It’s Not an App, It’s a Feature Redux: Xobni Hubris

As I've pointed out many times before, many Web 2.0 "apps" are merely features that could be added to existing products on the market. There seems to be a tendency to build these small extensions since they have a lower entry point, cost less money, and have a more obvious exit plan: get bought by the company whose app you are enhancing.

So when Xobni's near-imminent purchase by Microsoft seemed all but signed on the dotted line, it all made perfect sense. Xobni was a plug-in for Outlook. Microsoft owns Outlook. And they are alleged to have a behind-thes-scenes project to merge Outlook with Yahoo Mail, ideal for a company who is supposed to be buying Yahoo any second now. Why not buy them? And it was a sweet deal, according to all the rumors, in the ballpark of $20 million USD for a company who has only raised under $5 million USD to date. Wouldn't most people sign?

According to TechCrunch, Xobni walked, uncomfortable with the idea that Microsoft wanted them to move to Redmond and fold the app into what it essentially is: a feature for Outlook. I'm not saying it's not a nifty feature, but it's still a feature.

When it comes to these apps that are really, at their core, extensions of existing products, and only one potential exit strategy exists, people need to start realizing that a bird in the hand is worth two in the bush. As Google has shown time and time again, these large companies can build out most of these features themselves. It's more expedient to buy one that's already built out, and it saves both development time as well as user good will by buying a company instead of just building it. But that good will only goes so far, and eventually, these companies who think they should be able to dictate their terms will find that their product has been rebuilt by the very company they hoped would acquire them.

Obviously, I have no more information about the alleged deal or its fallout, but I can see the writing on the wall with a lot of these applications. It's easy to want to leave the money on the table and keep betting that you will get exactly what you wanted, but my advice would always be to take the money and run. If Xobni really did walk on this, it may be the biggest mistake they've ever made.