Microsoft Buys Austin-Based XOXCO, Its 15th Startup Deal This Year

Morning Markets: Microsoft bought something new for itself. Let’s take a look.

Software giant Microsoft bought XOXCO, a Texas-based dev shop, it announced today. The Redmond-based company has now made 15 known startup acquisitions in 2018, according to Crunchbase.

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The XOXCO deal, therefore, is just one among many. And it’s not the largest, given that Microsoft spent billions earlier this year for GitHub. The terms of the XOXCO deal were not shared, which nearly always means that the transaction in question was small.

But the size of the deal isn’t so important. (For reference, XOXCO raised just $1.5 million during its life as a private company.) What does matter is what XOXCO is currently known for, and what it may do for Microsoft.

Bringing back to mind our prior work on Microsoft’s work to limit Slack’s incursion into its productivity goldmine, observe the following paragraph from ZDNet’s Mary Jo Foley’s report on the recent acquisition:

“Among [XOXCO’s] products are Howdy.ai, which Microsoft describes as ‘the first commercially available bot for Slack that helps schedule meetings.’ Howdy assists with the creation of custom bots, including bots for work chat, bots for customer support and bots for marketing. XOXCO also sells Botkit, a collection of development tools for those working on GitHub. Microsoft has partnered with XOXCO for a number of years.”

This deal, therefore, could work in two directions. First, it could limit new, useful products being built for Slack, a well-capitalized company that is gunning for a larger share of the productivity market. And, Microsoft could bring the new talent into its own work to combat Slack (its Teams product, mostly). Either way, the deals seems like a reasonable move by Microsoft, though one that underscores the possible risk that Slack poses to the older company.

The recent pace of Microsoft’s acquisitions.

The deal is also a win (of sorts) for the Austin startup scene, which we’ve covered once or twice. XOXCO’s exit makes our focus on the area seem even more valid than usual.

Top Image Credit: Li-Anne Dias.