Entrepreneur In A Hurry To Change The World

David Sacks does not like taking things slowly. The chief executive of Yammer, a corporate social networking tool, even found working in Hollywood a little pedestrian.

He had been chief operating officer and one of the founder employees of PayPal, the online payments business, and had seen it grow from nothing to revenue of $1.5b in three years. "It was an incredible ride," he says.

Then he tried his hand as a producer and financier for a movie "the 2005 political satire Thank You For Smoking: "It took another three years," he says. "Making a movie is really slow. It made me nostalgic for the technology industry."

Back on home ground, his latest venture seems to be moving at a fair pace. From its inception in 2008, it took Yammer 18 months to gain a million users for its tool – a Facebook-style communications network for use inside companies. It took another nine months to add the next million, and a further six months to reach 3m. Mr Sacks predicts that, on the current trajectory, Yammer could soon have 10m users.

But what is Yammer's attraction? Many people, whether it is with the blessing of their management or not, use social networks such as Facebook and Twitter during their working day, so why would they need another?

Mr Sacks says the key difference with Yammer is that it is entirely private, internal and secure. "The company controls the environment," he explains. "If companies don't provide this, there is a risk that employees will go on Facebook and use it to communicate private or sensitive information about the company."

The fact that workers can communicate with multiple colleagues simultaneously also makes it a more efficient means of communication than "reply all" email conversations – publishing company LexisNexis, for example, claims to have reduced its email traffic by one third since it introduced Yammer in the UK.

Mr Sacks believes that, while email will not be wiped out completely, alternatives will gradually displace it as the main form of electronic communication in the workplace.

He is well-placed to assess the market, having entered the dot-com community in the late 1990s thanks largely to his friendships with Sean Parker, Facebook's first president, and Peter Thiel, one of its early investors.

Mr Sacks studied at Stanford University with Mr Thiel, who later co-founded and became chief executive of PayPal and gave Mr Sacks his first career break.

The connections continue to this day, as Yammer recently received a $17m injection of capital from Social+Capital Partnership, a venture fund run by Chamath Palihapitiya, another Facebook alumnus.

"I wouldn't say anyone in particular was my mentor, but back in 2007 we were definitely looking at trends around social networking and I was talking to Peter, Sean and Luke [Nosek, who co-founded PayPal with Mr Thiel] about how we could bring social networking inside companies as a private, secure tool," recalls Mr Sacks.

He wrote the initial product specification in late 2007, while he was running Geni, an internet genealogy company, which started to use it internally. It was so popular that Mr Sacks decided to spin off Yammer, and in the autumn of 2008 it launched at a start-up conference known as TechCrunch50, winning a prize at the event and $50,000 in seed capital.

With such rapid growth, however, Mr Sacks struggles to attract enough of the right talent: "It's a tale of two economies in the US," he says. "The overall economy is doing poorly, with high unemployment – but the technology business is still booming. Every company in Silicon Valley is having a difficult time hiring, specifically software developers.

"If all the people who were unemployed in the US were software developers, I think they'd all have jobs."

Anyone thinking of applying for a job at Yammer will need to share Mr Sacks' determination to reach as many potential users as possible. "A good understanding of social networking today would obviously be a requirement – but if you come in already understanding why Yammer is going to change the world, then that's quite useful as well," he says.

By his own admission, he gets little enjoyment out of creating something that will only reach a small audience. Everything he has worked on – PayPal, Geni and Yammer – has been something everyone can use.

In spite of all the successes, the entrepreneur almost missed out on a career in fast-growing technology start-ups altogether. "I feel very fortunate that the internet came along when it did. I actually almost missed it," he explains.

He went off to law school after graduating from Stanford in 1994 and did not return to technology until 1999, just as the initial dot-com bubble was about to burst. "All of these companies were dying around us, and we thought PayPal might die. But it didn't and I was lucky to get back in when I did."

He says he is unlikely to make a career change now: "The great thing about creating something web-based is that the product is never done. It keeps evolving and you keep making it better."

Secret CV

What was your big break?

I met Peter Thiel [co-founder of PayPal] at Stanford and he recruited me to join PayPal. His venture capital firm, Founders Fund, also provided the initial capital for Geni.

When have you felt most proud?

We've just been doing a series of customer events and the reception was incredible. Everyone could feel the energy in the room.

Best career advice to others

Jack Welch (former chairman and chief executive of GE) talked about "managing while walking around". I've never met a chief executive who didn't want more visibility into his or her company. I like to think Yammer allows executives to do this.

What else might you have been?

After I left law school I worked in Washington for a year for a congressman, but I wouldn't go back into politics.

What do you do outside work?

I'm a workaholic, but I try to spend time with my two little girls at the weekend.

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