Back in September, we reported that eBay was attempting to sell off StumbleUpon, the website recommendation service it bought for $75 million in 2007. That didn’t happen. And now the company has been spun off to start life over as an independent startup, backed by new investors and the original founders.
The new company is led by co-founder Garrett Camp, who now steps into the CEO role. Co-founder Geoff Smith also joins Camp in returning to lead the company, but in an unannounced role. The company is backed by Sherpalo Ventures, Accel Partners, and August Capital. David Hornik from August Capital and Sameer Gandhi of Accel Partners join the board.
“The company is amply funded. And everyone is glad that the company is away from eBay,” a source tells us. eBay had previously been looking for a minimum of $75 million for StumbleUpon. It’s likely the spin out valuation was significantly lower than that. Our understanding is that Sequoia placed a competing bid, but Camp and investor Ram Shriram went with Accel and August Capital.
It’s not clear if eBay maintains a stake in the company, but that seems fairly unlikely. Really, its interest in the company never made a lot of sense in the first place. StumbleUpon is a way for users to find interesting sites throughout the web. While eBay certainly could have used that technology to find interesting things on its site, it never did that.
And StumbleUpon’s traffic has been falling in the past year. In February 2008, the site was at 2.6 million unique visitors. But in February 2009 that number was down to 1.4 million, according to comScore (chart below). Of course, traffic numbers are a bit odd to use with StumbleUpon because the service doesn’t require that you visit its actual site if you use its popular web browser toolbar. But last year it launched a frame-based toolbar that kept you on the StumbleUpon domain in a way similar to what Digg is now doing with the DiggBar.
Similarly, just as the DiggBar allows users to shorten URLs, StumbleUpon had been working on a way to do this using the Su.pr domain.
This news comes at a time when reports are circulating that VoIP company Skype’s founders are also trying to rip it back out of the hands of eBay. That may be a bit more complicated as eBay bought Skype for a cool $3.1 billion back in 2005.
In its former life as a startup, StumbleUpon raised a $1.5 million seed round of funding in December of 2005.
Below find the press release:
StumbleUpon Goes Independent; Backed by Founders and New Investors
April 13, 2009 – StumbleUpon, the best way to discover new content on the Internet, today announced that after nearly 2 years as a subsidiary of eBay Inc., it has returned to the ranks of an investor-backed startup. StumbleUpon is now backed by the original company founders, Garrett Camp and Geoff Smith, as well as a number of well-known investors including Ram Shriram of Sherpalo Ventures, Accel Partners, and August Capital. Camp takes on the role of CEO of StumbleUpon.
“We are grateful to eBay for its guidance. However, we realized there were few long-term synergies between the two businesses. It is best for us to part ways and focus on our respective strengths,” said Camp. “This change makes it possible for StumbleUpon to continue to innovate and focus on becoming the Web’s largest recommendation service.”“StumbleUpon helps users discover the best of the web – it’s a way to find interesting content you wouldn’t think to search for,” said Shriram. “StumbleUpon’s personalized recommendation engine brings serendipity back to websurfing, and lets users sift through socially-endorsed content with a single click.”
StumbleUpon will remain focused on helping people discover interesting content by increasing the accessibility of the StumbleUpon service and the quality of recommendations. In addition, StumbleUpon has plans for several new products and features to be released in the upcoming months.
About StumbleUpon
StumbleUpon discovers Web sites based on your interests, learns what you like, and brings you more. With more than 7.4 million users and 425 million recommendations per month, StumbleUpon is the leading way to discover great content on the Internet. More than 20,000 advertisers are using StumbleUpon to promote products and services. Founded in 2001, StumbleUpon is based in San Francisco and backed by the same investors as Google and Facebook. For more information, visit www.StumbleUpon.com.
stumbleupon first, skype ’s probably next?
wth? pretty soon they ‘re going to add a new ‘Startups auctions’ category on ebay.com
That’s the first thing I thought of when I saw the title. They might try to unload them all at once.
I think Skype will be the next one out of the door, given that there is currently litigation between eBay and Skype’s original founders, and the licensing has been withdrawn.
Next up Paypal???
Yes, please, let go of paypal!
I totally agree with you guys seeing my problem of high rates and unaccurate/high currency rate differences and inexistant support, but I have to tell you why I don’t think this is going to happen unless someone offers a whole lota money to them-
-Its integrated into eBay now.
-They are earning a whole lot money through it, and they will continue to.
-They are not likely to let it go.
… But I wish they would though.
StumbleUpon Goes Independent; Backed by Founders and New Investors
MG I am loving your posts so far. Keep it up! =)
I’m glad StumbleUpon finally realized that eBay was not the best fit. StumbleUpon serves a great purpose; it just needs to focus its efforts on product development.
is this lets buy back our company month?
what is next flickr gets bought back?
I don’t know, but I bet the StumbleUpon employees are ecstatic. This is pretty much the only good exit possible for underlings in a company that gets acquired.
Can you explain the ParisLemon thing – where did it come from, why did u choose it?
It’s a state of mind.
Ebay unloads Stumbleupon and rumors are they’re looking to nix Skype as well. Looks like they’re going back to focusing on their core product/brand…
Does not shock me…Stumble never was part of EBay’s actual business plan.
Ebay has no business owning Stumble Upon or Skype. I think both companies will do better as independent start ups.
I completely agree. If you do not have intentions of integrating Skype or StumbleUpon into the auction platform, what’s the point of owning or investing in the business? eBay is becoming more and more like AOL.
how much did ebay loose on the deal?
told you.
I think you were a little too early on this one. I’ll give it to you though – good call!
Wow….
ebay must be real desperate. I wouldn’t shell out more than 10M for this post-ebay stumbleupon. And that’s stretching it.
I’m going to sound like a total Twitter Homer (Twittemer?) but doesn’t twitter do what Stumbleupon wants to do? Can’t I just go to my tweetdeck and click on the latest link from one of the people I follow? It’s a more controlled niche, since I actively follow them. Just a thought. I won’t tweet about this, I swear!
ok . . i had to tweet about . . so sue me!
I have no idea why eBay bought this. They must have had lots of cash to use.
I love ebay and I love stumbledupon. I don’t understand why ebay would even want to buy it.
Stick to your business model.
I love the image for this article. I can totally relate.
Kinda related: The number one issue for founders to negotiate is the clawback clause.
MG: Nice scoop and post.
Rent.com should go. Even Payflow and Bill Me Later, despite being payments companies, are bad fits.
I wonder how MyBrute got so famous. http://niggerrrr.mybrute.com
maybe they can do better now that they have new investers.
Glad to hear they kept Ebay away. StumbleUpon is a great site.
Not all of the Stumbleupon employees are happy. But as a Stumbleupon user, I’m happy, hopefully innovation accelerates now that they aren’t owned by eBay.
MG – I like your style my friend.
man… i gotta get my own lil’ startup going. sell it to eBay for millions and then buy it back at half price 2 years later. i love these guys!
i wonder if the stumbleupon guys got it at auction or simply paid the buy it now price…
ipo announced for skype …
eBay Inc. today announced that it plans to separate Skype from the company, beginning with an initial public offering that is intended to be completed in the first half of 2010. Specific timing of the IPO will be based on market conditions.
“Skype is a great stand-alone business with strong fundamentals and accelerating momentum,” said eBay Inc.’s President and CEO John Donahoe. “But it’s clear that Skype has limited synergies with eBay and PayPal. We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential. This will give Skype the focus and resources required to continue its growth and effectively compete in online voice and video communications. In addition, separating Skype will allow eBay to focus entirely on our two core growth engines — e-commerce and online payments — and deliver long-term value to our stockholders.”
The decision to separate Skype is based on a timeline outlined by Donahoe when he became eBay’s CEO in April 2008. At the time, the company said it would spend a year evaluating Skype and its potential synergies within the eBay Inc. portfolio before making any decisions about Skype’s future. Donahoe also installed a new management team at Skype led by Josh Silverman, which has driven stronger momentum and improved performance. In 2008, Skype generated revenues of $551 million, up 44 percent from 2007, and segment margins of approximately 21 percent. Registered users reached 405 million by the end of 2008, up 47 percent from 2007, and user metrics improved significantly throughout the year. The company recently announced that it expects Skype to top $1 billion in revenue in 2011, nearly doubling 2008 revenues.
“Under the leadership of Josh Silverman and his management team, Skype has become a stronger business in the past year, and I expect it will be even stronger a year from now,” Donahoe said. “Skype has accelerating global user growth and strong fundamentals, diversified revenue streams and is competitively positioned in a large market. We expect Josh and his team to continue delivering results as we prepare Skype for an IPO.”
Most recently, the release of the Skype for iPhone application has generated a great response. More than one million people downloaded Skype for iPhone in the first 36 hours after it became available—and Skype immediately became the No. 1 downloaded free iPhone application in more than 40 markets, including the U.S., UK and Japan. In just over a week, downloads passed the two million mark, putting Skype on more than 6 percent of all iPhones and iTouches – and adding almost half a million new Skype users.