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November 3, 2011

Not just Facebook for the enterprise: Q&A with David Sacks, Yammer CEO

CBR talks to the boss of enterprise social network company Yammer about ROI, security, getting the social enterprise message out there and why Facebook and Twitter may not be right for your business

By Steve Evans

David Sacks, Yammer CEO

Yammer was founded in San Francisco in 2008. It calls itself an enterprise social network, enabling users to communicate, collaborate and share files, pictures and documents. Users must share an email domain to join a group although external partners can be invited to join networks. The platform uses many familiar features from consumer social networks such as @ replies, news feeds, threaded conversations and direct messaging.

The social enterprise space is hot at the moment thanks mainly to salesforce.com but to plenty of others as well. Where do you fit in this space?
We launched in 2008 and since then we’ve gone from an idea to a market and we’re now seeing real interest; the market is taking off. It’s inevitable that new forms of communication would move to the enterprise space if they started in the consumer market. That was the bet we made back in 2008.

The pervasiveness of social networking in the consumer world and the consumerisation of IT are driving the market at the moment.

The look and feel of Yammer clearly borrows heavily from Facebook and Twitter. Why shouldn’t companies just be using those instead of Yammer?
Would you really want to push your workers to where they can play Mafia Wars? Second, there are open, public social networks. Yammer is internal to your company; only your workers can use it and see it. You own and control your data on Yammer. Facebook and so on are good for promoting a company but they can stop people from doing work. Yammer is also more secure, which is an opportunity for us.

Let’s talk a bit more about that then. There have been a lot of scare stories about the dangers of social networks in business. Is that fear holding back adoption of tools such as Yammer, do you think?
Yammer is still enterprise software that a company owns. We’re 100% cloud-based as well and we follow best practice. When we come up against that argument we ask a company if they are willing to use cloud computing at all and there are very few that can opt-out completely. You know, the Internet has been around for a while now, so for me there is no argument about security.

So if the Yammer service is internal-facing, does that make it more of an intranet rather than a social network?
It’s a very different kind of intranet. They are much like brochures in that they are not participatory and just broadcast out a message. The failure of traditional intranets has been to engage with employees, and that’s where Yammer comes in.

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We integrate with many intranets as well as SharePoint, email, Google Talk, Box.net salesforce.com, NetSuite and Google Reader and feeds from Twitter.

You mentioned salesforce.com there – is their Chatter tool your main competition?
I’ll start by saying that we integrate with Chatter, you can bring your feed into Yammer. Chatter is very good for tracking salesforce.com but that’s a siloed and compartmentalised application. Salesforce claims four million users, we’ve got four million and we’re a younger company.

You operate a freemium model at the moment [the basic service is free, businesses up to 100 users wanting improved security and admin controls can pay $5 per user per month and businesses over 100 users can get a quote from Yammer]. How many of your customers are paying?
Around 15-20% are playing and there is a big conversion rate of customers paying after using the free version. We’re not profitable at the moment but that’s not the focus, we focused on growing.

Can you give us an example of how your product is being used in the real world?
A retail store chain in the US has rolled it out to 5,000 stores across the country. Store managers are using it on their phones to share information of what’s doing well in their stores. So for example they are taking a photo of an in-store promotion that is doing well and sharing it with others – it’s like sharing best practice.

What about companies that are still unsure of the social side of the enterprise? I’m sure you must come up against them.
We’re seeing enthusiasm rather than concerns. We will walk them through the security, the regulations. And ROI is now being understood much better.

There are soft benefits such as improved collaboration but there are also hard benefits. Forrester examined Yammer and said we provided a ROI of 365% in just over four months. There are other benefits such as less staff turnover because they feel more involved in the business and less worker frustration because it is much easier to find information. People used to be unsure about email but no one questions it now.

Finally, you’ve recently opened up an office in the so-called Silicon Roundabout area of London, near to Old Street. Why did you pick there for your European HQ?
We wanted to be part of the scene here. Silicon Valley already has that eco system in place and we want to help London build the same.

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