How Salesforce Acquired ExactTarget for a Marketing Cloud Win

Executive overview

ExactTarget started in December 2000 with no technical background and built the largest, fastest-growing email marketing platform through aggressive sales, customer obsession, and moving upmarket while serving SMB to enterprise segments. Salesforce acquired the company for $2.5 billion in 2013 to plug a crucial gap in their marketing strategy and gain a multi-tenant SaaS platform that could scale from small businesses to Fortune 500 companies. The combination unlocked Salesforce's entry into B2C marketing and created one of their most successful acquisitions ever.

Building from scratch in a dead market

Three first-time founders started ExactTarget in Indianapolis in December 2000 just as the Internet bubble burst and VC funding dried up. They raised only $200,000 from friends and family—Chris Baggett's neighbors, founder parents, and local investors—and worked without salary for six months. The founding insight: permission-based email was a powerful way for small businesses to build personalized customer relationships. Early customers were literally mom-and-pop shops like restaurants, dry cleaners, and pizza shops.

Sales-driven product development

Early on, ExactTarget had 26 salespeople out of 44 employees—extraordinarily sales-heavy for the era. The founders convinced friends and former dot-com employees to sell as independent contractors on pure commission, handling everything from lead generation through implementation. This forced proximity to customers revealed the product roadmap: franchisees needed centralized control with franchise-level autonomy, and every organization eventually needed email and digital marketing.

Moving upmarket while staying SMB-friendly

ExactTarget evolved from restaurants to franchise organizations, then to enterprise, all while keeping a single codebase and "switchboard" architecture that let them toggle features on or off for different customer segments. Groupon, Microsoft, and Nike became major customers, yet $1,000-per-year small business customers used essentially the same platform. Digital agencies became a critical channel, reselling white-label ExactTarget to their Fortune 500 clients—a way to punch above their weight before having direct enterprise relationships.

IPO attempt, capital crisis, and acceleration

In December 2007 with $48 million in revenue and profitability, ExactTarget filed to go public. The 2008 financial crisis killed the IPO, and they stayed on file—public costs without public capital or benefits—until pulling it in early 2009. Rather than cut back like competitors, ExactTarget raised $145 million from Battery Ventures, Scale Venture Partners, and TCV and launched "Accelerate 2013": a specific vision of what the company would look like by 2013. They invested aggressively in R&D and sales while rivals downsized, building a sales organization three to four times larger than competitors. Growth accelerated from 30% in 2008 to mid-50s by their actual IPO in March 2012.

Six acquisitions: product and geography

ExactTarget executed three product acquisitions (iGo Digital, Pardot) and three geographic acquisitions (UK reseller in August 2011, Australia reseller in August 2012, Brazil reseller in August 2013). Each geographic play validated international demand before committing full infrastructure, then buying the reseller to scale. Pardot, a B2B marketing automation player, became a crucial piece for competing against Marketo and Eloqua.

The acquisition: inbound from a partner

Salesforce had been ExactTarget's customer and close integrations partner. As Salesforce invested in marketing via Radiant Six and Buddy Media acquisitions, they realized customers wanted a multi-channel platform with stronger data capabilities and B2C orientation—exactly what ExactTarget delivered. The inbound came through an established relationship and shared product vision. Multiple bidders competed; Salesforce won with a $2.5 billion offer ($33.75 per share, a 50% premium over trading price).

Why the acquisition stuck

Marketing Cloud revenue grew from ~$300 million at acquisition to $654 million in Salesforce's fiscal 2016—more than double in less than three years. Success came from Salesforce's deep CIO and CMO relationships, the ability to bundle ExactTarget with CRM, and ExactTarget's existing multichannel platform (email, mobile, social, analytics). Mark Benioff has called it Salesforce's most successful acquisition. Every ExactTarget employee had equity; friends and family investors who put in $5,000 in the 2000 seed round saw those stakes grow well north of $1 million by acquisition.

The Microsoft story

ExactTarget replaced Microsoft's internal email platform called Pens. Over an 18–24 month implementation, teams migrated Microsoft business units off Pens onto ExactTarget. At the completion party on the Microsoft campus, the team literally removed the servers running Pens from data centers, brought them to a celebration tent, and sledgehammered them in an office space-style ceremony.

Indianapolis tech community impact

Salesforce committed to Indianapolis, eventually consolidating 2,200 employees into the city—including plans to move into and rename the Chase Tower (Indiana's tallest building) as the Salesforce Tower. The company fought to establish a nonstop United flight from Indianapolis to San Francisco, removing a major barrier for founders and VCs. ExactTarget pioneered an urban downtown strategy centered on Monument Circle rather than office parks, making Indianapolis attractive to millennial talent and co-marketing partners visiting from the Valley.

The bigger tech picture

Salesforce is one of four giant enterprise software companies (alongside Microsoft, Oracle, SAP) with deep account control and sales channels that let them push products like marketing clouds through existing relationships. Yet innovation continues: new tools emerge with lighter products, freemium models, and employee credit cards that bypass the CIO, creating room for next-generation marketing automation built on data and analytics rather than email alone. The consolidation wave swept up email players into larger platforms—Eloqua into Oracle, Marketo into Adobe—but overlapping functionality and product redundancy made it hard for independent consolidation to work. ExactTarget's single-codebase, multi-tenant architecture solved this better than combining two platforms.

Venture studio lessons

Scott Dorsey founded High Alpha to launch new SaaS companies with the same thesis: identify unmet needs where many companies solve the same problem repeatedly. One launch: a SaaS platform managing SaaS applications—tracking spend, utilization, and user feedback to help organizations cut overlapping products and spot innovation pockets. The cloud and employee credit cards have opened the floodgates for new entrants to land first customers without CIO approval or 47-page security questionnaires, though large enterprises still demand SSO, SCIM, RBAC, and audit logs.