Yammer, based in San Francisco, is basically Twitter for business — although in the two roughly years since I regularly used it, it's evidently added some Facebook-esque features. It's been at the vanguard of "enterprise social networking," or bringing microblogging and social networking into the business environment. With the consumer space tapped out, this is where a lot of companies are looking to expand.
Or, in Microsoft's case, acquire. Just for perspective, $1.2 billion is FAT valuation for Yammer. Remember Instagram, the year-and-half old photo sharing site with 13 employees that Facebook bought on the eve of its IPO for $1 billion? Yeah, that seems so long ago now...
Yammer sold for a little more than one "Instagram," in the new parlance of Silicon Valley. But more importantly, Microsoft bought the company for all cash. Instagram, by contrast, was a cash-and-stock deal, mostly stock. So Yammer's investors, who had put about $150 million into the startup, are going to see a very large payday, composed of actual money that they can use to either buy a second yacht or turn around and pour into other startup investments.
In some respects, Yammer, which will be integrated with Microsoft Office, is a bigger deal than Microsoft's recent announcement that it's entering the tablet market with it's own device, Surface, designed to beat the iPad in the business environment. Yammer definitely adds something to the familiar Word-Excel-PowerPoint triumverate. It's just what MSFT needs to keep its cash cow a-milkin'.
There are numerous other trends in enterprise software, as it migrates to the "cloud." HootSuite CEO Ryan Holmes has a great take on the sale and what it means at Fortune.
I last wrote about Yammer in the context of company's avoiding an IPO. Yammer definitely did that. And in the end, it probably made its founders and investors a lot more money.
That said, an Instagram-plus-$200-million deal bolsters my argument that while we probably have a tech bubble right now, we definitely have an acquisition bubble. I've described the game as figuring out what Facebook can't do, doing it, and scaling quickly with zero regard for revenue. But figuring out what Microsoft, currently undergoing a revival, needs probably isn't a bad play, either.