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The Summly deal makes no sense

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Re: The Summly deal makes no sense

#111

Post by rayiner »

This article assumes that the primary goal of the acquisition is the technology. Without having looked at the technology or commenting on its merits, I can think of a boatload of other things Yahoo is buying with its money:

1) Free positive publicity--publicity that doesn't constantly remind people how Yahoo! is circling the train; 2) The recruiting hook of "yeah, we're not stodgy anymore, we paid some kid $30 million!" which will fly with some people; 3) A new engineer who obviously has both technical and business skills; 4) A subliminal "don't forget, there's more of you turning 18 every day" to the rest of the organization.

Re: The Summly deal makes no sense

#112

Post by PaulHoule »

People are on the threshold of really good text analysis algorithms. I know of teams all over the place who have bits of the puzzle solved amazingly well.

SRI is a world leader at this technology, it already spun off Siri to Apple, and they've got patents on key technologies in this system, so a $50 M valuation is about right.

I know another guy from New York who sold a company of the same size for $30 M or so and when I wargame scenarios around companies developing this kind of stuff I'd expect an exit between 20 M and 80 M.

Re: The Summly deal makes no sense

#113

Post by baby »

rayiner wrote: post #111

This article assumes that the primary goal of the acquisition is the technology. Without having looked at the technology or commenting on its merits, I can think of a boatload of other things Yahoo is buying with its money: 1) Free positive publicity--publicity that doesn't constantly remind people how Yahoo! is circling the train; 2) The recruiting hook of "yeah, we're not stodgy anymore, we paid some kid $30 millio…

Feels like your 4 points are the same one.

Re: The Summly deal makes no sense

#115

Post by minimax »

In 2005 Yahoo buys Delicious, a bookmarking site, for between $15MM - $30MM. Summly was acquired for a reported $30MM. Delicious had 5MM users, and let's face it how much "CS beef" goes into a bookmark sharing site. Summly claims to have 1MM downloads. The difference between Delicious' 5MM users and Summly's 1MM is a factor of five but the order of magnitude is roughly the same. Joshua Schachter is highly respected as an entrepreneur and engineer within the HN community, but Nick D’Aloisio is considered just some lucky teenager.

The jealousy on display in the post and subsequent comments is, I think, glaringly obvious to anyone who would take a second to compare it to almost any other startup acquisition where the founder isn't a 17 year old.

Re: The Summly deal makes no sense

#116

Post by xradionut »

IanDrake wrote: post #77

Right after college I started consulting at an eCommerce company that had bought a 17 year old's website for over 1M. Had had built a gaming community site that had become very popular and they wanted the traffic. I thought the kid was just lucky until I was in a meeting with him. His thought process basically ran circles around everyone else in the room, some twice his age. I realized then, that there are kids, KIDS…

As a counterpoint, there are real sharp people of all ages. At local meetups, I've met a couple of retirees not orignally in the programming field, (medical doctor, aerospace tech) that have picked up Linux and programming well enough, I'd hire them to build software/hardware for me if they weren't pursuing their own projects. Or the older opera singer that helped me debug code while on a flight and joked, "Programming is music for those that can't sing...". I believe she could succeed in any field, scary, scary, scary smart.

Re: The Summly deal makes no sense

#117

Post by corresation »

tixocloud wrote: post #98
huhtenberg wrote: post #78

Earlier quoted context omitted.

Actually it now looks more and more like some sort of elaborate kick-back scheme for the investors. "Your YHOO stock has sunk below the waterline, so here's something to sweeten the pot."

I actually think this kinda makes sense. That or relationship building with the investors. Plus, Yahoo! hasn't been making any new waves for quite a while. They needed to make something happen somehow to get people excited. The founder might be brilliant and I could be wrong about this whole relationship building with investors to try and get attraction nonsense.

Plus, Yahoo! hasn't been making any new waves for quite a while.

They've been making tonnes of Marissa Mayer waves. They're the New York Jets of technology.

Re: The Summly deal makes no sense

#118

Post by johnfuller »

IanDrake wrote: post #77

Right after college I started consulting at an eCommerce company that had bought a 17 year old's website for over 1M. Had had built a gaming community site that had become very popular and they wanted the traffic. I thought the kid was just lucky until I was in a meeting with him. His thought process basically ran circles around everyone else in the room, some twice his age. I realized then, that there are kids, KIDS…

It's difficult for me to comment on something that you saw while in this room when I wasn't in the room, but I'm guessing that much of that had to do with the fact that the kid had actually put in the work and did the experimentation to build this community.

How many of the people in that room could say the same? What communities (or anything else) had they built? If they had built something, did they do it on their own as opposed to being someone brought in after the company was already successful? The kid probably ran circles around everyone because he was an expert (on this subject) among managers / developers / designers and anyone else who could probably do anything but run a successful community / e-commerce site.

I think about this sort of thing as a web developer. How many web developers who build client sites have actually built a successful site? How many designers really know how to design something which can sell? If you haven't done it, then you probably have no clue. But if you have been there, then you probably wouldn't be working for someone else either.

Re: The Summly deal makes no sense

#119

Post by ebbv »

minimax wrote: post #115

In 2005 Yahoo buys Delicious, a bookmarking site, for between $15MM - $30MM. Summly was acquired for a reported $30MM. Delicious had 5MM users, and let's face it how much "CS beef" goes into a bookmark sharing site. Summly claims to have 1MM downloads. The difference between Delicious' 5MM users and Summly's 1MM is a factor of five but the order of magnitude is roughly the same. Joshua Schachter is highly respected a…

I think the assumption is, rightly or wrongly, that the 17 year old kid is unlikely to have done anything the rest of us couldn't have done. Whereas if he were an older more experienced developer, he would get the benefit of the doubt that maybe he had special something on offer that was worth Yahoo buying.

At least, that's what's going through my head.

EDIT:

If the assumption that the Summly codebase doesn't actually contain anything worth $30 million is true, then this purchase is all about branding. It's about fooling Wall Street into thinking Yahoo is revitalized and focused on new technology and talent.

When IMHO, in reality, any sane investor should see this purchase as evidence that Yahoo is acting irrationally and I'd pull every dollar I had out of it.

Re: The Summly deal makes no sense

#120

Post by patd »

minimax wrote: post #115

In 2005 Yahoo buys Delicious, a bookmarking site, for between $15MM - $30MM. Summly was acquired for a reported $30MM. Delicious had 5MM users, and let's face it how much "CS beef" goes into a bookmark sharing site. Summly claims to have 1MM downloads. The difference between Delicious' 5MM users and Summly's 1MM is a factor of five but the order of magnitude is roughly the same. Joshua Schachter is highly respected a…

1MM downloads is far from 1MM users. So it's not really a factor of five.
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