Yammer CEO: A voice to be heard

The gig: June was a busy month for David Sacks, chief executive of Yammer, which helps companies create private social networks where employees can chat, share documents and work together on projects.

First, Sacks rented the Fleur de Lys mansion in Los Angeles and threw himself a lavish “Let him eat cake” Marie Antoinette-themed costume party for his 40th birthday with hundreds of friends including Snoop Dogg. Then just this past week he sold his 4-year-old San Francisco start-up to Microsoft for $1.2 billion in an all-cash deal.

From PayPal to the pictures: The former PayPal executive already struck gold once in 2002 when that company was sold to EBay for $1.5 billion. Burnt out on tech, he moved to Hollywood to become a movie producer, a dream since youth. He bought a house in L.A. where Quentin Tarantino filmed parts of “Pulp Fiction,” and he approached Hollywood with the intensity of a tech entrepreneur. He spent 18 months securing the rights to “Thank You for Smoking,” Jason Reitman’s adaptation of Christopher Buckley’s novel. He and some of his PayPal friends put up about $4.2 million. He borrowed an additional $3.3 million. His 2006 chef d’oeuvre, a political satire about lobbying for the tobacco industry, won praise from film critics and was nominated for two Golden Globes.

Prodigal son returns: Frustrated with the glacial pace of Hollywood deal-making, Sacks returned to Silicon Valley to hitch a ride on the social networking boom. “I could have created an Internet company while waiting for people to call me back in Hollywood,” Sacks joked. He says he realized: “You can achieve things in tech on a scale you can’t in the movies.” In 2006, he started a social network for families called Geni.com, but he began to worry he would get crushed by Facebook. Geni.com had created an internal communication system to help employees share information. In 2008, he spun it out as a new business called Yammer.

Facebook for business: Yammer officially launched at a San Francisco technology conference and won first place. But it was panned by bloggers and analysts who said businesses would never use social networking. “One of the criticisms in the early days was ‘Why would I want to know what my co-workers are having for lunch?’” Sacks said. “But it doesn’t have to be used that way. Social networking is the most efficient many-to-many means of communication ever invented.”

Circuitous route to Silicon Valley: Born in Cape Town, South Africa, Sacks immigrated with his family to the United States when he was 5. He majored in economics at Stanford and was editor of the Stanford Review, the conservative libertarian newspaper founded by Peter Thiel, the PayPal co-founder, venture capitalist and Facebook board member. After graduating from University of Chicago Law School, he spent a summer in L.A. but gave up trying to break into the entertainment business. He took a gig at McKinsey & Co. as a management consultant. Less than a year later, Thiel recruited him to PayPal. Sacks, who eventually became PayPal’s chief operating officer, says the average age of executives at the time of the initial public stock offering was 29. That’s exactly how old Sacks was. At PayPal, Sacks said, he found his calling designing and building products. “I was obsessed with it, the idea if you make a good product, it will take off,” he said.

Getting the right advice: Sacks says he’s still benefiting from the PayPal brain trust. Yammer had influential backers including Thiel. “Advice is more important than money,” Sacks said. “And it’s harder to get smart advice than money these days.” That advice undoubtedly came in handy when Sacks sold Yammer for a hefty premium in a deal announced Monday. Just this February, Yammer raised $85 million in a funding round led by Draper Fisher Jurvetson that gave it a market value of about $600 million. Microsoft says Sacks will continue to run Yammer under the Redmond, Wash., umbrella.

Open Yammer: Now that Yammer has more than 400 employees, Sacks says, it’s tough for him to have an open door policy. So instead he has an “Open Yammer” policy. Employees can hit him up on Yammer with questions. He says he encourages dialogue and dissent because the best ideas will survive any challenge. His company belongs to the Facebook generation, but its motto is a bit different from Facebook’s “move fast and break things.” “It’s move fast and iterate,” Sacks said. “We’re in enterprise software. We can’t break things.”

No time for hobbies: Sacks, who lives in San Francisco, says he doesn’t have any hobbies. “I feel like hobbies are for people who don’t like their jobs,” he said. He plays an occasional hand of poker. But mostly he spends as much time as he can with his wife, Jacqueline, and two daughters.

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