Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

EBay acquires Hunch for $80m

uncrunched.com

Post reply on HN
Print view View original

71–80 of 94 posts

Re: EBay acquires Hunch for $80m

#71

Post by achompas »

AznHisoka wrote: post #60
hello_moto wrote: post #49

Earlier quoted context omitted.

I think we need to move away from all the nonsense of "A-level engineers" or superstar developers and so and so and so. Carl Henderson of Flickr fame looked like an A-level engineer back then (especially with his O'reilly book) yet some of the Flickr engineers baffled when they saw the Flickr codebase. Sometime it's all smoke and marketing hype.

agreed. ooh.. a recommendation engine backed by semantic cloud-based peer to peer infrastructure... for all we know, it could just be aggregating data from twitter and seeing whether the word "good" or bad appeared more often to decide whether to aggregate it.

Have you used Hunch? Have you ever written a recommender system? Have you even read the source of one??

This isn't some naive Bayes spam filter from 1992. Hunch is really, really accurate.

Re: EBay acquires Hunch for $80m

#72

Post by flavio87 »

drusenko wrote: post #69
socratic wrote: post #63

Could someone experienced breakdown what a transaction like this looks like for everyone involved? I'm super curious. I've never been acquired, so I really have no insight into the process other than what I've read. Here's the facts as I see them: Crunchbase says Hunch started in September of 2007 and had 23 employees on LinkedIn when they exited. (TechCrunch calls it a 20-person team, so I'm presuming that's all the…

Here's a wild, random-ass guess: - Let's keep it simple and say that since this is an experienced team, the investors invested $20m at a $60m post, so they have 1/3 of the company. Since it is an experienced team, I'm going to guess no participation or anything else hokey. 1x liquidation preference is likely but won't matter in this scenario b/c preferred will convert to common. - With a 20 person team, you've probab…

you are calculating the tax here at around 25%. Wouldn't this count as long term capital gains tax (if you hold the stock for more than 1 year, which it seems likely since the company was incorporated in 2007) that is currently being taxed at 15%?

Re: EBay acquires Hunch for $80m

#73

Post by jamiequint »

flavio87 wrote: post #72
drusenko wrote: post #69

Earlier quoted context omitted.

Here's a wild, random-ass guess: - Let's keep it simple and say that since this is an experienced team, the investors invested $20m at a $60m post, so they have 1/3 of the company. Since it is an experienced team, I'm going to guess no participation or anything else hokey. 1x liquidation preference is likely but won't matter in this scenario b/c preferred will convert to common. - With a 20 person team, you've probab…

you are calculating the tax here at around 25%. Wouldn't this count as long term capital gains tax (if you hold the stock for more than 1 year, which it seems likely since the company was incorporated in 2007) that is currently being taxed at 15%?

State/City long term capital gains in NY are around 11-12%. In California they are the same as the income tax rate of 9.3%. 25% is the blended Federal/State/City rate.

Re: EBay acquires Hunch for $80m

#74

Post by AznHisoka »

achompas wrote: post #71
AznHisoka wrote: post #60

Earlier quoted context omitted.

agreed. ooh.. a recommendation engine backed by semantic cloud-based peer to peer infrastructure... for all we know, it could just be aggregating data from twitter and seeing whether the word "good" or bad appeared more often to decide whether to aggregate it.

Have you used Hunch? Have you ever written a recommender system? Have you even read the source of one?? This isn't some naive Bayes spam filter from 1992. Hunch is really, really accurate.

Actually yes, I have written a recommender system.But if there's 1 thing I've learned over the years is that you don't go overestimating the complexity/intelligence of any system unless you take a peak underneath. For all you know, Hutch could be just hiring curators with good taste rather than write some complex system that would need to be constantly changed and updated. But people have all the incentive in the world to "over fluff" and overcomplicate their work to make it sound valuable. It's smart, but you gotta be skeptical.

Re: EBay acquires Hunch for $80m

#75

Post by smokinn »

mikeklaas wrote: post #67
smokinn wrote: post #31

Earlier quoted context omitted.

80 million dollars is a lot to pay for a recommendation engine. Netflix had their own and paid a million dollars as prize payout for an absolutely state of the art system. If it really was just a tech acquisition they massively overpaid.

As someone who builds recommender systems for a living, let me assure you that the output of the netflix prize was perhaps 10% of what you need to actually build a good recommendations product.

Sure, I wasn't implying eBay overpaid by 80x but 79 million dollars is a lot of product development once you've paid 1 million for a proven state of the art proof of concept.

Obviously eBay must see other reasons for the acquisition than just the tech itself.

Also, if it's also in large part a talent acquisition then they're going to paying more than 80 million since they're going to need to pay for some new pairs of golden handcuffs to keep the talent around.

Re: EBay acquires Hunch for $80m

#76

Post by flavio87 »

jamiequint wrote: post #73
flavio87 wrote: post #72

Earlier quoted context omitted.

you are calculating the tax here at around 25%. Wouldn't this count as long term capital gains tax (if you hold the stock for more than 1 year, which it seems likely since the company was incorporated in 2007) that is currently being taxed at 15%?

State/City long term capital gains in NY are around 11-12%. In California they are the same as the income tax rate of 9.3%. 25% is the blended Federal/State/City rate.

ah forgot about that - thanks for clarifying.

Re: EBay acquires Hunch for $80m

#77

Post by dmix »

alphamale3000 wrote: post #66
dmix wrote: post #25

Earlier quoted context omitted.

Technically he should be a software developer with a $120-200k salary working at Google, saving money with compound interest and getting company stock. Thats the easiest way as a CS grad to become wealthy - if thats your goal.

That's when you don't factor in 'skills'. If you're 'any' CS grad, you're right. Be if your skills are above average (CS and business sense), this skews the return of investment of the startup.

Well, not any developer can get $200k at Google. So skill is important in both respects.

Re: EBay acquires Hunch for $80m

#78

Post by mikeryan »

achompas wrote: post #36
AznHisoka wrote: post #9

Wow, this is like a knight in a white horse for Hunch.. I seriously doubt they were making any profit... This sounds like a talent acquisition. I mean this is ridiculous... but it goes to show you.. you gotta show up for the game (the startup game, I mean) to win it... $80 m for a site that doesn't even get 1 million uniques (per Compete) a month is a STEAL. I mean.. seriously, everyone who has a CS background should…

This sounds like a talent acquisition. I would agree, and it's a damn good talent acquisition. Hunch's team is made almost exclusively of engineers who (a) went to some of the best CS programs in the world (CMU, MIT, Stanford), and (b) really really really know their shit (just have a 5-minute convo with one of them). Here in NY, Hunch had a reputation for opportunistic hiring. They had lots of funding and an incredi…

You think Ebay can't just, you know, hire this kind of talent?

I'd think walking through the halls of those CS programs offering $250k a year in salary would get a a bunch of A-Level talent at a much lower price then they paid for Hunch.

Re: EBay acquires Hunch for $80m

#79

Post by tednaleid »

flavio87 wrote: post #72
drusenko wrote: post #69

Earlier quoted context omitted.

Here's a wild, random-ass guess: - Let's keep it simple and say that since this is an experienced team, the investors invested $20m at a $60m post, so they have 1/3 of the company. Since it is an experienced team, I'm going to guess no participation or anything else hokey. 1x liquidation preference is likely but won't matter in this scenario b/c preferred will convert to common. - With a 20 person team, you've probab…

you are calculating the tax here at around 25%. Wouldn't this count as long term capital gains tax (if you hold the stock for more than 1 year, which it seems likely since the company was incorporated in 2007) that is currently being taxed at 15%?

Chances are the options weren't restricted options that employes could exercise ahead of time and that there was a 4 year vesting cliff. Most people don't exercise options at vesting time so I'd bet that most of the options were taxed as short term capital gains (and that would mean that 25% is actually probably a bit low for most employees with where this would get them to).

Re: EBay acquires Hunch for $80m

#80

Post by harryh »

drusenko wrote: post #69
socratic wrote: post #63

Could someone experienced breakdown what a transaction like this looks like for everyone involved? I'm super curious. I've never been acquired, so I really have no insight into the process other than what I've read. Here's the facts as I see them: Crunchbase says Hunch started in September of 2007 and had 23 employees on LinkedIn when they exited. (TechCrunch calls it a 20-person team, so I'm presuming that's all the…

Here's a wild, random-ass guess: - Let's keep it simple and say that since this is an experienced team, the investors invested $20m at a $60m post, so they have 1/3 of the company. Since it is an experienced team, I'm going to guess no participation or anything else hokey. 1x liquidation preference is likely but won't matter in this scenario b/c preferred will convert to common. - With a 20 person team, you've probab…

This sounds about right. I would say that the investors probably own a bit more of the company than you guess because the cash didn't all go in at once but in 3 stages (I think? The crunchbase lists 2 different A rounds which doesn't make sense). Valuations for the earlier stages we almost certainly a good bit less.
Post reply on HN