Plaxo Finds Suitor Close to Home
Plaxo, which disclosed in April that it was shopping itself around, found a suitor in the shape of partner Comcast, which was reportedly ardent enough to pony up $175 million for the online address book service.
Plaxo found that it had to find a buyer because it was in the less-than-optimal position of providing essential technology to the booming social networking and messaging sector without having the momentum itself to grow into another Facebook or MySpace.
Plaxo's address book service works with Microsoft Outlook and AOL's instant messaging service. Plaxo also did a mashup of its Pulse Social Network with Outlook. It was also looking for ways to make Pulse as big and successful as Facebook and MySpace.
However, its prospects for long-term growth were limited, at least not without major ongoing new investments, which means that the organization and technology would only have a future as part of a larger company. Furthermore, Plaxo had raised $20 million in venture funding from Sequoia Capital, Globespan Capital Partners, Cisco Systems and DAG Ventures. Plaxo would have had to eventually pay off those investments by either going public or through a corporate buyout.
While Comcast and Plaxo did not disclose the terms of the buyout, Reuters reported that the sale price was about $175 million.
Plaxo CEO Ben Golub discussed the reasons for striking a deal with Comcast on his company's Web site.
"Joining forces with Comcast is a real win for our customers, our investors, and our employees. Comcast has an exciting vision to bring the social media experience to mainstream consumers. Together, we will be able to help users connect with all the people they care about, across all of the devices they use, with all the media they love to consume, create, and share. This is also great news for the Internet industry at large, where Plaxo has been--and will continue to be--a strong advocate for opening up the Social Web.
"Plaxo will remain an independent operation in Silicon Valley, reporting into Comcast Interactive Media, which is a division of Comcast that develops and operates Internet businesses focused on entertainment, information and communication. All of our 50 employees will continue to innovate on and grow both our networked address book service and our next-generation social network, Pulse. And through additional integration projects with Comcast, we'll be able to take these services to a lot more users and places than we could on our own. We are developing an exciting roadmap with Comcast that includes socially enabling the media experience in places such as Comcast's high traffic portal (Comcast.net),CIM's popular interactive entertainment properties (such as Fancast and Fandango), and the television."
While Microsoft, Google and Facebook were all mentioned as potential buyers of Plaxo, the company has also had an ongoing relationship with Comcast, as noted by Golub in his blog.
"Plaxo and Comcast have been working together for the past year on a number of initiatives. Plaxo is providing the universal address book for Comcast's SmartZone communications center (slated to launch later this year), and we are also now hosting all of the address book accounts for Comcast Web mail users. Our partnership has already more than doubled the reach of the Plaxo network, bringing the total number of accounts to nearly 50 million."