Qwiki COO: 'It's an Incredible Outcome'
Yahoo's quest to own the Internet rages on.
Yesterday, the company announced it had acquired Qwiki, a video and photo-sharing start-up founded in 2009 by Doug Imbruce and Jay Oh.
We're excited to announce that Yahoo! acquired Qwiki--a company that uses awesome technology to bring together pictures, music, and video to capture the art of storytelling.
I can agree with that--Qwiki is a legitimately cool app. But will its technology make a material difference in Yahoo's comeback plan? That I'm not so sure of. It looks increasingly like Yahoo is on a wild buying spree that may not return much to the company's bottom line.
Not so coincidentally, the founders of Qwiki won the TechCrunch 2010 Disrupt first place award--when Marissa Mayer was a judge.
Under the terms of the deal, Doug Imbruce, the company's CEO, is barred from speaking with the press, but Navin Thukkaram, the company's chief operating officer who joined the company in 2011, spoke with me this morning.
"It's been an incredible journey," Thukkaram says. "Everyone could not be more excited."
The deal, reportedly worth about $50 million (Thukkaram would not comment), will be a nice payday for the company's founders. It'll also be a decent return for the company's early investors--including Thukkaram himself--who have funneled more than $10 million to the company. However, its later investors (most notably Lightbank, which led the company's last round of funding in March 2011) will likely receive a considerably smaller return from the deal.
Qwiki's road to acquisition was anything but smooth. The company initially launched in New York as a Web search company, then moved to San Francisco and re-invented itself as a social-mobile-video app for publishers, then moved back to New York in 2013 to focus exclusively on its consumer app that enabled users to "Share your life through brief, beautiful movies." The company also reportedly turned down a $100 million offer from Google, which Thukkaram would not comment on. He also would not comment how many users Qwiki has. According to the company's website, their products have been downloaded by "millions."
But will it help Yahoo?
Yahoo is clearly leveraging its cash reserves to buy companies it believes it can use to reinvent itself--and generate revenue beyond its core advertising business. What it's looking for in Qwiki isn't totally clear just yet--beyond what it might contribute to the vague goal of making Yahoo a brand that resonates with millennials.
She plans to do this--as I've argued before--by betting heavily on both mobile and social products before it's too late. This, at least, Thukkaram could confirm.
"Qwiki's technology does go well with Yahoo's mobile strategy," Thukkaram says. "One part of their strategy is to be part of their users' daily habits. The Qwiki app can do that."
Unfortunately, Thukkaram was pretty unhelpful in explaining how, exactly, that might play out. He confirmed that the Qwiki app will be kept alive, and that "most" of the employees will be drafted into Yahoo, but in terms of scaling the product, generating new users, or developing altogether new products to be rolled into existing Yahoo products--Thukkaram was tight-lipped. Which was, frankly, sort of mysterious.
A heckuva buying spree, but to what purpose?
His reluctance to offer any details on the deal may fuel theories that Yahoo is working on building an altogether new tool for the publishing industry, as some have suggested. On the other hand, it may simply add to the skepticism mounting from some critics who argue that Mayer's spending spree will have little ROI, and that the acquisitions have little rhyme or reason. It's also worth noting that of the 15 companies Yahoo has purchased in the last six months alone, few have any significant revenue streams.
At this point, it's too early to tell what will happen to Yahoo. Mayer still has about $1.1 billion in cash on its balance sheet to play with, and plenty of other start-ups in the mobile space will likely be primping themselves for a similar deal.
After all, as Thukkaram puts it, "it's an incredible outcome for Qwiki."