A Silicon Valley Star Tries Out the Real World

June 16, 2010: 7:19 PM ET

Retro is a good bet in the fashion world. Witness the leathery wave of Sperry Topsiders and L.L. Bean moccasins a la the 1980s washing over hipster enclaves across the nation. But going retro in the software business? Seems like a step in the wrong direction. Still Xobni, a Silicon Valley darling of a startup that offers software that organizes and streamlines Microsoft's Outlook email program is doing just that.

Xobni (sounds like "zob-nee") is not abandoning the mouse for keyboard macros, or rendering everything in an amber color, nothing so dramatic, or bone-headed, rather it is for the first time selling its $29.95 premium version software in a box (a basic version is available free online). That's right, for all of you Web-heads who have never seen software arrive anyplace but from some button you pushed in your browser; as of this week Xobni's software can now be found burned on a CD, inside some folded cardboard, and get this, if you want, you can walk in and buy it in a store. About 3,500 stores including Fry's and OfficeMax (OMX) outlets as of Wednesday, says Xobni CEO Jeff Bonforte.

The idea of going retro – or more specifically retail - was not hatched within Xobni, Bonforte says kicking back in a bright green conference room in the startup's San Francisco offices. And how could it be? This is a software company with a Web 2.0-style confounding name, that although it built its business on top of a desktop application, Outlook, has relied on the Web for just about everything else including sales, marketing and distribution. "With the launch of Office 2010 coming up and a new version of Outlook, I had a friend with experience in the retail software business who said she figured she could get Xobni into a lot of stores," Bonforte says grinning.  "We, were like, go ahead, good luck with that."

A few weeks later, the friend came back and told Bonforte she had commitments from 3,000 stores, including some of the biggest chains in the nation. "Right then I told our engineers, 'looks like our next project is designing a box,' " Bonforte says.

The Xobni box they came up with may be the first to have testimonial "tweets" printed on the outside from customers. Its orange color scheme is more than reminiscent of the design scheme of the Office 2010 box it will be displayed alongside. Bonforte wanted to evoke the new Microsoft product as much as possible he says; even suggesting they consider making the word "Outlook" larger than "Xobni" on the front of the box. His lawyers talked him down from that idea.

Mockups for the Xobni boxed software now selling alongside Microsoft's Office 2010

Xobni is clearly drafting behind Office 2010, which in 2009 accounted for the bulk of the $19 billion Microsoft banked from sales of business-related software. For all the Web-based applications out there from Google (GOOG) and others – even Microsoft (MSFT)– Office remains a monster, and if you aren't a large company updating hundreds or thousands of PCs, the most convenient way to get it is still in a box. And when tens of thousands of people go to pick up this latest version of Office, they'll see Xobni right next to it. "Selling it this way legitimizes us for a lot of people," Bonforte says. "It something I can show my mom."

It's a marketing masterstroke for Bonforte and his team, and a move that could prove to be very lucrative. "We were doing the math, and this could be more efficient than search engine marketing, we could easily sell half of our premium licenses this way," Bonforte says. "It's sort of physical search engine marketing, we know they are there for Office already, why not pick up Xobni too?"

In the building that houses Xobni are other sleek Internet startups including Scribd and Apture. Twitter used to have the same address. Some of that peer group laughed when Bonforte told them he was putting his software in a box. But if succeeds, you can bet Xobni won't be the last Web-based company to try it, and nobody will be laughing.  In the same way that Web-based startups team up to market complementary products ands services online, you could see a similar approach landing on discs in a box. "I am not saying we will become a multi-billion-dollar company because of this effort," Bonforte says. "But it's almost all upside for us, it's just solid business."

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About This Author
Michael Copeland
Michael Copeland

Michael V. Copeland joined FORTUNE as a senior writer in September 2007. Copeland has covered everything from electric cars to e-readers. He is a creator of Tech Mate, an irreverent video series in which he debates (and skewers) digital issues of the day. Before joining FORTUNE, Copeland was a senior writer at Business 2.0. Copeland graduated from the University of Pennsylvania.

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