The Summly deal makes no sense

For some who need perspective:<p>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.<p>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.<p>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.<p>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.<p>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.<p>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.<p>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.

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.<p>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.<p>Sometimes you have to meet these people to believe they exist.

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.<p>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)<p>SRI is presumably getting a big chunk for a new license. Maybe even a domain-exclusive license. That alone could be $0-100mm.<p>If it's equity, it is a lot better for Yahoo!<p>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.)<p>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.

From the article,<p><i>Let's ignore the hurt feelings that our employees will have about making a 17 year-old a millionaire.</i><p>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!"?

Last year's press release had quotes from Daniel Ek (Spotify) and Mary Meeker, and said:<p>"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."<p>Not exactly a teen-programmer-in-mother's-basement story...

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.<p>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.

Unless I missed a particular story, I haven't seen Summly or Yahoo! announce the number <i>is</i> $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?).<p>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.<p>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

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.

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:<p>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.

"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"<p>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 ?)<p>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.<p>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,<p>"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.<p>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.<p>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.

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."<p>In other words, it's not repeatable. This is nothing new. It happens all the time.

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.

You haven't considered the simpler possibility that what has been reported is significantly incomplete and/or BS.

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.<p>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.<p>Worth $30m of <i>my</i> money? Probably not. Worth $30m of <i>Yahoo's</i> 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.

Oh. come on. I would kill to make an app as nice as this, even if it did not sell at all.<p>Kudos to the kids for actually making a product people wanted to use, and at least one person wanted to buy.

$30,000,000 to make yahoo relevant enough to be discussed on hacker news? Ehhh I think they got their money's worth.

...except that Yahoo just got $30 million worth of controversial press.

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.<p>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.<p>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.<p>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).<p>For instance:<p><pre><code> “Yahoo screens the employees, and tells the founder that 2 of them passed” </code></pre> AND<p><pre><code> “Summly says dang, only 2 out of 5 passed?” </code></pre> The article the OP links to, to cite this actually states[1]<p><pre><code> “In addition, only two of Summly’s employees will go to Yahoo with D’Aloisio” </code></pre> 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).<p>Moreover, the OP calls out Yahoo for acquiring Summly for $30M and citing that,<p><pre><code> “Summly says no, $50m is our minimum. We need to pay back our generous investors” </code></pre> However, there has been <i>no</i> confirmation of an acquisition price – there are <i>rumours</i> which place the amount in that ballpark and <i>rumours</i> 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 <i>unconfirmed</i> price by, saying that it is ridiculous – these things need highlighting.<p>Likewise, the OP concludes with:<p><pre><code> “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” </code></pre> 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.<p>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.<p>Either way, I wish Nick D’Aloisio and the rest of the Summly team all the best and congratulations on your exit to Yahoo.<p>[1] <a href="http://allthingsd.com/20130325/yahoo-paid-30-million-in-cash-for-18-months-of-young-summly-entrepreneurs-time/" rel="nofollow">http://allthingsd.com/20130325/yahoo-paid-30-million-in-cash...</a><p>[2] <a href="http://www.gamasutra.com/view/news/167244/Turning_down_Zynga_Why_I_opted_out_of_the_210M_Omgpop_buy.php" rel="nofollow">http://www.gamasutra.com/view/news/167244/Turning_down_Zynga...</a><p>[3] <a href="http://ycorpblog.com/2013/03/25/yahoo-to-acquire-summly/" rel="nofollow">http://ycorpblog.com/2013/03/25/yahoo-to-acquire-summly/</a>

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.<p>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.

Summly and Autonomy aren't the bet poster boys for Britian's software developers.

When the number sounds way too high and it's from a single anonymous source and no one else is talking - it's often a lie. People have big egos.

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?<p>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.

Truth be told, the deal is bullshit.

Pulse is getting purchased for over $50 million by LinkedIn. (<a href="http://gigaom.com/2013/03/11/linkedin-reportedly-buying-news-reading-app-pulse-for-over-50m/" rel="nofollow">http://gigaom.com/2013/03/11/linkedin-reportedly-buying-news...</a>)<p>Summly is much better than that as far as technology is concerned.<p>Yahoo got a better deal.

These things are a lot easier to understand once you realize that to the acquirer, the publicity is a part of the deal as well.<p>Plus, it's not all that common for senior management to face any sort of punishment for acquisitions that go bad.

&#62; I don't really understand why they picked this one.<p>Yahoo Executive: "Don't Make Me think"<p>Summly: Ok. 30 mil<p>Yahoo Executive: OK.

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.<p>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?

Who actually confirmed the $30M number though?<p>No-one that I've seen quoted?<p>Maybe it was $30M in stock?

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'.<p>Summly is a product, and as such, has been purchased for more than it cost to "manufacture", as you laid out.<p>$30M is bargain shopping; lest we forget "Draw Something" was bought for $180 million, or "Instagram" was purchased for a whopping $1 billion.

So what happens to the three employees who didn't clear Yahoo's interviews? Do they get nothing? Just curious.

Ignoring this specific deal, mull on this hypothetical.<p>Imagine you are a young superstar who with some justification believes you have the world at your feet.<p>A bloated, cadaverous company that your dad tells you was cool when you were in preschool wants to buy you and tether your career to them.<p>How much would it take to convince you to do that?

Where is this information coming from? Is this back and forth a fictional tale or actually what happened?

"I've got 30 billion, I guess 30 million is not too much to ask for. Do it." - Li Ka-shing

Seems to me that the kid has connections if you look at investors and business partners.<p>Maybe those partners wouldn't have wanted to collaborate with Yahoo, but now they'd consider it for 30M.

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.

Everyone now knows about this app. For $30000000 they pulled off the best marketing campaign ever.

Any open source equivalents to Summly's "pure rocket science" summarization technology?

Buying the Justin Bieber of Software Development for $30,000,000?<p>Seems like a good deal to me

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.<p>...and then the dump truck full of money pulled into his drive way.

Maybe they got some real nice licensing terms from SRI.

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"...

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.)<p>Bad for Yahoo.

Never really understood why Summly got so much press to begin with.<p>Isn't it just Flipboard with a slightly different UI

I say good for him. It is a PR deal.Wether it is a good deal or not I dont know,i'm not a yahoo's shareholder,but good for the guy.Congrats to him.

Let's say you're Yahoo:<p>You're making a huge effort towards mobile, with no apparent success.<p>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.<p>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.<p>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)?<p>--------<p>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.