Why We Are So Proud of Yammer

When we founded Emergence Capital in 2003 we envisioned a new generation of technology-enabled services (“TES”) companies that would fundamentally revolutionize IT globally. Early investments in Salesforce.com and SuccessFactors that became multi-billion public companies proved we were right about this tectonic shift to cloud-based computing architectures and recurring revenue business models. We also predicted an equally powerful shift to end users away from centralized IT that would ultimately change the way software was bought and sold now referred to as the “business freemium” model. Finally, we theorized that massive changes in consumer online behaviors would also impact the workplace and identified an investment thesis around enterprise social networking as a big potential opportunity. We reached out to many companies in the space, but Yammer, we believed, had the vision and caliber of team that could take full advantage of this enormous opportunity.

We were the first new investors into Yammer after it spun out of Geni, a consumer internet company also founded by internet visionary David Sacks. We joined the board in January 2010 and began to help the company modify it’s DNA from a kick ass, product-driven, consumer internet company to an enterprise sales and marketing powerhouse. In the two and a half years since we’ve been involved, the company has grown to from 25 employees and 1 sales rep to over 350 people with a world-class, global sales and marketing organization and penetrated 85% of the Fortune 1000. Today, Yammer has over 5 million users in 200+ countries on over 250,000 corporate networks. At $1.2 billion, this transaction is the largest private company acquisition in SaaS history. Certainly we are proud of the financial return, a “homerun” by any definition in VC parlance, but we’re even more proud of what this company has accomplished and it’s impact on millions of business users and companies around the globe.

David Sacks now joins the pantheon of Emergence-backed Cloud Titans such as Marc Benioff of Salesforce.com and Lars Dalgaard of SuccessFactors (now SAP). We wish David great success in continuing to make the dream of cloud computing come alive and look forward to the impact Yammer will have on the IT landscape in the future as part of Microsoft. Congratulations to David, Adam, Mark, DavidO, Jim, DeeAnna and the entire Yammer team – we are so proud of having been associated with Yammer and your historic success.