At LeWeb, we sat down with a high-level exec at the hot enterprise social networking startup Yammer. Yammer got started at the end of 2008 as “Twitter for the enterprise” and recently became a full fledged enterprise social network and raised a $25 million Series B round.
Here’s what we learned:
- Yammer’s revenue is growing fast. In 2009, the company hit $1 million in revenues and was doubling revenue every quarter, but revenue stopped growing so fast. With 90 employees now the company isn’t profitable (but doesn’t need to be with its big new round).
- Yammer is hard at work on an iPad app, which it expects will come out in a month or so, but hasn’t been announced yet.
- They’re doing well. Over 1.5 million users at 100,000 organisations are using it, and they are seeing 15% conversion rates to the premium service. (Freemium consumer web startups generally anticipate a 1% conversion rate.) All kinds of companies are converting, from huge multinationals to over 1,000 small and medium businesses.
- Enterprise social networking will get “more and more commoditized.” Yammer now has third party companies building apps on top of its platform. It can sometimes be hard to make work as, for example, many enterprise services don’t have free versions, so it’s harder to put them on Yammer, which is freemium. But the executive expects straight enterprise social networking to get “more and more commoditized” and so they want their platform to become a source of both competitive advantage, and eventually revenue, under a possible revenue share program.
- Yammer ain’t scared of Salesforce. They have a competing product called Chatter, which wasn’t getting much traction, mostly because it was expensive, but they recently took it to a freemium model, imitating Yammer. The executive pointed to specific features that make him think Chatter will still fail, such as the fact that the administrator of a Chatter network must allow users to invite their coworkers, which dampens virality, and that Chatter, which is built into Salesforce’s CRM product, doesn’t filter notifications from that service, which makes it spammy for people outside sales.
All in all, it seems that Yammer has struck gold. They definitely have a great product with a great business model that is getting a ton of traction. Ultimately this can be a huge profitable business.
EDIT: We originally misstated the company’s revenue numbers.
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.