Kawaski Interviews Balmer at Mix08

Check out this post with notes from the Guy Kawaski keynote interview with Steve Balmer at the Mix08 conference this week in Las Vegas.

In the interview Balmer talks about Google, the Yahoo! deal, Apple, his three types of day [see below], Silverlight, the Facebook investment, Fast Search & Transfer [see below], the number of emails he gets per day (~60), and he even gives out his email address: steveb@microsoft.com.

On his three types of day:

  1. With customers. From 730 AM to 800 PM and then get on [private] plane to next city.
  2. Doctor in office. Wall to wall meetings all day. “Exhausting.”
  3. Think, write, and research.

On Fast Search & Transfer:

Fast is company had internet and website/corporate products. Sold off web search. They have great for high end search on enterprise and engines that can search web sites. Tech fantastic and team is great. Anxious to build both ways. Love company/people. Great integration plan – more to say.

This is consistent with my thesis for why Microsoft bought Fast (to fend off the Google Appliance in high-end enterprise search, aka, the best defense is a good offense). However, I’d not previously heard the message that they want to build Fast out “both ways” — i.e., in enterprise search and in their Internet search offerings.

The only part of the acquisition that continues to amaze me is the ~8x revenue-run-rate price. That kind of multiple is in-line for high flyers, i.e., for healthy, high growth enterprise software companies. But Fast was in the midst of unwinding a world-class accounting mess, complete with lots of AR write-offs and a revenue restatement. I’d think companies in that situation are usually lucky to trade for 1-2x revenues.

Much as the the price SAP paid for Business Objects wasn’t surprising until you noticed that Business Objects was about to announce a quarterly miss, nor is Microsoft’s price for Fast surprising until you consider the not so easy to overlook financial mess. Personally, I would have guessed a sale in the $300M to $500M price range, proving that I’m not always right.

My current speculation is that there must have been a bidding war for the price to get so high. The fun question then becomes who else was bidding, why did they want it so bad, and what are they going to do now that they’ve lost?

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