Yammer CEO David Sacks: Here's How I Avoided Getting Crushed By Salesforce.com

Business Insider

It's cheaper than ever to launch a startup. And a theory of running companies inexpensively, known as the Lean Startup movement, has gotten popular.

Yammer CEO David Sacks, who raised $142 million from investors before selling his business-collaboration company to Microsoft last year for $1.2 billion, isn't a fan.

"I'm not a believer in the lean-startup theory once you get traction," Sacks told interviewer Jason Calacanis at the Launch Festival conference in San Francisco. "That's fine when you're throwing things against the wall and seeing what sticks. But once you know it works, you've got to pour gasoline on the fire.

"That's why we kept raising money. I said, 'We've got to expand as much as possible, we've got to hire in sales.'"

Yammer debuted in 2008 at a previous startup-launch event organized by Calacanis. One of the judges evaluating Yammer was Salesforce CEO Marc Benioff, who declared on the spot that he wanted to buy the company.

Sacks didn't sell, and Salesforce went on to create its own collaboration service, Chatter, that was very similar to Yammer. It launched in 2010.

"It's easier than ever for people to copy you," Sacks said. "Marc Benioff saw us on stage, and he said, I'm going to do that.

"When we first launched Yammer, it was easy to copy. It had been developed in nine months with less than 15 people. If a big company had moved fast enough, they could have crushed us. We moved fast to add ... depth to the product. Salesforce copied Yammer 2008. We were on to Yammer 2010."



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