Del.icio.us gets
acquired by Yahoo. My take away is USV's gut feeling in spotting the
opportunity - they invested a bit more than $1 mil (for a 25% equity
deal) and cashed it out only 8 months after. Some say the deal is valued at
$10 mil. while others say about an amount in the $30-$40 mil range. Nice
return in any of the cases.
Strategically, Umair
provides the context, though I still fail to see 1) why Yahoo didn't
build such a tool in-house and 2) how they would generate the returns for an
asset investment that so far doesn't have a business model (hence it's not a
business rather just an asset) -- to the moment, afaik, del.icio.us doesn't
have revenues. The contextual ads model is the usual suspect but it remains
to be seen if the loyal users of del.icio.us will appreciate it. So far,
Yahoo just seems to be collecting cool web-based apps.
update: the deal is in the $17-19
mil. range, just like Flickr
more update: Ross says that this is
a natural step for getting at Yahoo Social Search
...and more:
search landscape.
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How about this: Del.icio.us has significant userbase, who coincidently are also early adopters. Want to launch a product just need to create small amount of initial buzz, enough for it to hit the new & popular section. Say 20 links will more than suffice. Then just let the beast unfold, first 2000 users will come from del.icio.us. No business model? Maybe, but to control such resource is not to be taken lightly.
Most likely it will be incorporated within Yahoo's mechanisms, it won't be a revenue generator. It is an asset what Y boght, not a business.
Hey, what was the business model behind Skype that made ebay buy it for (a total of) $4 bn? The $20m revenue (not profit, but revenue) from last year?
No, the millions of users.
Same with del.icio.us. It's not the software (there are already better ones out there), but the huge user adoption.
BTW - Flickr had and has a strong business model and it had revenues when bought by Y - it's the 20$/year pro accounts. They had a couple tens of thousands when Y came in, and Y has the power to grow this to hundreds of thousands...
Not the same with del.icio.us. Here - Y is going the Google way: build a lot of service so more and more people use YOU. And make money with some of the services.