Marketing and Sales Intelligence vendor DiscoverOrg acquired RainKing on Friday and announced it this afternoon. Both firms employ large editorial teams for building and maintaining company and contact datasets and technology platform details (e.g. vendors, products, project plans). This is the second acquisition of a competitor by DiscoverOrg which bought iProfile two summers ago and quickly integrated iProfile’s international coverage into the DiscoverOrg universe.
According to Inc., RainKing posted 2016 revenue of $33.9 million, up $6.9 million. Combined, the two firms had 2016 revenue of $88.3 million and a 160% three-year growth rate. The combined firm has an Annual Recurring Revenue (ARR) in excess of $120 million. DiscoverOrg’s 2016 end-of-year ARR was $71 million.
“The path to rapid revenue growth is paved with highly accurate, actionable, and predictive sales and marketing data, and the combination of RainKing and DiscoverOrg means that our joint customer base has access to an extraordinary portfolio of data, contextual buying insights, and predictive intelligence. We are building a company that is to sales and marketing intelligence what Salesforce is to CRM.”
- DiscoverOrg CEO Henry Shuck
The plan is to immediately merge their coverage into a single database delivered via both platforms. RainKing customers will benefit from deeper coverage of non-IT execs (e.g. sales, marketing, HR, product management), the assignment of Customer Success Managers to their accounts, and access to DiscoverOrg’s TiLT training for SDRs. DiscoverOrg users will benefit from deeper company and contact coverage, particularly in Europe, along with a larger editorial team building out and maintaining the combined database. Both groups of customers will benefit from additional datasets in the DiscoverOrg research pipeline including a new one which will be announced in the next sixty days.
RainKing customers will continue on their current platform for at least a year until RainKing functionality is merged with that of DiscoverOrg.
The combined datasets will span over two million contacts and over 100,000 global companies. As both firms maintain high quality data standards, DiscoverOrg’s 95% accuracy guarantee will be maintained.
The deal is a cash transaction, though DiscoverOrg did not reveal the price.
Schuck provides additional details on his vision for DiscoverOrg and the acquisition in this YouTube video:
GZ Consulting Take
I have been tracking DiscoverOrg and its CEO Henry Schuck for over a decade. For a long time, I viewed them as a niche offering in the tech space competing against three other firms of roughly the same size (RainKing, iProfile, and SalesQuest). Due to competition and the cost of editorial resources, I figured they would plateau in their market coverage below that of the Hoover’s editorial dataset of 43,000 companies. With more exacting editorial standards and three direct competitors, it was difficult to see how the marginal cost of adding and maintaining the 40,000th profile was less than the marginal revenue for the 40,000th profile (Microeconomics 101 would contend that the rational firm would keep building additional profiles until MC = MR).
But I made several errors in my assumptions. Most importantly, I built in the additional cost of editorially maintained content without properly understanding the value of the data to clients, particularly as DiscoverOrg and RainKing extended their functionality into the marketing department and added light predictive tools such as ranking and scoring of prospects. Adding marketing and integration tools greatly increased the value of every profile within their databases and allowed clients to distribute the cost of licenses over both sales and marketing departments. The advent of Big Data and Predictive Analytics also increased the value of high quality company and contact data within CRMs and MAPs.
DiscoverOrg and RainKing quickly outgrew their other competitors resulting in the acquisition of SalesQuest by Avention and iProfile by DiscoverOrg. While other firms have entered the IT profiling market, they either focus on technographics (e.g. Datanyze, BuiltWith, HG Data) or remain much smaller (e.g. Corporate360).
Finally, the growth of ABM and a focus on top accounts increases the value of a top company database with rich targeting variables such as tech platforms and projects. “As the market continues to move toward account-based engagement built on a deep understanding of buying centers, investing in high quality data has become even more critical,” opined John Donlon, Sr. Research Director at SiriusDecisions. “Simply relying on information scraped from the web is not enough to succeed, but leveraging human-verified sales and marketing intelligence gives organizations a distinct advantage in all aspects of revenue generation.”
Initially, the merger is a win-win for the 4,000 DiscoverOrg and RainKing clients, immediately providing deeper company, contact, and technology opportunity coverage for their 70,000 clients. It also provides a runway from which DiscoverOrg can quickly grow its coverage including RainKing’s new Federal IT dataset. According to the firm, “Our roadmap is focused on accelerated data collection, deeper practical predictive intelligence, enhanced account-based marketing capabilities, and seamless data optimization and enrichment in CRM, marketing automation, and sales engagement tools.”
While DiscoverOrg could use the merger as an opportunity to raise prices, my guess is that prices will remain stable so that DiscoverOrg can position itself to take on sales and marketing intelligence vendors such as D&B Hoovers, InsideView, LinkedIn Sales Navigator, and Zoominfo. However, if DiscoverOrg is going to become the Salesforce of sales and marketing intelligence, the firm needs to expand its non-IT content beyond executives to include strategic company and industry intelligence. It is through the marriage of best-in-class executive intelligence (emails, direct dials, responsibilities, bios, social links, and org charts) with financials, filings, news, industry overviews, and SWOTs that DiscoverOrg will be able to go mano a mano with Dun & Bradstreet and LinkedIn in the broader sales intelligence market. Under this scenario, DiscoverOrg can continue to build out its best-in-class content set while licensing non-core content from other vendors.
This has been a year of significant M&A activity which has reduced the number of sales intelligence datasets on the market. Beyond DiscoverOrg/RainKing, Avention was acquired by Dun & Bradstreet to become their new D&B Hoovers platform (Dun & Bradstreet content fueling Avention’s functionality and connectors), Moody’s purchased Bureau van Dijk, Zoominfo was bought by PE firm Great Hill Partners, and Unomy was picked up by co-working company WeWork. The result is the phase out of the old Hoovers platform, uncertainty about Bureau van Dijk’s commitment to its Mint sales platform, and the withdrawal of Unomy and RainKing from the market (they will continue on in the near term, but are no longer being marketed). The future of Data.com is also in question as Salesforce has failed to announce a path forward for their AppExchange solution now that Dun & Bradstreet content is no longer available to new clients.