
Yammer agrees to Microsoft's $1 billion acquisition offer - theli0nheart
http://online.wsj.com/article/SB10001424052702303822204577467312505454118.html?mod=googlenews_wsj
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makecheck
"Sledgehammer spending" really bugs me. It says "we didn't exercise any brain
cells to figure out what our purchase is _actually_ worth, we're just throwing
money at the wall because we think we can".

Investors should scream at stuff like this. How many things could millions of
extra dollars buy? For one thing, maybe they could have acquired 4 or 5
additional companies, patents or other IP. If there was _any_ chance that they
could have done this for $500 million or $400 million or $50 million, that
_matters_ and should have been investigated thoroughly. Those saved millions
of dollars can also be used to employ a bunch of people on projects for years
(heck, sometimes entire applications are written by one or two people inside a
company, and they might build something really cool that can be sold).

Microsoft has lots of money, sure. But this kind of spending isn't thinking
long-term. Are they guaranteed to have this kind of money in a few years,
even? There may be a time when they're completely incapable of making a key
future acquisition because they overspent on crap like this.

~~~
pbreit
$1b is a steal for Yammer. I'm surprised Yammer would take that right now
considering it's current valuation and how bright its prospects are. It has
one of the most efficient B2B customer acquisition schemes. Even with the
culture mis-match, I suspect this will be a good acquisition for MSFT.

~~~
csallen
Do you have reliable information on Yammer's success? User numbers, revenue,
etc.

~~~
pbreit
[http://www.marketwire.com/press-release/yammer-
accelerates-m...](http://www.marketwire.com/press-release/yammer-accelerates-
momentum-in-a-breakout-2011-1606205.htm)

Guesses: 6 million users, 1 million paid, 2012 revs between $60-100m.

~~~
GFischer
That's nice, it's still a pretty hefty valuation but if they're that
profitable it's not as awful as I initially expected.

Microsoft has done some good investments and acquisitions in the past, and
also some duds. The jury is still out on Skype.

[http://en.wikipedia.org/wiki/List_of_mergers_and_acquisition...](http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Microsoft)

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theli0nheart
Here's the full text of the article:

Business-software company Yammer Inc. has agreed to sell itself to Microsoft
Corp. for more than $1 billion, according to a person familiar [with] the
matter.

It is unclear when the acquisition will be completed and announced, this
person said.

A Microsoft spokesman declined to comment. Representatives for San Francisco-
based Yammer didn't immediately respond to requests for comment.

Yammer is often called Facebook for the workplace because it creates a private
social network inside a company. The purchase of Yammer could add social-
networking functions to Microsoft's popular Office suite of software.
Microsoft has an existing product, called SharePoint, with some functions that
overlap with Yammer.

Bloomberg News earlier reported Microsoft was in discussions to acquire
Yammer.

~~~
harryh
They've since updated the article to indicate a 1.2B purchase price.

------
therealarmen
_Microsoft buys Yammer, renames it SharePoint Cloud Server 2012 Mobile
Enterprise Social Networking Edition_

~~~
berberich
source (as best as I can tell):
<https://twitter.com/gsmith/status/213325584921665537>

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newobj
I remember laughing at them when they launched at and won TC50. "Twitter for
the enterprise! What a dumb idea." I'm laughing all the way to their bank now.

~~~
shangrila
I was at a company a few years ago where the designers and execs were all
about using Yammer internally, and I thought it was a joke. A billion dollar
joke, turns out.

~~~
pbreit
For the people who "thought it was a joke" have you (or will you) put this
data point into your data bank so as to improve your future thinking?

~~~
shangrila
Heh, I suppose so. Thing is, I still feel like my initial assessment was
right. It was a very poor fit the company I was at, not to mention it was a
rather immature service at the time -- it felt like a half-baked Twitter clone
and it made for a poor replacement for chat/email, especially in a small
company. Today it seems like an almost completely different toolset with a lot
more features. Looking at it now I think it could be useful, but until this
story came out I hadn't thought about the service since that time more than 3
years ago.

The important takeaway I get from this is that they kept trying and managed to
improve and deliver a service that actually works for their target market. If
it had stayed like it was I don't think it would have gone anywhere. Hats off
to them for pushing through and executing well!

~~~
pbreit
It came flying out of the gates, was always more like Facebook than Twitter
and is targeted at pretty much all companies (I've worked at a 6 person
company that loves it, a company that went from 10 to 100 employees that loves
it and a company with 10s of 1000s of employees that loves it).

~~~
mangodrunk
You've been at a lot of companies in a short amount of time. My experience has
been that Yammer is not useful, for when the company was small and even less
useful for a larger company. What exactly do you find useful that isn't
covered by existing products?

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mindcrime
Well, this is interesting. Our company (Fogbeam Labs) are working on products
in this same "Enterprise 2.0" space: social-networks for the enterprise,
knowledge management with a social twist, social-search for the enterprise,
etc.

So, what - if anything - does this mean for us? Well, it confirms that the
area we are working in has value, and illustrates the potential we're chasing.
And this could actually be good if/when we start trying to raise outside
money, as it shows that there are viable exit scenarios in this field. OTOH,
it also means we're competing with Microsoft, and it probably makes us look a
little behind the curve. That's OK though... the adage about the tortoise and
the hare still stands.

On a personal level, I'm excited by this. I _like_ the idea of competing with
Microsoft. It's easier to see them as the "evil empire" given their history,
and I've never liked Steve Ballmer anyway. These guys I could get fired up
about competing with. It's even better that we are a "pure play" Open Source
company, where MS has a long history of antipathy for F/OSS.

~~~
nostromo
I'd rather compete with Microsoft than Yammer in this space; be happy.

Remember, Yammer itself was competing with Microsoft.

------
DrJokepu
I'm not very familiar with how raising funds works so this is a genuine naive
question and I'd appreciate if someone could explain this to me.

On their "About Us" page, they say that they've raised $142M in venture
funding. How much equity VCs typically get for such an investment? 20%? In
that case, the exit of the VC would be around $240M which in not even a 2x
profit. Is it possible that the equity owned by the VCs is much larger than
that? It seems to me that VCs would have to own a very large percentage of
their equity to make this acquisition worthwhile for them, in which case the
original founders wouldn't get anything nearly close to the $1.2B purchase
price.

~~~
nivertech
I expect investors to have majority of equity in the company now, more like
60% or even more, not 20%.

You can't raise 142M and stay with 80% of the equity.

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rayval
Yammer is Microsoft's Instagram, and not just because of the same price tag.

As did Facebook, Microsoft is buying market traction, user engagement, brand
equity, UX chops, and vision.

~~~
mtgx
I think Facebook bought Instagram because they were afraid of its fast growth
and what it could become in the future.

~~~
moreorless
Aren't they all the same people?

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jkaljundi
From actual usage of Yammer, have heard of many companies where it is in use
but the user engagement is really low. Can anyone using it comment on any
success stories or failures of using Yammer internally? What has worked and
what not?

~~~
lmm
In my current company it's pretty successful; it pretty much fills the role
that IRC had at my previous two jobs. I guess it's less intimidating for less-
technical folks than installing an IRC client (and one less server for ops to
maintain).

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xxcode
Yammer says we are their 'top ten' users. We are a 8K employee software
company.

Most common comment about yammer - "Oh I've used it....once".

------
dm8
Congrats to Yammer team. On a side note, we are seeing lot of acquisitions
that are > $500M. Buddy Media, Instagram and now Yammer (during last couple of
months itself).

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lukejduncan
IT's a great exit for the team, but being bought by Microsoft seems like the
kiss of death for the actual product

~~~
mindcrime
Cool, that may help create an opening for our startup. :-)

------
dhughes
It's like Facebook only with your grandmother standing behind you watching
every word you type.

~~~
maguay
Actually, that's how Facebook already is ... with your literal grandmother
watching everything you post.

~~~
bukl
Actually that describes the original startup that Yammer was spun out of: a
spam-heavy social network called Geni, that tries to turn a family tree int a
social network, and brings not only your grandmother, but every other crazy
distant relative out of the woodwork.

~~~
maguay
Very interesting. I'd never heard of Geni and the story behind Yammer.

------
bukl
Kudos to them for recognizing the value of an internal tool and spinning it
off. Their original idea, Geni, seems to be languishing(unsurprisingly-how
many mentally ill second cousins once-removed does it take to ruin a social
network?).

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statictype
Is this the first not-small web software company that Microsoft has acquired?

I wonder if they're going to eventually convert all the Java and Scala to C#
and F#

~~~
mindcrime
They had previously acquired Powerset, for one:

<http://en.wikipedia.org/wiki/Powerset_%28company%29>

~~~
samstave
Powerset had a ton of hype, then they were acquired and then they seemingly
died.

Never heard anything about them since.

~~~
larrywright
I think that technology was rolled into Bing. I don't think they ever expected
that it would be a standalone product offering.

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sosuke
Darn WSJ gate! Is it confirmed or not?

~~~
naner
[https://www.google.com/search?q=Business-
software+company+Ya...](https://www.google.com/search?q=Business-
software+company+Yammer+Inc.+has+agreed+to+sell+itself+to+Microsoft+Corp.+for+more+than+%241+billion%2C+according+to+a+person+familiar+the+matter)

You can get in with the Google referrer.

------
NDizzle
There goes their hipster cred.

~~~
callmeed
Maybe they're playing the "ironic" card.

------
thought_alarm
So this is basically a Win32 version of Zynga? Or, is it COM?

Well, either way, good for them.

------
hankejh
$1.2 B

------
Comrade
Smart buy.

------
tubbo
there's always <http://github.com/diaspora/diaspora> for those seeking an
alternative

~~~
mindcrime
I'm not sure Diaspora has any enterprise specific leanings, although - to be
fair - I haven't spent as much time studying Diaspora as I probably should
have.

OTOH, there is another Open Source (ALv2) "enterprise social networking"
project out there, and we're always happy to have other folks get involved.

<https://github.com/Fogbeam/Quoddy>

So far we support features like:

A "facebook wall" like event stream for various event types, including status
updates, calendar events (via iCal), business events (via our business event
subscription engine), and external activities (via the activitystrea.ms
protocol)

Friending / Following users

User Lists

User Groups (well, this is still being worked on)

"User Streams" (sort of like Circles in G+, but more flexible)

User profiles (this still needs a fair amount of love)

Status Updates (like "post to your wall")

ICal Subscriptions

Business Event Subscriptions (for SOA integration)

And we have a pile of other features planned or in progress. See:

<http://code.google.com/p/quoddy/wiki/Roadmap>

Disclaimer: I freely admit that we intend to make money from this initiative
eventually, but the code is (and always will be) under a true OSS license
(it's ALv2 now and _probably_ always will be) and we don't ask for copyright
assignment or anything. Hack on the project with us and hopefully we can hire
you full-time when we (land a couple of paying customers | raise a round of
funding | win the lottery).

~~~
pferde
I guess it is not distributed (meaning I can run my own Quoddy server, and
talk to users at friend's Quoddy server)?

~~~
mindcrime
_I guess it is not distributed (meaning I can run my own Quoddy server, and
talk to users at friend's Quoddy server)?_

Well... there's not _exactly_ a notion of "distributedness" built in. That's
on the wishlist (and, in fact, this project sprung out of a much older project
that had that as it's core idea) but there _is_ support for receiving and
display messages from any other arbitrary system that supports the
activitystrea.ms protocol. So modifying Quoddy to emit, as well as consume,
activitystrea.ms messages would give you a way to achieve a degree of
"distributedness." And that wouldn't be a hard change to make in and of
itself.

The trickier part would be how to say "I want to receive updates from remote
user $FOO when they come in" since $FOO is probably not a user on your local
Quoddy instance. Once we have FOAF support implemented, it would be easier to
talk about navigating the remote social graph and connect to non-local
users... but a short-term way to achieve that could probably be hacked up.

------
lawnchair_larry
I heard Yammer has no hope of revenue ever and that this is obviously a talent
acquisition.

