Xobni Takes Enterprise Push to Redmond

Posted by: Douglas Macmillan on April 20, 2010

Workers at Microsoft’s corporate headquarters in Redmond, Wash. are being courted by a much smaller software maker. This week, Xobni spent thousands of dollars advertising its email tool - a free add-on for Microsoft Outlook - on shuttle buses, local radio stations, and other attention centers in and around the Redmond campus. The goal: win over a big corporate customer, one employee at a time.

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Xobni, a San Francisco-based company that began in the Y Combinator startup incubator in 2006, aspires to be a big name in enterprise software. Since launching an enterprise product for faster and smarter email management in January, it’s signed up more than 50 corporate customers, including General Dynamics and the U.S. Army. Xobni recently made its email software compatible with Microsoft Office 2010, which will be released to businesses on May 12. But in Redmond, where Microsoft employees have been using the latest version of the productivity suite for months, the startup is already working hard to win users.

In many ways, Microsoft’s workforce presents ripe opportunity for Xobni. The email tool is suited to workers in large organizations, who need to quickly scan through thousands of contacts, messages, appointments, and attachments. It only works for companies using Outlook - at Microsoft, a given. And it doesn’t hurt that Xobni has already been used by as many as 15,000 Microsoft employees, or more than 15% of the staff.

Xobni has some of its biggest fans at the top of the Redmond food chain. Bill Gates showed off the product during a developer conference in 2008 and called it “the next generation of social networking.” The same year, TechCrunch reported that Xobni walked away from an acquisition offer from Microsoft. Both companies declined to comment on the reports of a negotiation.

Dave Drach, the managing director of Microsoft’s emerging business team says he “couldn’t live without” the email program. When Microsoft began requiring all employees to use a test version of Office 2010 last year, Drach and other Xobni addicts found their access to the add-on cut off - a glitch in the programming code for Outlook 2010 rendered it incompatible. A few persisted and found a workaround, but Xobni lost the vast majority of users from what was its largest pool of individual customers from a single company.

Now that the software has been made compatible with Outlook 2010, Xobni is making sure Microsoft staffers know it. Ads, like the one adorning the shuttle bus above, aim to rebuild the ranks of non-paying users within the software giant. Eventually, the hope is that enough workers come to rely on the product and force Microsoft's IT managers to take notice, says Xobni chief executive Jeff Bonforte. "The consumer side is driving the enterprise side," says Bonforte, who joined Xobni in 2008 after leaving Yahoo.

Xobni's basic email search utility is free, but users who pay $30 per year get more advanced search capabilities and other extras, like tech support. Bonforte says more than 5% of free users decide to pay up for the extra features, a conversion rate he aims to increase by attracting enterprise customers. As more companies take notice of the time workers save using the product on their own, they're signing up for enterprise accounts - an offering which costs around $3 per month for each employee and works in conjunction with other corporate software like Salesforce.

Word is already spreading inside the company that Xobni works with the latest version of Outlook. Bonforte says new sign-ups have jumped 30% since the guerrilla marketing campaign in Redmond kicked off on Monday. Drach calls himself an "evangelist" for the product and says he has turned several colleagues into regular Xobni users. "I'm always hitting them up and saying 'if you've got a big inbox, you should try this,'" he says.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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