Thereâs an old saying, âThe two best days in a boat ownerâs life are the day he buys it and the day he sells it.â The same can be said of marriages â¦ and most tech acquisitions, for that matter. Itâs all rainbows and unicorns until the sad realization that, what seemed like a good idea at the time, was not.
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Will that happen between LinkedIn and Microsoft, which announced its intent to acquire the professional network for $26.2 billion in cash yesterday? Good question.
As mergers go, this one didnât exactly jump out at me as a match made in heaven or a âWhat the hell are they thinking?â sort of thing. This is more of a thinking manâs acquisition. Having thought about it, I can definitely see the attraction for LinkedIn, but for the software giant, the equation is a bit more nuanced.
LinkedIn has struggled with profitability for the past couple of years, which kept its share price sort of range bound. Then revenue growth hit a wall last quarter and the stock tanked, losing half its value practically overnight. Microsoftâs offer essentially erased that event as if it had never happened.
Besides, Jeff Weinerâs email to employees makes the CEOâs motives clear: âImagine a world where we're no longer looking up at Tech Titans such as Apple, Google, Microsoft, Amazon, and Facebook, and wondering what it would be like to operate at their extraordinary scale -- because we're one of them.â And so on.
Just so weâre clear, when he says, âTech Titans such as â¦â and rattles off that list, he means âFacebook.â Weiner apparently has Facebook envy. And since Microsoft boss Satya Nadella structured the deal so Weiner would continue to run LinkedIn as an independent company, that sort of made it a no-brainer.
As for why Nadella is ponying up all that cash in what is far and away the biggest acquisition in the Redmond companyâs history, thatâs where the nuance comes in. LinkedInâs customers essentially use the site in three distinct ways, corresponding to three distinct business purposes:
Talent acquisition. Most of the Silicon Valley companyâs revenues come from a service that helps corporate recruiters identify candidates. Would this be beneficial to Microsoftâs corporate customers? Since talent is increasingly hard to come by, thatâs a big fat âyes.â
Peer-to-peer connections. Cheapos like me spend zilch to post our resumes but many if not most users pay a subscription fee for premium services to help them connect and sell. Microsoft has productivity down pat, but connectivity is a gap that Nadella would like to fill.
Business content. Practically everyone in business posts content on LinkedIn, from your local handyman to Bill Gates. Whether being one of the 100 million âthought leadersâ on Earth really benefits your career or business is another matter entirely. Some ad revenue aside, this is probably the least important of the three.
If you look at Microsoftâs ongoing transition from selling client-based software that everyone needs to cloud-based services that customers want, thatâs necessitated a cultural shift from a company used to shoving software down customersâ throats to one focused on bringing value to its corporate clients.
Evidently, Nadella thinks that integrating LinkedInâs services with its own â Office 365, in particular â will add value and help differentiate it from cloud computing competitors like Amazon, Google and yes, even Apple. Worst case, it will save customers a click or two as they shift back and forth between productivity and connectivity tools.
Whether thatâs worth the price tag remains to be seen. In any case, it does highlight an aspect of Nadella that I truly admire: he doesnât do things in half measures. Heâs either all in or not. And one thingâs for sure. Heâs betting big that LinkedIn integration will benefit Microsoftâs customers in terms of talent, connectivity and content in a big way.