del.icio.us has been bought by Yahoo. I’ve been sitting on this one for a bit; am glad that it’s out. I can keep a secret but that doesn’t mean I like to keep a secret. First off, congratulations to Joshua. And to Seth and Fred, who (among others) invested in something with no revenue model whatsoever and yet managed to make a healthy profit. I should be so astute.
What’s the acquisition mean? Well, first of all, no more slow and flaky del.icio.us – Yahoo’s server farms should make sure the service is nice and speedy. Second, I suppose this means Yahoo will be pulling the plug on / merging in the very del.icio.us-like My Web 2.0, while as of this writing has only 424K saved pages and about a quarter of that in tags. Third, Yahoo gets a chance to learn from or repeat the mistakes of its Flickr experience. (Note to Yahoo: my del.icio.us username is first initial + last name, just like I like it. Make me use some crap Yahoo ID instead, and watch me leave.)
But most importantly, the del.icio.us acquisition says ‘hey, community is worth something.’ The technology behind del.icio.us was easily duplicated – thanks to the open-source clone de.lirio.us and the social-app-building service Ning anyone can start a similar service, just like Yahoo did with My Web 2.0. It’s the del.icio.us community that can’t be duplicated. Yahoo didn’t buy del.icio.us’ technology; it bought our bookmarks and tags – and for quite a price. Assume 300,000 people make use of del.icio.us in a meaningful, regular way (a wild-ass guess, but for the sake of argument) and assume the purchase price is around $30 million. That means my personal bookmarks just got sold for a hundred bucks. Which is considerably more than I thought they were worth. Looking forward to seeing what Yahoo wants to do with them; how will they recoup their investment? Do they have the cojones to use the tagging within del.icio.us – a pretty good measure of interest, importance, and subject matter – to modify their main search results? If they choose to do so, will they be able to keep del.icio.us useful and non-spammy? Will they be able to expand del.icio.us aggressively? If they succeed in bringing del.icio.us to the mainstream, will they be able to keep the service useful and appealing? Or is the entire purchase just a PR stunt to get street credibility among the Web 2.0 crowd? We shall see.
I expect a bunch of people to say ‘I don’t get it – why’d Yahoo buy a company with no revenue model?’ But if Yahoo does have a solid plan for del.icio.us’ data, they may have been smart to buy when they did, since del.icio.us’ value is in its userbase and its userbase was continuing to expand. If Yahoo can maintain or increase del.icio.us’ rate of growth, Joshua et al. could spend the next couple of years wondering if they sold too soon.
UPDATE: TechCrunch and Memeorandum are probably the best hubs for discussion of the acquisition. Blogspotting says my 300,000 user guesstimate was spot on. I still can’t believe Yahoo paid around $100 for my bookmark list. Size of the transaction wasn’t announced but I’ve read rumors of $30 million – $40 million. The lower figure feels right to me, give or take ten percent – Yahoo’s too shrewd to offer more than they’d have to, so I’m guessing the final figure wasn’t really based on the value of my bookmarks but instead was the amount needed to give Union Square Ventures a 10x or so return on their money and justify a sale. Assuming a valuation in the low millions eight months ago – okay, $30 million feels a little high. Maybe $25 – $30 million is about right.
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Your numbers sound way high. Om’s numbers sound much more realistic.
Where do you get the 424K saved pages and quarter that numbers for MyWeb? I’m curious, because they are muuuuch lower than my Simpy numbers. Thanks.
I heard $10-15m, which is not verified but if true, sounds like the $1-2m fragmented round didn’t give them that much control over whether the company sells – or there was a diversity of opinon amongst those who invested.
Perhaps the investors decided that kicking in another $8m might be less appealing than taking their money off the table at 4-5x.
Otis: The 424K saved pages came from the homepage of Yahoo My Web 2.0 – they display it openly.
Indeed, they are. Amazingly and surprisingly small numbers… Thanks.
::: first of all, no more slow and flaky del.icio.us – Yahoo’s server farms should make sure the service is nice and speedy :::
Slow and flaky? I’ve been using del.icio.us for over a year, and nearly every day. I can tell you that I remember it being down for maintenance a total of two times when I wanted to logon, and it was actually pretty fast, especially after the major hardware upgrade they did on their own (pre-acquisition, that is).
Not only that, del.icio.us is the only community I’ve seen in, like, forever, where 5 minutes after submitting an emailed bug report directly to Joshua it was fixed 5 minutes later.
Give a little credit where credit is due (and BTW, I am not an investor, relative, or friend of anybody associated with del.icio.us or Yahoo!).
Wyclif: Hmmm. I don’t know what to say other than that I’ve either had a different experience or have an inaccurate perception. I can’t speak to Joshua’s speed in fixing bugs, of course, having never submitted a report.
I already give Joshua *plenty* of credit for the eight-figure payday.
All I know is now more and more of my personal content and attention data keeps flowing into the Yahoo cloud – first Flickr and now del.icio.us. I can’t see how this is good for the Web 2.0 and/or the AttentionTrust movements….other than financial exit..
Why does Yahoo need to own these services when users could have already easily flowed their Flickr photos and personal links into Yahoo via RSS feeds?
Control that’s why… But I (the user) want to be in control!
Current status: “del.icio.us is down for maintenance. we’ll be back in one hour.”
It’s been more than an hour. Guess something goes wrong during the transition?
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