Why Yammer Said Yes to Microsoft: Q&A with Co-founder David Sacks

8/30/12Follow @wroush

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the next version of Office, which again is fully touch-enabled. You’ve got stuff happening with Xbox. You’ve got the Yammer acquisition. The company feels like it’s doing a lot right now.

X: Do you feel confident that you’ll have room to keep innovating?

DS: We are staying here in San Francisco and are going ahead with our plan to move into our new office. Microsoft has said they want Yammer to continue to be offered as a standalone product. They have given us quite a lot of operational independence—I am still running the company, and my CTO and co-founder Adam Pisoni is still here. We’ve made a long-term commitment to stay with the company. So I think we will be able to innovate. Microsoft has made it clear to us that innovation was one of the reasons they bought us. They absolutely don’t want us to slow down.

In fact, we just did our first post-Microsoft release. It’s one of the biggest we’ve ever done, and I think the best. We completely redesigned the website and introduced features like Online Now, which is a chat interface, and Inbox, a prioritized way of consuming your messages. On the design side, I think we finally have a look that is distinctively Yammer, but is still a social network; I don’t think anyone is going to accuse us of ripping off Facebook anymore. We have new features like trending files, company resources—a place to pin important items like documents and company announcements directly to the home page. The larger point is that we continue be very innovative, and that is what Microsoft wants.

X: What kind of company is Microsoft becoming? There’s a lot of talk that it’s evolving away from its focus on consumers, which was a legacy of its PC operating system business, and becoming more of an enterprise software company, with big systems like SharePoint and Dynamics and Office.

DS: I don’t think anyone at Microsoft sees themselves as just an enterprise company. You’re right that it has a very strong position; the Office division, if it were a standalone company, would probably by the most valuable enterprise software company in the world, and that’s just one franchise in their business.

I think one of the reasons Microsoft was attracted to Yammer was that we represent this move toward the consumerization of IT. They definitely recognized that trend, and I think they believe they can serve consumers and enterprises at the same time.

As Steve Ballmer has said, they are all-in on the cloud, they are all-in on touch, they are all-in on devices and services. When you are outside Microsoft, as we were before this deal, maybe you think that’s marketing hype. But I can tell you from the inside that it’s absolutely real.

X: Yammer put out an announcement this month about Crane, a sentiment analysis tool developed by a company called Kanjoya. Companies with Yammer can use Crane to look at what people are posting on Yammer and gauge morale within their ranks. How did that come about, and does it represent the sort of technology that you hope outside developers will keep building for Yammer?

DS: We don’t build features like Crane—we let third parties build them. That’s something most reporters don’t seem to get. They thought we had somehow launched sentiment analysis as a feature of Yammer. But now that we have an open platform, a company like Kanjoya can come along and build a sentiment analysis thing, and it’s great. We put out the press release because we have a little more reach than they do, but we have an open an unbiased posture with respect to all of these applications.

The whole idea of a platform is that people can use our APIs to build whatever they want. Sometimes, somebody will launch an app on our platform, and their competitors will think, ‘Okay, I can’t work with Yammer anymore.’ No. We aren’t announcing partnerships. It’s just that they announced an app on our platform. I agree that sentiment analysis is an interesting one, but really Kanjoya deserves the credit for that, and it’s up to them to make it successful.

X: You mentioned YamJam in October. It’ll be the first time Yammer has put on a user conference. Are you looking to foster more apps like Crane?

DS: That’s part of it. We have been doing “Yammer on Tour” for about a year in a dozen cites and have had phenomenal attendance. We had 400 people in London, 400 people in Sydney. We thought the time had come and that we were big enough that we should have our first user conference. It’s an opportunity for our customers to come talk to us and to each other. We will also have a lot of prospects there, people who are interested in becoming Yammer customers. We will have developers there. It’s an opportunity for everybody to come together and learn from each other as much as from us.

X: I have to ask you about your Facebook post from August 17, where you said that “Silicon Valley as we know it may be coming to an end” and argued that there’s a dwindling supply of ideas for successful new companies. That post kicked up a huge dust storm of replies and counterarguments from people like Marc Andreessen. First, what inspired you to post that?

DS: Why do people post anything on Facebook? This was just a spontaneous utterance. Once it got picked up, I had to explain my views in more detail, so that’s what I did.

X: Were you surprised by the vehemence of the responses?

DS: Yeah, absolutely. In hindsight, I guess the question is, why did people react so vehemently? There was so much emotion that maybe people thought I was saying they aren’t doing good work. That wasn’t my point. It was more of a structural point about the industry. I never said that Silicon Valley was dying or dead. What I said was that … Next Page »

Wade Roush is Chief Correspondent and Editor At Large at Xconomy. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

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