Yahoo! Pays Kid $30M For Coolness
There’s no logical explanation for Yahoo’s reported $30 million acquisition of Summly, an app created by a 17-year-old Brit that launched five months ago. The team and technology are unexceptional and the app itself will be shut down. What Yahoo really gets for its big check is momentum and buzz.
In other words, Yahoo bought Summly to appear cool again.
Yahoo was last cool in approximately the mid 1990s. It has been attempting comebacks ever since. Its best stab at renewed relevance came in 2005, when Yahoo bought a string of hot startups, including bookmarking service Delicious, photo-sharing pioneer Flickr, and events site Upcoming. For a brief moment, people in Silicon Valley sat up and took fresh interest in Yahoo. But once Yahoo’s crop of golden founders started walking out the door, the optimism and innovation quickly faded.
Summly might just be the first in a new wave of similarly high-profile acquisitions under freshly installed CEO Marissa Mayer. By acquiring the algorithmic news summary app, Mayer sent a loud public message that she’s interested in mobile apps and innovative software, two weak spots for Yahoo. And by bringing Summly’s baby-faced founder on board along with two other employees of the startup, Mayer sends a not-so-subtle message that the company can make fresh and vital hires again.
Still, $10 million per head, 90 percent of it reportedly in cash, is quite a price to pay for some buzz about reinvigoration. But Yahoo needs to change a lot of minds about its trajectory. It’s not just curmudgeons in the tech press and weary advertising customers Yahoo needs to convince but also engineers in Silicon Valley, who have their pick of potential employers.
“I’m already impressed with the change in talent pool of our candidates,” Mayer said on an earnings call later last year. “It’s increased in quality and volume.”
Despite Mayer’s optimism, it must be tough for Yahoo to compete for recruits against world-changing pre-IPO startups like Twitter or posh, highly profitable internet companies like Facebook or Google. If the Summly deal and similar acquisitions can give Yahoo more of an edge in the fight for talent, the premiums involved will seem a bit less insane.
Spending a lot of money on cool startups like Summly won’t make Yahoo cool again, but it helps make a comeback possible.
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