Earlier this month we reported on eBay’s spinoff of StumbleUpon, a company it owned for a little less than two years. Ebay bought the company for $75 million in May 2007. Unknown until now, though, was the spinoff value of StumbleUpon. According to a source close to the transaction, it was $29 million.
New investors Sherpalo Ventures, Accel Partners, and August Capital joined StumbleUpon founders Garrett Camp and Geoff Smith in purchasing the company back from eBay. Outside investors put in 85% or so of the $29 million, we’ve been told, with Camp and Smith making up the rest.
eBay was paid $25 million in cash for StumbleUpon and retains a 10% interest in the spun off entity. $4 million remains in the company to fund operations.
StumbleUpon’s revenues are estimated at $5 million – $10 million annually.
This will be an interesting story to watch. What’s your prediction their revenue will be in two years from now?
Close to zero… I just don’t see a business model for this company worth saving considering the competition in this very small niche.
Jon
http://WoodMarvels.com – Create Unique Memories
I disagree. Just before eBay bought SU they had the almost perfect pages for highly targeted ppc advertising! If they restore those pages and make them easy to locate they would have their own pay per click golden goose.
I wrote about it in a blog post suggesting that monetization model for other Social Networking sites such as Twitter, FriendFeed or cliKball. I am amazed that to date none have moved in that direction.
I used that post in the Website link so you can read more about what I am suggesting. I can connect any site interested in the concept to the people who were behind the development of Go-To and Overture and worked for Yahoo! Search Marketing.
No Bcc’s for this story?
Gosh I’m dissapointed
I used su, but no traffic from su.
http://www.stum...tumbler/cnties/
http://twitter.com/cnties
Su can drive a lot of traffic but only if you know how to use it. I’ve seen large bumps in traffic and if you read the post at http://www.aimc...bleupon-friend/ you’ll see what can be done there. I know that is true because I know the author and the person who sent the traffic.
nuts to techcrunch how about some pacman http://www.craz...9fa566e1648a986
or some mario brothers http://www.craz...9fa568a49ab4112
I’m surprised whoever’s in charge of M&A at eBay still has a job. They’re buying great companies for absurd valuations. I guess they saw Google do it quasi-successfully and decided to join the party. Skype & StumbleUpon will both be better companies as independent properties.
A refund with penalties.
bought back 90% of the company for 29 million which is 46 million less than what they were originally paid. pocketing 46 million for the fiasco. who knew a fiasco could be such a good thing. i wonder what AOL will sell Beebow for.
BuyLocator.com – deals only
Seriously I never saw the synergy between eBay and SU. Ebay should be snapping up those value added services that are serving the ebay members, better then they do.
Pretty soon someone is going to find a way to crack their nut, and when they do…. Game over eBay.
Agreed — there are a handful of companies, mostly small — offering services that help eBay grow their core or extend PayPal (or both). But rather than a strategy to buy those small, focused companies at a low-price, and take and grow those WITH eBay, they are trying to buy companies that can grow without eBay and attaching to those shooting stars.
We can see where that strategy got them.
Makes no sense. Their best acquisitions to date (PayPal by far, their automotive listing tool, BML, etc..) are all tightly hooked to eBay.com.
The deals that are distant to eBay have cost them billions.
Why the existing M&A team remains makes no sense.
No, no… You guys don’t get it. Buying SU was a SUPERB move on eBay’s part, and selling SU is the dumbest thing they’ve ever done.
See, SU is one of the few companies to offer a credible alternative to Google. SU lets people find websites while bypassing Google, and unlike Mahalo, it’s all automated, scalable, and actually works.
SU could have formed the kernel for eBay’s strategic competition with Google. Letting go of SU means they’ve decided not to go toe to toe with Google.
I still think stumble upon is worth $2 billion regardless of who owns it. Stumble upon has huge growth, market dominance , and great revenue potential. http://iamned.com/blog/ Ebay
This doesn’t necessarily value the company as of today (maybe you would be $2 billion dollars) but it certainly would need to grow into that valuation
5-10 million at $30 million values this 3-6x revenue, not bad for a tech company today.
I wonder what EBITDA / cash flow is, must be burning through cash if eBay wanted to spin it off…
$2 Billion aye? Sounds like 1999 all over again.
Kudos to David Hornik. Much like ‘01-’02, there are great bargains to be had for those with the powder and vision to invest. This should be a no brainer.
Classic example of a hype, too much hope, traffic makes you a millionaire, buy before it becomes the next google thinking. It is just completely naive to pay for 75$ million for a webpage suggesting website and then realize some years later that it is not even probably worth more than 2$ million. Plus the idea that a auction website buys this website for that much money is stupidity.
If they’re worth only $2 mil, sign me up to acquire them because with revenues of 5-10 million, you’d make that back in less than 6 months.
Unless of course their burn rate exceeds that by a large amount.
Anyone know their operating costs? Servers or people or what costs them the most?
It’s always a shame to see good companies with promise sold to the giants(ebay) with no passion or vision for it. It’s great to see one of my favorite web services go back to where it belongs, it’s creators.
And Here I am trying to advertise on StumbleUpon, and keep wondering why they deny the campaigns.. I just don’t think they are in the mood to make money…
Oh well..
Thanks Josh, you answered my question (below). Do they just insert your site into the system for people to ‘Stumble’ or what?
Its a shame a company like ebay can’t generate positive news any longer.
So how many users do StumbleUpon have these days?
How active are they? eg, 10, 30, 90 day usage information?
I think most have moved to Twitter, Twitter brings way more traffic these days, SU is great for traffic but they never convert to real money, the real problem…
Where does SU make it’s money? No seriously I don’t actually know. I use the SU toolbar, and never see any ads or anything related to SU in my use of the service.
Do they take money to put sites in the rotation (premium) or do they sell ads or is this revenue from their new ‘toolbar’ ?
gimmicky company, no revenue model. add them to the deadpool
As of a couple months ago, StumbleUpon was still cash flow negative. They are close, but need about another $.5 million per year to break even. They may have surpassed this figure.
This is Web 2.0 Gone Wild …….
Most of the Web 2.0 startups have no business models. They are free, based on “eye-balls” that the business model that Web 1.0 bubble is based on.
eBay and tons of money and could never think of what to do with money so they went off shopping and buying companies which did not made business sense. Sersly how could stumble upon had helped ebay.
And why the hell would you pay $4 bn (I hope figure is correct ) for a internet phone company ?
You want your buyers and sellers to make call to each other. Very good develop a application on your own or buy some small company in this space.
I think SU can be worth a lot more. I think SU like twitter, has a unique play at search. Real-time search with twitter and user qualified and community rated search with stumble upon. I’m surprised that with every new release, they don’t expand on the opportunity. Maybe they’re already thinking in this direction and looking for a buyout by a company that gets it.
SU is already late to the game, there’s http://stumbletweets.com that does that.
A great deal for those that bought it. The paid model for stumbleupon just hasn’t been a great revenue driver… yet, but the gross margin must be amazing, and tightly run with work on better revenue streams this site is going to rock. Stumble’s not going away, it can drive a lot of traffic still.
I think SU has gone downhill, it’s simply not a great site for monetizing blogs or SU itself.
Twitter has on the other hand, taken control, there’s even Twitter StumbleUpon, http://stumbletweets.com much better than SU for real-time up-to-the-minute stumbling.
I think SU will die out eventually.
It’s Megs Fault. NEG HER http://www.negmeg.info
Personally, I never understood the supposed synergy between eBay and StumbleUpon. Frankly I think it’s a bit naive to pay a lot of money for a webpage that suggests other websites and then some years later realize that it is not even worth half that. How can you monetize something like this?
I just don’t see a business model for this company worth saving considering the competition in this very small niche.
Maybe they’re already thinking in this direction and looking for a buyout by a company that gets it.
It is silly to have bought it for so much in the first place… I hadn’t heard of Stumble in 2007. But it’s a powerful tool for driving traffic around the web, and I suspect the like/dislike function is a big part of its value. They can profile users and have an ongoing record of what they like. AND every site has an exit rate… but Stumble is just a service, and if I don’t like the site it brings me to, I’m very likely to just click Stumble! again.
What eBay did in this situation was a bit ridiculous. The idea of buying a competitor was a good one, the idea of buying out a competitor for that price was just absurd. Nice to see the creators getting their company back and really having there way with a powerhouse like eBay.