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Summary:

Updated: TechCrunch just reported that StumbleUpon is in talks to being acquired with AOL, Google and eBay as possible suitors. Though we have not been able to chat with folks from StumbleUpon, the social bookmarking discovery service, we have heard that eBay is the likely winner […]

Updated: TechCrunch just reported that StumbleUpon is in talks to being acquired with AOL, Google and eBay as possible suitors. Though we have not been able to chat with folks from StumbleUpon, the social bookmarking discovery service, we have heard that eBay is the likely winner of the derby. I have not been able to confirm if they initialed the documents.If true, then this is the second time Google and eBay have tussled over a start-up – the last one being Skype. TechCrunch says the price is in the $40-to-$75 million range, though we heard it is closer to the $40-$45 million. Again, it is not confirmed, and so treat the price tag as a rumor. StumbleUpon has raised close to $1.5 million in seed financing.

Its recent expansion into Video has helped boost the company’s traffic numbers in recent months. It has a unique business model: it embeds sponsor-sites in some of its search results, which provides better returns for advertisers since it lands on a sponsors page instead of users having to click on an ad – be it a banner or a link

In case you were wondering why, here are my reasons:

Look at this from the toolbar-and-Skype lens. StumbleUpon makes a toolbar that provides collaborative serendipity to find web sites. The toolbar, if you ask StumbleUpon users provides more useful and productive results, than say Google.

By marrying the toolbar to Skype client, eBay can do an end run around Google’s dominance of the search business. A simple search box inside Skype client is all it would take. It is not that far fetched: Skype has been slowly integrating various different services (including PayPal) into its client, and slowly becoming eBay’s desktop backdoor.

Now this is just a hypothesis, and I would love to hear what you folks have to say about the logic behind this deal.

  1. eBay spending under $100M? I can’t believe it.

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  2. That indeed is funny. but not bad for the guys – who started this company.

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  3. Sounds great, except I am not sure how scalable SU’s model is, especially with only a handful of rigidly defined categories (=topics).

    How many “music” or “sci/tech” sites would you need to “stumble upon” to something that you REALLY like? A lot, I think.

    Therefore, I doubt that by incorporating something like this in Skype, eBay can really do anything to challenge Google’s dominance.

    But I agree it would be nice to see something working here.

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  4. I’m just not sure how they are going to implement StumbleUpon into their current business model (or if they think StumbleUpon will make an ROI on its own?).

    I would be a little worried if I was a major stock holder; they really didn’t do anything with the monster Skype acquisition, and now this (although, it is a pretty low-ball value).

    Perhaps there is something bigger going on… Maybe eBay is really using these social services to aggregate user relationships so that they could eventually be applied to their auction site (i.e. recommending products based on your network).

    Anyway, congrats to StumbleUpon!

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  5. While I have been an BIG admirer of StumbleUpon since before Del.icio.us & Digg came along, I do not agree with the the statement that their business model provides better returns for advertsiers

    Yes you get more unique visits, but
    when a person clicks an ad they are much more likely to spend time on the site it takes them to vs. StumbleUpon where they are shown a paid placement site in the middle of exploring one site after the next in a Stumble Stroll. The user shown the paid site they may not even spend 5 seconds on the site before they are off.

    This may be fine for awareness advertising, but not for registration drives or calls to actions. We have a 5 out of 5 StumbleUpon rating, but it still led to very few new users … just very brief, one-time uniques.

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  6. Om–Given how it operates and what it provides, I; probably like most; initially pictured a Yahoo, FIM, Microsoft, AOL, or Google picking up a property like this…but your analysis makes sense.

    Demonstrates again that–done right–valuable pieces of search monster (“All your data are belong to us”) Google really can be siphoned off by others…

    As an aside, it’s fascinating to watch the Internet “big boys” (and those trying to join them) find reasons to cooperate and work together when and where it makes sense…compete vigorously when it doesn’t…and even sue each other when they believe grounds to do so exist…and, often, all at the same time.

    Hard to think of any other industries operating in this manner (per chance they’re missing something by not doing so?).

    When individuals go through such gyrations and machinations, we give them labels like “bi-polar” and “schizophrenic”…yet when companies do the same thing, we call them…wise, smart, and prescient.

    Fascinating.

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  7. I love the small round raised

    My prediction is that some sophomore from Cal State Fullerton is gonna ramp for less than $50k and sell something for $50mm

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  8. [...] TechCrunch and GigaOm are reporting on rumors that popular toolbar social network StumbleUpon has signed a deal to be [...]

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  9. Anyone from SU reading this? I got the next version of your dream. contact me.

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  10. One hint to eBay’s strategy is that they just announced they would allow sellers to link to videos hosted on approved sites (YouTube, MySpace Video, etc) and Video is the drive behind Stumble Upon’s recent growth. I also agree with you Om that’s it all about the toolbar.

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