Kara Swisher

Recent Posts by Kara Swisher

Update: Xobni Price Paid by Yahoo Was $48 Million in Cash, Plus Possible Earn-Outs

According to people close to the situation, Yahoo paid just over $48 million in cash for Xobni, and has promised its staff of 32 many millions more in stock for earn-outs if they stay at the company for several years.

This price that the Silicon Valley Internet giant paid for the maker of address book apps and plugins is nominally higher than the $30 million to $40 million that AllThingsD had reported when news of the acquisition was revealed last week. (In other words, I was wrong.)

ATD broke news about the Yahoo interest in Xobni and also the lower price range, which was initially offered by Yahoo.

But Xobni balked at that offer, since common shareholders might have not gotten any value at all over preferred ones, and Yahoo upped what it paid to $48 million.

That means that investors — including First Round Capital, Baseline Ventures and Khosla Ventures — had only a very slight gain on the investment of about $39 million. Launched in 2008, Xobni received its initial round of funding in 2006 from Y Combinator.

It’s still a good outcome for Xobni, which is “inbox” spelled backwards, which has not gained the traction that had once been hoped for it. It had been shopped to several different companies, but Yahoo has offered the best price and is the most natural home for it, given its strong email offerings.

Perhaps the most interesting aspect of the purchase is what role Xobni’s CEO Jeff Bonforte will get at Yahoo. Before he headed Xobni, Bonforte was VP of social search and real-time communications for Yahoo.

After a series of snafus recently related to Yahoo Mail and also after there have been numerous innovations in the space elsewhere, the company does need stronger leadership in the key communications area. Sources said he will lead a big effort here that is important to CEO Marissa Mayer.

Thus, keeping Bonforte and the Xobni employees is key and, if they stay, the group has been offered incentives in stock worth up to $5 million annually. None of these earn-outs, of course, went to Xobni investors and depend on how long the staff stays at the company and other considerations.

(Note to readers: ATD tries in most cases to separate out earn-out figures in such deals as they are often used to inflate the actual price paid for a company itself to make the deal look richer than it actually is (imagine that!). These payments are far from certain and often depend on performance goals and stock price and, perhaps most of all, they are a common and necessary tools used by all tech companies to retain talent.)

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik