eBay Looking Set On Purchase Of StumbleUpon

Back in autumn of ’05, eBay purchased Skype, the very successful venture by Janus Friis and Niklas Zennstrom, two of the most prominent names in tech industry. Why the company did so is still a question which has yet to be fully answered. But okay. They had the cash. They did the deal. An odd deal, for sure, but nonetheless, a deal already done.

Now, however, eBay appears to be scouting another species it hasn't been known to commiserate with. The catch-to-be? StumbleUpon.

When you look at the numbers and the numbers only, it’s clear that StumbleUpon is a pretty darn good investment. Scrounge together about $75 million (Those are the digits the WSJ is reporting as the final sale price for the startup. All the respective parties have to do is sign on the dotted line.), place it in a few sturdy Samsonites and you’ve got yourself something that will most likely give you a nice return. I suspect that’s how eBay sees this particular buy.

The founders (and investors) of the most popular “stumbler” on the Net will clearly come away from the negotiating table smiling. Having only required $1.5 in “seed financing,” StumbleUpon has managed to amass a user base of over 2.3 million in just a couple of years. At 4-million-plus “stumbles” per day, it should be valued at a number many times the initial investment. As you see in the aforementioned sale price, eBay thinks so, too.

Money and statistics aside, there’s still plenty of room to ponder whether there’s more to this deal than just the dollar signs and the line charts. Would eBay try to integrate Stumbleupon into its auction system? Would such a combination even make any sense at all? My own judgment says no, and no.

It isn’t secret that eBay wished very much for Skype to work far more closely with it’s main business. In fact, contact can be made between Skype users on eBay auction pages; between buyers and sellers, for example. The feature simply hasn’t had very many takers.

I presume Stumbleupon will have naught to do with eBay. It will simply be another moneymaker to expand the bottom line. Nothing wrong with that, of course. If eBay is struggling to continue making year over year profits and can’t raise fees much further, it’s choice to spend some money to make more money elsewhere is to be expected. I only feel eBay’s excess funds would be better spent on items with more relevance to its core business, not a random gem. No matter how shiny it may be.