What does Linkedin really mean to Microsoft?

Microsoft has stirred up a swirling buzz of discussion around the Linkedin acquisition for $26.2 billion. There are a number of angles that have been considered in the gazillion news stories floating around. Here’s a few of those threads:

  • Linkedin is a Salesforce counter by Satya Nadella — It has been argued by Steve Nellis and others that Linkedin’s efforts at developing and selling the tools in the company’s Sales Solutions unit have not gone very far, but the data in Linkedin’s network — when coupled with Microsoft’s own Salesforce competitor — Dynamics — could become a real player. Note that Nadella’s rumored efforts to acquire Salesforce stalled because of a too-high price tag (10X revenues), while Linkedin was much more affordable (7X revenues). Plus, with Linkedin in there are other angles to play.
  • Linkedin is a professional social network, and could counter Facebook for Business — Facebook has not yet released its business variant, Facebook for Business, but it’s supposed to roll out this year. Nadella might be trying to get there first by offering a fusion of Linkedin’s current mix of blogging, social networking, and recruitment use cases with Office 365 productivity options. Linking together the professional graph (Linkedin) with the work graph (Office 365)– as Nadella talked about in a call with the NY Times — and getting a premium on the integration of the two is probably a smart move so long as the seams can be made low friction. There is a devil in these details, but this is one of the most powerful visions for the merger.
  • Linkedin alone was a company with real problems — Linkedin stock got hammered earlier this year after lowered sales estimates. This would be bad in itself but doubly bad for Linkedin, since many of its best and brightest are compensated in part by stock grants, so when the stock falls, so does compensation. As a result, Linkedin was facing a mass exodus unless they could right the boat. This is one of the reasons Microsoft got the terms that it did. And now, people will be compensated in the more standard Microsoft way (as will the accounting for these expenses, which were clouded by non-GAAP practices).
  • Microsoft sees Linkedin as a way to deflect Slack — Personally, I don’t buy this conflation of threats to Microsoft. Yes, Slack is making huge inroads in work technology — specifically as the defining product in the exploding work chat space — but just because is has some of the features of a ‘social network’ (in that people are logged in for long periods of time each day, message each other, can coordinate outside of company boundaries) that doesn’t mean Slack and Linkedin are in some way head-to-head competitors. Yes, Slack is a competitor to Microsoft’s productivity/work technology products — most specifically Yammer, but also the core functionality slowly growing in Office 365 — but that doesn’t mean that Linkedin is intended as a Slack killer. Although Microsoft should be working on that, as well. I just don’t expect it will come from the Linkedin side of things.

After all the dust settles I expect that we’ll see a reoriented Linkedin, with a greater focus on CRM technologies and networking, and also a much enlarged focus on people operations (HR) technologies and networking, an area that Microsoft has functionally no offerings. This will take the form of enlarged platforms, and an ecology of partners building on Microsoft/Linkedin capabilities, as well as other, subsequent acquisitions. And Linkedin will immediately find its operational core — and culture — pulled toward CRM and HR by the Microsoft sales operation.
I also don’t believe that Jeff Weiner will be at Microsoft for longer than his required tenure, two years or whatever it is, and Kara Swisher agrees. More likely he will find new worlds to conquer, and Satya will find someone in Microsoft or Linkedin who will better execute what will rapidly become an integration strategy, rather than a trailblazing one.

Why Bootstrapping Builds Better SaaS Apps

I used to think bootstrapping was unsustainable, then a client in the cloud changed my mind.
I used to treat bootstrapping as a joke, likening startups that “bootstrap growth” to new restaurants that keep talking about their first Zagat listing while still having only plastic displays of food in the kitchen. Then I took on sales-and-marketing startup Agile CRM as a content strategy client. Being a part of cloud-based app’s core team since before Agile CRM’s public beta launch has completely changed my opinion on bootstrapping, and not just because we passed the sacred seven-figure revenue mark last year.
I used to see investors and VC firms as market soothsayers, as if they somehow understood business better than the businesses themselves. Now I know that bootstrapping builds better SaaS apps. Here’s why.

Pitching Customers Instead of Investors

With a bootstrapped SaaS app, you pitch your customers instead of investors. And guess what? You pitch them every day. That daily engagement and interchange that enable bolder innovation, from the app to the marketplace and back again.
When I first started working with the Agile team, we were our own best customer, if only because we were the only customer. The core development team had designed the first version of the app to solve immediate, real-world problems faced by their first SaaS app, ClickDesk, when it started scaling at an unprecedented rate. They couldn’t find a single affordable, extensible, integrated option for sales and marketing automation to track lead behavior and engage contacts throughout the entire customer lifecycle. Fed up with overpriced software that seemed to be aimed only at enterprise users with unlimited budgets, they decided to build a solution themselves and voila, Agile was born. It was just an internal solution at first, but that would soon change.
In my opinion, the most innovative part of founder Manohar Chapalamadugu’s million-dollar vision in leading Agile CRM (and this was there from the very beginning) has been his emphasis on building an all-in-one solution focused on sales and marketing processes, rather than just standalone features. It’s a bold vision, encompassing everything from call automation and online scheduling to sales gamification and automated email nurturing. With the decision to bootstrap growth from the beginning, input about these processes has continued to come directly from customers.
Something special happens when you daily pitch customers and listen closely to their response. Agile now has almost 1,300 ideas posted by customers on UserVoice, with over 200 of those ideas completed or in progress. If the CRM had taken outside investment, I think it’s unlikely that features such as the in-app landing page builder with integrated lead magnets would have been able to evolve naturally on top of an already extensive feature set. There would have been too many constraints.

An Ongoing Conversation

Technically-skilled support staff are one of the core reasons that bootstrapped SaaS companies create better products in the long run. Many of Agile’s customer testimonials speak of real campaigns and successes, and those quotes come not from anonymous review websites but from actual conversations with team members in India.
A brief word of advice. Whether you call them customer success agents, sales support staff, customer happiness rockstars, or a new title we haven’t even heard yet, let me emphasize two things: 1) They need to understand customer wants and needs (ie. it’s better to have one technically-skilled success agent than three with limited knowledge or experience of the actual product and industry); and 2) They should be some of your first hires. Just because you’re bootstrapping, that doesn’t mean you should skimp on support. In fact, the opposite is true.
I’ve been continually impressed by the dedication and responsiveness of Agile’s sales and support staff to customer wants and needs, and as I’ve learned more about bootstrapped companies with exceedingly high customer satisfaction ratings, I’ve noticed that this dedication to customer success goes hand-in-hand with smart bootstrapping. Aha!, the (totally bootstrapped) visual roadmapping app for product managers, stands out in particular with their decision to forego salespeople in favor of customer success.

Failure is the Ultimate Motivation

Bootstrapping a SaaS app isn’t about the choice between having weekly investor calls (or shareholder meetings) or weekly calls with your early adopters. It’s bigger than that. As Ryan Shank of (totally bootstrapped) mHelpDesk has written, bootstrapping is about building “an empire…one customer at a time.” We’ve already discussed the importance of customers. Now let’s shift focus to that idea of building “an empire.” The problem with empires is that eventually most of them fail.
Once a SaaS company decides to bootstrap their own growth, there’s a shift in perception regarding their own product. Maybe this is true for other types of apps, too, but with software-as-a-service I’ve noticed that the shift is much more dramatic, maybe because the rate of micro-focused iteration is so high, as are the possibilities for large-scale changes, both on the front and back ends of your product. It’s terrifying, but it’s also exhilarating. Updates happen automatically and customers are instantly engaged with them.
Bootstrapped SaaS apps can create more dynamic products because (if they’re successful) they embrace the possibility of failure, using it as motivation for streamlining their product and constantly making small enhancements, too, such as cleaning up front-end code and improving speed in as many ways as possible, like for one particular feature in one particular mobile browser. As Shank notes, having a smaller amount of cash on hand also demands a certain discipline and focus. How will you use that money? Will you build an app customers love, or will you create another pitch deck for investors?

Aviso launches to do risk analysis for revenue, raises $8M

Aviso, a startup from Zuora co-founder K.V. Rao and former JPMorgan Chase head quant Andrew Abrahams, launched on Wednesday with a new service for applying risk-analysis methods to corporate revenue. The company has raised $8 million in series A venture capital from Shasta Ventures, First Round Capital, Cowboy Ventures and Bloomberg Beta. In an interview, Rao explained that companies — like investment banks — should use machine learning to constantly analyze their corporate data and external data in order to spot potential shortfalls. That some people still use Excel as their primary tool for this, Rao said, “is a little appalling.”

Post-PC CRM startup Linko scores $2.6M, snaps up Localstream for location context

Linko, a mobile enterprise startup operating out of Berlin, San Francisco and Helsinki, has just picked up two rather useful things: $2.6 million in seed funding, and another Berlin-based startup called Localstream.

Both should help Linko flesh out its customer relationship management (CRM) product, which is all about automatically pulling data from various other apps the salesperson might have on her mobile device. This provides contextual information for a searchable social feed, and cuts down on time-consuming manual entry.

“It’s a smart, CRM-focused address book,” Mark McMahon, one of Localstream’s co-founders, told me on Tuesday, explaining that Linko can pull data from Google(s goog), Google+, Facebook(s fb), LinkedIn(s lnkd), Microsoft(s msft) Exchange, DropBox and more. “The more signals we get from different systems, the better our ranking becomes.”

In that scenario, location helps provide another piece of the contextual puzzle. Localstream’s founders used to work on what became Nokia(s nok)’s Here location platform, and in the last year or two had been developing a “browsable hierarchy of locations” that recognizes places and neighbourhoods, linking them to a database of alternative and translated names and so on.

According to McMahon, the idea now is to be able to, for example, scan through business documents held in a linked Dropbox account and automatically detect location entities that are mentioned.

Linko’s “post-PC”, bring-your-own apps focus makes it an interesting startup to watch. It’s currently in private beta, but the company tells me it will open up around mid-February.