Xobni - wouldn't get out of bed for $20m

In a recent blog post I expressed a negative opinion on the usefulness of Xobni and astonishment that Microsoft would have shown any interest in buying them, particularly at a reported $20m.

Evidently I wasn't alone in this view. It certainly caused something of a storm on Y Combinator's forum, Hacker News, partly because the venture is Y Combinator backed.

Now it appears Xobni have walked away from the deal discussions. According to Techcrunch,

[Xobni felt un]comfortable it felt about its eventual fate inside the Microsoft machine. The fear was that Xobni would end up nothing more than a feature of Outlook. Microsoft wanted the entire team to move up to Redmond, and was vague in its answers about what it had planned for that team, or the product. In the end, the body language just wasn’t there.

Duh? What is Xobni OTHER THAN a feature of Outlook? Whilst I've seen it rumoured that they want to replicate their offering on other email clients, how can it be anything other than a feature? You have to suspect these folks are simply holding out for more money. But that is a dangerous game since it's hard to see another obvious buyer for Xobni who they can play Microsoft off against, especially since there is no clear revenue stream opportunities with the product - do you really want ads inside Outlook or would you really pay in order to get the "information" being thrown up about email traffic?

This is one lucky lottery ticket that Xobni should quickly cash and congratulate themselves on getting so much for so little.

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posted by John Wilson @ 9:26 AM Permanent Link newsvine reddit


At 11:23 AM, Blogger Harj said...

Hey John,

I think the related article showing up under your post about Xobni about Xobni's Yahoo product shows that they're more than an Outlook feature.

It is also worth keeping in mind that Xobni raised a significant Series A round from some high profile investors (Vinod Khosla, Josh Kopelman). While obviously not an indicator of success, it's certainly an indicator that they're looking for a big play beyond being a feature of Outlook.

I have a lot of respect for the Xobni founders, walking away from $20m is certainly not an easy task.

At 5:31 PM, Blogger Tony Wright said...

If you judged software startups by what they looked like 1 year after they got investment, not many would be worth a $20m offer.

How many people were looking at Google after their first year and saying, "Wow-- these guys are going to own the world!". How about Facebook? Not many.

It's pretty easy to see the opportunity-- email is hugely inefficient and broken. There's a lot of money in making it better (in Outlook and beyond).


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