12 ms·

The Summly deal makes no sense

379 points by thomseddon 14y ago

MMXII 14y ago
Seems to me that the kid has connections if you look at investors and business partners. Maybe those partners wouldn't have wanted to collaborate with Yahoo, but now they'd consider it for 30M.
nicholassmith 14y ago
It makes perfect sense, they've got some technology out of it, some people who understand mobile, and a nice big headline. Worth $30m of my money? Probably not. Worth $30m of Yahoo's money? Maybe, they're not likely to have decided to spend that much on an acquihire without board approval really are they. Unless they Zuckerberg'd it and thought it was better to seek forgiveness.
- alex1 14y ago
  The summarization tech isn't owned by Summly. It's owned by SRI International and was licensed to Summly. Maybe a large chunk of the reported $30 million was actually used to acquire that technology from SRI?
  - hdra 14y ago
    I actually didn't know about this before. I think one of the first article I read about the product was the story when the product was called TrimIt, and the company just received some investment from Li Ka Shing. For some reason, the articles[1][2][3] gave me the impression that the technology was developed by the founder (or did they switched the algorithms?) [1]: http://www.forbes.com/sites/parmyolson/2011/12/13/teenage-programmer-backed-by-hong-kong-billionaire-li-ka-shing/ http://www.forbes.com/sites/parmyolson/2011/12/13/teenage-pr... [2]: http://techcrunch.com/2011/07/15/trimit-summarizes-emails-blog-posts-and-more-with-a-shake-of-your-iphone/ http://techcrunch.com/2011/07/15/trimit-summarizes-emails-bl... [3]: http://gigaom.com/2011/12/13/meet-the-internets-newest-boy-genius/ http://gigaom.com/2011/12/13/meet-the-internets-newest-boy-g...
  - arunoda 14y ago
    A good answer.
  - lubujackson 14y ago
    Here's my conspiracy theory - Summly has a very nice contract with SRI that gives them full usage forever and is transferable to Yahoo. Yahoo tries to license the tech from SRI directly and realize it will cost them 20 mil a year based on their heavy usage. So instead they buy Summly for the SRI tech at a discount. Annnd that's about the only way this makes sense to em.
- buro9 14y ago
  There is nothing that I can see on Summly's site to suggest that they own their technology. That is, the piece of technology that creates a summary of an article does appear to be licensed from SRI.com
  - waitwhat 14y ago
    Maybe it was just quicker/cheaper for Yahoo! to buy Summly and their license than to negotiate their own license off SRI?
- Nursie 14y ago
  Also free advertising. The BBC had "teenage entrepreneur sells amazing app to yahoo" plastered all over it yesterday.
  - Jare 14y ago
    Free as in "costs $30m"? Not to get into who is this advertisement aimed at, and what kind of image value can Yahoo derive from it.
    - Nursie 14y ago
      All the best free stuff costs millions :) Yeah I guess that is a bit of a non-sequitur, but you can't pay to get coverage on the BBC news page (AFAICT) so it sort of works.
  - gargoiler 14y ago
    Will anyone really remember it tomorrow though? Nope.
- PavlovsCat 14y ago
  What is a "people who understand mobile"?
_chrismccreadie 14y ago
I suppose Yahoo will have to answer to their shareholders, just not yet. It seems to me that they have invested in the talent and the current customer base. If Yahoo really do make an impact on the mobile news market I'm sure $30m will seem like buttons. I do agree that many other development teams would have jumped at an acquisition offer of a lot less money but they were either unknown to Yahoo or deemed not suitable for Yahoo.
amirhhz 14y ago
There's a possibility that this publicity changes younger people's perception of Yahoo's. They'll see the BBC headline and a) will now know what Yahoo! is and b) might get motivated to write/learn code and even want to go work for a tech company (even Yahoo itself). Combined with everything else Marissa Mayer is doing, (b) might actually happen, as altruistic-seeming as it might sound.
- csmattryder 14y ago
  I'm 21, probably out of the definition of 'younger person' by a while, but even I don't get it. $30m is a lot for what I assume is an application of SRI's technology. Still seems to me like Yahoo! is a place where engineers are handed the purse strings, a la 2005 era.
  - ecspike 14y ago
    I'd say so, Marissa Mayer was an engineer before becoming an executive.
    - corresation 14y ago
      Marissa Mayer was an engineer before becoming an executive. Was she? Her career essentially started at Google, her rise arguably being one of right place/right time. For all of the talk about Mayer, I have literally never heard about anything actually interesting that she has done. Instead it's her 90 hour work weeks, n-shades of blue, and abrasive attitudes with others. She sounds like management through and through.
  - amirhhz 14y ago
    > Still seems to me like Yahoo! is a place where engineers are handed the purse strings Exactly! :) Assuming the above is meant in a positive way, you might not have said/thought that if it wasn't for this, and other, stories recently involving Yahoo and their acquisitions.
- d4nt 14y ago
  You're assuming an lot of clever forethought on the part of Yahoo. I find it hard to believe their PR team are that cunning. It's more likely that Yahoo are desperate to rejuvenate and buying up the nearest hot startup (at whatever price it takes) is politically easier than forming an internal skunkworks to build something cool, which would be way cheaper.
t4nkd 14y ago
Unless I missed a particular story, I haven't seen Summly or Yahoo! announce the number is $30m. A reasonable point here was that relicensing from SRI for the core functionality of this app could be a large part of the purchase price. Also, not being totally familiar with taking VC money, it sounds reasonable to me that a significant portion of the monies is going back to the investor(s?). While I think $15m would have been fine and generous, it doesn't shock me that someone important in Yahoo! got it stuck into their head that Summly was hitting on something that would "change the way people use news", a particularly neat fit if their intention is still to be the new homepage of the internet.
sdfjkl 14y ago
Good point about "ignore the hurt feelings that our employees will have". Now a bunch of Yahoo(er?)s have this kid sitting in their Soho office with a £17m price tag on his sleeve - that's got to be a little awkward for everyone involved.
- ecspike 14y ago
  It's only awkward if you are carrying around a big ego. I've joined places just after acquisition and had co-workers who were worth millions as well. It's really not a big deal.
  - orta 14y ago
    He's not got a good reputation for communication: http://gizmodo.com/5830076/how-i-made-a-15+year+old-app-developer-cry http://gizmodo.com/5830076/how-i-made-a-15+year+old-app-deve...
    - ecdavis 14y ago
      So he's a teenager?
      - seivan 14y ago
        I was a teenager, I did no such thing. That's borderline depressing, given how much bullshit he is spewing out. He comes from money, and give talks about shutting down and how they will lose money.
        ecdavis 14y ago
        We were all teenagers once and we all had different experiences. I'm sure we all did things when we were young that we now find mortally embarrassing. Unlike most of our embarrassing moments, D'Aloisio's happens to have been written up in a Gizmodo article.
      - ruswick 14y ago
mtoddh 14y ago
From the article, Let's ignore the hurt feelings that our employees will have about making a 17 year-old a millionaire. The price tag for this company aside, am I the only one that detects a hint of jealousy in some of the comments that seem to imply "but he's too young to be a millionaire!"?
- jgrahamc 14y ago
  I read the entire thing as someone being jealous and trying to explain that away by picking at the deal.
  - mattmanser 14y ago
    Sometimes you just want to make sense of something that seems flabbergastingly stupid. Hell, it's Yahoo's money to burn, but it's not jealousy, it's confusion. It would be interesting to read any sort of explanation, not that we'll get one. But this acquisition is eerily reminiscent of about.me's and is getting a similar level of scorn from us. Big, dead, web 1.0 company purchases virtually worthless startup for no apparent reason. Site is like almost any HN weekend project that pops up here on Mondays. Confused!
    - nefasti 14y ago
      Heck, I read HN and had no idea about Summly, went trough my radar.
    - deleted 14y ago
      [deleted]
    - freyr 14y ago
      "Big, dead, web 1.0 company" You do realize, Yahoo remains one of the most-visited sites on the Internet? It drives an enormous amount of traffic. By our standards, Yahoo may not be an exciting or innovative company. But it's in no way dead.
- _chrismccreadie 14y ago
  I did find that sentence a little strange myself. I didn't think jealousy from the writer, my first thought was "why should the employees be jealous?" Is it the employees of Summify, didn't they all receive a nice payment ($1m each)? And I can't imagine any of the Yahoo employees being jealous, well, perhaps, but I doubt it is the first time Yahoo have made a millionaire teenager. Even if they are, let them use it as motivation to build a valuable product of their own.
workbench 14y ago
Never really understood why Summly got so much press to begin with. Isn't it just Flipboard with a slightly different UI
- jwmoz 14y ago
  Agreed. I played with it once. Lack of decent content. Summaries sometimes not great. UI too simple. Flipboard is far better.
L0j1k 14y ago
What I read in this piece of news (though not really any article in particular) was: "Yahoo spent 30 million to attract the attention of high school kids"...
- cududa 14y ago
  Is there anything inherently wrong with that? After High School I had my pick of tech companies and projects to join. And frankly, a good position in yahoo working with someone like Nick and Marisa Mayer seems pretty fun to me.
  - L0j1k 14y ago
    I don't know and truthfully, I don't care. I'm not in high school, after all. Nor am I a shareholder of Yahoo.
jval 14y ago
I feel this would be an appropriate subject for a Dilbert comic. Storyline is that someone accidentally left the dot out of $300000.00 to make it $30000000 and then everyone else went along with it for fear of looking stupid.
- justanother 14y ago
  A decimal point? I always mess up some mundane detail!
  - fuser 14y ago
    Oh! What is this fairly mundane detail, Michael?!!!
  - unclebucknasty 14y ago
    That movie should be required viewing for all ninth grade students. It's a more realistic depiction of the life for which they are being prepared than most of what they are fed.
  - chiph 14y ago
    Peter Gibbons: So you guys are gonna fire Mike and Samir, and you're gonna give me more money? Bob Porter: [nods] Uh-huh. Peter Gibbons: Wow.
  - dpcx 14y ago
    It's not a mundane detail Michael!
  - vidarh 14y ago
    In quite a few countries "." is the thousand separator, and the "," is the decimal point...
- timdorr 14y ago
  Or Project Jaberwocky from Better Off Ted.
  - 14y ago
danso 14y ago
Can someone comment on whether this is a reasonable amount of money to pay for talented engineers and some patents? As a service, the deal doesn't make much sense...it doesn't seem that the world is hungry for ways to simplify web content, even if the technology actually worked. The most popular articles on most news sites are popular because of their in depth content or because they are slideshows of arousing photos. Summly would appear to not really affect either of those trends
- smackay 14y ago
  Perhaps it is a signal to the marketplace, either to other startups or to investors that Yahoo! is rejuvenating itself (or at least is trying to), moreso since it is an acquisition outside of Silicon Valley.
  - wavefunction 14y ago
    What sort of signal though? Other than the mainstream media, pretty much anyone else with at least a clue seems to be confused by this acquisition.
    - easytiger 14y ago
      well how much does it cost to get your company name on the front page of every tech site without allowing a massive data breach
      - tbomb 14y ago
        I'd guess less than $30 mill?
- nayefc 14y ago
  You're right. The bigger problem is that Summly does not work as expected.
- brown9-2 14y ago
  Are there patents involved? This article and other state that key technology is licensed from SRI.
pisarzp 14y ago
I kind of agree with the author. Have I been engineer in Yahoo, I would ask myself question "Why is he paid so much, where we could do it in house better and spend this money on bonuses for employees?". Especially given that fact, that Summly doesn't even own this technology just licences it from SRI. The only explanation I see, is that what Yahoo actually really bought is the great licensing deal (flat fee? exclusivity?).
- jimfl 14y ago
  Yahoo! engineers probably could do this. Yahoo! middle management not so much.
- jimfl 14y ago
  Yahoo! engineers probably could do this. Yahoo! middle management not so much.
chuhnk 14y ago
Where is this information coming from? Is this back and forth a fictional tale or actually what happened?
- zenocon 14y ago
  Same question -- how does this individual know that their team only passed 2/5 interviews, and what the back and forth negotiations were. It seems to me they're either making this up, or they are sharing info that I'd guess is going to make Yahoo fairly annoyed.
  - objclxt 14y ago
    He's surmising it from the AllThingsD story, which states only two of the five employees will be moving to Yahoo. That doesn't necessarily mean the other three failed the interviews - maybe they don't want to work for Yahoo.
    - senthilnayagam 14y ago
      If indeed 3/5 developers rejected yahoo offer, that's a PR nightmare
marknutter 14y ago
Summly has had a ton of buzz since it was first announced and that's saying more than, oh, every single product Yahoo has come out with in the last 5 years. I think Yahoo wants to inject some of that young and naive but optimistic joojoo that the Summly founder embodies into the company. Maybe this will light a fire under some of the old guard's asses and get them to work on Yahoo side projects in their spare time.
k__ 14y ago
Buying the Justin Bieber of Software Development for $30,000,000? Seems like a good deal to me
kadaj 14y ago
Truth be told, the deal is bullshit.
akristofcak 14y ago
At the risk of stating the obvious, big companies overpay for deals all the time especially when there is some perceived intangible benefit to be accrued. Alas.
disclosure 14y ago
"I've got 30 billion, I guess 30 million is not too much to ask for. Do it." - Li Ka-shing
hmottestad 14y ago
Everyone now knows about this app. For $30000000 they pulled off the best marketing campaign ever.
- uptown 14y ago
  ...which is great - except they pulled it from the app store once the announcement was made. If it were me, I would have leveraged the headlines to grow the user-base.
- jonknee 14y ago
  To be fair, $30M could have kicked off a hell of a marketing campaign. Imagine watching 10 Super Bowl ads in a row... Talk about "everyone" knowing about something.
- javis 14y ago
  They're shutting it down.
ck2 14y ago
Who actually confirmed the $30M number though? No-one that I've seen quoted? Maybe it was $30M in stock?
- k-mcgrady 14y ago
  It's not and probably won't be confirmed but 'sources' are saying $30m with 90% in cash and 10% in stock. I can't remember which site had the sources (it might have been WSJ).
brown9-2 14y ago
These things are a lot easier to understand once you realize that to the acquirer, the publicity is a part of the deal as well. Plus, it's not all that common for senior management to face any sort of punishment for acquisitions that go bad.
trotsky 14y ago
When the number sounds way too high and it's from a single anonymous source and no one else is talking - it's often a lie. People have big egos.
- patrickskim 14y ago
  What's the point? Doesn't the truth come out eventually? Yahoo is a public company, their financials aren't exactly secrets.
  - trotsky 14y ago
    Public companies have great leeway in how they present transactions. You aren't required to divulge M&A details, and they often won't be below a certain level.
- patrickskim 14y ago
  What's the point? Doesn't the truth come out eventually? Yahoo is a public company, their financials aren't exactly secrets.
- rhizome 14y ago
  I think it's probably a bit more abstract. The perception of a rising tide can lift a few boats.
scholia 14y ago
Last year's press release had quotes from Daniel Ek (Spotify) and Mary Meeker, and said: "Summly is backed by several investors, including Horizons Ventures, Ashton Kutcher, Betaworks, Brian Chesky, Hosain Rahman, Joanna Shields, Josh Kushner, Mark Pincus, Matt Mullenweg, Stephen Fry, Troy Carter, Yoko Ono and many more." Not exactly a teen-programmer-in-mother's-basement story...
- wangarific 14y ago
  Yahoo just paid $30mm for an unknown technology and a fresh face to parade around, they would appreciate it if you didn't start poking holes in the narrative. Thank you
  - huhtenberg 14y ago
    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."
    - tixocloud 14y ago
      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.
      - corresation 14y ago
        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.
    - gesman 14y ago
      Highly likely. The crowd sees only the tip of the iceberg and knows only what it allowed to know when it allowed to know.
porker 14y ago
Any open source equivalents to Summly's "pure rocket science" summarization technology?
- nshm 14y ago
  Good discussion on this subject here: https://www.linkedin.com/groupItem?view=&gid=131222&item=ANET%3AS%3A214661120 https://www.linkedin.com/groupItem?view=&gid=131222&... And here http://www.quora.com/What-are-some-good-open-source-text-summarizers http://www.quora.com/What-are-some-good-open-source-text-sum... The best candidate is MEAD http://www.summarization.com/mead/ http://www.summarization.com/mead/
  - porker 14y ago
    Thanks!
IanDrake 14y ago
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!, much smarter than I'll ever hope to be in my life. Sometimes you have to meet these people to believe they exist.
- joeblau 14y ago
  You have a very good point. Thought process and vision are what make or break a product. As close as it is to other news aggregators, there may be a perspective that the Founder has that Yahoo team doesn't.
  - ilamont 14y ago
    Thought process and vision are what make or break a product. I would put far more emphasis on execution. Lots of founders with "vision" can spin great stories to investors but can't execute quickly enough, or are unable to deviate from their original vision when the market or other evidence suggests they should.
    - bertomartin 14y ago
      I'd say Thought process, vision AND execution. He's obviously executed well, so what's left is his vision and thought process behind that vision.
- xradionut 14y ago
  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.
giffo 14y ago
They might have picked this company up because its news, "Yahoo" buys "17 wiz kid" "mobile app and company", is good advertising around the world, yahoo is now a company who buys the "latest" technology, they hired a wiz kid - they have him on board he will do crazy technology experiments - "you have no idea what he could come up with next!", and they have his technology that a company as big as yahoo would play $30m for. It tells potential users and more importantly investors and current shareholders it is now company who buys stuff because its investing and changing for the better and maybe people should change their views about yahoo etc etc. note: I have not used the app, still don't care about yahoo.
deleted 14y ago
[deleted]
rdl 14y ago
It's possible it's a big top line number (some press quotes even higher than $30mm), but in a way which actually makes sense. Long earn-outs could be one factor. Giving engineers $1mm with 1/2/3/4 4-year earn-outs would even be on the low side. Doing the same with a founder would obviously be worth less (especially at Yahoo!, given how founders historically leave after acquisition) SRI is presumably getting a big chunk for a new license. Maybe even a domain-exclusive license. That alone could be $0-100mm. If it's equity, it is a lot better for Yahoo! It's possible the founders and key employees have a weird incentive structure -- if they continue with the product and get 50mm users, they'd get a payout of an extra $10mm vs. otherwise, for instance. That kind of thing could add to the reported deal figure without adding much risk to Yahoo!. (I'm sure I could get a "if you turn Yahoo! into a $60b/yr business in the next 3 years, you can have an extra $100mm" on any deal.) I'm not Marissa Mayer's biggest fan, but I don't think she's in the same vein as the previous leadership at Yahoo!, so presuming that they're throwing money away irrationally isn't the first thing I'd do.
niggler 14y ago
"The craziest thing is that there are a lot of really qualified, CS-beefy teams doing really amazing things in the mobile news/discovery space these days" That's true of most of these acquisitions. There are a lot of qualified people doing crazy things, but the smartest people aren't always the ones who win. That fact is immaterial here until we find out what other things they got (maybe the kid brings along investors who may buy more yahoo stock ?) I do agree, in general, that as a public company Yahoo has to explain to shareholders why they made the acquisition.
mortdeus 14y ago
$30,000,000 to make yahoo relevant enough to be discussed on hacker news? Ehhh I think they got their money's worth.
robmcm 14y ago
Summly and Autonomy aren't the bet poster boys for Britian's software developers.
lifeisstillgood 14y ago
Oh. come on. I would kill to make an app as nice as this, even if it did not sell at all. Kudos to the kids for actually making a product people wanted to use, and at least one person wanted to buy.
mortdeus 14y ago
I read in forbes that this kid was supposed to write a machine learning search algorithm that would slay the titan google beast and bring balance back to the ad force. The moral of this story? Invest in the opposite of what Forbes says will go do.
fleaflicker 14y ago
I once heard Joshua Schachter describe this kind of acquisition by a public company as "somebody in corp-dev falls in love with your product and has to have it." In other words, it's not repeatable. This is nothing new. It happens all the time.
- arbuge 14y ago
  Quite so. In the real world, things don't always have to make sense for them to happen. That counts for both good as well as bad luck. Counting on luck, of course, is not a reliable business plan. Whether these folks deserved all the money they got or not is really a moot point - your best shot at success remains to put yourself in a position where you deserve it. You may still not achieve it, or you may grossly overachieve it, but still the best way to go overall.
harel 14y ago
Good on him. Doesn't matter if it makes sense to us (it doesn't to me but hey, its not my money!). The kid got minted, his employees probably got a good deal out of it, his mum must be proud as punch. All in all, congratulations kiddo, don't spend it all at once. What baffles me most though, is that Yahoo would conduct a CS type interview to the employees, failing some of them in the process (if that bit is true). I have over 16 years of real hard world experience and I would never dream of passing a CS type exam. Is that really a gauge of excellence?
- dirtyaura 14y ago
  Of course Yahoo will do at least similar level interviews for expensive acquihires as to their normal hires. It's a standard practice, Google does this too. They are looking to acquire people that fit to their culture and standard interviews are their procedure to try to ensure that. I'm personally of the opinion that a little bit of diversity (more designer-type front end devs without academic background) would do good for Google's (or Yahoo's) internal culture, but if they have decided that they only want CS people, it totally makes sense to interview acquihires too.
- scrumper 14y ago
  It's not about excellence. It's additional leverage for Yahoo in the deal. Only 2 of the 5 employees passed it, so they were able to argue for a lower number for the company. Likely they guessed that only a couple would have been able to pass the interview before making that part of the deal.
askimto 14y ago
Maybe they got some real nice licensing terms from SRI.
naunga 14y ago
You know if the kid really wanted some press for his app...he should have turned down Yahoo's and state that he values his company too much to allow them to be used as a PR stunt. ...and then the dump truck full of money pulled into his drive way.
nns1212 14y ago
Pulse is getting purchased for over $50 million by LinkedIn. (http://gigaom.com/2013/03/11/linkedin-reportedly-buying-news-reading-app-pulse-for-over-50m/ http://gigaom.com/2013/03/11/linkedin-reportedly-buying-news...) Summly is much better than that as far as technology is concerned. Yahoo got a better deal.
camus 14y ago
I say good for him. It is a PR deal.Wether it is a good deal or not I dont know,i'm not a yahoo's shareholder,but good for the guy.Congrats to him.
rayiner 14y ago
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.
- baby 14y ago
  Feels like your 4 points are the same one.
- mgkimsal 14y ago
  #2 - "we paid some kid $30m!" Why on earth would that be used for 'recruiting'? Getting me to come be your full time employee by telling me how much you pay outsiders (sometimes for lame tech)? If Yahoo wants to increase their recruiting power, start rewarding - publicly - internal teams that innovate. Start a $50m innovation fund, and reward internal teams for demonstrating initiative, problem solving, innovative solutions, bold new idea, etc.
  - maxbrown 14y ago
    I really like this. Why don't more companies do this? Is it better in theory than in practice? Maybe it creates too competitive of an atmosphere? Curious...
    - danielweber 14y ago
      Most companies think they have already bought your ideas.
PaulHoule 14y ago
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.
- foobarqux 14y ago
  I don't think anything was acquired from SRI except a license.
aheilbut 14y ago
You haven't considered the simpler possibility that what has been reported is significantly incomplete and/or BS.
minimax 14y ago
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.
- ebbv 14y ago
  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.
- patd 14y ago
  1MM downloads is far from 1MM users. So it's not really a factor of five.
- adventured 14y ago
  Your comment does a lot to make the point that Summly was a horrific acquisition on any count. I don't think nearly as many people here are jealous as they are aghast.
- macspoofing 14y ago
  Delicious in 2005 had a huge level of excitement surrounding it. It was also the beginnings of "Web 2.0" and tag-mania, and Delicious was positioned nicely. Paying $15M-$30M for Delicious in 2005 made sense. Like the OP, I don't really understand this purchase.
kyro 14y ago
For some who need perspective: Right now, somewhere in the world, a child is being born into an uberly rich family. That child will grow up to inherit millions for absolutely no work. He'll live the good life full of yachts and private jets. Right now, somewhere in the world, there is a party happening full of gorgeous wealthy people who need not lift a finger to attain the luxuries that they have. Their success is only a matter of genetics and luck. Right now, somewhere in the world, is an investment banker who is making literally millions after clicking a few buttons and making a few phone calls to a few friends. He knows the right people and is in the right place, and that's all that matters. Right now, somewhere in the world, is a 20-some year old guy who is worth billions because of a website he started. He was born into a family that sent him to the right high school. He then went on to one of the best universities in the country, built his website, moved, met the right people, and raised $500+ million in funding. He and likely generations down the line are set for life. Right now, somewhere in the world, is a 17yr old teenager who started a company with some money from his parents, built a product, with help from friends and family, and got acquired for $30 million. There's always someone becoming richer than you for much less work, every second of the day. Look past that and just keep working. I get down about how unfair that is from time to time, but there's nothing you can really do about it, other than focus on your work. Edit: Others are asking where in the article is jealousy mentioned. It isn't, but I took the entire post as one rooted in envy and bitterness. There certainly wouldn't be any of this type of reaction had the guy been a 40-year old who finally got acquired after years of failed attempts. If anything, I'm sure people would be applauding him and the whole affair.
- larrik 14y ago
  I thought the point was that Yahoo, a public company, was throwing away 30 million for no apparent gain.
  - cygwin98 14y ago
    That's the part I don't understand capitalism: on one hand, big corps try to save every dime by downsizing and outsourcing, and on the other hand, they pour money like this.
Mc_Big_G 14y ago
...except that Yahoo just got $30 million worth of controversial press.
rdouble 14y ago
The Summly deal makes sense as much as any Yahoo! acquisition over the years has made sense. Yahoo! is a frankenstein of almost 2 decades of acquisitions. If the CEO of this particular acquisition wasn't a teenager, nobody would bat an eye at $30M for this company.
thiagoperes 14y ago
Let's say you're Yahoo: You're making a huge effort towards mobile, with no apparent success. You see a small team that built a great product, that fits mobile nicely and that has a huge user base. BTW, You have a lot of money. A 17yr old boy did something that lots of highly skilled engineers, managers, designer couldn't do, and that you pay a lot of money. If you have the chance to acquire a great product with a huge user base, wouldn't you do it (being a company like Yahoo)? -------- That's the same as the Instagram deal. Huge companies are not succeeding in mobile, but they need to do this right and create a mobile presence. If it costs "only" 30m, it's a great deal if you ask me.
- mikecane 14y ago
  >>>A 17yr old boy did something that lots of highly skilled engineers, managers, designer couldn't do Well, that might be stretching. As Comments elsewhere have pointed out, in a large corporation the very same idea might have been done and shot down internally. There might be a few people at Yahoo going, "Wait. WTF! That's what we showed them last year! And it was better!"
31reasons 14y ago
> I don't really understand why they picked this one. Yahoo Executive: "Don't Make Me think" Summly: Ok. 30 mil Yahoo Executive: OK.
itsprofitbaron 14y ago
Normally whenever an acquisition happens, I avoid these types of posts on HN because there are often people in the comments (and even in the posts themselves) calling out the acquired company saying “I could have done this” or “Acquirer could have built Acquired Company in a day” but, this one deserves a reply. The reason why this deserves a reply is that the OP’s post does not really contain any facts rather, it contains assumptions (either the OP’s assumptions or others). For instance: “Yahoo screens the employees, and tells the founder that 2 of them passed” AND “Summly says dang, only 2 out of 5 passed?” The article the OP links to, to cite this actually states[1] “In addition, only two of Summly’s employees will go to Yahoo with D’Aloisio” There is no mention of anyone failing a ‘test’, all it states that only that 2 of Summly’s employees will be joining Yahoo alongside the founder. Now when OMGPOP were acquired by Zynga, one of their employees didn’t join Zynga[2] and that employee chose not to join Zynga – the same may have happened to Summly’s other employees as well (something that we do not know). Moreover, the OP calls out Yahoo for acquiring Summly for $30M and citing that, “Summly says no, $50m is our minimum. We need to pay back our generous investors” However, there has been no confirmation of an acquisition price – there are rumours which place the amount in that ballpark and rumours which say the price was 90% cash. Now, when startups get acquired, they do not get acquired for one price (as Media outlets etc will report) rather, amongst other things there’s an earn out for employees/founder(s) and money to cap table. These things are often complicated and can be very complicated which is why, I am not criticizing media outlets for reporting a single price – in particular these Media outlets love the “millionaire” stories because it gives them a ton of page views - although, when someone is calling out a company for selling for an unconfirmed price by, saying that it is ridiculous – these things need highlighting. Likewise, the OP concludes with: “The craziest thing is that there are a lot of really qualified, CS-beefy teams doing really amazing things in the mobile news/discovery space these days - and that would definitely take a $30m acquisition offer or less. I don't really understand why they picked this one” First of all, as I already highlighted no one knows that Yahoo gave the people at Summly a test – and if they did, if the employees who are not joining either rejected the role or failed the test. Likewise nor do we know an official price for the company of which flaws I already mentioned in regards to a single price. However, what we do know is that Yahoo acquired Summly (which is shutting down although, some of it will be incorporated into Yahoo)[3] and regardless if you agree with it or not, they acquired them for a price which is suitable to Yahoo and Summly's investors/team. Either way, I wish Nick D’Aloisio and the rest of the Summly team all the best and congratulations on your exit to Yahoo. [1] http://allthingsd.com/20130325/yahoo-paid-30-million-in-cash-for-18-months-of-young-summly-entrepreneurs-time/ http://allthingsd.com/20130325/yahoo-paid-30-million-in-cash... [2] http://www.gamasutra.com/view/news/167244/Turning_down_Zynga_Why_I_opted_out_of_the_210M_Omgpop_buy.php http://www.gamasutra.com/view/news/167244/Turning_down_Zynga... [3] http://ycorpblog.com/2013/03/25/yahoo-to-acquire-summly/ http://ycorpblog.com/2013/03/25/yahoo-to-acquire-summly/
Evbn 14y ago
The problem in a nutshell: Yahoo just indirectly but clearly told all their talented employees to quit and try to get acquired back. (The untalented employees know they have better expected returns if they just chairwarm for a few years.) Bad for Yahoo.
tangledweb 14y ago
Ignoring this specific deal, mull on this hypothetical. Imagine you are a young superstar who with some justification believes you have the world at your feet. A bloated, cadaverous company that your dad tells you was cool when you were in preschool wants to buy you and tether your career to them. How much would it take to convince you to do that?
dhannum 14y ago
Summly has no real history to speak of, but Yahoo clearly has a long, sad, sorry history of overpaying for little nascent startups, failing to capitalize on them and then eventually letting them fall apart while missing out on larger trends. At first it seems that whether or not this deal makes sense to you depends on whether or not you're a shareholder of Yahoo or a shareholder of Summly. But keep in mind that if Yahoo didn't make a similar deal with ViaWeb a decade ago there may not be a YC or any of the companies they helped start.
plinkplonk 14y ago
So what happens to the three employees who didn't clear Yahoo's interviews? Do they get nothing? Just curious.
smnl 14y ago
I'm confused why they decided to immediately remove Summly from the App Store rather than use it to drive traffic to other Yahoo apps - anybody know why they did this?
lmirosevic 14y ago
My first reaction was that this was a play by yahoo to get in on the newsreader market. There's been a lot of fanfare about google abandoning its RSS reader so obviously this is a big market, one to which Google doesn't think RSS is the answer. So what is the answer? I don't think anyone knows but it seems to me like yahoo is taking a bet on summly. Plus it's a great opportunity to capitalise on the press and general sentiment of the whole Google RSS story. And finally Marissa is new, and a lot of people are probably pointing their eyes at her to see if she can turn around yahoo; and what better way to do that than to win a game of chess against Google? Edit: and if Marissa does get a lot of faith from investors, which she will if one of her first moves is a victory against google, then her reputation will undoubtedly rise. And how much is the reputation of a CEO worth at a multi billion dollar company? I think a lot more than $30M. Just look at Apple's recent stock movement.
fruor 14y ago
To put your question more into perspective, I would ask if paying $50 for something that only costs $10 to manufacture, makes sense? Anyone who runs a profitable business will say 'yes'. Summly is a product, and as such, has been purchased for more than it cost to "manufacture", as you laid out. $30M is bargain shopping; lest we forget "Draw Something" was bought for $180 million, or "Instagram" was purchased for a whopping $1 billion.

379 points by thomseddon 14y ago

MMXII 14y ago

Seems to me that the kid has connections if you look at investors and business partners. Maybe those partners wouldn't have wanted to collaborate with Yahoo, but now they'd consider it for 30M.

nicholassmith 14y ago

It makes perfect sense, they've got some technology out of it, some people who understand mobile, and a nice big headline. Worth $30m of my money? Probably not. Worth $30m of Yahoo's money? Maybe, they're not likely to have decided to spend that much on an acquihire without board approval really are they. Unless they Zuckerberg'd it and thought it was better to seek forgiveness.

alex1 14y ago
The summarization tech isn't owned by Summly. It's owned by SRI International and was licensed to Summly. Maybe a large chunk of the reported $30 million was actually used to acquire that technology from SRI?
- hdra 14y ago
  I actually didn't know about this before. I think one of the first article I read about the product was the story when the product was called TrimIt, and the company just received some investment from Li Ka Shing. For some reason, the articles[1][2][3] gave me the impression that the technology was developed by the founder (or did they switched the algorithms?) [1]: http://www.forbes.com/sites/parmyolson/2011/12/13/teenage-programmer-backed-by-hong-kong-billionaire-li-ka-shing/ http://www.forbes.com/sites/parmyolson/2011/12/13/teenage-pr... [2]: http://techcrunch.com/2011/07/15/trimit-summarizes-emails-blog-posts-and-more-with-a-shake-of-your-iphone/ http://techcrunch.com/2011/07/15/trimit-summarizes-emails-bl... [3]: http://gigaom.com/2011/12/13/meet-the-internets-newest-boy-genius/ http://gigaom.com/2011/12/13/meet-the-internets-newest-boy-g...
- arunoda 14y ago
  A good answer.
- lubujackson 14y ago
  Here's my conspiracy theory - Summly has a very nice contract with SRI that gives them full usage forever and is transferable to Yahoo. Yahoo tries to license the tech from SRI directly and realize it will cost them 20 mil a year based on their heavy usage. So instead they buy Summly for the SRI tech at a discount. Annnd that's about the only way this makes sense to em.
buro9 14y ago
There is nothing that I can see on Summly's site to suggest that they own their technology. That is, the piece of technology that creates a summary of an article does appear to be licensed from SRI.com
- waitwhat 14y ago
  Maybe it was just quicker/cheaper for Yahoo! to buy Summly and their license than to negotiate their own license off SRI?
Nursie 14y ago
Also free advertising. The BBC had "teenage entrepreneur sells amazing app to yahoo" plastered all over it yesterday.
- Jare 14y ago
  Free as in "costs $30m"? Not to get into who is this advertisement aimed at, and what kind of image value can Yahoo derive from it.
  - Nursie 14y ago
    All the best free stuff costs millions :) Yeah I guess that is a bit of a non-sequitur, but you can't pay to get coverage on the BBC news page (AFAICT) so it sort of works.
- gargoiler 14y ago
  Will anyone really remember it tomorrow though? Nope.
PavlovsCat 14y ago
What is a "people who understand mobile"?

_chrismccreadie 14y ago

I suppose Yahoo will have to answer to their shareholders, just not yet. It seems to me that they have invested in the talent and the current customer base. If Yahoo really do make an impact on the mobile news market I'm sure $30m will seem like buttons. I do agree that many other development teams would have jumped at an acquisition offer of a lot less money but they were either unknown to Yahoo or deemed not suitable for Yahoo.

amirhhz 14y ago

There's a possibility that this publicity changes younger people's perception of Yahoo's. They'll see the BBC headline and a) will now know what Yahoo! is and b) might get motivated to write/learn code and even want to go work for a tech company (even Yahoo itself). Combined with everything else Marissa Mayer is doing, (b) might actually happen, as altruistic-seeming as it might sound.

csmattryder 14y ago
I'm 21, probably out of the definition of 'younger person' by a while, but even I don't get it. $30m is a lot for what I assume is an application of SRI's technology. Still seems to me like Yahoo! is a place where engineers are handed the purse strings, a la 2005 era.
- ecspike 14y ago
  I'd say so, Marissa Mayer was an engineer before becoming an executive.
  - corresation 14y ago
    Marissa Mayer was an engineer before becoming an executive. Was she? Her career essentially started at Google, her rise arguably being one of right place/right time. For all of the talk about Mayer, I have literally never heard about anything actually interesting that she has done. Instead it's her 90 hour work weeks, n-shades of blue, and abrasive attitudes with others. She sounds like management through and through.
- amirhhz 14y ago
  > Still seems to me like Yahoo! is a place where engineers are handed the purse strings Exactly! :) Assuming the above is meant in a positive way, you might not have said/thought that if it wasn't for this, and other, stories recently involving Yahoo and their acquisitions.
d4nt 14y ago
You're assuming an lot of clever forethought on the part of Yahoo. I find it hard to believe their PR team are that cunning. It's more likely that Yahoo are desperate to rejuvenate and buying up the nearest hot startup (at whatever price it takes) is politically easier than forming an internal skunkworks to build something cool, which would be way cheaper.

t4nkd 14y ago

Unless I missed a particular story, I haven't seen Summly or Yahoo! announce the number is $30m. A reasonable point here was that relicensing from SRI for the core functionality of this app could be a large part of the purchase price. Also, not being totally familiar with taking VC money, it sounds reasonable to me that a significant portion of the monies is going back to the investor(s?). While I think $15m would have been fine and generous, it doesn't shock me that someone important in Yahoo! got it stuck into their head that Summly was hitting on something that would "change the way people use news", a particularly neat fit if their intention is still to be the new homepage of the internet.

sdfjkl 14y ago

Good point about "ignore the hurt feelings that our employees will have". Now a bunch of Yahoo(er?)s have this kid sitting in their Soho office with a £17m price tag on his sleeve - that's got to be a little awkward for everyone involved.

ecspike 14y ago
It's only awkward if you are carrying around a big ego. I've joined places just after acquisition and had co-workers who were worth millions as well. It's really not a big deal.
- orta 14y ago
  He's not got a good reputation for communication: http://gizmodo.com/5830076/how-i-made-a-15+year+old-app-developer-cry http://gizmodo.com/5830076/how-i-made-a-15+year+old-app-deve...
  - ecdavis 14y ago
    So he's a teenager?
    - seivan 14y ago
      I was a teenager, I did no such thing. That's borderline depressing, given how much bullshit he is spewing out. He comes from money, and give talks about shutting down and how they will lose money.
      - ecdavis 14y ago
        We were all teenagers once and we all had different experiences. I'm sure we all did things when we were young that we now find mortally embarrassing. Unlike most of our embarrassing moments, D'Aloisio's happens to have been written up in a Gizmodo article.
    - ruswick 14y ago

mtoddh 14y ago

From the article, Let's ignore the hurt feelings that our employees will have about making a 17 year-old a millionaire. The price tag for this company aside, am I the only one that detects a hint of jealousy in some of the comments that seem to imply "but he's too young to be a millionaire!"?

jgrahamc 14y ago
I read the entire thing as someone being jealous and trying to explain that away by picking at the deal.
- mattmanser 14y ago
  Sometimes you just want to make sense of something that seems flabbergastingly stupid. Hell, it's Yahoo's money to burn, but it's not jealousy, it's confusion. It would be interesting to read any sort of explanation, not that we'll get one. But this acquisition is eerily reminiscent of about.me's and is getting a similar level of scorn from us. Big, dead, web 1.0 company purchases virtually worthless startup for no apparent reason. Site is like almost any HN weekend project that pops up here on Mondays. Confused!
  - nefasti 14y ago
    Heck, I read HN and had no idea about Summly, went trough my radar.
  - deleted 14y ago
    [deleted]
  - freyr 14y ago
    "Big, dead, web 1.0 company" You do realize, Yahoo remains one of the most-visited sites on the Internet? It drives an enormous amount of traffic. By our standards, Yahoo may not be an exciting or innovative company. But it's in no way dead.
_chrismccreadie 14y ago
I did find that sentence a little strange myself. I didn't think jealousy from the writer, my first thought was "why should the employees be jealous?" Is it the employees of Summify, didn't they all receive a nice payment ($1m each)? And I can't imagine any of the Yahoo employees being jealous, well, perhaps, but I doubt it is the first time Yahoo have made a millionaire teenager. Even if they are, let them use it as motivation to build a valuable product of their own.

workbench 14y ago

Never really understood why Summly got so much press to begin with. Isn't it just Flipboard with a slightly different UI

jwmoz 14y ago
Agreed. I played with it once. Lack of decent content. Summaries sometimes not great. UI too simple. Flipboard is far better.

L0j1k 14y ago

What I read in this piece of news (though not really any article in particular) was: "Yahoo spent 30 million to attract the attention of high school kids"...

cududa 14y ago
Is there anything inherently wrong with that? After High School I had my pick of tech companies and projects to join. And frankly, a good position in yahoo working with someone like Nick and Marisa Mayer seems pretty fun to me.
- L0j1k 14y ago
  I don't know and truthfully, I don't care. I'm not in high school, after all. Nor am I a shareholder of Yahoo.

jval 14y ago

I feel this would be an appropriate subject for a Dilbert comic. Storyline is that someone accidentally left the dot out of $300000.00 to make it $30000000 and then everyone else went along with it for fear of looking stupid.

justanother 14y ago
A decimal point? I always mess up some mundane detail!
- fuser 14y ago
  Oh! What is this fairly mundane detail, Michael?!!!
- unclebucknasty 14y ago
  That movie should be required viewing for all ninth grade students. It's a more realistic depiction of the life for which they are being prepared than most of what they are fed.
- chiph 14y ago
  Peter Gibbons: So you guys are gonna fire Mike and Samir, and you're gonna give me more money? Bob Porter: [nods] Uh-huh. Peter Gibbons: Wow.
- dpcx 14y ago
  It's not a mundane detail Michael!
- vidarh 14y ago
  In quite a few countries "." is the thousand separator, and the "," is the decimal point...
timdorr 14y ago
Or Project Jaberwocky from Better Off Ted.
- 14y ago

danso 14y ago

Can someone comment on whether this is a reasonable amount of money to pay for talented engineers and some patents? As a service, the deal doesn't make much sense...it doesn't seem that the world is hungry for ways to simplify web content, even if the technology actually worked. The most popular articles on most news sites are popular because of their in depth content or because they are slideshows of arousing photos. Summly would appear to not really affect either of those trends

smackay 14y ago
Perhaps it is a signal to the marketplace, either to other startups or to investors that Yahoo! is rejuvenating itself (or at least is trying to), moreso since it is an acquisition outside of Silicon Valley.
- wavefunction 14y ago
  What sort of signal though? Other than the mainstream media, pretty much anyone else with at least a clue seems to be confused by this acquisition.
  - easytiger 14y ago
    well how much does it cost to get your company name on the front page of every tech site without allowing a massive data breach
    - tbomb 14y ago
      I'd guess less than $30 mill?
nayefc 14y ago
You're right. The bigger problem is that Summly does not work as expected.
brown9-2 14y ago
Are there patents involved? This article and other state that key technology is licensed from SRI.

pisarzp 14y ago

I kind of agree with the author. Have I been engineer in Yahoo, I would ask myself question "Why is he paid so much, where we could do it in house better and spend this money on bonuses for employees?". Especially given that fact, that Summly doesn't even own this technology just licences it from SRI. The only explanation I see, is that what Yahoo actually really bought is the great licensing deal (flat fee? exclusivity?).

jimfl 14y ago
Yahoo! engineers probably could do this. Yahoo! middle management not so much.
jimfl 14y ago
Yahoo! engineers probably could do this. Yahoo! middle management not so much.

chuhnk 14y ago

Where is this information coming from? Is this back and forth a fictional tale or actually what happened?

zenocon 14y ago
Same question -- how does this individual know that their team only passed 2/5 interviews, and what the back and forth negotiations were. It seems to me they're either making this up, or they are sharing info that I'd guess is going to make Yahoo fairly annoyed.
- objclxt 14y ago
  He's surmising it from the AllThingsD story, which states only two of the five employees will be moving to Yahoo. That doesn't necessarily mean the other three failed the interviews - maybe they don't want to work for Yahoo.
  - senthilnayagam 14y ago
    If indeed 3/5 developers rejected yahoo offer, that's a PR nightmare

marknutter 14y ago

Summly has had a ton of buzz since it was first announced and that's saying more than, oh, every single product Yahoo has come out with in the last 5 years. I think Yahoo wants to inject some of that young and naive but optimistic joojoo that the Summly founder embodies into the company. Maybe this will light a fire under some of the old guard's asses and get them to work on Yahoo side projects in their spare time.

k__ 14y ago

Buying the Justin Bieber of Software Development for $30,000,000? Seems like a good deal to me

kadaj 14y ago

Truth be told, the deal is bullshit.

akristofcak 14y ago

At the risk of stating the obvious, big companies overpay for deals all the time especially when there is some perceived intangible benefit to be accrued. Alas.

disclosure 14y ago

"I've got 30 billion, I guess 30 million is not too much to ask for. Do it." - Li Ka-shing

hmottestad 14y ago

Everyone now knows about this app. For $30000000 they pulled off the best marketing campaign ever.

uptown 14y ago
...which is great - except they pulled it from the app store once the announcement was made. If it were me, I would have leveraged the headlines to grow the user-base.
jonknee 14y ago
To be fair, $30M could have kicked off a hell of a marketing campaign. Imagine watching 10 Super Bowl ads in a row... Talk about "everyone" knowing about something.
javis 14y ago
They're shutting it down.

ck2 14y ago

Who actually confirmed the $30M number though? No-one that I've seen quoted? Maybe it was $30M in stock?

k-mcgrady 14y ago
It's not and probably won't be confirmed but 'sources' are saying $30m with 90% in cash and 10% in stock. I can't remember which site had the sources (it might have been WSJ).

brown9-2 14y ago

These things are a lot easier to understand once you realize that to the acquirer, the publicity is a part of the deal as well. Plus, it's not all that common for senior management to face any sort of punishment for acquisitions that go bad.

trotsky 14y ago

When the number sounds way too high and it's from a single anonymous source and no one else is talking - it's often a lie. People have big egos.

patrickskim 14y ago
What's the point? Doesn't the truth come out eventually? Yahoo is a public company, their financials aren't exactly secrets.
- trotsky 14y ago
  Public companies have great leeway in how they present transactions. You aren't required to divulge M&A details, and they often won't be below a certain level.
patrickskim 14y ago
What's the point? Doesn't the truth come out eventually? Yahoo is a public company, their financials aren't exactly secrets.
rhizome 14y ago
I think it's probably a bit more abstract. The perception of a rising tide can lift a few boats.

scholia 14y ago

Last year's press release had quotes from Daniel Ek (Spotify) and Mary Meeker, and said: "Summly is backed by several investors, including Horizons Ventures, Ashton Kutcher, Betaworks, Brian Chesky, Hosain Rahman, Joanna Shields, Josh Kushner, Mark Pincus, Matt Mullenweg, Stephen Fry, Troy Carter, Yoko Ono and many more." Not exactly a teen-programmer-in-mother's-basement story...

wangarific 14y ago
Yahoo just paid $30mm for an unknown technology and a fresh face to parade around, they would appreciate it if you didn't start poking holes in the narrative. Thank you
- huhtenberg 14y ago
  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."
  - tixocloud 14y ago
    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.
    - corresation 14y ago
      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.
  - gesman 14y ago
    Highly likely. The crowd sees only the tip of the iceberg and knows only what it allowed to know when it allowed to know.

porker 14y ago

Any open source equivalents to Summly's "pure rocket science" summarization technology?

nshm 14y ago
Good discussion on this subject here: https://www.linkedin.com/groupItem?view=&gid=131222&item=ANET%3AS%3A214661120 https://www.linkedin.com/groupItem?view=&gid=131222&... And here http://www.quora.com/What-are-some-good-open-source-text-summarizers http://www.quora.com/What-are-some-good-open-source-text-sum... The best candidate is MEAD http://www.summarization.com/mead/ http://www.summarization.com/mead/
- porker 14y ago
  Thanks!

IanDrake 14y ago

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!, much smarter than I'll ever hope to be in my life. Sometimes you have to meet these people to believe they exist.

joeblau 14y ago
You have a very good point. Thought process and vision are what make or break a product. As close as it is to other news aggregators, there may be a perspective that the Founder has that Yahoo team doesn't.
- ilamont 14y ago
  Thought process and vision are what make or break a product. I would put far more emphasis on execution. Lots of founders with "vision" can spin great stories to investors but can't execute quickly enough, or are unable to deviate from their original vision when the market or other evidence suggests they should.
  - bertomartin 14y ago
    I'd say Thought process, vision AND execution. He's obviously executed well, so what's left is his vision and thought process behind that vision.
xradionut 14y ago
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.

giffo 14y ago

They might have picked this company up because its news, "Yahoo" buys "17 wiz kid" "mobile app and company", is good advertising around the world, yahoo is now a company who buys the "latest" technology, they hired a wiz kid - they have him on board he will do crazy technology experiments - "you have no idea what he could come up with next!", and they have his technology that a company as big as yahoo would play $30m for. It tells potential users and more importantly investors and current shareholders it is now company who buys stuff because its investing and changing for the better and maybe people should change their views about yahoo etc etc. note: I have not used the app, still don't care about yahoo.

deleted 14y ago

[deleted]

rdl 14y ago

It's possible it's a big top line number (some press quotes even higher than $30mm), but in a way which actually makes sense. Long earn-outs could be one factor. Giving engineers $1mm with 1/2/3/4 4-year earn-outs would even be on the low side. Doing the same with a founder would obviously be worth less (especially at Yahoo!, given how founders historically leave after acquisition) SRI is presumably getting a big chunk for a new license. Maybe even a domain-exclusive license. That alone could be $0-100mm. If it's equity, it is a lot better for Yahoo! It's possible the founders and key employees have a weird incentive structure -- if they continue with the product and get 50mm users, they'd get a payout of an extra $10mm vs. otherwise, for instance. That kind of thing could add to the reported deal figure without adding much risk to Yahoo!. (I'm sure I could get a "if you turn Yahoo! into a $60b/yr business in the next 3 years, you can have an extra $100mm" on any deal.) I'm not Marissa Mayer's biggest fan, but I don't think she's in the same vein as the previous leadership at Yahoo!, so presuming that they're throwing money away irrationally isn't the first thing I'd do.

niggler 14y ago

"The craziest thing is that there are a lot of really qualified, CS-beefy teams doing really amazing things in the mobile news/discovery space these days" That's true of most of these acquisitions. There are a lot of qualified people doing crazy things, but the smartest people aren't always the ones who win. That fact is immaterial here until we find out what other things they got (maybe the kid brings along investors who may buy more yahoo stock ?) I do agree, in general, that as a public company Yahoo has to explain to shareholders why they made the acquisition.

mortdeus 14y ago

$30,000,000 to make yahoo relevant enough to be discussed on hacker news? Ehhh I think they got their money's worth.

robmcm 14y ago

Summly and Autonomy aren't the bet poster boys for Britian's software developers.

lifeisstillgood 14y ago

Oh. come on. I would kill to make an app as nice as this, even if it did not sell at all. Kudos to the kids for actually making a product people wanted to use, and at least one person wanted to buy.

mortdeus 14y ago

I read in forbes that this kid was supposed to write a machine learning search algorithm that would slay the titan google beast and bring balance back to the ad force. The moral of this story? Invest in the opposite of what Forbes says will go do.

fleaflicker 14y ago

I once heard Joshua Schachter describe this kind of acquisition by a public company as "somebody in corp-dev falls in love with your product and has to have it." In other words, it's not repeatable. This is nothing new. It happens all the time.

arbuge 14y ago
Quite so. In the real world, things don't always have to make sense for them to happen. That counts for both good as well as bad luck. Counting on luck, of course, is not a reliable business plan. Whether these folks deserved all the money they got or not is really a moot point - your best shot at success remains to put yourself in a position where you deserve it. You may still not achieve it, or you may grossly overachieve it, but still the best way to go overall.

harel 14y ago

Good on him. Doesn't matter if it makes sense to us (it doesn't to me but hey, its not my money!). The kid got minted, his employees probably got a good deal out of it, his mum must be proud as punch. All in all, congratulations kiddo, don't spend it all at once. What baffles me most though, is that Yahoo would conduct a CS type interview to the employees, failing some of them in the process (if that bit is true). I have over 16 years of real hard world experience and I would never dream of passing a CS type exam. Is that really a gauge of excellence?

dirtyaura 14y ago
Of course Yahoo will do at least similar level interviews for expensive acquihires as to their normal hires. It's a standard practice, Google does this too. They are looking to acquire people that fit to their culture and standard interviews are their procedure to try to ensure that. I'm personally of the opinion that a little bit of diversity (more designer-type front end devs without academic background) would do good for Google's (or Yahoo's) internal culture, but if they have decided that they only want CS people, it totally makes sense to interview acquihires too.
scrumper 14y ago
It's not about excellence. It's additional leverage for Yahoo in the deal. Only 2 of the 5 employees passed it, so they were able to argue for a lower number for the company. Likely they guessed that only a couple would have been able to pass the interview before making that part of the deal.

askimto 14y ago

Maybe they got some real nice licensing terms from SRI.

naunga 14y ago

You know if the kid really wanted some press for his app...he should have turned down Yahoo's and state that he values his company too much to allow them to be used as a PR stunt. ...and then the dump truck full of money pulled into his drive way.

nns1212 14y ago

Pulse is getting purchased for over $50 million by LinkedIn. (http://gigaom.com/2013/03/11/linkedin-reportedly-buying-news-reading-app-pulse-for-over-50m/ http://gigaom.com/2013/03/11/linkedin-reportedly-buying-news...) Summly is much better than that as far as technology is concerned. Yahoo got a better deal.

camus 14y ago

I say good for him. It is a PR deal.Wether it is a good deal or not I dont know,i'm not a yahoo's shareholder,but good for the guy.Congrats to him.

rayiner 14y ago

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.

baby 14y ago
Feels like your 4 points are the same one.
mgkimsal 14y ago
#2 - "we paid some kid $30m!" Why on earth would that be used for 'recruiting'? Getting me to come be your full time employee by telling me how much you pay outsiders (sometimes for lame tech)? If Yahoo wants to increase their recruiting power, start rewarding - publicly - internal teams that innovate. Start a $50m innovation fund, and reward internal teams for demonstrating initiative, problem solving, innovative solutions, bold new idea, etc.
- maxbrown 14y ago
  I really like this. Why don't more companies do this? Is it better in theory than in practice? Maybe it creates too competitive of an atmosphere? Curious...
  - danielweber 14y ago
    Most companies think they have already bought your ideas.

PaulHoule 14y ago

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.

foobarqux 14y ago
I don't think anything was acquired from SRI except a license.

aheilbut 14y ago

You haven't considered the simpler possibility that what has been reported is significantly incomplete and/or BS.

minimax 14y ago

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.

ebbv 14y ago
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.
patd 14y ago
1MM downloads is far from 1MM users. So it's not really a factor of five.
adventured 14y ago
Your comment does a lot to make the point that Summly was a horrific acquisition on any count. I don't think nearly as many people here are jealous as they are aghast.
macspoofing 14y ago
Delicious in 2005 had a huge level of excitement surrounding it. It was also the beginnings of "Web 2.0" and tag-mania, and Delicious was positioned nicely. Paying $15M-$30M for Delicious in 2005 made sense. Like the OP, I don't really understand this purchase.

kyro 14y ago

For some who need perspective: Right now, somewhere in the world, a child is being born into an uberly rich family. That child will grow up to inherit millions for absolutely no work. He'll live the good life full of yachts and private jets. Right now, somewhere in the world, there is a party happening full of gorgeous wealthy people who need not lift a finger to attain the luxuries that they have. Their success is only a matter of genetics and luck. Right now, somewhere in the world, is an investment banker who is making literally millions after clicking a few buttons and making a few phone calls to a few friends. He knows the right people and is in the right place, and that's all that matters. Right now, somewhere in the world, is a 20-some year old guy who is worth billions because of a website he started. He was born into a family that sent him to the right high school. He then went on to one of the best universities in the country, built his website, moved, met the right people, and raised $500+ million in funding. He and likely generations down the line are set for life. Right now, somewhere in the world, is a 17yr old teenager who started a company with some money from his parents, built a product, with help from friends and family, and got acquired for $30 million. There's always someone becoming richer than you for much less work, every second of the day. Look past that and just keep working. I get down about how unfair that is from time to time, but there's nothing you can really do about it, other than focus on your work. Edit: Others are asking where in the article is jealousy mentioned. It isn't, but I took the entire post as one rooted in envy and bitterness. There certainly wouldn't be any of this type of reaction had the guy been a 40-year old who finally got acquired after years of failed attempts. If anything, I'm sure people would be applauding him and the whole affair.

larrik 14y ago
I thought the point was that Yahoo, a public company, was throwing away 30 million for no apparent gain.
- cygwin98 14y ago
  That's the part I don't understand capitalism: on one hand, big corps try to save every dime by downsizing and outsourcing, and on the other hand, they pour money like this.

Mc_Big_G 14y ago

...except that Yahoo just got $30 million worth of controversial press.

rdouble 14y ago

The Summly deal makes sense as much as any Yahoo! acquisition over the years has made sense. Yahoo! is a frankenstein of almost 2 decades of acquisitions. If the CEO of this particular acquisition wasn't a teenager, nobody would bat an eye at $30M for this company.

thiagoperes 14y ago

Let's say you're Yahoo: You're making a huge effort towards mobile, with no apparent success. You see a small team that built a great product, that fits mobile nicely and that has a huge user base. BTW, You have a lot of money. A 17yr old boy did something that lots of highly skilled engineers, managers, designer couldn't do, and that you pay a lot of money. If you have the chance to acquire a great product with a huge user base, wouldn't you do it (being a company like Yahoo)? -------- That's the same as the Instagram deal. Huge companies are not succeeding in mobile, but they need to do this right and create a mobile presence. If it costs "only" 30m, it's a great deal if you ask me.

mikecane 14y ago
>>>A 17yr old boy did something that lots of highly skilled engineers, managers, designer couldn't do Well, that might be stretching. As Comments elsewhere have pointed out, in a large corporation the very same idea might have been done and shot down internally. There might be a few people at Yahoo going, "Wait. WTF! That's what we showed them last year! And it was better!"

31reasons 14y ago

> I don't really understand why they picked this one. Yahoo Executive: "Don't Make Me think" Summly: Ok. 30 mil Yahoo Executive: OK.

itsprofitbaron 14y ago

Normally whenever an acquisition happens, I avoid these types of posts on HN because there are often people in the comments (and even in the posts themselves) calling out the acquired company saying “I could have done this” or “Acquirer could have built Acquired Company in a day” but, this one deserves a reply. The reason why this deserves a reply is that the OP’s post does not really contain any facts rather, it contains assumptions (either the OP’s assumptions or others). For instance: “Yahoo screens the employees, and tells the founder that 2 of them passed” AND “Summly says dang, only 2 out of 5 passed?” The article the OP links to, to cite this actually states[1] “In addition, only two of Summly’s employees will go to Yahoo with D’Aloisio” There is no mention of anyone failing a ‘test’, all it states that only that 2 of Summly’s employees will be joining Yahoo alongside the founder. Now when OMGPOP were acquired by Zynga, one of their employees didn’t join Zynga[2] and that employee chose not to join Zynga – the same may have happened to Summly’s other employees as well (something that we do not know). Moreover, the OP calls out Yahoo for acquiring Summly for $30M and citing that, “Summly says no, $50m is our minimum. We need to pay back our generous investors” However, there has been no confirmation of an acquisition price – there are rumours which place the amount in that ballpark and rumours which say the price was 90% cash. Now, when startups get acquired, they do not get acquired for one price (as Media outlets etc will report) rather, amongst other things there’s an earn out for employees/founder(s) and money to cap table. These things are often complicated and can be very complicated which is why, I am not criticizing media outlets for reporting a single price – in particular these Media outlets love the “millionaire” stories because it gives them a ton of page views - although, when someone is calling out a company for selling for an unconfirmed price by, saying that it is ridiculous – these things need highlighting. Likewise, the OP concludes with: “The craziest thing is that there are a lot of really qualified, CS-beefy teams doing really amazing things in the mobile news/discovery space these days - and that would definitely take a $30m acquisition offer or less. I don't really understand why they picked this one” First of all, as I already highlighted no one knows that Yahoo gave the people at Summly a test – and if they did, if the employees who are not joining either rejected the role or failed the test. Likewise nor do we know an official price for the company of which flaws I already mentioned in regards to a single price. However, what we do know is that Yahoo acquired Summly (which is shutting down although, some of it will be incorporated into Yahoo)[3] and regardless if you agree with it or not, they acquired them for a price which is suitable to Yahoo and Summly's investors/team. Either way, I wish Nick D’Aloisio and the rest of the Summly team all the best and congratulations on your exit to Yahoo. [1] http://allthingsd.com/20130325/yahoo-paid-30-million-in-cash-for-18-months-of-young-summly-entrepreneurs-time/ http://allthingsd.com/20130325/yahoo-paid-30-million-in-cash... [2] http://www.gamasutra.com/view/news/167244/Turning_down_Zynga_Why_I_opted_out_of_the_210M_Omgpop_buy.php http://www.gamasutra.com/view/news/167244/Turning_down_Zynga... [3] http://ycorpblog.com/2013/03/25/yahoo-to-acquire-summly/ http://ycorpblog.com/2013/03/25/yahoo-to-acquire-summly/

Evbn 14y ago

The problem in a nutshell: Yahoo just indirectly but clearly told all their talented employees to quit and try to get acquired back. (The untalented employees know they have better expected returns if they just chairwarm for a few years.) Bad for Yahoo.

tangledweb 14y ago

Ignoring this specific deal, mull on this hypothetical. Imagine you are a young superstar who with some justification believes you have the world at your feet. A bloated, cadaverous company that your dad tells you was cool when you were in preschool wants to buy you and tether your career to them. How much would it take to convince you to do that?

dhannum 14y ago

Summly has no real history to speak of, but Yahoo clearly has a long, sad, sorry history of overpaying for little nascent startups, failing to capitalize on them and then eventually letting them fall apart while missing out on larger trends. At first it seems that whether or not this deal makes sense to you depends on whether or not you're a shareholder of Yahoo or a shareholder of Summly. But keep in mind that if Yahoo didn't make a similar deal with ViaWeb a decade ago there may not be a YC or any of the companies they helped start.

plinkplonk 14y ago

So what happens to the three employees who didn't clear Yahoo's interviews? Do they get nothing? Just curious.

smnl 14y ago

I'm confused why they decided to immediately remove Summly from the App Store rather than use it to drive traffic to other Yahoo apps - anybody know why they did this?

lmirosevic 14y ago

My first reaction was that this was a play by yahoo to get in on the newsreader market. There's been a lot of fanfare about google abandoning its RSS reader so obviously this is a big market, one to which Google doesn't think RSS is the answer. So what is the answer? I don't think anyone knows but it seems to me like yahoo is taking a bet on summly. Plus it's a great opportunity to capitalise on the press and general sentiment of the whole Google RSS story. And finally Marissa is new, and a lot of people are probably pointing their eyes at her to see if she can turn around yahoo; and what better way to do that than to win a game of chess against Google? Edit: and if Marissa does get a lot of faith from investors, which she will if one of her first moves is a victory against google, then her reputation will undoubtedly rise. And how much is the reputation of a CEO worth at a multi billion dollar company? I think a lot more than $30M. Just look at Apple's recent stock movement.

fruor 14y ago

To put your question more into perspective, I would ask if paying $50 for something that only costs $10 to manufacture, makes sense? Anyone who runs a profitable business will say 'yes'. Summly is a product, and as such, has been purchased for more than it cost to "manufacture", as you laid out. $30M is bargain shopping; lest we forget "Draw Something" was bought for $180 million, or "Instagram" was purchased for a whopping $1 billion.