Some consolidation afoot in world of cloud-based enterprise services. Intuit has made another acquisition to help position itself as the go-to place for small and medium businesses to run their offices in the cloud: it has bought Lettuce, a platform for companies to manage both orders and inventory online. Lettuce is not disclosing the terms of the deal in its announcement, but we have confirmed with sources that the price tag was $30 million, a figure first reported in Pando Daily.
A spokesperson for Intuit said the company was not releasing terms of the deal “as it isn’t material to their business.” This is the company’s 17th acquisition.
Unlike some acquisitions that see the buyer shut down the newly owned product, either in a talent acquisition or with the intention of using some of the tech in a new service altogether, in this case Intuit will be continuing to operate Lettuce as a standalone app. It will also integrate it further into its flagship SMB office accounting product, Quickbooks (there had already been an integration; now it gets deeper).
“While this is a big step for Lettuce, it doesn’t mean that much will change,” he writes. “Since the beginning, we’ve worked hard to improve the way you manage your orders and inventory so you can eliminate time-consuming, tedious tasks and spend more time doing the things you love. We plan on continuing down this path and once the transaction is closed, with Intuit’s support, we plan to accelerate this tremendously.”
When we wrote about Lettuce’s $2.1 million funding round back in 2012 from investors like 500 Startups and Crosscut Ventures, we noted that the company had by that point processed some $2 million in orders.
What the sale and subsequent product extension implies is that not only will Intuit have another service to expand the usefulness of Quickbooks, with more mobile-friendly features to boot (so crucial these days) but it will also be tapping into an existing SMB customer base at Lettuce as potential customers for its other services. Mobrem says that it will be continuing to develop Lettuce as a standalone product “for at least a year”, if not more.
Lettuce charges businesses in three different tiers starting at $39/month and going up to $179/month.
The sale opens up the question — a pertinent one for other startups in the enterprise space — about consolidation in this vertical. Are the margins for services in the cloud strong enough to support lots of standalone businesses, or will we see others, such as Lettuce competitor Stitch Labs, also go the M&A route in the long run?
Mobrem says, despite the direction his own company has taken, the answer is an emphatic yes.
“Before the Internet it was hard to connect one thing to another,” he says, and that meant that big was nearly the only way to go. “But besides a few companies like Intuit, you will see a lot of smaller companies connecting to each other and growing into substantial companies. It’s almost like a partnership for marketing.” Indeed this is the same trend that has played out with companies like Box and Huddle, using APIs, creating webs of multivendor services.
“For us specifically the reason we sold to Intuit is that we built Lettuce to solve our own problems (at another startup) and saw others that could use what we created. We weren’t romantic but we were realistic. And this helps us get to more people faster.”