Why Yahoo really bought Zimbra

3.58K

Owen Thomas

09/18/07 02:26PM

Filed to: Acquisitions

I've been scratching my head trying to figure out why Yahoo shelled out $350 million — $350 million! — to buy Zimbra, a mostly unremarkable, if well-reviewed, email-software startup. True, Zimbra's Web-based email has found a smallish customer base of Internet service providers, universities, and startups — a customer base which has been turning to Google's Gmail. By buying Zimbra, Yahoo might hope to protect its still-popular Yahoo Mail, and perhaps expand it to new markets. But that hardly seems like enough to justify the hefty purchase price. And then it hit me — this has nothing to do with email. Not really. Yahoo's Zimbra purchase is part of Sue Decker's ongoing upgrade of the troubled company's management.

While Kara Swisher got the scoop on the story, posting her item an hour before TechCrunch's Michael Arrington's so-called exclusive, both she and Arrington missed this angle. Zimbra's management team is extremely high-powered for a startup its size, and heavily weighted in the very tech expertise that Yahoo lacks in its battle against Google.

My bet: Zimbra president and CTO Scott Dietzen fills Yahoo's currently empty CTO slot, while Zimbra CEO Satish Dharmaraj might squeeze out the widely disliked Marco Boerries, who currently oversees Yahoo's mobile efforts. Any other Yahoos who you think might have to make way for a Zimbran? Let me know.

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snidleywhiplash Owen Thomas 09/18/07 06:04PM

That $30m they paid for Oddpost is really starting to pay off now huh? It only took them 3 years to integrate that ajaxy kludgery, and still have problems with browser compatibility and getting the traffic ratings folks to correctly tabulate page views in an asynchronous environment. Given Yahoo's abysmal history in integrating new acquisitions (almost 3 years to shutter the ultra-lame Yahoo Photos in favor of Flickr, hello?), I expect we'll see Zimbra integrated sometime during the second Obama administration.

renaissancechambara Owen Thomas 09/18/07 03:10PM

There was also a move before I left Yahoo! to improve the internal (then POP3-based) email system and have a group calendar application that would work with people who had business unit and functional or project commitments would have been handy as well.

Zimbra will allow them to build better projects, get an injection of talent to join Schachter, Horowitz, Butterfield and Co. and make happier more productive workers who can more efficiently schedule meetings about meetings.

trevo Owen Thomas 09/19/07 01:56AM

CJCREGG: I know what you mean. If I were an engineer at Yahoo I'd be scratching my head thinking WTF is management doing enriching other people and how the hell is this deal going to help our OWN stock price that has been sitting in the tank for the past 3 years!

And corect me if I'm wrong... but what was behind the 30M acquisition of Oddpost anyways? That thing should take AT MOST 3 engineers a year to build.

trevo Owen Thomas 09/18/07 05:31PM

Always? Umm I think acquisitions are more often done for the customers... especially those paying ones.