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Summary:

Stumbleupon, which was reborn as a recommendation-and-discovery service in 2009 after an earlier ill-fated acquisition by eBay, produced another tangible sign of that rebirth today with the news that the company has landed a Series B financing round of $17 million from a group of funds.

Stumbleupon CEO Garrett Camp

Stumbleupon CEO Garrett Camp

StumbleUpon, which was reborn as a recommendation-and-discovery service in 2009 after an earlier ill-fated acquisition by eBay, produced another tangible sign of that rebirth today with the news that the company has landed a Series B financing round of $17 million from a group of funds including Accel Partners, First Round Capital and Google investor Ram Shriram’s investment firm Sherpalo Ventures. StumbleUpon CEO Garrett Camp said the company plans to use the money to expand its content-discovery platform into mobile and even onto users’ televisions.

The reference to television isn’t as odd as it sounds: when the company was founded in Calgary, Alberta in 2002 — while Camp was still in graduate school — the idea behind the service was to recreate the “channel-surfing” metaphor from television for the web. After receiving some angel funding in 2005, the team moved to Silicon Valley and launched the StumbleUpon browser toolbar, then were acquired by eBay for $75 million in 2007 — a deal that didn’t really seem to make sense to anyone at the time, despite how much eBay CEO Meg Whitman and others tried to defend it as a good fit.

The service languished inside of eBay in much the same way that Skype did, in the sense that there was little or no attempt to leverage the service or take advantage of any “synergies,” perhaps because there weren’t any. Finally, Camp and the rest of the management team bought the company back from eBay and took it private in 2009, supported by financing from Accel, August Capital and Sherpalo.

Since it escaped from eBay’s clutches, StumbleUpon has become a kind of dark horse when it comes to driving social traffic to websites — it has never really gotten as much attention as Digg or some of the other early social-recommendation systems, and yet many websites know that it consistently drives large amounts of readers to their content. A survey by search tools company Lijit last year found that the service drove almost as much traffic as Facebook, the 800-pound gorilla of social news, and a more recent one from Statcounter found that it topped Facebook in that department. Last year, the company celebrated its 10 millionth user, and as Om noted in a post recently, that’s largely because the service has focused on being simple and fun to use.

The biggest challenge for StumbleUpon now, however, is that Facebook has made it clear it intends to leverage its social-graph plugins — including the ubiquitous “like” button that has shown up on millions of websites over the past year, for which the social network recently launched new analytical tools — to become a giant recommendation engine. Given the data it has about its users and their preferences and interests based on these voting systems, it wouldn’t be difficult for Facebook to create a StumbleUpon-style service that suggests new content to users. Camp and his team may have survived eBay, but now they have an even bigger fight on their hands.

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Post and thumbnail photos courtesy of Flickr user Giuseppe Bognanni

  1. The biggest problem with StumbleUpon is the quality of the traffic they drive. The bounce rate on SU traffic is significantly (3 – 5x) higher than most other sources and time-on-site is almost negligible.

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    1. That’s a good point, Jonathan — although Digg’s bounce rate is also quite high, I believe. But you are right to question the value of that kind of “drive by” traffic.

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  2. StumbleUpon seems to drive an initial spike of traffic (great for seeding a user base and getting the word out), but not sustained interest. Perhaps because it is built and branded around discovery of new experiences, and not around filtering for quality.

    For a small social/photo site I saw much more sustained traffic from well-placed links on blogs, email referrals, widgets and SEO.

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  3. I find it ridiculous that wise words like these were forgotton in the decision to cut the art grants. Especially by Harper, considering it’s written on our own canadian MONEY!

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  4. I love Stumbleupon and I use it almost every day. If Facebook opened up a somewhat similar plattform I doubt it would get as big as Stumbleupon just for the fact that many users wouldn’t want all the pages there going through on their Facebook profile. More people see their Facebook profile as being personal and don’t post any shenanigan on it.

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