Why eBay wants Stumbleupon

92 Comments

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.

92 Comments

TG

I would propose that one of the other possiblilities is the use of StumbleUpon to help EBay buyers find items that they need but don’t know about based on their interests. Apply the StumbleUpon random search by category to the EBay index to help a user find items they may be interested. This would build bids across items while also minimizing keyword spamming in EBay headlines.

Veronica Montero

I tend to agree with Taylor Barada’s comment here. For a long time I’ve thought that one of eBay’s major pitfalls is not having a comparison shopping feature. I think they would benefit from user reviews of products that are being sold and something a-la-Amazon would be a first step, where potential shoppers/bidders are given information about a product based on the selling history of a particular item. ‘People who bought this also bought this’ for a related category. This feature makes easier sense for eBay stores but I’m curious to see if they can use SU to enhance their bidding experience as well.

Mia D

Whether or not, eBay acquires Stumbleupon, I think the time has come for more market-specific specialized/intuitive search tools. These yield better results for specific market segments (as opposed to the generic results that Google spits out) and have more credibility as these search results have been vetted by other users. I think I’ve heard this mentioned here before, Google’s dominance in search won’t be threatened by head-on competition but rather by specialized search tools that will slowly chip away at its marketshare.

Mike

I think this would be a great aquisition by ebay.

StumbleUpon has the ability to greatly approve the ebay user experience when integrated into ebay’s on site search engine. User’s could in effect ‘window shop’ ebay (shopping on ebay is in itself a hobby/recreational activity for many) and all pages/products a user would stumbleUpon would be pre-screened according to the user’s interests.

Indeed in a longer time frame, integration of stumbleupon technology combined with ebay’s own search technology and skype could eventually produce a search product superior to Google, and most importantly more user friendly.

Very interesting.

Marshall Kirkpatrick

This is SO exciting! I sure hope they don’t mess it up! There’s a lot of parallels with the MyBlogLog acquisition – StumbleUpon’s just more lovable and took far longer to get bought. Not so distant cousins as services though. I love SU video!

Robin Majumdar

Interesting… I like the theory that they are aggregating client-side tools to virally drive traffic to eBay through tools such as Skype and SU Toolbar.

I seriously think that eBay is doing these pre-emptive acquisitions to keep other players (i.e. GOOG & MSFT) out of the game… and “figure out” what to do with the acquired technology (or eyeballs) at a later date. Witness the delay in integrating Skype into eBay…

We (still) live in fascinating and thrilling times.

Spud

Nice position for StumbleUpon founders to be in. What price will these companies be prepared to pay? I see that Google might be coming up with there own version of StumbleUpon so perhaps eBay will end up aquiring it.

Nivi

I can’t imagine Google would let any serious strategic threat get away for $40M.

Or $1.6B for that matter.

Jeff Clavier

It is all about aggregation of explicit user “attention” data, and eventually behavioral targeting.
Congratulations to StumbleUpon’s founders and their investors, an awesome outcome.

kosmar

[sorry to have bugged your layout with my trackback.]
i dont know if the toolbar, skype or the datamine of interest and profiles are the key here. the combination with shopping.com, ebay express or plain ebay with the rating and discovery means of SU sounds interesting, too.

Taylor Barada

Om-
I’m not a StumbleUpon user so this may be offbase, but it seems to me the concept would be more broadly applicable via the toolbar than to just websites. Specifically to auction items…this type of technology is fundamentally all about a unique approach to using metadata for personalization and would seem to have the potential to be a new twist on the Amazon “other users bought X” and could be potentially usable across eBay’s core business. Which if you believe it would drive up purchases/spending would make it a pretty easy bet for them with the search angle as essentially just option value. Thoughts?

Casey Carpenter

As an advertiser and a user I am not really happy about this. While stumble is not really good at driving leads, say software, it is great at driving awareness and brand loyalty, say fashion sites.

I have had great success in their advertising model for certain clients though its not good for everyone.

I dont care how this integrated into ebay. I care how ebay will use this property and what they do with it on its own.

Randy Smythe

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.

Larry Chiang

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

Steve Morsa

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.

Ted Rheingold

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.

Robert Dewey

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!

Rover

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.

Comments are closed.