Enterprise social network company Yammer announced today another round of funding: a whopping $85 million round led by DFJ Growth. That’s more than all of Yammer’s previous rounds combined. This follows Yammer’s fourth round of funding last September and brings its total funding to $142 million.
It may sound like a lot, but remember that Box closed $81 million last fall. There’s tons of money for social collaboration right now.
Yammer CEO David Sacks spoke with me from Amsterdam, where he will host a Yammer event tomorrow. Sacks says that all of Yammer’s previous investors and board members are participating in the new round. He wanted to emphasize Social+Capital Partnership’s involvement in particular, which co-led the round with DFJ and led the previous round of funding.
At the beginning of the year, Yammer published an infographic outlining its 2011 sales results. According to the graphic, the company grew from 1.6 million users to 4 million users and tripled its sales. When asked why Yammer is raising so much money when it already well funded and fairly successful, Sacks said “The enterprise social software market is moving out of the validation stage and it’s time to seize the full market opportunity.”
Sacks says the company will continue to expand its engineering team. “We want to have more people working on enterprise social networking than any other company,” Sacks said. “I think we already do, but I want to maintain that leadership.” Yammer recently added more real-time collaboration features and, more importantly, has been developing more integrations between its software and other enterprise software, most recently a SAP connector (for more on the importance of integration, see Integration-as-a-Service and The State of the Enterprise App Store).
Yammer will also spend much more on sales and marketing. The company started out with its viral model, with few sales people and little marketing. The company has been expanding its team, including former Salesforce.com VP of Vertical Sales David Obrand. Starting tomorrow a new advertising campaign will begin, including a full page ad in the Wall Street Journal. Salesforce.com has been promoting Chatter, its Yammer competitor, aggressively through advertising campaigns, going so far as to advertise during the Super Bowl.
It’s no secret that Sacks has ambitions to take Yammer public, and the expansion traditional sales and marketing efforts will be important for that effort.
Yammer is starting to face the realities of being a vendor of software for large enterprises. Shareholders will want to see traditional sales and marketing efforts on Yammer’s part, but customers also need to be reassured that Yammer is enterprise ready. If Yammer wants to be the next Salesforce.com (and eventually, the next Oracle or SAP), it needs to project the appearance of a “real” enterprise company – that means advertising alongside other enterprise software.
The next logical step, from my point of view, is an expansion of services to help companies implement social networking in the most effective way possible and integrate collaboration tools into existing software. Salesforce.com is already working on this.
Update: It looks like Yammer is already doing more of this than I’d realized. In an interview with Dennis Howlett Yammer CTO Adam Pisoni said: “We have now a pretty large consultancy arm. We’re in there talking about integrating with IT, identity systems and business processes. That’s a relatively new thing for us.”
Pisoni also said:
We want to bring SIs into that conversation. In large organizations we’re relying on the Deloittes. They did a rollout to 200,000 people. They said it was the fastest software rollout. They’re going to actively make it part of their practice, we’re talking to them on this now. The problem for the consultants is that social software is not highly configurable. We try to make it so that it is very easily rolled out and integrated and in many ways that’s not what they’re looking for. The majority of the cost is around change management. It’s definitely its a mindset shift for them.