As for M&A, eBay's (NASDAQ: EBAY) strategy has been mostly helter-skelter. In some cases, the deals were brilliant, such as for PayPal. But in other cases, the transactions have been wacky.
Well, it looks like eBay is cleaning up the M&A mess. And the first action-item: getting rid of StumbleUpon.
In the overall scheme of things, the transaction wasn't very material -- coming to $75 million (two years ago). But the site – which allows for the recommendation of sites -- did have lots of traffic and some brand in the marketplace. Under eBay's control, Stumbleupon increased registered users from 2.5 million to 7.5 million. What's more, the site plans to launch some new features, such as a search engine and a Twitter-friendly URL shortener.
stumbleupon posts
FeedeBay's spring cleaning includes StumbleUpon
Continue reading eBay's spring cleaning includes StumbleUpon
Growth Matters: StumbleUpon filters the web
With all the gloom in the global economy, I got to wondering whether there is anything else going on in the world of business. I'm looking for growth because I think that's what will ultimately bring the economy out of the doldrums. Not surprisingly, that growth is coming from technology companies. In Growth Matters, I look at consumer technology companies that point the way to growth trends -- and in the process introduce services and products you may want to explore.
With all the content on the Web, wouldn't it be nice if your friends could sort through it all and let you know which ones are worth viewing? That's the idea behind StumbleUpon, which its General Manager, Michael Buhr, described to me as follows, "StumbleUpon -- which eBay (NASDAQ: EBAY) bought for $75 million in May 2007 -- is an internet community that allows its users to discover and rate Web pages, photos, and videos. It is a personalized recommendation engine that uses peer- and social-networking principles."
Continue reading Growth Matters: StumbleUpon filters the web
eBay possibly looking to dump StumbleUpon
It looks like Skype is not the only bad acquisition for e-commerce giant eBay (NASDAQ: EBAY) lately, as TechCrunch is now reporting that eBay is looking to dump another recent acquisition, StumbleUpon.com. According to TechCrunch, eBay has hired Deutsche Bank to help the company unload StumbleUpon, a website recommendation service that it acquired a little over a year ago, back in May 2007.
At the time that eBay purchased StumbleUpon, it paid $75 million for the company, and it is pretty doubtful that it is going to be able to sell it for that amount, probably far less due to the inability to grow its popularity over the past 16 months.
Dear New Media Executive: I am not your friend
Given my position as a long-time denizen of the dot-com world, with dozens of contacts in new media and venture capital and all of the numbered Webs (1.0, 2.0 and maybe even 3.0), I'm quite frequently invited to things. Some are valuable networking tools, like LinkedIn; others are fun and a bit useful for keeping track of my virtual colleagues, like Twitter. Still others, like AIM, are vital for day-to-day working life.And then there are the sites where my so-called "friends" hang out. It seems quite ironic that many of the former colleagues and distant contacts who invite me to "keep up with what he and your other friends are doing" were never what I would categorize as "friends." Vexing rivals? Quixotic bosses? Difficult customers? Unhappy underlings? Probably more like it. While I understand that social networking sites like Facebook.com and StumbleUpon and, to a lesser extent, MySpace and del.icio.us and the rest of them, are the rage right now -- and are used by many legitimate corporate types for actual work purposes -- well, I'm highly uncomfortable with the rampant use of the word "friend."
Let's face it: even if I'm pleased because Brian in Legal delivered that contract to me quickly, he's not actually my "buddy"; nor is the receptionist you just hired ready to be asked to join your "circle of friends." Plenty of people with whom I could happily carry on pre-conference-call banter, while I'm sure they're quite lovely, just aren't friends. Flickr gives us a break and lets us designate lots of "contacts," while Twitter has recently changed its nomenclature to count those you are following, and those that follow you. This makes sense to me! This is not presumptuous or uncomfortable.
Just because my name is in your contact list, Mr. and Ms. New Media Executive, it does not mean that you are my friend.
eBay and StumbleUpon: The silence is deafening
If you were eBay Inc. (NASDAQ: EBAY) you would have several good reasons for paying $75 million for StumbleUpon, right? I know that if I was eBay I myself would need significant justification for paying that amount of money for a social discovery site. Since May 30, 2007 when eBay announced that a deal had been reached for the purchase of StumbleUpon, more news from the company about that acquisition and any underlying reasons has been absent.
Everyone, from analysts to kids with frogs in their pockets, has been waiting for some manner of revelation regarding eBay's reason for buying StumbleUpon. Because there seem to be few concrete explanations about why this deal took place, I decided to throw my hat in. eBay bought bodies, that's it.
eBay bought a user base of about 2.5 million users to augment its own membership numbers. StumbleUpon came into the deal with nothing to offer eBay beyond user names. Although StumbleUpon is quite a fun place, it has nothing which will breath new life into an auction site. If eBay had interesting plans or a measurable strategy to make use of StumbleUpon in any tangible way, it would be trumpeting those facts everywhere, but from where I sit the silence is deafening.
eBay StumblesUpon an acquisition candidate
Ebay is in "advanced talks" to acquire StumbleUpon, a website that seeks to help surfers find web pages that match the interest. This will be a relatively minor acquisition for a company of eBay's size, with the price tag expected to be in the vicinity of 75 million dollars. If the acquisition does go through, it will be the next step in eBay's efforts to diversify its business away from its online auction site, whose growth is slowing. In February, eBay bought StubHub, which is a marketplace of event tickets.
I'm not sure if the acquisition strategy will pay off, although eBay might not really have any choice if it wants to pursue growth. But with companies like Google aggressively going after interesting new websites, there's doubt as to whether eBay will be able to find gems at good values.
eBay may be reaching a point of diworsification. It's hit a wall as far as the growth of its auction site and now it's trying to find other growth-drivers. I'll be surprised if the acquisition strategy works out, as it very rarely does for most companies.
eBay's acquisition strategy confuses market
What is eBay Inc. (NASDAQ: EBAY) these days? Sure, most of us think that eBay is an online auction giant where anyone and everyone can go to buy and sell new and used goods. That's a pretty general way to describe eBay's business these days, but there's more to the company than that -- and some investors are taking notice. The thing is, they don't know what eBay is trying to become.eBay's purchase of PayPal five years ago for $1.5 billion was arguably its smartest acquisition. Almost all eBay auctions I see these days provide the option to pay using PayPal, and I see more and more non-eBay merchants accepting PayPal as a payment method. Each time a transaction goes through, eBay collects a fee. I'm quite sure that PayPal fees collected by eBay up to now have surpassed the $1.5 billion purchase price. eBay's Skype acquisition from a few years ago, however, is another matter.
Is eBay planning on becoming a telecommunications provider now? Skype is a product I use and find immensely helpful. In fact, us Vonage types have shunned costly landline phones for technological alternatives, and Skype has quite a large worldwide subscriber base. Will eBay continue to operate as a minor (or major) influence on telecommunications? Probably so. Additionally, its StubHub purchase makes sense, as eBay wants to make a cut on event tickets (concerts, sporting events). No big surprise there. But with all these varied businesses, eBay's becoming more and more of an enigma, according to BusinessWeek.
Will the online auctioneer operate these brands as separate businesses and aim for profitability in each one? It's already done that with PayPal, and someday (hopefully), the Skype purchase will pay for itself. If eBay acquires social networking site StumbleUpon, it will be another seemingly-disconnected business that makes eBay look like a bizarre bazaar within its corporate identity. Maybe that is what it wants.
The next Google?
While Google Inc.(NASDAQ:GOOG) is the king of search, there are many startup companies trying to get a piece of the action.
One is StumbleUpon, which got its start in Calgary in 2001.
True, this is not exactly the hub of tech activity. Then again, that's been a good thing -- as the company was able to refine its system while "under the radar."
What is the service? Basically, StumbleUpon has a toolbar that allows users to rate and write reviews about sites. A user can then press a button and find a cool site (which is based on complex calculations of the growing database of recommendations).
Sound pretty cool? Others think so, too. The company has snagged money from an elite group of angel investors: Ram Shriram (Google, Junglee, Zazzle), Mitch Kapor (Lotus, Real Networks, UUNET), Josh Kopelman (Half.com, TurnTide, Delicious), Ron Conway (FaceBook, StubHub, Simply Hired), Rajeev Motwani (Google, Kaboodle), and Ariel Poler (LinkExchange, Kana, I/PRO).
I had a chance to interview the co-founder and Chief Architect of StumbleUpon., Garrett Camp.
And he does have an interesting bio:
"An adaptive information systems researcher, Garrett holds a master's degree in software engineering from the University of Calgary. His research has focused on evolutionary algorithms, knowledge retrieval, and web usability."
Now, for the interview:
What's your take on Google's new custom search product? Where do you think Google is taking it?
The new Google Co-op looks much better, letting people create a custom search engine much like Rollyo. The revenue sharing via AdSense is also interesting since it will let publishers profit when their content is queried. With further aesthetic customization I can see a lot of webmasters using this before moving up to an enterprise search appliance.
You've talked about how social search will be a big factor in 2007.
I think social search will take off in 2007 because social networking has become ubiquitous, and integrating it with content retrieval systems is the next logical step.
Currently the experience offered by MySpace, Friendster and other online networks is compelling, but often not useful outside of an entertainment context.
Systems like StumbleUpon, Digg and del.icio.us are now integrating social interaction with content discovery, and helping people find better content by leveraging recommendations from friends and like-minded people.
How does Google play there?
As far as Google, while they haven't directly entered into social search, they have included social and personalized features in recent product updates. The Google Personalized Home has an "Interesting Items for you" module and the Google toolbar now has "Send to" functionality - both social elements. Google is definitely thinking about recommendation and social search.
And about your new product?
Our new product, StumbleUpon Search Reviews, integrates our database of 7 million reviewed Web pages with existing search engines - so you can see who likes the pages you've found through Google or Yahoo!. This makes searching more social and meaningful, since it lets you connect with others who liked the same content. Search Reviews is now available to all Firefox users, and is coming soon to IE as well.
Tom Taulli is the author of various books, including the Complete M&A Handbook. He operates InvestorOffering.com.
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