires
building a sort of team he has already built.

------
thepumpkin1979
Quip is amazing, I started using it last year when they published a blog post
documenting how they build their native Mac app app using a mix of
React+cpp[0] and been using it since then, not without issues though [1][2].

[0] [https://medium.com/@btaylor/react-with-c-building-the-
quip-m...](https://medium.com/@btaylor/react-with-c-building-the-quip-mac-and-
windows-apps-c63155c1531b#.wuw1fnun7) [1]
[https://twitter.com/bithavoc/status/750419283797237761](https://twitter.com/bithavoc/status/750419283797237761)
[2]
[https://twitter.com/bithavoc/status/760231521211080704](https://twitter.com/bithavoc/status/760231521211080704)

------
askafriend
I'm honestly surprised so many people on HN haven't heard of Quip.

I mean Bret Taylor is a pretty big name, and we've all known that he was
working on Quip for a while. There are a bunch of Bay Area companies that use
Quip and the Quip team made a big deal about the future of mobile word
processing when they first came out.

I'd be less surprised if the general public was unaware, but interesting to
see the surprise come from the HN crowd.

------
dmix
Quip talked about how many users they had in a Recode article from Oct 2015
[1]:

> Taylor said Quip has millions of individual users and 30,000 business
> customers, though not all of those are paying.

So to do some back of a napkin math if they had 15,000 paying customers (50%
of their noted business userbase) how much would they make in revenue? I've
distributed the numbers across different levels of SaaS monthly bills because
most customers will pay for the cheaper packages.

    
    
        75% (11250 customers) *  5x users =  $30/m = $337,500/month
        15%  (2250 customers) *  7x users =  $50/m = $112,500/month
        10%  (1500 customers) * 10x users =  $70/m = $105,000/month
        5%    (750 customers) * 25x users = $230/m = $172,500/month
                                Estimated Revenue:   $727,500/month 
                                                 or  $8,730,000/year
    

(these buckets of average users could be much much bigger (100's of users) on
the higher end if they have enterprise customers but I'm being purposefully
modest)

[1] [http://www.recode.net/2015/10/15/11619612/bret-taylors-
quip-...](http://www.recode.net/2015/10/15/11619612/bret-taylors-quip-
lands-30-million-to-take-on-office-google-docs)

~~~
smt88
I see I'm not the only one who's never heard of Quip. It seems hard to believe
they have so much traction and aren't an HN-household name...

~~~
ubernostrum
_It seems hard to believe they have so much traction and aren 't an HN-
household name..._

I would suggest that, perhaps, "HN household names" and "things lots of people
actually use" are not particularly strongly correlated.

~~~
smt88
I strongly disagree when there are "millions" of users, and the product in
question is a web-software startup. The early adopters of these products are
very likely to be small, tech-savvy businesses, which is definitely one of the
core HN audiences. Not to mention a lot of us just follow software startup
news in general...

~~~
abrookewood
Yep, I agree with you. Very surprised I haven't heard of this company in the
slightest considering someone just bought them for $750m.

------
k__
Have to use it on a daily basis and coming from libre office, it feels really
weak. Especially the table calculations are not good. They got a bit better in
the last months, but still feel like a toy :/

~~~
duaneb
Liber office has virtually no realtime collaboration, no mobile, and no web
app. It's apples and oranges. Libre office is still going to be better for
writing long form, and quip is for pairing (a)sync review and ACL management.

It is difficult to see the role of libre office (or any native only app) in
the enterprise for much longer.

~~~
k__
I see both as office apps.

~~~
duaneb
This is facesioustly reductive.

~~~
k__
True, but when I get told to use this instead of Libre Office, because we can
collaborate better with it. Then I think it's natural to miss features.

~~~
duaneb
Definitely.

------
surfmike
For those who haven't heard of Quip: one interesting data point is that
Facebook uses it internally, since they don't use any Google products. I'm
sure countless other companies use it too.

------
Animats
MicroPro, the company behind Wordstar, was the dominant word processing
company in 1984. They were the largest software company in the world at the
time, with about 25% of the industry. They went public in 1984 for a market
cap of $165M. That's $482M in 2016 dollars.

What makes this word processor worth $750M?

~~~
frankchn
For one, the market is _a lot_ bigger. Only 8.2% of all US households had a
computer at all in 1984, and only 18.3% of adults aged 18 or above had
reported that they used a computer somewhere (either in school, at work or at
home) [1].

[1]:
[https://www.census.gov/hhes/computer/files/1984/p23-155.pdf](https://www.census.gov/hhes/computer/files/1984/p23-155.pdf)

~~~
Animats
But the prices for apps are a lot lower.

~~~
frankchn
Not necessarily. A copy of Microsoft Office Home & Student 2016 is still $150,
and Google Apps for work is still $5 or $10 per user per month. Heck, Slack is
$6.67 or $12.50 per month per user.

~~~
Animats
Microsoft Office was $499 to $999 in 2000.[1] And that was promotional
pricing.

[1] [https://news.microsoft.com/1999/01/07/microsoft-announces-
of...](https://news.microsoft.com/1999/01/07/microsoft-announces-
office-2000-pricing-and-prelaunch-promotions-2/)

------
dajohnson89
What are the odds of Microsoft buying Salesforce?

~~~
apapli
Not sure why you were down voted.

I'd say they are becoming lower by the day. Microsoft have announced
Dynamics365 and I suspect they will double down on competing with Salesforce
now.

Particularly now that Salesforce are competing against office365 with quip.

Salesforce only have a CRM, and even though it is popular they don't offer
ERP, financials or any productivity tools.

I think they got greedy when they rejected Microsoft. With oracle buying
netsuite (super charging their product dev funds) I think Salesforce will be
in a bit of a pickle in a few years time, as they simply won't be able to
offer an integrated package to the same level of depth their competitors do.

~~~
snuxoll
Microsoft has a long way to go before they can start cannibalizing Salesforce,
Dynamics has some perks but customizing it _sucks_. I managed to start a
Salesforce trial, implement a couple custom apps in 48-hours (albiet, with
knowledge of Salesforce before hand from my previous job) and within a month
got the green-light to roll it out to the ~8 person team in our company that
desperately needed a proper CRM to replace the access DB they were using + a
couple LOB applications. 80% of this was point-and-click work I could have
given to one of our Jr developers if I wasn't scrambling to get a POC ready on
the side, and, in fact, most of the day-to-day work on our Salesforce org _is_
done by one of our Jr. devs today.

My experience with customizing Dynamics is extremely poor, I'm a C# developer
but the thought of touching that gives me horrors equating to Sharepoint.

I don't have any experience with NetSuite, so I won't say anything about it.
Regardless, as long as Salesforce keeps being a great platform for quickly
hammering out LOB apps I don't see it going anywhere, our parent company is
heavily invested in it and we have doubled our licenses over the past year and
are looking at upgrading most of them from the "App Cloud" licenses to full
"Service Cloud" licenses to take advantage of the case-management
functionality so our teams can have everything under one roof instead of
having to go back and forth between email, zendesk, and Salesforce.

------
luckydata
Quip is a turd, a common investor of my past startup pushed me hard to try it
and I didn't like it one bit. I never understood the hype.

------
screature2
Seems that Facebook makes extensive use of Quip internally even though it's
doing the whole Office 360 subscription doohickey.

"An interesting side-note, though: While this deal means Microsoft will use
Office 365 for e-mail and calendaring, they probably won't get much use out of
Microsoft Word — Facebook uses Quip, a mobile word processor developed by
former CTO and current Twitter board member Bret Taylor, for word processing."

[http://finance.yahoo.com/news/top-facebook-exec-microsoft-
go...](http://finance.yahoo.com/news/top-facebook-exec-microsoft-
got-144500200.html)

See also embedded tweet.

------
pavlov
The HN title is misleading because Quip isn't really a word processing app.

It's more like the combination of Google Docs and Slack: realtime documents
and chat seamlessly linked.

------
randall
I hope the product continues to grow at Salesforce. I love it and it runs our
business. I need it to get some of slack's integration features and it'll be
perfect.

------
yalogin
This is a such a big company but I have never heard of it till now.

------
sjg007
Man.. I was wondering who would take google wave to the next level. Wished I
had even heard about this company 2 years ago.

------
Jack_32
It seems SF got the fear because of Google and ZOHO. SF cant beat Google or
ZOHO where they have deep and broad portfolio..

------
betolink
$750M for a word processing app? Go home Silicon Valley you're drunk!

------
ALee
I'm guessing this means that Bret Terrill will be taking a bigger role working
with Twitter, given that he just joined their board as well.

------
wNk6A23YB
Hopefully this investment will help the guy reach the finish line even though
his extremities are all controlled by different keys on the keyboard.

------
frik
If we speak about Quip as word processor with collaboration and chat
capability. You get almost the same word processor capabilities with Etherpad
(+ plugins) - sure less polished - for free, open source:
[http://etherpad.org/](http://etherpad.org/) (its root go back to Google Wave)

------
epall
According to CrunchBase, they've only raised $45M. 16x return after 4 years in
business. Well done!

[https://www.crunchbase.com/organization/quip#/entity](https://www.crunchbase.com/organization/quip#/entity)

~~~
minimaxir
It's worth nothing that Mark Benioff invested in the original 2013 Venture
round.

