Yahoo Paid $30 Million in Cash for 18 Months of Young Summly Entrepreneur’s Time
Earlier today, Yahoo said it had acquired the trendy and decidedly stylish news reading app Summly, along with its telegenic and very young entrepreneur Nick D’Aloisio.
Yahoo said it plans to close down the actual app and use the algorithmic summation technology that the 17-year-old D’Aloisio built with a small team of five, along with a major assist from Silicon Valley research institute SRI International, throughout its products.
While Yahoo did not disclose the price, several sources told me that the company paid $30 million — 90 percent in cash and 10 percent in stock — to buy the London-based Apple smartphone app.
And despite its elegant delivery, that’s a very high price, especially since Summly has been downloaded slightly less than one million times since launch — after a quick start amid much publicity over its founder — with about 90 million “summaries” read. Of course, like many such apps, it also had no monetization plan as yet.
What Yahoo is getting, though, is perhaps more valuable — the ability to put the fresh-faced D’Aloisio front and center of its noisy efforts to make consumers see Yahoo as a mobile-first company. That has been the goal of CEO Marissa Mayer, who has bought up a range of small mobile startups since she took over nine months ago and who has talked about the need for Yahoo to focus on the mobile arena above all.
Mayer met with D’Aloisio, said sources, although the deal was struck by voluble M&A head Jackie Reses.
Said one person close to the deal, about the founder: “Nick will be a great person to put in front of the media and consumers with Mayer to make Yahoo seem like it is a place that loves both entrepreneurs and mobile experiences, which in turn will presumably attract others like him.”
Having met the young man in question, who was in San Francisco in the fall on a fundraising trip, I can see the appeal. He’s both well-spoken and adorkable, as well as very adept at charming cranky media types like me by radiating with the kinetic energy of someone born in the mobile world (you can see that in full force in the video below with actor and Summly investor Stephen Fry).
Still, D’Aloisio is very young and presumably has a lot of other entrepreneurial goals and that’s why he agreed as part of the deal to only officially stay 18 months at Yahoo, multiple sources told me. In many cases, startup founders strike such short-term employment deals with big companies, agreeing to stay for a certain determined time period.
He will also remain in England, where he lives with his parents, said sources. In addition, only two of Summly’s employees will go to Yahoo with D’Aloisio.
That’s $10 million each, along with a nifty app Yahoo will not be using as is (too bad, as it would up the hip and fun factor of Yahoo’s apps by a factor of a gazillion if it were maintained).
“It works out on a lot of levels,” said another person close to the situation. “Nick is a founder that will make Mayer and Yahoo look cutting edge.”
Cue the parade of PR profiles of the young genius made millionaire, helping Yahoo become relevant again.
I have an email for comment into the always friendly D’Aloisio. But I don’t expect a reply, since he has apparently been specifically instructed by the martinets of Yahoo PR not to talk to me any longer — well, for 18 months at least! (Don’t worry, Nick, I don’t blame you and will still listen to whatever you are pitching next, since you are so dang compelling and I enjoyed using Summly!)
Until then, here’s the faboo Summly video, with the best chairs ever: