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Adobe to acquire Magento for $1.68B

FROM TECH CRUNCH

Adobe to acquire Magento for $1.68B

https://techcrunch.com/2018/05/21/adobe-to-acquire-magento-for-1-6-b/

Adobe announced today that it was acquiring Magento for $1.68 billion. The purchase gives Adobe a missing e-commerce platform piece that works in B2B and B2C contexts and should fit nicely in the company’s Experience Cloud.

It should also help Adobe compete with Salesforce, which offers its own marketing, sales and service offerings in the cloud and which bought Demandware for more than $2 billionin 2016 to provide a similar set of functionality.

Brent Leary, who owns CRM Essentials and keeps a close eye on the intersection between marketing and CRM, says this fills an obvious hole in Adobe’s Experience Cloud. “Now they have an offering that allows them to close the loop with consumers, who are able to finalize a digital transaction that started online with digital marketing tools Adobe already offered,” Leary explained.

Leary also sees this deal bringing Microsoft and Adobe, who have already announced partnerships in the past, closer together. “But maybe even more interesting may be how this may further the relationship Adobe has with Microsoft. As they also are missing an e-commerce piece to their customer engagement platform [as well],” he pointed out. Leary speculates this could lead to an even deeper relationship between the two companies as they are each battling Salesforce.

Salesforce is the 10,000-pound gorilla in this space with revenue across its various clouds reaching more than $8 billion last year. The company is on a run rate to exceed $10 billion in 2018. It has set a long-term company goal to reach $60 billionin annual revenue by 2034.

Leary says this isn’t necessarily the perfect deal because up until now Magento has concentrated on SMB customers, whereas Adobe’s target audience is clearly the enterprise. If you look at the other players in the space who have already taken the e-commerce platform plunge, Salesforce got Demandware and SAP got Hybris, which were geared more to the enterprise target demographic, but he believes it was simply a case of the best option available.

But Cindy Zhou, VP and principal analyst at Constellation Research says Magento has some big-time customers too. “Magento has become the commerce platform of choice for many big and mid-size companies including Coca Cola. There is great synergy for Adobe to complete the customer journey,” she said. “From my perspective, the marketing-to-sale insight potential is what’s exciting,” she added.

This isn’t the first time the company has been acquired. Magento was founded in 2008 and purchased by eBay in 2011in a deal reported to be just $180 million. The company went private again in 2015 with help from Permira Funds, which sources say paid around $200 million.

Today the company sold for almost $1.7 billion. That’s a hefty increase in value since that 2011 purchase and a tidy five times return for Permira, which brought in Hillhouse Capital Group last year as a fellow investor. At the time, Hillhouse invested $250 million in Magento; presumably, it will see a nice return on its investment in just one year, too.

Image Credits: Lisa Werner / Contributor / Getty Images

The $400,000 Engineer

The high end was a $550K salary, $100K in cash bonus and about $200K in stock options, so about $850K per year. Senior software engineers at Google make an average total compensation of $210K. At the highest end, they make $630K, with $80K in cash bonus and $300K worth of stock grants, just over $1 million per year.

Real estate in the town I’m living in part time has doubled in the past 2 years. 2x in 2 years.
A home I rented for $2,000 per month in Palo Alto 20 years ago now rents for $14,000. 7x increase.
A house I owned 30 years ago in Portland Oregon has only tripled in value. 3x in 30 years? That’s weak.
Average salaries for software engineers have increased less than 2x in the past 25 years.
You need to make $506,000 annually to be in the top 1%, about $180,000 to be in the top 10%. To be in the bottom 1% you make less than $2,500 per year.
The Exalted Engineer

A top level software developer / architect can earn over $200,000 in base salary in a big city. This is before bonuses and stock options, upsides that can take compensation over $400,000 per year. At Google or Facebook, the base income can be even higher.

I recently launched a career advice and placement site for top level software professionals, specifically Java EE and Adobe AEM engineering professionals. The goal is to help these and all software developers at all levels to understand, plan, navigate and optimize their careers as opposed to just taking new opportunities one position at a time.

So I’ve started to study the incomes of professionals that feel they are already optimizing their compensation and employment experience. In most cases they’re not. One of the most interesting observations to me is that salaries have not really increased much in the past 25 years, not even 2x.

I’ve recently asked several of my non-developer colleagues what they make per year in income. Most of these people have their own companies or professional practice — attorneys, agency owners, doctors, real estate brokers etc. Some are executives at larger startups. I mostly avoided small startup founders because they’re under-salaried. The short answer is that income is quite variable and unstable in most jobs unless you’re in the US Senate — they make over $400,000 per year easily, but that’s a different article.

I’ve focused a lot of the study on engineers in New York, L.A., San Francisco, Silicon Valley. Big expensive cities where everything costs more and where costs have multiplied in the past decade while average incomes have not.

I want to know what a “high end” annual income is, something beyond the range of $80,000 to $199,000 that most successful professional engineers find themselves within for their entire careers. The lifestyle a long term high steady income affords is in many ways better than the one that the variable (and riskier) spikes in income that comes from cashing in stock options will give you.

Yes, the magic threshold of a “six figure salary”, something that many people never see, but as more and more reach this goal they realize that it’s not so magical unless they continue their former low cost lifestyle. $100,000 isn’t so much anymore?? So what is a great income now? One that makes you smile, allows you to take your family to Aruba every year? One that let’s you buy a new Ferrari? A new $4,000 mountain bike?

A friend of mine, a successful attorney answered this way, ”I could be a professor, but it only pays in the low 100s.” He makes $300,000 in a good year. $100,000 puts you in the top 18%, but still doesn’t go very far in the big cities mentioned above. It’s about $65,000 after taxes, or $5,000 per month. Theatre tickets in Manhattan are now from $100 to over $2,000 per person. A gourmet meal for 2 in San Francisco can be over $1,000. NFL tickets go for $400 each in Los Angeles.

If $100,000 isn’t enough, what is?

Based on all that, I came up with the number $400,00. Nice number, right? It’s more than you “normally” hear, but not the millions that some Silicon Valley ties brag about. Its more than the typical high end salary for top tech executives or software architects.

Are you a qualified successful software engineer making $400,00 per year? If not, you need to make some changes and plan your career properly.

The Problem With Outsourcing

Marketing your outsource company to U.S. based clients

I realize it’s difficult for offshore agencies to market to the U.S., yet there are so many that some must do well.

So I think we must be doing something wrong, because there are so many mismatches in the responses.

I’ve been through a few of these processes, recently hiring Adobe AEM developers and Architects (JavaEE), Machine Learning engineers (Python) and now looking for Shopify development experts(Ruby on Rails).

I know there are some great bus dev/sales people, but the bad ones make me not want to try any.

Also, your competition, real developers who market themselves, are very accessible and easy to evaluate.

It seems like such a wasted resource of so many great developers and architects in India and Ukraine and elsewhere that are under-earning because their marketing is so weak.

Below are our critiques from the recent search for ShopifyPlus expertise.

1. TOO GENERAL AND BROAD BASED

Most outsource companies try to be all things to all clients, offering every kind of development. This is a turn-off to most potential clients. The responses are also very general vague, “we can do that” vs. specific data on past successful projects. They list dozens of technologies – that scares many people away.

SOLUTION: We look for specialization in the one area we are working in, deep specialization and experience. In some cases, certifications. For ShopifyPlus, I want a team that only does Shopify/RoR and can show several sites they’ve built.

2. MIDDLE MEN (WOMEN) / TOO MANY LAYERS

Many respondents are bus dev or sales for an agency. I understand the reason for this but it causes friction, takes more time and obfuscates us from the actual engineers. Also, too many are not even real agencies.

SOLUTION: We want to evaluate each actual engineer, look at some of the following: repos, urls of their work, YouTube training videos, code bases, blog entries, twitter feed.

3. NO REAL CONNECTION TO THE DEVELOPER

As above, trying to discuss the spec for a software project through an interpreter is cumbersome.

SOLUTION: Connect client with real developers asap. When I talk directly with developers I can discern exactly where their strengths and weaknesses are and have an efficient conversation.

4. REFERENCES / CASE STUDIES

Most of these don’t help much, unless they are about a very similar project and are recent.

SOLUTION: Connect client with real developers asap. When I talk directly with developers I can discern exactly where their strengths and weaknesses are and have an efficient conversation.

5. NO PRIOR RELATIONSHIP

When there is no prior relationship, trust must be built, especially if it’s a different country than your own.

Do a free small project to show your skills. Build a working relationship.

If packaged right most agencies could gain much more business and not get dismissed before they have a real chance.

Please comment below.