Social startups: The hot ones are getting snapped up (pictures)
Yahoo and Tumblr are only the latest pairing involving an older, established tech company paying top dollar for a small, smart startup in the social-networking space.
Yahoo and Tumblr
Back in the day, Yahoo took a try at buying Facebook, but that went nowhere. Now it's taking another crack -- in a big way; we'll have to wait for the official release and conference call, but the deal is apparently done: As Marissa Mayer pursues her remodeling of Yahoo, Tumblr is the latest social service to sell out to a more established company.
Why would Facebook plunk down for $1 billion for a company that only a few months earlier was valued at half that amount? Sum it up in one word: Trendline. Facebook CEO Mark Zuckerberg in 2012 saw that Instagram's passionate users were growing in leaps and bounds in the one area where Facebook was lagging at the time -- mobile. At the time, the deal looked pricey. After all, we're not talking about Monopoly money. But this was a long-term investment, and if Facebook can successfully navigate the transition to mobile, we'll look back upon the Instagram acquisition the way most folks now view Google's purchase of YouTube.
Some thought enterprise social networking was a contradiction in terms. Hardly. Microsoft paid $1.2 billion in 2012 to buy Yammer even though it had been developing its own Yammer competitor at the time, known as OfficeTalk. For Microsoft, Office remains one of the company's biggest cash cows and the idea was to weave Yammer's technology throughout Office (as well as Skype).
LinkedIn last year paid nearly $119 million to buy Slideshare, which developed a platform that let users share presentations and videos -- the big idea here being social discovery for people with similar interests. It didn't hurt that it had a growing roster of enterprise fans including IBM, along with heavy-hitting investors including Venrock and Mark Cuban.