Hello,
Your friendly neighboring analyst (who apparently never writes anything anymore).
I had to dust off the cobwebs for this one… I had such a busy day with calls and messages and emails and such – I figured it was a good time to break the streak and write something.
First off, won’t comment on the price… OK, maybe just one tiny one. One of the people who was in the team who setup the Yammer deal (the one that was done for $1.2 billion, ‘member?) called me today to get my thoughts… This person was very happy because they no longer own the title of worst buy at Microsoft… <rim shot>
There’s also this — the price per monthly active user is $260.00. Expensive acquisition cost…. (thanks Dave Kellogg for doing the math). What happens when (not if) users start leaving because now Microsoft owns it? Don’t think this is true? How many customers have each of the acquired businesses by ANY large vendor (including Microsoft) lost following acquisitions? My data says 20-80%.
I won’t go deep into that – but there are a few questions that I ponder on. Beyond the salutatory and congratulatory posts that I’ve seen all day and the enthusiasm that plagues Microsoft executives – three things come to mind…
Who owns the data?
There is a lot of data in LinkedIn (not all the data is good, as you know if you use it — you don’t put all your data and allow it to track everything you do, much like you don’t put everything you have done in your resume or allow your employer to track everything you do). One of the jokes I heard during the day was that Microsoft did this as a marketing campaign to offer everyone on LinkedIn a Hotmail or Outlook.com account (since mostly no one uses their work email there… yeah, bad joke… sorry).
A lot of it is semi useful in the form of a Social Graph (friend and colleague Ray Wang expressed this first among the people I follow and talked to). It’s likely incomplete, but it is the best we have and aggregate use aligned with it (your former boss read four articles on cloud security after you left your former job as a cloud security expert — hmm) makes it more interesting to the outside world. LinkedIn has been using this well for targeting content and offers.
Who will own this data following the acquisition? I know Satya Nadella has said it was going to be independent – but how long will Microsoft be able to maintain that? How will you prevent, for example, the Dynamics CRM team from attempting to get all that data and use it as a value proposition for their Marketing tools? Or Sales tools?
More important, how will use of this data be governed? Today that is governed by LinkedIn making sure that it is not all exposed and all available to anyone just because – will Microsoft continue to enforce this? How about if it becomes a matter of winning the largest deal ever? Or offering a new product that will place them as a market leader?
How bad can a little indiscretion be? Think about it this way, Microsoft has PowerBI, Azure ML, cloud everything, and a lot of other properties where trust is the number one currency. If they obviate or change the data governance to fit their other needs – who will continue to trust they will not do the same for the other properties?
How is this going to be used?
This is actually one of the questions that interests me the most. If we are going to be honest here, the products that LinkedIn had were — average at best.
As the first company to offer them, there was a value (small) by lack of comparison and competition. Sales Navigator gave the sales people access to colleagues of the prospect they might’ve worked with or contended with before. The recruiter tools gives the HR department information about an applicant that is not easily obtainable otherwise.
These tools are not must have. They are nice to add, but any job can be done without them. Knowing that my fraternity brother (sorry, yours – I know, shocking to think I was not part of a fraternity) knows the person who is driving the deal on the prospect’s company does not do much for me other than — maybe I can ask for a favor? What if my bro and this person are enemies? Or if their bosses are? None of this information is available to me – just a weak relationship with no contextual data attached.
Better than nothing? Potentially – but then again… spend the time more wisely and don’t look for shortcuts?
The point is that if the products are going to be integrated into Office 365 (and be part of One Microsoft) they may give a false sense of usefulness to the people using them. LinkedIn never had exceptional products, nor could it ever figure out how to better market and monetize the data they have. This is what slowed down their growth and what ultimately caused them to be acquired (monumental job by LinkedIn management to unload a stagnant company).
If the usefulness of these products, and new uses, will come from a different utilization of the data – or integration of the capabilities… well, see my point above about governance.
Couldn’t the cloud have done it better?
Let’s say it – twenty-six billion dollars is an obscene amount of money. It’s not a criticism of anyone – as my friend Paul Greenberg said about Salesforce and Demandware – if two consenting adults want to do it — who am I to stop them?
I am in favor of two things that, well utilized, could’ve done this better. Open, public clouds and platforms.
I still think, like I did about the Salesforce-Demandware deal last week, that the purchase was not only not necessary – but it actually made things harder to work for users.
In an open cloud anyone who can access a platform with the right responsibilities (which, corresponding to a capitalistic world, you can purchase and self provision in the same open cloud) can access any data. Any smart provider, in the same open cloud, will make their data and services available to anyone who wants to purchase them — it’s how you make money as a service provider in a cloud world (strictly PaaS talk here).
Couldn’t $26 billion have been better invested in building better open clouds, with better services, offering better data to — more people? Is the need for lock-in into taller walled gardens that necessary that you MUST spend an obscene amount of money in protecting your walled garden?
Wouldn’t $26 billion (and “change”) be better spent in building a better ecosystem? a better accessible model?
Heck. Yeah.
That’s it. Nothing earth-shattering, but nothing in this deal is earth-shattering.
I had so many conversations and discussions today, and so many opinions and ideas that i heard that my head is about to explode. But… these are the questions that continue to haunt me.
Forget whether Microsoft wants to get into HR, or they want to offer more value than anyone else to small businesses via Office365, or even if they figured that $100+ billion they would have to pay for Salesforce is too much and are passing on it altogether… those are conspiracy theories at best.
These questions are the ones I want to hear honest answers to (I heard the party line about them many times today).
Don’t you?
disclaimer: Microsoft and Salesforce are clients – some of my oldest, nicest, and kindest clients with lots of forgiving in their hearts who would never get upset at my opinions — that’s why they love me and I am endearing to them… Demandware and LinkedIn are not clients, but I know and talked to a few people in both at the time of their respective acquisitions. These past 1,200 or so words are all my opinions and I stand by them. Any mistake, omission, or misstatement is mine alone and my insurance company better be ready to fight for them. I stand by my opinions and these words and will gladly clarify any statements or correct any mistakes – just talk to me. thanks for reading.