Salsify Blooms With $8M in Skok Brothers’ First VC Deal

9/12/13Follow @gthuang

One of the most intriguing young Boston startups is having its coming-out party this week. Salsify, named after a plant that is “beautiful, low maintenance, and spreads like wildfire,” is trying to reinvent the fundamental data flow that is crucial to e-commerce businesses.

Salsify is announcing it has raised an $8 million Series A round from North Bridge Venture Partners and Matrix Partners. The leaders on the financing are Michael Skok from North Bridge and David Skok from Matrix. They are brothers, longtime VCs, and interestingly, this is their first venture deal together.

It couldn’t come at a better time for the local ecosystem. With the Boston tech scene—as well as the rest of the country—still in the midst of a Series A crunch, Salsify is getting off the ground during a challenging period for startups.

The 10-person company is led by co-founders Rob Gonzalez, Jeremy Redburn, and Jason Purcell, the CEO. They all came out of Endeca—the Kendall Square icon acquired by Oracle in 2011—so they know a thing or two about e-commerce data platforms and business software.

The problem they are solving is this: If you are a manufacturer, distributor, or retailer, how do you manage your product content that ultimately shows up on e-commerce websites, online catalogs, mobile devices, and other screens? Things like images, product descriptions, and data on related items and accessories have to be created, formatted, and shared with partners throughout the supply chain.

Right now that’s done either with bulky enterprise software (for big companies) or manual data-entry and management methods (for the little guys).

Rob Gonzalez, SalsifySalsify wants to level the playing field, says Gonzalez (pictured). A marketer at a retail site, say, can drag an Excel spreadsheet into Salsify’s Web app and upload, edit, and share product data with partners.

The idea is to put all the product information in one place—in the cloud—so it can be searched and operated on by authorized collaborators; from there, the data can get published to an e-commerce platform or Amazon.com.

In geek-speak, it’s like “GitHub for product content,” Gonzalez says—a cloud-shareable repository for data that designers, manufacturers, distributors, and retailers can access on demand. Oh, and it has to be easy to use for marketers and business people, not IT folks, he says.

That’s as opposed to the “totalitarian, centralized IT command and control model,” he says, where “it’s about IT controlling exactly what exists and in what way.”

Gonzalez says the company has paying customers already. They run the gamut from small retailers to a medical device distributor to consumer electronics companies. A distributor, for example, has to deal with different categories of products from various manufacturers, and it can use Salsify’s software to suck in all that data and then pass it along to websites and catalogs that display the products.

Look at the startup’s competitors, and you see two markets that could end up being disrupted here. One is product information management—the likes of Hybris, Akeneo, and parts of Oracle and IBM that cater to e-retailers. The other is product content syndicators like CNET or ChannelAdvisor, which sell product data subscriptions to companies.

Getting “manufacturers, retailers, and distributors collaborating” on product content “eliminates the need to sell data,” says Gonzalez. “Engagement between these companies is critical to our long-term success.”

What’s more, that kind of collaboration—if it becomes widespread—could fundamentally change how products are designed and developed. The whole ecosystem would become more distributed, and interactions would happen where they couldn’t before—sort of like the effect of social media on communications, marketing, and traditional media.

“It’s not going to be one person building a product and sending it to a distributor,” says Michael Skok at North Bridge. “It should become a dialogue.”

Skok is known for his investments in Demandware (business software for e-commerce) and Acquia (Web content management), two companies that seem to complement what Salsify is trying to do.

Meanwhile, his older brother David at Matrix has invested in GrabCAD, HubSpot, JBoss, and a number of other enterprise software companies. Many years before, the brothers had worked together at Skok Systems, a computer-aided design software firm.

Michael Skok is quick to downplay the sibling-VC angle or any rivalry between them. “It’s always about the entrepreneur. It had to be the entrepreneurs to choose us,” he says. Besides, he adds, “our sister is the bright one.”

What could make Salsify fail? Skok says it has the same risks as any business-to-business e-commerce startup. The growth of the e-commerce market could slow down. The company could make bad hires. It could fail to deliver the right product or have trouble dealing with customers.

But the VCs like their chances with this one. “A lot of companies want to look at the sexy parts of e-commerce,” Skok says. “But you have to fix the less sexy part that’s actually more important. Boston companies have a great heritage in the e-commerce world.”

Indeed, Salsify fits the Boston stereotype of a company tackling a tough business, marketing, or design problem with technology—see PTC, SolidWorks, Unica, EMC, and others. We’ll be watching intently to see how it turns out.

“There’s an element of Boston [tech] that feels like it lost its shine, whether it was DEC or Wang,” Skok says. “Now we have a lot of companies that should bring that shine back.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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