StumbleUpon - The Story Behind The $45M Buyout
By Jason Drohn • Apr 19th, 2007 • Category: entrepreneur stories, young entrepreneur
When I see news like the $45 million StumbleUpon Acquisition, it makes me feel all warm and fuzzy inside. Right in front of our eyes, a young entrepreneur started, built, and sold a high profile company to a huge organization.
After reading about the StumbleUpon buyout from every single vendor and website out there, I decided to dig through the archives (as in my bookshelves) to see what I could find on the company and where they got their start.
It seems Garrett Camp, one of the StumbleUpon Founders, was looking for a way to find new photo sites. Apparently, there just wasn’t anything out there that led him to places he wanted to go. So in recruiting Justin LaFrance and Geoff Smith, he created an early version of StumbleUpon to fit his own
needs.
After nailing the photo website problem, they decided to adapt it to different forms of media. They built it out to include all different kinds of websites, selectable through categories, and started pairing online ads with the results. In fact, about every 20 StumbleUpon results is a paid advertisement. Bet you didn’t know that!
Last December, the startup launched their video application, aptly named StumbeVideo which is the closest thing to channel surfing as you can find on the web.
The part I like the best about this story is the formation of the StumbleUpon idea. Garrett simply designed a solution for his own problem. He needed a way to find photo sites on the internet that just couldn’t be done with Google or Yahoo. So he and a couple buddies designed an algorithm and portal to fit their needs.
After they conquered the original problem, one of them had the idea to offer it as a service, combine it with advertisement, and make some money!
Also just announced is the Google competitor. There always has to be a “me-too”
In the end, I am still curious as to why Ebay wants StumbleUpon at all. It is documented that Ebay wants to marry the StumbleUpon toolbar with an eBay application and Skype, but why? That is a pretty damn expensive toolbar..
The other side of the coin is eBay’s profits are up 52%. I wonder if that has anything to do with the acquisition? Any thoughts?
Also, thanks to Scott, Gary, Ed, and Sean for the last posts’ comments!
Jason Drohn is a blogger, business owner and consultant concerned with helping others build their businesses. So far, he has founded Tech Solution, Axiium, JDsBlog, and a host of other properties both on and off the web.
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Toolbars are among the most valuable pieces of real estate in the whole consumer media landscape. They’re an increasing source of search traffic for Google and Yahoo!, so there is your revenue stream, and they’re excellent integration points for a full suite of services offered by a large company such as eBay. This is less about Skype and more about the proven distribution point for all eBay services…
Think of it as a remote control for the web..
That is an excellent point. I for one don’t use toolbars much, preferring keyboard shortcuts and hotkeys, but I also spend 6-10 hours a day on or around the web.
If Ebay is buying the functionality and notoriety of the Stumble toolbar, then it was a great purchase. When I originally wrote the article, I was having trouble seeing how they were going to integrate it into the StumbleUpon service itself.
Thanks for adding your thoughts, Danny! I am still swooning over their profitability statements for this last quarter :0)
See, i had no idea that “about every 20 StumbleUpon results is a paid advertisement”. I am using SU for a while now and i would have never thought that was their trick.
Now…the SU toolbar is like no other and i am sure many big companies could make a great use of it….especially someone such as eBay.
Imagine eBay instead of SU under that tooldbar and how easy would be for anyone to find the exact items they want…
I think you nailed it — eBay’s profits are up and it is time for them to purchase someone. eBay doesn’t want to get lost in the shuffle, therefore buying a hot company such as SU makes a lot of sense.
I just hope that I won’t be stumbling upon too many eBay sales any time soon! — MattK