StumbleUpon buy begs this question: What’s he building in there?

As you are almost certainly aware, the large media and internet firms have lately been on a buying spree. This week news came of one more acquisition: StumbleUpon, to be purchased by eBay. Tom Waits recorded a spooky little ditty (made even more creepy by the video), called What’s He Building? In this spoken word song, the narrator wonders aloud what his loner neighbor is building in his basement. Well, I’m feeling a lot like that guy, scratching my head and wondering what strategic purpose eBay would have with this social bookmarking site.

With 2.5 million registered users, StumbleUpon behaves somewhat like a search engine. It recommends various categories of sites based on the votes of its members. In this way it uses the collective intelligence of a network of backlinks, in the same way that Google made famous. Instead of clicking on a link that states “I’m feeling lucky,” you press a Stumble! button on your specialized browser toolbar, and a new, fun site is served up for a category you enjoy.

The odds that you’ll like the recommended site are quite high, since your peers have already given it hundreds of “thumb’s ups.” You can add your own Thumb’s Up/Thumb’s Down to refine future recommendations, ala Pandora.com (a song recommendation site which, coincidentally, is a perennial favorite that StumbleUpon recommends to anyone saying they like “Music”).

Wait a minute. What did I just say? Toolbar. Google. Just yesterday a friend was wondering if Google would find its share of users eroding because it introduced Personalized Search. That’s a way that Google uses information gleaned from its toolbar and other sources to customize search results. My friend suggested that Personalized Search’s results will often miss the context of a person’s search. After all, when we go home at night we search on very different things, and for very different reasons — than during our workday. So will there be an opportunity for other search innovation to capture some of Google’s share?

True, three years ago eBay launched A9, a search engine in the stricter sense of the word than StumbleUpon ever will be. But maybe eBay is hoping to bolster A9 with a more social mechanism, to make it some sort of social bookmarking mega-search. Or perhaps they’ll try to combine StumbleUpon with another acquisition: CraigsList.org.

I’m baffled. Maybe you can help. “What’s he building in there?”

4 thoughts on “StumbleUpon buy begs this question: What’s he building in there?”

  1. Hi, Zedrick —

    Thanks for reminding me that fact-checking is as important as spell-checking. :-) I appreciate you setting me straight.

    The question remains, and I invite other readers to offer whatever theories they might personally hold, or have heard in the blogosphere.

  2. A9 is AMZN, yes.

    Don’t get too hung up looking for deep meaning — sometimes it isn’t there.

    Some of the acquisitions are defensive, not offensive. G buys DC to stop MSFT or Y from buying it, even if they intend to gut technology, replacing it with their own, keeping only the advertiserr relationships.

    I’d wager StumbleUpon was so reasonable to Ebay (expressed as % of quarterly cash generated, or expressed as % of valuae, whatever) that the question is “why not?”, rather than “why?”

    Not that it matters, but was this purchase done with cash or equity?

    Cheers —

    Alan

  3. Good question, Alan, about how the purchase was financed. And yes, I know many of these deals are purely to keep the toys out of a competitor’s sandbox. If I can believe my source (can’t remember it now), the eBay purchase of CraigsList was a similar defensive strategy. It has neither been gutted or leveraged for its relationships, but simple kept at arm’s length yet away from a potential eBay competitor. It makes sense if it’s true.

    Thanks for your two cents!

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