PowerInbox Merges with ActivePath, Looks to Push Interactive E-mail

11/27/12Follow @gthuang

What happens in Boston doesn’t always stay in Boston. Just ask Mark Zuckerberg, who famously moved Facebook from Harvard to Silicon Valley in 2004.

But Matt Thazhmon, who wouldn’t mind overthrowing Zuck as the king of social, is playing things a little differently. His Cambridge, MA-based social e-mail startup, PowerInbox, is merging with New York-based enterprise e-mail firm ActivePath—but Thazhmon and his team are staying in Cambridge, while keeping an additional office in Silicon Valley.

The combined company, which has 17 people, will be called PowerInbox, and has raised some new financing as part of the merger. The money comes from Thazhmon’s previous investors, which include Atlas Venture and Longworth Venture Partners, as well as ActivePath’s investors, including Battery Ventures, Gimv, and Genesis Partners. From PowerInbox’s perspective, Thazhmon says, the deal involves $10 million in funding. But that figure includes some of ActivePath’s existing VC money in the bank; that company raised a $10 million round last year.

Confused yet? Don’t be, says Thazhmon. “We saw an opportunity,” he says. “Together we can create the new market for interactive e-mail.”

PowerInbox, which started in 2010, has been trying to make e-mail into a platform for social apps like Facebook, Twitter, Groupon, and whatever else comes along. The idea is to target consumers and encourage them to access everything—shop for deals, watch videos, share content—from their inbox. Meanwhile, ActivePath has gotten traction on the enterprise and marketing side of e-mail. But its core mission is pretty similar to the original PowerInbox’s.

The deal came about when PowerInbox was looking to raise a Series A venture round. A meeting with Battery Ventures led to the realization that combining two existing startups might be a win-win for the future of e-mail. (As an aside, Battery famously passed on investing in Facebook when it was the future of social.)

Thazhmon is staying on along with his co-founders, Dileep Thazhmon and Lance Jackson, all in executive roles. Matt Thazhmon says he’ll be focusing on products, while Jeff Kupietzky, ActivePath’s CEO, will serve as PowerInbox’s chief executive. The firm’s chairman will be ActivePath co-founder Aryeh Mergi, who also co-founded msystems (bought by SanDisk) and XtremIO (bought by EMC). The merged company has offices in New York City; Cambridge, MA; Palo Alto, CA; and Tel Aviv, Israel.

From what I hear, ActivePath’s roots in Israel made the timing of the merger somewhat dicey, what with this month’s deadly developments in Gaza. Deal negotiations were taking place as at least one lawyer involved was called to the front lines, Thazhmon says, “right in the middle of missiles flying.”

On the business front, startup mergers aren’t the norm, but they aren’t uncommon either. One of the biggest examples would be PayPal (Confinity) and X.com (led by Elon Musk) joining forces in 2000, and then being bought by eBay for $1.5 billion in stock.

Those are the footsteps Thazhmon would like to follow in, not surprisingly. “We’re putting together two teams that have spent a lot of time on interactive e-mail,” he says. “Our shared knowledge of that positions the combined company to take advantage. It’s hard to create a new market. This lets us get to the next stage. We now have the resources to make interactive e-mail a reality.”

Of course, big challenges remain for PowerInbox (and anyone else) in terms of creating the future of e-mail as a broad platform. “E-mail is a tricky space,” Thazhmon says. “There are lots of stakeholders. Because it’s so huge, you have to get lots of people to move together.”

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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