API Extrapreneurs

Why take the trouble to open up your software to third-party add-ons through an API? Revenue, exposure, empire-building, and maybe now add to that list "API extrapreneurialism". When you harvest the talent of outside programmers to improve and extend your product, sometimes the logical result is to purchase the company that took the gamble of building on it. Case in point is the recent Salesforce purchase of Koral. The enterprise innovator through its AppExchange Platform has an ecosystem of 35,000 developers and 500+ AppExchange apps that are built around the Salesforce.com API. Koral's product is a content management system that handles collaboration on unstructured data that swirls through office environments, and was built on AppExchange. This week's purchase filled a niche in Salesforce's product line with an already compatible product - a win-win for both companies.

This is at least the second time this has happened in the Salesforce.com ecosystem: last summer they acquired Kieden, a search marketing tools company that leveraged their platform. For the company that Builds a platform that truly opens up their processes to improvement, the result can be a farm team of potential acquirees.

And for more on this acquisition see ZDNet's Phil Wainewright who raises some good questions about what this might mean in terms of competitive conflicts between Salesforce.com and other members of their partner community.

Be sure to read the next Financial article: Mashup for Sale