Microsoft buys Toutonghi's Seattle startup
Microsoft's apparently still enthusiastic about the work of Mike Toutonghi, a former distinguished engineer who initiated the Media Center version of Windows before leaving for startup world. — With support from some early Microsoft executives …
Context & Ripple Effects
Mike Toutonghi's return closes a two-year loop: he was among the Microsoft veterans who left the company to launch a startup in 2005, after initiating the Media Center version of Windows as a distinguished engineer. His Seattle company built a media-sharing service under early Microsoft executives' backing.
The pickup matters less for the technology than for what it says about Microsoft's talent economics at the end of 2007 — the syndicated coverage (Mobile Gadgeteer's report that users have 30 days to download their content) confirms the acquired service is being folded in and shut down rather than run standalone.
First-order effects
- WebFives users get a hard deadline: the syndicated Mobile Gadgeteer report gives them roughly 30 days to export their stored photos and content before the service folds into Microsoft.
- Microsoft regains Toutonghi, a distinguished engineer who originated the Media Center version of Windows, along with his team and media-sharing technology.
Second-order effects
- The buyback sets an exit template for other ex-Microsoft founders backed by early Microsoft executives, tightening the loop between Redmond's alumni network and its acquisition pipeline.
- Competing photo- and media-sharing services inherit displaced WebFives users looking for a new home within the shutdown window.
Third-order effects
- If boomerang acquisitions become routine, Microsoft effectively treats alumni-founded startups as outsourced R&D — letting engineers take product risk elsewhere, then reacquiring the ones that work.
- Shuttering small acquired consumer services on short notice risks training users to distrust startup platforms owned by large acquirers.
The trend: Large platform companies are increasingly recapturing products and people through alumni-founder buybacks, turning former employees' startups into a de facto acquisition funnel.