And so, some five years since I suggested it, Microsoft have at last bought LinkedIn. During my interview process for my ill-fated spell at the Redmond giant’s UK branch, I was asked which Cloud-based company Microsoft should buy. My response was LinkedIn – for years I’ve regarded it as the only Enterprise Social Network, and it seemed a logical step for the company to take.

This was, of course, in the days when Microsoft was still predominantly an operating system company. The story also insinuates that I was being interviewed by people who had influence in the decision making of the organization. Draw your own conclusions.

The thing is that Microsoft’s acquisition record in recent years has been a bit patchy: in Skype they were buying a Verb – and they’ve now begun to transfer that verb-brand into the business world with Skype for Business (although it’s not entirely clear whether it’s much more than a branding exercise, or if Skype actually makes any money…). Their acquisitions of aQuantive and Nokia’s phone business were written off. The next biggest of their purchases, games company Mojang, is probably too early to call. The purchase of LinkedIn will cost them as much as all of those plus their 5th biggest ever purchase Visio Corp (although not at today’s value dollars…).

But the comparison of purchases past that I think is the one that gives best comparison was the $1.2bn acquisition of Yammer back in 2012. And again, I think that’s a takeover on which the jury is still very much out.

In Yammer, it seems Microsoft thought they were buying a software company, and that’s possibly the reason why it seems to have stalled. For ages they’ve been talking about how its functionality will be integrated deeper into the Office Suite. But it’s still a distinctly separate product from the rest of the suite. But they in recent months appear to have dismantled Yammer’s standalone customer success team. (My own hunch is that they are trying to turn Yammer into something akin to Salesforce Chatter – less of a social place to go, more of a way of have less structured conversations within the more structured applications of Microsoft Office…)

But if you are buying a social network, is it software you are buying? Or the data? Or the network? It’s probably a bit of both, but with LinkedIn I’d argue that it’s mostly the network and the data. And that’s not well-trodden ground for Microsoft who are very much a software company (Cloud or otherwise).

At this sort of time there will be talk of synergies and complementary strategies. Most large acquisitions fail – 70-90% are abject failures. That timely article from this month’s Harvard Business Review says that the one thing likely to promote success in an acquisition is the acquirer focusing on what they can give to the acquisition, and not just what they can get. 

If that is the the case, the omens don’t look good: in this “welcome to the family” video, Satya Nadella seems to be already talking in terms of how LinkedIn will add value to Office 365…

One thought on “The acquisition thing…

  1. “one thing likely to promote success in an acquisition is the acquirer focusing on what they can give to the acquisition, and not just what they can get.”

    Agreed, and if the only thing they can offer is cash, that may not be enough (e.g. Alphabet & Nest). The social graph Microsoft gets access to is valuable, but if they can’t turn LinkedIn into a company that knows how to serve its user base, then that asset will grow stale.

    While the beauty of a social network is that you don’t have to own the cows you’re milking, you do have to lure ’em into the yard from time to time to do so.

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