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Salesforce buys Heroku for $212m  

An impressive sale for the Heroku team, no doubt, and a fantastic result for YCombinator, which should be making at least about $7m (based on an initial 7% share diluted by 30% twice) on an initial investment of $15k - in other words, a 460x return at least. This is YCombinator's biggest exit so far.

Does this mean that Ruby development is mainstream enough in the enterprise (which is Salesforce's primary market at the moment), or does it mean that Salesforce is trying to expand to the lower end of the market?

From the press release, it would appear that it's the latter:

Salesforce.com anticipates that the acquisition will help it attract and serve a critical mass of developers, customers and ISVs wanting an open, scalable and trusted Cloud 2 platform. The purchase also will enable salesforce.com to take an increased share in the worldwide market for public IT cloud services, which market research firm IDC forecasts will grow 27 percent a year, to $55.5 billion in 2014.

On the other hand, Heroku uses Amazon AWS as its backend, and Heroku is not at all a "mega-cloud provider" like Amazon. So when Salesforce is saying that they're entering the "public IT cloud services" market, they're aiming more in the force.com/GAE model of helping people host applications directly, rather than the Amazon/Rackspace model of providing raw servers.

Heroku is certainly a more credible effort than yesterday's database.com launch. With this, Salesforce finally steps into the realms of "cloud services for the rest of us", rather than purely enterprise-focused, super-expensive platforms.

More from the library:
Why VCs do what they do
Customer development vs distribution channel development
Hypothesis testing for startups