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.
Where did the article make any mention of jealousy or bitterness (other than the "hurt feelings" of Yahoo's engineers)? The article describes the stupidity of this acquisition from a business perspective.
The fact that your comment has received the most upvotes indicates that people generally agree with your sentiment that nobody should be bitter or jealous. Yet nobody is suggesting any bitterness or jealousy... So who exactly is this directed at? Hey HN... I think you're "projecting." :)
Lots of the comments below read like they're full of bitterness and jealousy to me, I suspect the comment is targeted at them rather than the original article.
Simply because of the fact that in the first sentence that it mentions that he is 17 years old. Companies get acquired all of the time every day, but those don't warrant posts on HN mentioning how young the employees are. Hence the jealousy.
I think you should have the top comment - but I am willing to admit I'm jealous anyway. :) Jealous, but thankful that I was never made a millionaire at age 17...because that 17 year old will no longer get to see what the real world is like.
That is exactly it: People whose first reaction was jealousy are now projecting jealousy onto everyone else. I'm not jealous of this individual at all (though I, like most, would love to be in the same position). But being professionals in this field we naturally do try to figure out where the money is at (trying to yield hints at how we can get some of that), and when it is irrational it confuses and potentially angers us. This ridiculous canard that we can never critique a story without being jealous is obnoxious.
Actually this is a very common scheme in Silicon Valley -- public companies "throwing away" money on relatively worthless startups. It is a good way to siphon money out of the stock market and into the pockets of VCs and founders -- and I would not be surprised if the person who pushes the acquisition gets a cut of the money too, or other "favors" in the future. The company knows its going to can the product and the founders will leave after their stock vests -- why else would it make the acquisition?
That's a perspective that hadn't occurred to me (I'm not actually in startups or Silicon Valley). Sounds like a conspiracy theory, but it's believable.
It does not, however, mean shareholders can't/shouldn't complain about throwing money away, though.
Yep, it sounds like a conspiracy to me as well. :)
The one thing that I have learned about corruption is that at least small instances of it occur everywhere, even if its not "the norm." Wherever there is way to make money, people might very well be doing it.
And yes you are right although I tried to imply that shareholders were the ones being screwed - this is obviously unfair to shareholders, whether the transaction is corrupt or not.
It might be something like that but with less malice. First, Summly and the entrepreneur are far from worthless. But to your point, a bunch of decent angel investors just got a pretty nice check from Yahoo. The "deal guy" builds some reputation but unlikely benefits monetarily in any nefarious way.
I think the OP sentiment and many comments here are mostly classic HN resentment of success.
Seeing these acquisitions, it always seemed like that what's very often happening is the folks who make the Buy decisions (NOT the owners of the buying company) are basically stealing from then owners to hand money to their friends)
Or, when the bizdev team is told to spend a billion dollars this year, (1) is is easier for them to like in extra money into each deal than to find more smaller deal, and (2) they don't get bonuses for only spending 500million and saying there is nothing else worth buying.
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.
That's not capitalism, it's poor valuation, managerial inefficiency/stupidity, and fad/reaction behavior (among other things, I'm sure). It's counterintuitive, counterproductive, a massive waste, contrary to the penny-pinching you mention, and obtuse.
It's also just kind of how people are. You can't reasonably expect a large corporation -- which is just a big group of people who are all trying to make decisions and getting in each other's way -- to be able to make logical choices when they're subject to every large stakeholder's whim and every bit of incompetence that happens everywhere along the line.
Is it happening in a capitalist setting here? Yes. But it happens in all settings all over the world, so to suggest it's unique to this system ignores the actual nature of the issue (which is the Human Condition).
The downsizing and outsourcing is driven by incentives to remove cost from the balance sheet. If there's no incentive to do so wisely, if there's no disincentive against doing so poorly, people will inevitably make bad 'outsourcing' deals, just to have made them. Quality might take a hit, direct billings might skyrocket, products might have to be scrapped, etc. But if you don't fix the incentives, it will happen over and over.
Similarly, if you incentivize a person to make deals, if they have a stronger incentive to make deals than to make good deals (e.g. if they have no effective disincentive against making bad deals) bad deals will get made.
It's a control issue under the guise of a cost-saving effort. Contractors and vendors are easier to hire and fire compared to employees. Generous advances in worker productivity mean that the same permanent internal workforce is no longer required.
1- Is the traction convertible to any Yahoo properties?
2- Are the 1 million "downloads" legitimate interested users? Do any of them still use the app?
3- Did the "traction" come from paying firms to get them to the top of app store(s)?
I assume Yahoo knows more about this stuff than I do, and I'm not a Yahoo shareholder. Still, I didn't get the impression that the article was just complaining about rich teenagers.
According to Alexa, yahoo is the 4th most visited website in the world. They have innumerable ways to generate traffic. "Traction" implies a company that is not being visited at all trying to get a jump start, and is just not accurate.
Not all traction is created equal. I'm not sure how simply Yahoo could convert its users, who tend to be more conservative, to mobile.
Technical parity is a bad way to price a company, i.e. the value of Summly cannot be approximated by what it would take to replicate the technology in-house.
I have no faith whatsoever that Yahoo will productize or promote anything they create and there's no real evidence that anyone else should think that either.
What happened to the good ole days when a huge corporation would just implement the app on their own and cut out the need for an aquisition?
For $30 million, even an order of magnitude less, I think a lot of us could put together a team good enough to implement the Summly app. That's what's being questioned by the blog post.
>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.
I regret upvoting you prior to finishing your post.
This is bullshit. Of course we can do something about it. We're members of a society, and if we collectively think something is bullshit, we can do something about it.
I'm tired of people looking at these absurd inequities and shrugging and putting their head down and hoping maybe they'll get lucky too. In the meanwhile, these people at the top are ensuring that only people like them can continue to succeed.
Let's tax everyone who didn't earn their wealth. Let's put an end to dumb gambles that only reward people born at the top.
I'm confused. Are you saying this kid should have his $30M (or whatever he gets out of the deal) taken away from him, because you perceive he didn't earn it?
I'm saying is maybe increase high end income taxes, maybe look into the viability of higher capital gains taxes, maybe find and create some kind of disincentive for companies to be bailing out VCs.
Find some way to even the playing field. I'm sorry, but you don't need to have come from Stanford to be smart enough to work at Yahoo! or Google or etc.
> I'm sorry, but you don't need to have come from Stanford to be smart enough to work at Yahoo! or Google or etc
It's like every other human relationship, the more you have to offer the higher your standards can be. Google can afford to hire only top CS people (or accomplished non-traditional ones) because they're Google. Yahoo!... I don't think that's going to work out so well. The market will take care of it soon enough.
No, it's the "redistribute the wealth" argument. Whether you do it by funding welfare or schools or giving tax refunds, it's up to you.
>It's like every other human relationship, the more you have to offer the higher your standards can be.
It's more complicated than that. Since the prestige of your alma mater is largely divorced from the quality of the teaching therein, it's also an expression of class discrimination.
I have this burning suspicion - borne out by my own anecdotal experience - that the most important thing distinguishing the median Harvard undergraduate from the median Good State School undergraduate is a capacity to absorb the tuition fees.
Setting up a system that rewards having been born to rich parents is ultimately detrimental, in my opinion. It's just a lot easier to check whether you came from Stanford than to determine if you're smart.
>I have this burning suspicion - borne out by my own anecdotal experience - that the most important thing distinguishing the median Harvard undergraduate from the median Good State School undergraduate is a capacity to absorb the tuition fees.
Not true. Even near the upper end, the price tag is not insanely high compared to top state schools --
Harvard policy states that families with annual incomes below $60,000 pay only a student contribution of a few thousand dollars, and families with annual incomes between $60,000 and $180,000 pay the student contribution plus a family contribution averaging 10 percent of annual income.
The kind of things "the market" takes care of is vanishingly small, and even when it does it rarely works in favor of most people. Why shouldn't we act in some way to make sure society as a whole benefits from our economy as much as it can? After all, our economy exists to serve us, not the other way around.
Or how about you get over your negative emotions with regards to wealth so you can enjoy meeting wealthy people and end up making millions getting involved in their business deals?
After all those million-a-year investment bankers did just that.
I have no negative emotions regarding wealth. In absolute terms, I am quite wealthy; I enjoy the serendipity of my birth tremendously and every day give thanks for it.
It's just plain to me that we're getting fucked by those much further up the chain and being admonished for having the gall to find it unpleasant.
This is good perspective and i think it's good to keep this in mind, but let's not forget the other end of the spectrum:
Right now, somewhere in the world, a child is being born in a farm house with a dirt floor. That child will grow up to die in a civil war before age 14.
Right now, somewhere in the world, there are people waiting in line to get food from a charity.
Right now, somewhere in the world, someone is suffering from a disease because they can't afford the cure.
Right now, somewhere in the world, a man goes to work carrying bricks for 10 hours a day to feed his 3 children.
Right now, somewhere in the world, a woman rides her bike to work in polluted air at 6am, to a factory job where she will work 12 hours a day putting together tablets that all the "unlucky people who have to work" trying to be dot com millionaires will buy one day on a whim and then discard less than 6 months later. And this is good, because she has a job.
The real interesting thing is these people generally don't complain much, not nearly as much as we do.
My Mom grew up on the wrong side of the tracks. Her biological father had a habit of staying at home just long enough to get my Grandma pregnant, then taking off. Life for single mothers (especially French Canadians) in the late 1940s/early 1950s was hard. Consequently, my Grandma worked multiple jobs just to keep food on the table and a roof over their heads. Grandma was always an incredibly hard worker - she eventually remarried and her and my Grandpa started a cleaning business. She ran that business and worked incredibly hard up until the day she died.
My life was very different from my Mom's. My Dad was a police officer and, though we weren't wealthy, I never went without. But, I got to grow up in a household where two things were valued - hard work and education. Consequently, I'd spend summers working in my Grandma and Grandpa's business - I had my first job (with an actual hourly wage) when I was 8 years old and worked every single summer and during Easter break.
Grandma never complained because she got herself in that mess and by golly, she'd get herself out. That sense of resilience carried through the generations and now, finally, my generation has the benefits of a middle class upbringing, combined with the work ethic that only comes from having been very poor one generation ago.
I think that it's wonderful you're concerned with people who are less fortunate and I respect what you wrote. However, poverty is a great motivator and frankly, I'd rather hire someone who knows hunger than someone who went to prep schools and fancy Universities with billion dollar endowments...
You would rather hire someone who knows hunger because it is part of your story. I know what you mean, my family story is very similar. But the truth is that people making hiring decisions are usually from that different background. Example. When I was in Greece and the crisis and unemployment was starting to explode, I had secured a huge implementation project and convinced the bosses to hire someone in addition to the current team. They did hire an LSE graduate and a Columbia one. I was telling them that it does not make sense when so many people are getting poor to give all jobs to people who do not have a money issue, but alas it is not how it works.
Actually, I've come to believe that complaining is an inherent aspect of human nature. Everybody complains; its just that you don't hear much from the above-mentioned as they do not write blogs which make the frontpage on Reddit or HN (let alone popular media) and/or are not part of your immediate circle of friends (to whom we usually air our grievances)
I agree that all of the events you've listed are probably happening somewhere in the world, but I disagree that we should all just accept this as "the world we live in" and carry on. Look back across history and consider what would have happened if at any point, the people on the losing end of any deal were to simply keep their heads down and keep working.
It's worth talking about. It's worth criticizing. It may not be worth obsessing over, but it is worth some portion of our attention.
It's laughable that a programmer would worry about how unfair the industry is on the top end. Do you get how lucky we are compared even to other engineers? To say nothing of service workers who work much harder for much less.
Every now and again, if I feel I need more money, I take a look at http://www.globalrichlist.com/ and plop in my current salary. Though the numbers are probably a bit dated by now, it's quite sobering.
Well, every now and again, I come across this type of salary comparison charts, and realize that out of context they make no sense at all. And with some context - hmmm.. Nope, not much sense either.
I don't know what you're trying to say. If you are trying to imply that someone on a developer salary in Europe or the US are not well off by global standards, you're out of your mind.
I mean just what I wrote: these lists and charts comparing everyone to everything make little to no sense without context. Global standards in the vacuum make no sense. And in the case of global salary charts - well, comparing apples to oranges doesn't even come close. But, as much as I hate generalizations, I'll try to clarify my point. So: usually, above certain, and rather low level, your happiness doesn't scale linearly with the your wealth expressed in money, and the farther you are in the "rich" percentile, the more so. This charts tend to imply that wealth should (well, that it has to!) be distributed uniformly, when it isn't, and has never been, and I'm pretty sure will never be.
Now, let's suppose you make $15k/yr. (By the way, how's that for your estimate of a European salary? See why I said I hate generalizations?) This site says you're in the top 13% richest people in the world. Immediately, a ton of questions arises: OK, top 13% - what of it? Was it practical to take everyone in the world into consideration? Why and how should this (unverified) information change your feelings about your well-being? Is the current wealth distribution, as represented by the chart, really not OK? Will the knowledge about being in the top 13% help you pay your bills? Should you, now knowing that you are ahead of 87% of population, start to think about redistribution of your wealth and transferring it to those behind you? Should you not be pissed off by those guys higher than you? What if you'd find yourself in the lower 50%? Should you get depressed, or get to work, reaching the 50% mark and then stopping, or what? I could go on and on, but the point I'm trying to make here is that all those questions can be answered in a dozen or so ways, exact number depending on your will to participate in rhetoric battles, and that's why I just can't figure out how this chart can be of any use. There's probably some statistical value in it to me, but almost none practical value. I hope you now see what I was trying to say in the GP comment.
Lastly, and moving from the comparison chart itself to the idea that it's used to be backing up here: I dislike cheap attempts to make people participate in some charity out of induced guilt, and I dislike portraying of being wealthy (whatever that means) as a kind of being unclean with money and obliged to share as a tool of said shame/guilt feeling inducing. I don't think charity should work this way and I think this instills the wrong views of the basic principles of economical and social responsibility in the readers and just exploits the guilt feeling.
TL;DR: Do you need money? You should probably stop contemplating 'global salary comparison charts' of questionable real world value, and instead get your statistics straight and start working on your skills/paycheck/whatever keeps you wealthy. Do you want to participate in the charities? Stop getting anxious and building guilt inside you for no reason, get informed (really, get your statistics straight already) and get involved.
on the flip side, someone could create a list of where you rank on the cost of living, amount of free time, environmental health standards, living space, and so on. Suddenly a lot of us would find ourselves on the other end of the scale.
with that said, I do consider myself tremendously lucky, but when looking at such lists there are more dimensions to consider than just salary number.
One hopes selfishness and legacy, and in some cases, idealism, overcome genetics, and those billionaires give their money to others instead of their spawn.
While this has little to do with the original post (which is about the logic behind Yahoo's decision, on which I have absolutely no opinion one way or another), I think it's extremely important to adress what you're saying. You write "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". This is not only patently false, it is dangerously so. It is the thinking of the downtrodden man who accepts the hegemony's perspective on things, namely, that this is the natural order of things, and all you can do is work.
True, the world is unfair and it will remain so. But much of its unfairness is not a result of cruel nature, but as a result of our political actions. And I won't even go into what actions we should take to adress the issues you've raised, only to say that we should, and must act to change society, and that there's quite a lot we can do. We are not sheep.
> 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.
Fairness is a fictional manmade concept. That we expect some sort of fairness in life is solely due to our social contract. It's not fair to me that someone steals my car and thus we have systems in place to address that. However, nothing in our laws, norms, ethics, or philosophy says that people must get everything they deserve and no more or no less. Hence the concept of fairness does not apply to kids of billionaires or friends of politically connected.
Fairness is about mathematical expectation. Fairness means people have equal opportunity (often within a restricted domain, or ignoring certain starting conditions). There is [nearly?] always going to be a locus in which fairness is asserted outside which it is no longer the case.
* The race is fair because both runners run the same distance. Ah but the ground is uneven.
* The race is fair because the ground and distance is even. Ah but one runner is poor and hasn't eaten for days and so is weak.
* The race is fair as the runners have been nourished equally, the distance and going are controlled. Ah, but this runner's family have a genetic disposition that enables them to run faster without tiring ... et cetera.
If mankind didn't exist a situation could still be fair or unfair for a creature - a combat test for leadership is unfair because this creature had a greater opportunity for nourishment and so grew stronger than the others. That of course doesn't mean it's the wrong test, just that each creature able to take the test doesn't have equal opportunity to achieve through their own efforts.
>It's not fair to me that someone steals my car //
Everyone had opportunity to steal a car, including you, that's fair!
I don't equate fairness and just deserts [ie justice]. For example two people can compete in a fair competition but the least deserving - the one who made the least effort or the one whose lifestyle is least noble - can win; the competition was still fair though.
That was my overall point. Fairness is manmade. We decide what's fair and not and certainly your concept is different from mine. Nature doesn't care. Markets don't care. Systems don't care. All we can do as humans is impose our view of fairness on others by legal means or social norms. Most of us agree killing is bad and unfair to the person who got killed and their family/friends, so we legislate against that.
While many might feel that kids of rich people have an unfair advantage, we haven't as a collective decided to do anything to put that to an end. We have made it a bit easier for non-rich kids to get some of the benefits that rich kids get like daily meals, access to education etc. but the gap is far too wide to bridge for everyone.
You can certainly try to design a social structure where nobody is rich or nobody gets preferential treatment but those haven't worked well so far for numerous other reasons. In a capitalistic, democratic/republic society, we haven't legislated the unfairness of being born rich, mostly because most of us don't think it is unfair enough to be illegal. In fact, most of us would think it is fair when looking at it from the parents' point of view. If you work hard and make a lot of money, why shouldn't your kids have it better than you did?
What I was trying to say to the parent was that fairness is not a concrete standard, especially when it comes to things many of us can disagree on.
I agree, however it is important to consider how we pick the people we choose to hold up as examples and who we are holding them up to.
With the traditional bigCo job market in the tank there is a push right now to get young people interested in entrepreneurship so stories like these make excellent narrative supporting that.
So you hear stuff like "bootstrap your company!" , "Be your own boss!" , "Be a risk taker!" and this message is being pushed to everyone, including those on the lower rungs of society.
I know a few people who bootstrapped reasonably successful businesses and have been asked to give talks on how anybody can do it and how they started with no investment and nothing more than $50 in their bank account etc.
Problem is that most of these guys had backgrounds that allowed for risk taking. They had families who were not necessarily uber wealthy but were quite happy to subsidise them for often over a year for things like living expenses and keeping their car on the road. The narratives often don't mention these sorts of factors.
As a 17 year old I think this is awesome and stupid (at the same time). It's pretty eye opening that if a 17 year old can make an app and get bought for a lot of money, it's possible for anyone to.
As awesome as it is for the guy, this doesn't change the fact that a Summly got paid so much for a 2 employees and a founder. I mean the app hardly had traction and $30 million can you get you a nice army of talented mobile developers with signing bonus'. $30M really isn't justified in this case.
Congrats to the summly team, but it's also really sad how desperate and pathetic Yahoo is.
Bitter and jealous is no way to go through life. All of these guys executed on their project or have specialized knowledge. The pie is not zero-sum, and we live in the greatest, most fair time in human history.
The fairest time would be before [mass] land ownership, when anyone could stay with their tribal group or, should they choose, set off on their own and find land a-plenty to hunt/develop/farm as they see fit.
Hard times, sure; but that sort of situation seems most fair to me.
Well said. And I agree, sometimes when people don't realize it they are jealous and hurt. A guy I knew who was, in my experience working with him, a complete loser [1] was fired and got a job at another company and that company went public during the dot com boom and made him several million dollars. Meanwhile my company, and I personally, made no such million dollar moves. And it made me jealous and angry and I could have easily written this exact same article about how clueless that company was for hiring the loser, but the emotion was from my hurt. It took a while to get over that [2].
Yahoo may be clueless here, but we really can't say that until we see if they get $30M in value out of the deal or not. So really all we can say is that we cannot see how they came up with that valuation. Then watch what they do to see where it goes looking for insights into their thinking.
[1] I recognize that "loser" is relative to the job they were asked to do, as opposed to the individual. At the time I was much less forgiving of people who weren't in jobs they fit (or didn't fit) with.
[2] I am still incredulous but I don't get angry and jealous over it any more.
Right place right time seems to sum up all these people, and most of life is about that! But the only way to fight it is work your ass off and put yourself in a position to be at the right place at the right time (give yourself a platform for an investor to find you for a high acqui-hire price coughcough what happened here). For the many people who complain all the time on this site and critique but have never started / built or done anything except complain, you have no ground to stand on. Sitting on your computer complaining has (almost) never put someone in a right place, right time opportunity (except when blogs were first invented)
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.
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.
In one of my projects, two of my team mates were in their mid forties. One of them was a mother of two (pointing this out because she didn't have lots of free time to learn new stuff). She didn't know Java, but she was probably a million times smarter than the rest of the team (4 more people, all in their early to mid twenties) combined. She didn't go to college, while the rest of the team came from pretty good schools, with good grades etc. Yet, she picked up things faster than any of us.
So yeah, some people are just sharp by nature - just like some people are cute, strong etc (not saying others can't develop, but it does give the "naturals" an advantage)
It's difficult for me to comment on something that you saw while in this room when I wasn't in the room, but I'm guessing that much of that had to do with the fact that the kid had actually put in the work and did the experimentation to build this community.
How many of the people in that room could say the same? What communities (or anything else) had they built? If they had built something, did they do it on their own as opposed to being someone brought in after the company was already successful? The kid probably ran circles around everyone because he was an expert (on this subject) among managers / developers / designers and anyone else who could probably do anything but run a successful community / e-commerce site.
I think about this sort of thing as a web developer. How many web developers who build client sites have actually built a successful site? How many designers really know how to design something which can sell? If you haven't done it, then you probably have no clue. But if you have been there, then you probably wouldn't be working for someone else either.
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.
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.
Sometimes it's not that they are smarter it's just that they aren't constrained by current thinking, maybe even the pragmatism that comes from experience.
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.
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.
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.
It is so rare to see a reference to that wonderful, tragically short-lived show. Maybe it was just the right amount of pent-up angst, but that show spoke to me.
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!"?
As someone who isn't remotely jealous for the kid (I'm happy for him actually), let's not pretend that he is an innovator. It's a link aggregator app, no different than pulse or others. In fact, the difference from Pulse is that its inferior, because it displays far less at a time. But that is my opinion, and I'm sure a lot of older folks like it better BECAUSE it displays less.
Kid: Go for it dude, and good luck.
Yahoo: WTF?? Why not just build your own version of this?
C'mon, this can't be the first time you've noticed that "innovation" has been overused to the point of meaninglessness in tech. "Disruption" doubly so. Don't harp on this kid, he is no less innovative than 95+% of "innovation" I've heard about in the last year.
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!
Normally I have a kneejerk reaction to someone calling someone else jealous. It always strikes me as someone projecting their own jealousy onto someone who very well may have legitimate criticism.
That having been said, it is a bit rich for Vibhu Norby to be concerned about the hurt feelings of employees by making a 17 year old a millionaire. That is an incredibly, incredibly, incredibly, narrow area of the social consequences of wealth to focus on. I have a hard time taking such a myopic point at face value.
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.
Obviously the writer means yahoo employees. Maybe not jealousy but certainly frustration. Wouldn't you feel frustrated if your company spent $30 million on what is basically the face of a hype machine especially when your company wants to integrate the hype machine's "tech" into your products even though it would probably take a few days to get similar results in house?
More to the point, I've no doubt that some Yahoo employees have likely investigated this sort of tech and built prototypes, only to get shot down by middle management.
I've no special insight at Yahoo (had a couple friends work there) but for any sufficiently large company with employees as talented as Yahoo (YUI, YQL, etc) this has surely happened. So... to have your idea/prototype/demo shot down, then later $30m spent on essentially what you'd offered the company for free... that's gotta be frustrating.
Again, pure speculation that this had happened, but I'd be surprised if no one internal to Yahoo had floated/demos something like this before. They certainly could have bought some of the hype (stephen fry, etc) during a rebrand. But... instead, they buy from outside vs using and promoting internally.
Once more - just speculation, but that's were I would suspect frustration would come from.
> investigated this sort of tech and built prototypes, only to get shot down by middle management.
Bingo.
in fairness the culture there prob prevented people from even feeling this innovative and self motivated.
I've worked in a couple of large orgs where i've told management about great little cheap ideas that just get ummed and ahhed and then forgotten (despite in 2 instances using my own free time to make a prototype).
No doubt, and that's part of the legacy of having "hey, we're a media company!" leadership from many moons ago.
There used to be an incredible mix of talent at yahoo, and they squandered a lot of that.
What's also interesting is that no one (yet? - maybe I missed it?) seemed to mention the Yahoo 'kiss of death' - how many acquisitions have they done that end up never seeing the light of day, or get shut down? Brickhouse seemed like it might be successful, but culturally that didn't seem to work out too well over time.
Having been in the position of shooting down all to often, the challenge for managers here is that often we get 100 absolutely crap ideas for every gem, yet the developers who bring them to us often are totally blinkered about which ideas are a fit for the company and/or are remotely realistic.
That makes it very easy to make calls that in retrospect might seem extremely stupid. Even more so, many of the engineers who get shot down for truly bad ideas will still insist they are good.
Getting the balance right for what you spend time on is very hard.
(That said, I did work at Yahoo until 2005, and at least "my little corner" of Yahoo did feel very bureaucratic and not very conducive to innovation even then)
Agreed. Which is why I don't pitch too many ideas anymore in my current role unless I've done some exploratory coding.
That has led to 2 different internal products and I'm presently working on something to replace a piece of commercial software that they paid almost $1 million for and doesn't work/has serious limitations. However I did it out of band because I found it interesting. I guess it comes down to put up or shut up.
Often when you come up with an idea, then go to try and do it you realise its 100x times harder than you thought
When I read things like this, I assume the software has nothing to do with the hire. This guy has shown, at an early age, that he is a real player. He has the right[1] kind of people backing him which has caused his name to be talked about in the right circles.
A major viewpoint that separates me from "when I was a kid" was the realization that the continuum of everything (talent, intellect, potential for evil, charisma, etc) exists. One judges the world by the people around oneself, but those are not limits of human capability, those are the friends one keeps. That realization took a long time to sink in.
Good on this guy. Nice play :)
1: "right" in the sense of a situation like this occurring, not in the sense of moral or intellectual superiority
That's their job though. Don't forget, the face of that new hype machine is also an employee at Yahoo now. I am sure if he stays at Yahoo long enough he will also be asked to integrate other acquisitions into software he is working on.
You make a valid point about Yahoo being able to produce similar results in house but the software alone doesn't get you a client base, publicity (certainly not the same level of publicity the Summify purchase has received) and the 3 guys they have hired.
So what if he's only 17? If he has good ideas about how to take Yahoo's mobile news presence forward then the problem should disappear. Of course if he's a poor developer then other employees have the right to be frustrated but it should only be based on his competency and not what he is worth.
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...
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.
Actually it now looks more and more like some sort of elaborate kick-back scheme for the investors. "Your YHOO stock has sunk below the waterline, so here's something to sweeten the pot."
I actually think this kinda makes sense. That or relationship building with the investors. Plus, Yahoo! hasn't been making any new waves for quite a while. They needed to make something happen somehow to get people excited.
The founder might be brilliant and I could be wrong about this whole relationship building with investors to try and get attraction nonsense.
So you're assuming they didn't do their due diligence? That they threw $30MM at a company they knew nothing about? Has anyone in this thread gone so far as to even try the product?
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.
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.
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.
Frankly, I'm jealous and I don't see why that's a problem. Who wouldn't want $30m for an relatively-mediocre app? Is this not what a large portion of the entrepreneurs strive for: exits for inflated sums of money?
Delicious was actually the first social bookmarking site I was aware of (and used). So I'm under the impression that they were ahead of the curve. Saying it's just a social bookmarking site I guess is the same as saying it's just a wheel.
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.
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?).
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
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.
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.
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.
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.
> 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.
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.
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.
#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.
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...
"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.
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.
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.
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.
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.
Wait til you are 60. Then you will start saying "With 25/30/35 hardly".
He just sold a company at the age of 17 to a huge corporation for a truck load of money. Unless he's got loans up to his ears I reckon he must be a lot smarter at business than I am.
> Wait til you are 60. Then you will start saying "With 25/30/35 hardly".
Most certainly I will laugh at my naive 30year old self. But that doesn't mean I'm not allowed to reflect about maturity levels of teenagers.
> He just sold a company at the age of 17 to a huge corporation for a truck load of money. Unless he's got loans up to his ears I reckon he must be a lot smarter at business than I am.
Well, I don't want to come off as a too negative but word is that his parents' money helped at least a little with generating Buzz. Now nothing against that - he used every possibility he had. But don't call yourself bad at business when you don't have that kind of resource available to you. With the right connections you can sell a bunch of photo filters for $1 billion nowadays. And without you have to work off your ass to become ramen profitable.
I'm pretty sure that he is not the only person accountable for the sale. I would even guess that's it is far from it. He's backed up by many people as someone said in the comments.
Can you actually sign any of these papers if you're a minor ?
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.
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.
That is not "teenage" behavior. That is sociopathy. He outright lied to this reporter, then berated him with dozens of emails. Regular people, "teenagers" included, do not behave that way.
(I, as someone who is comparable in age to D'Aloisio, would never try this kind of shit, especially to someone affiliated with a major news organization; nor can I think of any of my peers who would. I honestly don't understand why people have such outrageous notions about how young people act, and have such permissive views about they ought to act. It doesn't matter how old he is, this sort of behavior is absurd.)
It's certainly not sociopathy. I can think of a number of reasons why he might have behaved that way and I've seen similar behavior from similar people in similar circumstances.
Your level of maturity is an asset which not everyone has at your age. The reason people are more permissive of poor behavior from young people is that they are still learning the ways of the world. Hopefully D'Aloisio learnt from this experience.
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.
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.
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.
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.
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.
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?
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?)
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.
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
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.
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?
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.
Thank you for bringing some sanity to these comments. Assumptions are abound, and they aren't going to benefit anyone trying to understand the machinations of this purchase. Stockholders will demand an answer if they are skeptical. This blog post may be an indication of one stockholder who wants more info, but a lot more traction will be necessary before anyone at Yahoo feels the need to explain themselves.
Good points about all the assumptions. Given all the new anti-flexibility rules at yahoo, you have to wonder how appealing the offer was for the other 3 employees.
Most of your comment is reasonable, except for the part about a reasonable price for Yahoo. There is no evidence that Yahoo isn't suffering a costly mistake (or worse) from a small group of decision makers on this deal.
I said that the price is suitable for Yahoo because, if they did not believe that the price was acceptable to Yahoo and its shareholders then, they would not have sanctioned an acquisition for the company. Likewise, I think your comment about there being no evidence to support the acquisition etc is a valid one although, it could be applied to any M&A deal such as it could have been applied (at the time) to Google’s acquisition of YouTube (with regards to the lawsuits etc) - and whilst the Summly deal may or may not end up being successful for Yahoo, if the Summly Team provides Yahoo with value beyond their acquisition price then, it certain cannot be debated that it was anything but a successful one.
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.
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.
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.
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?
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.
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.
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).
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.
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.
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.
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.
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.
...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.
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.
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"...
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.
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.)
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.
>>>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!"
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.