According to TechCrunch, eBay is looking to unload Stumbleupon, the “crowd-sourcing” Web recommendation engine that the online retailer bought last year for $75-million. Mike Arrington says that reputable sources have told him the company is for sale. I can’t say I’m all that surprised. Not because Stumbleupon isn’t an attractive asset (although whether it was worth $75-million is a different question entirely) but because it never made any sense as part of eBay in the first place. When the rumours of an acquisition first surfaced in April of last year, I said that I didn’t really get it, and despite the attempts by many people to justify the deal since it happened, it has never made much sense to me, and still doesn’t. Combine that with talk of layoffs at eBay in the near future and a sale seems fairly plausible.
Just a quick update for anyone interested in mesh 2008, which is coming up on May 21 and 22 at the MaRS Centre in Toronto: Garrett Camp, one of the founders of StumbleUpon, is coming as our keynote speaker for the business stream (you can see the other keynotes here, as well as some of the other great speakers and panelists we have lined up). We’re pretty excited to be able to bring one of Canada’s leading Web entrepreneurs to Toronto for one of mesh’s “keynote conversations.”
Garrett co-founded StumbleUpon in 2001 with several university friends while he was finishing his degree in software engineering at the University of Calgary. He and a couple of the other members of the StumbleUpon team later moved to San Francisco after getting venture financing, and last year the company was acquired by eBay for $75-million. Garrett is still responsible for StumbleUponâ€™s product design and strategy, and the service has more than 3.5M members.
I’m still trying to recover from the incredible two days that was the mesh conference, and will be posting updates and links to video, blogs, photos and reviews as I come across them, but in the meantime here’s a cross-post from my Globe and Mail blog in which I try to catch up with two of the many tech deals that occurred while I was en-meshed:
It’s been a busy week in tech-land, as media and Internet giants have been snapping up Web startups like kids in a candy store. CBS, which only just finished buying the financial video-blogging show known as Wallstrip (created in part by Toronto venture capitalist and hedge fund manager Howard Lindzon) is paying $280-million (U.S.) to acquire Last.fm, one of the most popular online music tools around today. And as has been rumoured here and other places, eBay — which paid $2.4-billion or so for Skype not too long ago — is buying StumbleUpon, a Canadian creation that was based in Calgary before moving to the Valley.
StumbleUpon is what you might call a “serendipity engine,” in the sense that it randomizes the Internet by serving up web-pages from a vast catalogue of user submissions, either sending you to a completely random page or choosing a random one from a category of your choosing. Users — of which there are about 2.3 million now — can then vote on whether they like the site or not. I have to confess that I still don’t see how it’s going to fit into eBay’s traditional auction business, but someone at Seeking Alpha has done their best to put together a convincing argument here.
Last.fm, which is similar to another site called Pandora, allows users to set up a profile with their favourite music (including their iTunes playlists) and then share that with others. The site then recommends new music based on similarities between their selections and those of people with similar tastes. By contrast, Pandora uses advanced algorithms to determine similarities between songs, and then recommend new ones based on those attributes (there’s a good discussion of the differences between the two here).
Scott Karp has some thoughts on the Last.fm deal as a sort of Hail Mary play by CBS because of its radio assets, and there’s a post from one of the Last.fm founders here. In case you are keeping score at home, according to the Times of London (Last.fm was created in London), the three founders will get approximately $38-million each from the deal.
They’re baaaack. The rumours about eBay buying StumbleUpon have resurfaced, but this time it’s the Wall Street Journal that is breathing new life into the story — a tale that was sparked first by TechCrunch back in April. At that point, the site — which was created by Garrett Camp and two university friends in Calgary — was rumoured to have talked with Google and Yahoo as well as eBay, and the price was said to be in the $45-million range. Now, according to the WSJ, it’s more like $75-million. Not bad for a site that has 2 million users.
Does it make sense for eBay? When the rumours first surfaced I wrote a post saying that I didn’t get it, and I still don’t. Muhammad Saleem at ProNet and Pete Cashmore at Mashable wrote about how they could see it working, but I still don’t buy it. Maybe eBay has some kind of grand vision that I’m not seeing — or maybe it’s just desperate for growth of any kind. Scot Wingo at eBay Strategies has some more thoughts on it, and Valleywag says the only explanation is that eBay just has way too much money on its hands from its online auction monopoly.
Now it appears that Google has decided if it can’t have StumbleUpon, it will just build similar stumbling ability into its toolbar, with a “dice roll” feature that produces random links. Om Malik says that he thinks Google is lashing out at SU because they lost out on the acquisition, but I think it’s more likely Google decided they could build the same functionality for a lot less than $45-million.
Chris Sherman over at Search Engine Land says he got a comment from Garrett Camp, one of the founders of StumbleUpon, who says there is no truth to the rumours. But then, he would say that, wouldn’t he 🙂 And Muhammad Saleem at ProNet Advertising says he can see some synergies between eBay and StumbleUpon involving the latter’s word-of-mouth marketing potential. Pete Cashmore has some thoughts along the same lines.
Mike Arrington at TechCrunch and Om Malik at GigaOm seem to have a kind of tag-team scoop going about StumbleUpon — the social Web-surfing app that was created in Calgary — being acquired by eBay for between $40-million and $45-million. Mike seems to have broken the story first, but gives Om credit in an update for narrowing the alleged price range, while Om has an update that mentions Mike as having pinned the likely suitor down as eBay.
Reports are that StumbleUpon, which got some venture capital money last year and moved to the Valley, has been in talks with eBay, Google and AOL, and that the company has signed a term sheet with eBay. The company has been the subject of acquisition rumours since November. Of course, there are no shortage of takeover-talks stories that don’t actually come to pass — including some that involve Canadian companies, such as the rumours that Albert Lai’s Bubbleshare was going to be bought by News Corp. (it was eventually bought by Toronto-based Kaboose).
StumbleUpon has developed a substantial following by doing one simple thing: sending people to random websites, at which point they can vote on whether they like the content or not. And the service can drive a lot of traffic to sites that get stumbled, although there are debates about how much value there might in that traffic, as there is with Digg.
With all due respect to Om, I don’t get his explanation of why eBay might want StumbleUpon, which seems to involve some kind of integration with Skype. But then, I never understood why eBay bought Skype in the first place, so that’s par for the course, I suppose. My friend Mark Evans says he doesn’t really understand it either.
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