
Why Did Yahoo Buy Summly? - scholia
http://www.businessinsider.com/why-marissa-mayer-bought-a-30m-startup-2013-4
======
theatraine
I would be interested to see the Summly summarization of this article! I think
it would read something like this:

Yahoo bought Summly, a startup with an app that not many people used, made no
money, and employed no technical geniuses (since it wasn't actually built by
them), because Marissa Mayer believes summarization technology is "going to be
huge for Yahoo".

~~~
runnr_az
Yeah... I guess? Doesn't really help it make sense....

~~~
harlanlewis
I believe that is exactly the point.

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jasonkester
You know, I think I prefer to live in a world where giant tech companies
occasionally act in strange, irrational ways that result in random people
getting multi-million dollar windfalls.

Especially if said people vaguely resemble, well, me. That being,
entrepreneurial software folk running companies with trivially buildable
products. That's the sort of person in my mind that _should_ have as many
foolish megacorporations as possible stumbling over one another to randomly
dump tens of millions of dollars in cash upon them.

Given the alternative world, where all companies behave rationally at all
times and nobody ever makes mistakes that could possibly make, say, me a
gozillionaire overnight, I think I'll keep living in this world.

Keep up the good work, Yahoo!

 _[Disclaimer: I own a small pile Yahoo stock (that made me a bunch of money
in the 90's and has been taking it steadily back ever since), so I probably
lost a few hundred dollars because of this particular deal. I'm happy to pay
it, much as people who buy lottery tickets are happy to pay it. Having a
crazy, aquisition-happy company out there doing its thing is more than worth
the price]_

~~~
macspoofing
>You know, I think I prefer to live in a world where giant tech companies
occasionally act in strange, irrational ways that result in random people
getting multi-million dollar windfalls.

You're in luck, that happens all the time with executive compensation
packages.

------
ksherlock
Maybe this was edited in later (I missed it the first time), but...

>Though Summly's own Web site once said: "SRI International, with the help of
the Summly team, built the summarization technology behind Summly," we are
told that D'Aloisio "invented" the product's original technology.

>In a statement provided to us by a Yahoo spokesperson, an SRI spokesperson
says: "Basically, Nick developed the original code for Summly."

>"After the original product was built, SRI supported development of the
technology and provided artificial intelligence expertise in machine learning
and natural language processing."

I don't know about you, but I need a pretty large grain of salt.
<http://www.youtube.com/watch?v=Y11ps1H6Aq4> is a youtube demo of his first
app, trimit, 9 months and $300,000 in VC before summly. It seems 2 comprez ur
mezages like this. Maybe that's the original code.

~~~
eridius
At the 1 minute mark he says "some other.. form.. of documentation.. which I
don't know what that is". So either he misspoke, or he didn't actually even
develop that original app.

~~~
dangero
The video isn't made by the Summly founder. It's just a random person
reviewing the app.

------
podperson
I used automatic summarization to try to reduce the article to a pithy tweet
and ended up with:

"Fuck, I don't know. And what's with Bezos investing in BusinessInsider? And
what is Amazon's business plan anyway? And why does Apple's stock keep
dropping whenever it gains market share?"

~~~
OGinparadise
_And what's with Bezos investing in BusinessInsider?_

For peanuts they more or less buy good coverage in a widely read news site. A
certain VC fund also invested in them and PandoDaily. It's a great investment,
even if Business Insider goes kaput 2 years from now.

------
bsimpson
I just read the whole article, and I still don't know why Yahoo! bought
Summly.

~~~
spoiler
I guess it has something to do with IP. The way I understood it was that the
company Summly licenced the summarisation algorithm was selling it to Yahoo!,
but they couldn't do that because Summly was using it, too. So, to get them
out of the way, Yahoo! bought them and shut them down.

Disclaimer: This is just the way I understood it, I might be partially or
completely wrong.

~~~
dhaivatpandya
That doesn't make much sense - as far as I understand, so far as the US, you
cannot patent or hold a license over an algorithm, only an implementation
thereof.

~~~
LucasCollecchia
Yes, but if the algorithm is a trade secret and you're licensing it out with
terms of use that aren't favorable to you, you may determine that its in your
best interest to buy the company rather than get sued for breach of the
licensing contract depending on how much cash you're anticipating to lose
through that litigation.

------
spdy
It´s a strategic investment to make people invested in Summly happy.
<http://summly.com/about.html>

Their will be follow ups and some of them might lean towards Yahoo on the next
acquisition.

~~~
notlisted
My thoughts exactly. The 17MM was a 'cheap' way to save face for big-name
investors and "celebrities" who'd been duped. Circle-jerk money.

"Angel Investors and Advisors include; Ashton Kutcher, Betaworks, Brian
Chesky, Hosain Rahman, Jessica Powell, Joanna Shields, Josh Kushner, Mark
Pincus, Matt Mullenweg, Seb Bishop, Shakil Khan, Spencer Hyman, Stephen Fry,
Troy Carter, Vivi Nevo, Yoko Ono and many more. We are also working closely
with News Corporation on the summarization of their content."

Edit: actually, reading all of the comments on this page, I think my
explanation is less likely than the "summly may have had a special license,
and SRI couldn't be sold unless summly was acquired as well" (without
resulting in lawsuits or sub-licensing deals) and/or "a nice way to pay more
for SRI via the backdoor" (artificially increasing the value of the summly
stock they held -> more $$ for SRI).

Do we know how much stock SRI owned of the company? Perhaps they provided
services in exchange for summly shares? Wouldn't be the first time.

------
volandovengo
Interesting but confused on the conclusion...

If the real story is that Yahoo bought the technology to summarize articles
from SRI International, who partly owned Summly -> why did Summly's owners
make 30 million?

~~~
Notre1
Exactly. I came here looking to see if anyone else had a good idea of what
theory this article was trying to express.

I think the author is trying to infer that Yahoo agreed to buy Summly, so that
SRI could liquidate their equity in Summly. Maybe, SRI saw Summly as a loser
and as part of their negotiations with Yahoo, they asked Yahoo to turn this
loss position into a win. So, maybe, then that $30M price was really $20M as
part of the SRI deal and then $10M for assets and aqui-hire talent of Summly
itself.

    
    
      Acquiring Summly seems to have been an almost incidental side effect of a deal Yahoo made with SRI for a piece of "summarization technology."
    
      A source tells us that Yahoo has "agreements in place" with SRI for "knowledge transfer," and the acquisition of IP, code, and technology.
    
      Until Yahoo bought it, SRI International held equity in Summly.

~~~
UK-AL
Eh, surely just paying that acquisition money directly to sri would be a
better win?

~~~
samstave
Maybe that would be too overt. Maybe they needed to get a way to get a license
with SRI that didn't look like a me too act and also nullify existing
licenses.

If SRI actually had equity in Summly, then this is a way to pay off SRI, grab
the license for Summly and potentially get SRI to make a change to its
licensing agreement with other companies in Yahoo's best interest.

However, I thought that Apple wholly owned SRI, which would make my
speculation BS...

------
jgalt212
Perhaps Yahoo saw some positive benefit in paying off Summly's coterie of
celebrity investors and advisers.

<http://summly.com/about.html>

~~~
el_fuser
Wow... That reads like a poster for the slogan "it's not what you know, it's
who you know".

------
fnbr
Are there sources for the $30 million? I've only seen it mentioned in
secondary sources, never in an official Yahoo press release (or similar). I
suspect that was leaked, and the real price was much lower.

------
bonjourmr
Everyone around the world was saying 'Yahoo' a fortnight ago for the first
time in a long time because of this purchase of summly and coincidentally,
Yahoo also quietly became the default search in Safari for iPhones during
March. I like to think this is all great marketing and survival positioning by
Yahoo as the big 3 companies/partnerships (read on) rear up for an exciting
next few years in technology.

Why would Apple change the default search? Well Apple and Google are the main
rivals in the mobile market, it makes sense for both Apple to choose an
alternative default search engine, as they don't want to strengthen their main
rival. I also think Apple's recent 'interest' in robotics (Siri, hiring ex-
segway engineer) v.s. Google's robotic cars & Glass, this will be another
front that Apple will have to fight Google on.

"1 Billion People Will Use Mobile As Primary Internet Access Point In 2012"
[http://googlemobileads.blogspot.com.au/2012/02/consumers-
lov...](http://googlemobileads.blogspot.com.au/2012/02/consumers-love-their-
smartphones-now.html)

That leaves them with two options, the first being Bing. No way in hell would
they choose Microsoft to partner with, with MS' purchase of Skype and close
ties with FB you can expect MS to push harder than ever in the Mobile space,
over the next few years (assuming they can tie all of their products together
neatly).

So that really only leaves Yahoo for search, which works out well for both
companies; Yahoo get to survive the battle of the big 3 and still appear
somewhat relevant and Apple are no longer strengthening their main rival. I
really have no idea what I'm talking about but it sounds interesting.

tl;dr - purchase of summly was marketing and survival by Yahoo

~~~
Me1000
Google is still the default search engine on the iPhone. They just removed the
"google" button and replaced it with "Search"

------
mindcrime
Dear Marissa:

The next logical step for Yahoo! is to move into the enterprise. I know a
great startup you could acquire that would accelerate your move into that
space. I expect it could be had for somewhere around what you paid for Summly.
Call me.

Mindcrime

~~~
mgkimsal
usually helps to put a phone number if you're expecting a call.

~~~
mindcrime
It's in my profile. :-)

------
UK-AL
Why didn't they just go direct to SRI? I'm guessing summly got a good
lisencing deal.

~~~
nilkn
I'm confused on how summly would have gotten a better licensing deal than
Yahoo! could have managed. [Honest question.]

~~~
kd0amg
Plain old price discrimination? I wouldn't expect SRI to try to get a Yahoo-
sized license fee out of some tiny startup.

~~~
jeffgreco
Sure, but would a tiny startup get exclusive rights?

------
jmduke
Tech news from the USAToday news section and TechCrunch to Anandtech and, yes,
Hacker News was dominated by news of the Summly acquisition for five days.

That PR alone was well worth the purchase price.

~~~
volandovengo
Hmmm... but this is bad PR.

The PR read that Yahoo is acquiring a company but shutting down its product
and getting only 2 of their engineers for 30 million dollars. PR like that
gets Yahoo's name in the press but does nothing to improve the image that
Yahoo has no idea what it's doing.

~~~
JacobAldridge
_"does nothing to improve the image that Yahoo has no idea what it's doing."_

I think that's true, but only true to those people who read (or remembered or
understood) beyond "Yahoo buys hot new company, hot new technology, hot new
talent". The PR implication is that Yahoo is investing in once again being hot
and new.

For those of us who understand the details of the company and product being
bought, Yahoo's reputation was already entrenched. For the majority of
readers, however, "hot new Yahoo" was the takeaway[1].

[1] Based on my experience as a journalist / writer, and the half dozen people
who raised Summly in conversation with me the week the acquisition went
public.

~~~
harlanlewis
But startup acquisition news doesn't reach the vast, VAST majority of Yahoo's
current, prospective, or desired users. Even pretending news like this reached
a broad audience (while also pretending that audience doesn't have the same
context you're attributing to HackerNews readers), acquisitions aren't just
expensive - they're expensive with a significant risk of creating longterm
internal pain of varying types and degrees for what, at best, could be a
shortterm positive blip in general opinion.

How does this perceived misuse of funds and focus impact Yahoo employees?
Their moral, productivity, and general satisfaction/enthusiasm?

Does it make it easier to attract great new hires who meet Mayer's hiring
standards? ([http://www.businessinsider.com/yahoo-employees-worry-that-
ma...](http://www.businessinsider.com/yahoo-employees-worry-that-marissa-
mayers-hiring-standards-are-too-high-2013-3))

Brand marketing has real value, but this has got to be the least efficient way
to do it.

~~~
cookiecaper
I don't know, who are Yahoo's prospective customers? Search advertisers,
right? They need goodwill with small business owners, whether those
businesspersons are technically inclined or not. I'm sure they reached many of
that type with this announcement. What niche do you think Yahoo needs for a
customer base but has totally failed to contact?

------
brudgers
To the degree Summly's license to the technology was transferable, the
purchase makes a lot of sense because it prevents strategic acquisition of
Summly by a potential Yahoo competitor.

Even if not transferable, the purchase prevents Summly from partnering with a
Yahoo competitor, and that is very likely to have been allowed by Summly's
license.

With nearly $4 billion in net income last year, the purported purchase price
is less than a penny to the dollar.

------
louischatriot
It's great to get some insight on a deal that, frankly, I couldn't understand.

I am of course biased, because I believe (like many others) that algorithms
are bad at summarization, except for already well-structured content (news are
usually like this). That includes most blogposts and videos. My startup
(tldr.io) is trying to actually solve the summarization problem using
crowdsourcing. For example, here is the summary of this article:
[https://tldr.io/tldrs/516542c52dcbc1ab3b0000d2/heres-the-
rea...](https://tldr.io/tldrs/516542c52dcbc1ab3b0000d2/heres-the-real-reason-
marissa-mayer-bought-a-17-year-olds-startup-for-30-million)

------
securingsincity
I actually stopped reading Gizmodo because i thought the article where they
made him cry a few years back was too far. Shaming a 15 year old kid publicly
no matter how annoying seemed too far. Now he successfully gets summly
acquired and the support for and shade that has been thrown at this kid has
been so massive. I still don't know what to think of the kid, but I do think
that SRI's tech definitely meets the needs of Yahoo and would fit perfectly
with their media content.

~~~
UK-AL
I don't like how they treated him.

However I think it does expose the difference between media reporting(tech
genius,visionary, future leader, hard working) and actual
reality(Narcissistic, child like, unprofessional). And those traits have been
exposed again, since he claimed to invent the tech and developed the app in
the media. Media have hailed shower of praises, mainly because he uses a top
PR agency.

Its kind of depressing for me, because it seems to mean being showy, and
having a good PR facade is worth far more than people doing the actual work.

~~~
badgar
> Its kind of depressing for me, because it seems to mean being showy, and
> having a good PR facade is worth far more than people doing the actual work.

Marketing is a huge part of the startup world. There's a reason people are
told to stop building at MVP - what you build isn't really important, and
you're really likely to throw away what you built and switch to something
else.

------
jahansafd
Very few people invent anything. Most developers with limited resources work
with groundbreaking technologies(built by others) to create something
meaningful.

------
LandoCalrissian
My question then, is why didn't Yahoo just try and work with SRI International
directly and not deal with Summly?

------
ig1
Flagged. This article contains zero new information and just speculation.
Unless you were involved in the transaction you have no idea what was
involved. Maybe they overpaid and maybe they didn't.

If you believe Yahoo are stupid you're free to go and short Yahoo shares. They
are after all a publicly traded company.

Lets stop with all this stupid speculation where people rehash the small
amount of public information for the purpose of linkbait.

------
fauldsh
I'm getting increasingly intrigued to how much advertising they're getting for
their $30m

------
fosterzone
Well curated article Thanks

------
michaelochurch
_Further, D'Aloisio deserves credit for outsourcing technology development and
app development to the right firms, and coalescing their work into a product
that made him millions._

I can't tell if this is a brilliant dog-whistle dig or if it's actually being
said without irony.

~~~
pseut
All of the articles I've read about Summly have a bit at the end where the
author bends over backwards to not appear to be crapping on a 17yo. I read
that passage the same way.

~~~
badgar
Considering how much heat gizmodo got for calling out the same kid two years
ago, I'm not surprised.

~~~
dopamean
What's the story there? I'm unfamiliar. Link?

~~~
bobwaycott
The founder (then 15 yrs old) was basically dishonest, annoying, ridiculous
... etc. More here: [http://gizmodo.com/5830076/how-i-made-a-15+year+old-app-
deve...](http://gizmodo.com/5830076/how-i-made-a-15+year+old-app-developer-
cry)

~~~
zem
not surprised they got heat - however annoying the guy was, that was a deeply
mean-spirited article.

------
biswajitsharma
Now about that Kid, D'Alosio ... I don't care he built it or not, he made
money like a crazy chicken!! I think that's enough!! :)

Coming back to Yahoo! I believe Marissa Mayer has something in mind. She is a
smart lady, smart enough to point out what we are pointing out here.

If not, we'll soon see another JC Penney episode here.

------
algosio
The Sad Part is they could actually be out buying companies like

<http://www.algorithms.io>

