Speaker 1: Welcome to Tech Stuff, a production of I Heart Radios
Speaker 1: How Stuff Works. Hey there, and welcome to tech Stuff.
Speaker 1: I'm your host, Jonathan Strickland. I'm executive producer at How
Speaker 1: Stuff Works in My Heart Radio and I love all
Speaker 1: things tech. It's time for another classic episode, y'all. This
Speaker 1: one went out May two thousand twelve and it was
Speaker 1: called Texts Biggest Acquisition Stories. This has been a big
Speaker 1: part of a lot of Tech Stuff episodes, the idea
Speaker 1: of companies acquiring other companies and how that changed the
Speaker 1: fate of both parties involved. In some cases, those companies
Speaker 1: go on to do great things and in other cases
Speaker 1: things fall apart, sometimes because the acquiring company has overextended itself.
Speaker 1: But this is one of the the episodes where I
Speaker 1: talk about and Chris, my co host, also talks about
Speaker 1: some of the biggest acquisition stories in tech history. So
Speaker 1: enjoy today. We're gonna talk a little bit about some
Speaker 1: of the big tech acquisition stories that we've had in
Speaker 1: the past. And this is prompted by a recent as
Speaker 1: of the recording of this podcast, acquisition that made the news,
Speaker 1: you know, in in the last week. Really, I think
Speaker 1: one of the funny things about tech acquisitions is there
Speaker 1: in a way, there's kind of two versions of tech
Speaker 1: acquisitions to me, UM, there are things like the uh,
Speaker 1: the acquisition that you were just talking about, the Facebook
Speaker 1: purchase of Instagram for one billion dollars UM and this
Speaker 1: is kind of this is a big deal for a
Speaker 1: number of reasons. It kind of struck me as funny,
Speaker 1: this this deal. We'll get into that just a second.
Speaker 1: I want to finish my thought. UM. And And but
Speaker 1: in this case, you have a situation where both companies
Speaker 1: are well known. UM. Instagram has a lot of is
Speaker 1: going on about it right now. Plus you know everybody
Speaker 1: knows Facebook is UM. But then there are these other
Speaker 1: tech acquisitions where it's something like infrastructure. You know, some
Speaker 1: big company and that's a big company, but it's somebody
Speaker 1: who makes something that people don't rush out and buy
Speaker 1: off store shelves. UM gets acquired by somebody else who's
Speaker 1: sort of in the same vain. And you know, this
Speaker 1: is the kind of thing that investors talk about but
Speaker 1: is not common UM. And that was one of those
Speaker 1: things that kind of struck me as I started doing
Speaker 1: research for this podcast. Is you've got the big names
Speaker 1: and you go so and so acquired such and such.
Speaker 1: Oh my gosh, what is this gonna mean? And then
Speaker 1: you have somebody else who goes, well, that was a
Speaker 1: billion dollar purchase. Okay, so um yeah, but the big
Speaker 1: news the week that we're recording this is the Facebook
Speaker 1: acquisition of Instagram for one billion dollars, a princely sum
Speaker 1: to be sure. Um, and it's got a lot might
Speaker 1: actually might actually be a kingly sum at that point,
Speaker 1: um got got promoted. Yeah the uh and and for
Speaker 1: those who don't know, just so that we can get
Speaker 1: this uh all on the table. Instagram is a photo
Speaker 1: app used to be iOS exclusive and then opened up
Speaker 1: recently for Android. I have it on my Android phone.
Speaker 1: I as well have it on my Android phone. And
Speaker 1: it is both an app that allows you to take
Speaker 1: photos and apply different filters to those photos so that
Speaker 1: you can make a good photo suddenly look really bad
Speaker 1: or uh that's just me making some editorial comments. Well, no,
Speaker 1: I mean it's supposed to the idea is that you
Speaker 1: grunge it up so it looks it appears as though
Speaker 1: we're taken on an older camera, or maybe it's a
Speaker 1: former paper photo that's gotten stepped on and rubbed in
Speaker 1: the dirty. I mean it's it's done on purpose. Yeah,
Speaker 1: it's it's it's kind of it's kind of good to
Speaker 1: be bad distressed if you will, But yeah, it does.
Speaker 1: It gives it gives things a neat little twist really.
Speaker 1: Um and it's made a lot of iOS fans happy
Speaker 1: that they can it can do some some very simple filters,
Speaker 1: color filters on top of their photos that give it
Speaker 1: an appearance as if it's been edited, uh, you know,
Speaker 1: by someone who's fairly skilled in photo editing. But it's
Speaker 1: all you're doing is just choosing a filter. It's really
Speaker 1: really simple, very easy interface and um uh. And it's
Speaker 1: also not just an app lets you take photos, but
Speaker 1: lets you share them as well. So it's got a
Speaker 1: social aspect to it where you can follow people on
Speaker 1: Instagram and then you can see as they upload more photos,
Speaker 1: as they take more photos using Instagram, you can see
Speaker 1: them in a feed, so that way you can kind
Speaker 1: of keep up with what's going on in that person's life.
Speaker 1: And that is the key I think to this, to
Speaker 1: this acquisition. That's why Facebook was interested in Instagram because
Speaker 1: Facebook is all about you know, social and photos as well,
Speaker 1: but it's mobile interface has not been in widely regarded
Speaker 1: as being easy to use or good if we want
Speaker 1: to if we want to really boil it down. I mean,
Speaker 1: I personally don't have any problem with the Facebook mobile interface,
Speaker 1: but I know a lot of people who use Facebook
Speaker 1: even more extensively than I do, which is hard for
Speaker 1: me to imagine, but they find that it's just not
Speaker 1: as robust as they would like. And part of that
Speaker 1: is the photo functions. Now, I use a lot of
Speaker 1: other apps that will allow me to automatically push a
Speaker 1: photo to various social networks, including Twitter or Facebook, so
Speaker 1: for me it wasn't as big a deal. But for
Speaker 1: people who don't use that or don't have that option,
Speaker 1: Instagram gave them the ability to take a photo, put
Speaker 1: this filter on, share it with UH, the social network,
Speaker 1: and now with Facebook's purchase, they're going to be able
Speaker 1: to share it with Facebook itself, or maybe Facebook will
Speaker 1: just integrate Instagram's UH functionality into its own mobile apps well.
Speaker 1: From whatever, the whole idea is to leave Instagram sort
Speaker 1: of on its own UM, and Facebook actually has a
Speaker 1: reasonably good track record of doing that. I remember being
Speaker 1: a fan of friend feed when Facebook acquired that UH
Speaker 1: some time ago, and they said, um, oh, well we're
Speaker 1: pretty much gonna leave it alone. We just want to
Speaker 1: incorporate some of this technology into Facebook as well, and
Speaker 1: that we wanted to get these guys for their expertise
Speaker 1: and add some of this functionality Facebook and a lot
Speaker 1: of people on friend feed were going out, well, this
Speaker 1: is the end. This is the end. And really they
Speaker 1: didn't mess with it um as much. But uh, but
Speaker 1: it is kind of funny because different companies have different
Speaker 1: takes on it. Um. Jonathan and I first started talking
Speaker 1: about this podcast is being our take on Instagram, but
Speaker 1: I think it's kind of been um done in pretty
Speaker 1: much every tech channel. Why they were doing it and
Speaker 1: on all these things and what happens if you don't
Speaker 1: like it. There are a lot of Facebook uh, people
Speaker 1: who don't like Facebook taking over Instagram because they um,
Speaker 1: you know, they just said, well, they're going to ruin it,
Speaker 1: kind of like they didn't like the Facebook Spotify partnership. Yeah, yeah, um.
Speaker 1: And there have been lots of well, if you don't
Speaker 1: want to use Instagram anymore, here are some alternatives. I
Speaker 1: installed a couple of them, like stream Zoo and pixeler
Speaker 1: oh Matic and some of those, and they sort of
Speaker 1: do the same kinds of things. There are all sorts
Speaker 1: of alternatives if you don't want to use Instagram anymore.
Speaker 1: But you know, I think I felt like this would
Speaker 1: be an opportunity to talk about some of these these
Speaker 1: acquisitions in the past, because, um, they've all taken different
Speaker 1: kinds of turns. Um. Some have been very hands off,
Speaker 1: some have been very hands on, some have succeeded, some
Speaker 1: have flopped miserably. Um, So we wanted to talk about
Speaker 1: some of the big ones. Yeah, and uh, and we've
Speaker 1: got a whole bunch here. I wanna I want to
Speaker 1: credit someone before we get too far into this, because
Speaker 1: a lot of the pretty much all the information I
Speaker 1: pulled I pulled from a spreadsheet that a Wired writer
Speaker 1: named Andy Bayou created. He he created this amazing spreadsheet
Speaker 1: where he he just sort of uh trolled the Internet,
Speaker 1: not the negative you stink kind of way, but rather
Speaker 1: the grabbing right getting all the information you can for
Speaker 1: info about various big tech acquisitions. And these are the
Speaker 1: ones that are really the kind that that get the
Speaker 1: notice of users because it's the recognizable brand names. But
Speaker 1: he pulled them all together, and he went so far
Speaker 1: as to even compare how much the reported acquisition amount
Speaker 1: was versus how many users the service that was acquired,
Speaker 1: how many users it had. Uh, he broke down what
Speaker 1: the cost per user was based on that information, and
Speaker 1: even how many employees the service had, and what the
Speaker 1: cost per employee was, because when you think about it,
Speaker 1: these acquisitions, some of them like Instagram, that's a billion dollars.
Speaker 1: Instagram did not have a lot of employees. Uh, that
Speaker 1: thirteen employees according according to Andy's research, So thirteen employees
Speaker 1: and a billion bucks. He estimated that that was about
Speaker 1: seventies seven million dollars per employee. Now that doesn't mean
Speaker 1: that each employee of Instagram is is taking home a
Speaker 1: cool seventy seven million, because the CEO and the head
Speaker 1: of Instagram are taking down about half a billion dollars together.
Speaker 1: So that's so about of that purchase price went to
Speaker 1: the guys in charge of Instagram. But still you're thinking,
Speaker 1: that's like winning the lottery. You know, you're working and
Speaker 1: you're working for this, You're working in a small type
Speaker 1: group and you get acquired for a massive amount of money.
Speaker 1: That's kind of like that was the dream of the
Speaker 1: whole dot com bust too. There are a lot of
Speaker 1: companies that were starting up that we're trying to be
Speaker 1: really small and nimble and get acquired by bigger companies.
Speaker 1: Some of the some of the stories we have, some
Speaker 1: of the um the acquisitions we can talk about happened
Speaker 1: before the dot com crash, including a couple from Yahoo
Speaker 1: that I wanted to talk about. So back in ninete,
Speaker 1: Yahoo made two really big acquisitions. The first was in
Speaker 1: January of n when Yahoo purchased geo Cities. Yeah. Now,
Speaker 1: geo Cities was sort of a place where you could
Speaker 1: build your own web page and it was laid out
Speaker 1: like a city, like they had neighborhoods and everything, and
Speaker 1: and it was kind of a uh it was kind
Speaker 1: of like the place where people would build a website
Speaker 1: before there were really social networks. Yeah yeah, Now, UM,
Speaker 1: maybe some of you don't remember necessarily what what the
Speaker 1: world Wide Web was, like, I was gonna say the Internet,
Speaker 1: but let's go stick with the Worldwide Web. Um. Back
Speaker 1: in in the mid to late nineties, Um, people didn't
Speaker 1: necessarily uh intend to go I mean, and the Internet
Speaker 1: was still sort of a new concept for people and
Speaker 1: they wanted to know what can you do with this?
Speaker 1: I mean, email is a fairly reasonably easy concept to understand, um,
Speaker 1: and you know there were others. There were more difficult
Speaker 1: things like us net for example, um, and then databases
Speaker 1: that weren't the most intuitive. Yeah, as far as user
Speaker 1: interfaces are concerned. So, I mean, at the time, geo
Speaker 1: Cities was kind of a neat deal because it allowed
Speaker 1: people to create their own websites without having to learn
Speaker 1: how to code HTML. And there weren't a lot of tools, um,
Speaker 1: you know, things like a WordPress dot com or blogger
Speaker 1: or you know the journaling sites, which is I think
Speaker 1: sort of what a lot of geo Cities pages were like.
Speaker 1: Or even Whizzywig editors. Yeah, exactly as drain Weaver or
Speaker 1: before that go live, so even even page mails stuff
Speaker 1: like that and Whizzywig. Just in case you don't know,
Speaker 1: is what you see is what you get where the
Speaker 1: edit that you're making on the screen, what you're looking
Speaker 1: at on the screen and your edit mode is you
Speaker 1: can be reasonably confident that's what's going to show up
Speaker 1: if you were to navigate there through a browser like
Speaker 1: in the old days, we had to do everything by code. Yeah,
Speaker 1: well I should clarify too, because I was using some
Speaker 1: whizzy wig editors back in the late nineties. But they
Speaker 1: for the most part, they were they came in two flavors,
Speaker 1: um fairly trustworthy, but very expensive, uh like like like
Speaker 1: a couple of hundreds of dollars or you could you
Speaker 1: could buy them. There were a couple of them that were,
Speaker 1: you know, in the forty to fifty dollar range. But
Speaker 1: they inserted junk code and the pages would break depending
Speaker 1: on what browser you were using or sometimes not depending
Speaker 1: on what browser you're using. Um, and they were just
Speaker 1: and you'd have to do this and upload it to
Speaker 1: a server. Not everyone is comfortable with FTP and knowing
Speaker 1: how to do this, and geo City is was sort
Speaker 1: of a pioneer in this space. You know, hey, throw
Speaker 1: this content up there and make new friends in your neighborhood. Okay,
Speaker 1: So the acquisition went for reported about three point five
Speaker 1: seven billion dollars. Three point five seven billion dollars people,
Speaker 1: that's that's three point five seven times more than the
Speaker 1: Instagram acquisition. And those were in you know, that was
Speaker 1: about fifteen years rounding off, and that was that was significant.
Speaker 1: So here's the problem is that Geo Cities that was
Speaker 1: probably right at the peak of Geo City's popularity. Uh.
Speaker 1: And then before too much longer, there was a shift
Speaker 1: in the way people use the web because before the
Speaker 1: dot com crash, a lot of the websites on the
Speaker 1: web were very static. So you would build a web
Speaker 1: page and it would pretty much stay that way for
Speaker 1: months at a time. You wouldn't necessarily add new material
Speaker 1: because it was kind of a pain to do it,
Speaker 1: and really most people weren't thinking of the web in
Speaker 1: that sense. They were thinking of the web kind of
Speaker 1: like a book. You would go you would read a
Speaker 1: web page, and just like if you were to read
Speaker 1: a book, you wouldn't go back necessarily unless you just
Speaker 1: truly enjoyed the web page. But there wouldn't be any
Speaker 1: new material there because it wasn't dynamic. But that began
Speaker 1: to change right around the same time that Yahoo made
Speaker 1: this purchase. And of course today geo Cities no longer exists.
Speaker 1: So that's a three point five seven billion dollar purchase
Speaker 1: that eventually fizzled out. Now, it stayed around for a while,
Speaker 1: it's not like it it's not like it died immediately
Speaker 1: after y'all who purchased it, and y'ah who got more
Speaker 1: community oriented as a result of it. Yeah, I wouldn't
Speaker 1: say that that it was a complete failure on Yahoo's
Speaker 1: part in as much as um the idea really of
Speaker 1: geo cd s really did propel things forward in the
Speaker 1: social space. UM. But yeah, in a way you go, Okay,
Speaker 1: well they spend a lot of money and then the
Speaker 1: service shutdown in that in that regard, you know, strictly
Speaker 1: on that place. Then, yeah, I know that whenever you
Speaker 1: look at Yeah Who as an analyst today, because y'ah
Speaker 1: who is a company that has has been struggling over
Speaker 1: the last couple of years, um, and you start looking
Speaker 1: back on deals like this, it's very easy to point fingers.
Speaker 1: But it's even easier to point a finger at Yeah Whose.
Speaker 1: Other purchase in Broadcast dot Com, which was an internet
Speaker 1: radio company. Broadcast dot Com was so back in the nineties. Uh,
Speaker 1: there were there were a couple of people who were
Speaker 1: thinking about the possibility of broadcasting radio over the Internet,
Speaker 1: and you know, started looking into what they would need
Speaker 1: to do in order to do that, and eventually this
Speaker 1: company began m the company that would become Broadcast dot Com,
Speaker 1: and UH had a fellow eventually leading it named Mark Cuban.
Speaker 1: I feel like I've heard that name somewhere. Yeah, you
Speaker 1: might have anyway, Cuban he uh he was leading broadcast
Speaker 1: dot com and yah who approached to purchase the company
Speaker 1: for a amazing five point seven billion dollars. And when
Speaker 1: I say amazing, there are a couple of reasons for that.
Speaker 1: First of all, that's that's a whole lot of money.
Speaker 1: But second of all, the theme but he had about
Speaker 1: according to Andy over at, Wired had about five and
Speaker 1: twenty thousand active users, so just over half a million
Speaker 1: active users five point seven billion dollars to essentially acquire
Speaker 1: those half million users. Keeping in mind that, you know,
Speaker 1: the idea was that these services would be rolled out
Speaker 1: into other parts of Yahoo and become a bigger role.
Speaker 1: But um but still, if you were to break that
Speaker 1: down as Andy did, I like to call him Andy Uh,
Speaker 1: as Andy did for for the purposes of his article,
Speaker 1: he determined that that means that they spent almost eleven
Speaker 1: thousand dollars per user buying that that company. And um
Speaker 1: uh so that's you know, that's just it's crazy how
Speaker 1: how much money that is. I mean, it's for per user,
Speaker 1: Like you could have walked out to each person and said,
Speaker 1: if I give you ten grand, will you come to
Speaker 1: my side every day? The person yes, And that might
Speaker 1: have been more effective. But as the broadcast dot com features,
Speaker 1: they did get rolled out into some other Yahoo features.
Speaker 1: But most of that stuff no longer exists either, not
Speaker 1: as not as it did then. No, it got incorporated
Speaker 1: into other things. It's it's essentially lost now, like it's
Speaker 1: it's so buried in other other products that you can't
Speaker 1: even recognize it anymore. And I think the Yahoo Broadcast
Speaker 1: acquisition by many is regarded as the biggest mistake and
Speaker 1: acquisitions ever, and that's up against some pretty stiff competition. Well,
Speaker 1: it did give the Dallas Mavericks another shot since Mark
Speaker 1: Cuban bought them, and it's spent a lot of money
Speaker 1: on them. It's gotten quite good. But yeah, five point
Speaker 1: seven billion dollars for that company. And uh, I should
Speaker 1: add that there's something else we need to talk about,
Speaker 1: just very very briefly. I'm just I just want to
Speaker 1: address some people may be thinking, Hey, what about a
Speaker 1: Well and Time Warner that was that was that was
Speaker 1: often talked about the worst deal in heck ever, But
Speaker 1: we should point out that was a merger that was
Speaker 1: not an acquisition. It was a merger, and it was
Speaker 1: a it was sort of a tech non tech thing
Speaker 1: because you know, it merged, if you will, the digital
Speaker 1: world with the um old media world l d E
Speaker 1: or media um uh. But you know, if you if
Speaker 1: you think about it, though, they were yeah who was
Speaker 1: at least thinking ahead, uh, the idea of streaming media,
Speaker 1: the idea of social websites. They were able to identify
Speaker 1: these things, but they were you know, pre dot com
Speaker 1: bubble bursting uh situations too because this was the late
Speaker 1: you know, nineties, which was right before the bubble burst.
Speaker 1: It's definitely frustrating in a way because you look at
Speaker 1: what yeah, who was doing, and you think they were
Speaker 1: moving in the right direction. It was just it was
Speaker 1: just slightly the wrong. It was bye bye by the
Speaker 1: end the number of like a year and a half.
Speaker 1: If it had been a year and a half later
Speaker 1: after the dot com bubble had burst, and y'all who
Speaker 1: assuming that, Yeah who had been able to weather the
Speaker 1: dot com bubble well enough? And I mean the company
Speaker 1: is still around today. So even after making these massive deals, um,
Speaker 1: they might not have had to spend as much and
Speaker 1: they might have might have been able to invest in
Speaker 1: similar products that would have been more attuned to the
Speaker 1: and I hate to use this buzzword web two point
Speaker 1: oh approach to the way the web works. Well, should
Speaker 1: we stick with ya who? Then? Sure we can talk
Speaker 1: a little bit more. Yeah. They they've made some other
Speaker 1: purchases that actually did quite well for them, or at
Speaker 1: least are still very popular, like Flicker. Yes, that's you know,
Speaker 1: the photo sharing and photo album uh database site, and
Speaker 1: Flicker I think is one of the more popular ones
Speaker 1: that's out there. Um, although I did read in UH
Speaker 1: in my research that some people have been upset that
Speaker 1: Yahoo didn't really do anything with Flicker, like they were
Speaker 1: expecting them to take it the next step and Flick
Speaker 1: or sort of stayed the same as it really innovated much.
Speaker 1: That's true, it hasn't changed much and launch, and as
Speaker 1: other social networks like Facebook and Google Plus have become
Speaker 1: more popular and even Twitter, a lot of that photos
Speaker 1: sharing and photo storage stuff has been offloaded onto those
Speaker 1: so sites like Flicker and also Google's Picasa, which never
Speaker 1: I don't think it was ever anywhere near as popular
Speaker 1: as Flicker was. Um, but Google's Picasa also have have
Speaker 1: sort of taken ahead I guess Google Picasa less so,
Speaker 1: because that is what Google Plus uses as its foundation
Speaker 1: for UM for photos photo Bucket one of the two. Yeah. Well,
Speaker 1: as a contrast, we're talking when Yahoo was spending billions
Speaker 1: of dollars for these acquisitions in two thousand five, and
Speaker 1: I would argue that Flicker in a way, it's probably
Speaker 1: way more popular than either of those two products, where
Speaker 1: that they acquired for multibillions of dollars. Um Flicker was
Speaker 1: acquired for thirty million. But that's a big change, much
Speaker 1: more modest acquisition compared to the billions of dollars they
Speaker 1: spent just a few years earlier. And I think, yeah,
Speaker 1: I think that was much more wisely spent in that case.
Speaker 1: And the the acquisition the same year of Delicious for
Speaker 1: thirty million dollars, to which I think was done again
Speaker 1: with the best of intentions. Link sharing sites are still popular.
Speaker 1: I think they were in ways for runners to Twitter
Speaker 1: because it was supposed to be social link sharing sites.
Speaker 1: But I use mind more for Hey, I wanna save
Speaker 1: this because I'm gonna look at it later. Let me
Speaker 1: save this, and I don't really want to share it
Speaker 1: with anybody because it's you know, I just want to
Speaker 1: remember to read it. Yeah, there are a couple of
Speaker 1: these links sharing sites that are on these acquisitions at
Speaker 1: what we can talk about and and and a lot
Speaker 1: of them have kind of faded away. There's still there's
Speaker 1: still I think Reddit is really the only one that
Speaker 1: I habitually go to now I don't. I don't tend
Speaker 1: to use dig anymore. Yeah, and I don't don't really
Speaker 1: use stumble Upon, and I don't really use Delicious so well.
Speaker 1: Delicious was one of the early sites like this, and
Speaker 1: I think Yahoo had intended to make something big out
Speaker 1: of it, but they ended up, uh planning on shutting
Speaker 1: it down until people complained about that so much that
Speaker 1: they found someone to uh to let it go to um.
Speaker 1: So another one of those things that just sort of,
Speaker 1: you know, passed right on through. Chris and I have
Speaker 1: more to say about tech's biggest acquisition stories, but first
Speaker 1: let's take a quick break to thank our sponsor. How
Speaker 1: about we talked about eBay, because eBay's also made some
Speaker 1: pretty big acquisitions in the past. One of them was
Speaker 1: in two thousand two and eBay bought PayPal. Yeah, that
Speaker 1: was the most synergistic of all of these. If you'll
Speaker 1: pardon the corpse speak. Yeah, it's the one that fit
Speaker 1: the best into what eBay does. I mean PayPal. Obviously,
Speaker 1: if you want to have a service that allows you
Speaker 1: to set up an account to purchase things online, and
Speaker 1: you have a site that is all about selling things online,
Speaker 1: then there is clearly some uh some complementary overlap going
Speaker 1: on there. And uh so eBay bought PayPal for about
Speaker 1: one point three billion dollars um and uh it sounds
Speaker 1: like a lot of of money. I mean, there's a
Speaker 1: lot of money. But there were over fifteen million users
Speaker 1: of of PayPal, so there was already a big established
Speaker 1: user base. There is much different from broadcast dot com
Speaker 1: where I only had the half million, so that that
Speaker 1: purchase actually seemed like it was a pretty good idea,
Speaker 1: you know, and are there are plenty of people who
Speaker 1: still use PayPal now. Granted, PayPal over the last couple
Speaker 1: of years has had a couple of controversial news stories
Speaker 1: pop up, generally about there's been some about PayPal offering money,
Speaker 1: not offering money, but PayPal uh administering over payments to
Speaker 1: illegal sites or sites that are selling uh what pirated
Speaker 1: stuff or um uh that kind of thing. And then
Speaker 1: there's also uh some other arguments about PayPal requiring people
Speaker 1: to go through some pretty crazy steps in order to
Speaker 1: get money back. Like you've heard the story about the violin, right, So,
Speaker 1: a guy purchased a violin, purchases an antique violin, and
Speaker 1: uh it is truly an antique violin for a couple
Speaker 1: of thousand dollars, as I recall, and then is for
Speaker 1: some reason or another unsatisfied with the purchase and wants
Speaker 1: the money back. But PayPal says that in order to
Speaker 1: get the money back, they have to have proof that
Speaker 1: he destroyed the violin. He has to actually break it,
Speaker 1: because PayPal doesn't want to refund money and then have
Speaker 1: the guy just keep the violin anyway, And then he
Speaker 1: has the violin and the money. So the guy goes
Speaker 1: and takes pictures of the destroyed antique violin. So something
Speaker 1: that a lot of people would argue has a lot
Speaker 1: of intrinsic value in it and should not have been
Speaker 1: destroyed was destroyed because of this this procedure, this whole
Speaker 1: this policy that PayPal had, and uh so that's an
Speaker 1: example of some of the bad press PayPal has had
Speaker 1: in the past couple of years. But still it's again
Speaker 1: a very popular way of of processing transactions on online now.
Speaker 1: eBay also made some other acquisitions over the last few years,
Speaker 1: and two thousand five, eBay purchased Skype, the voipe client
Speaker 1: voice over Internet procol client for two point six billion dollars.
Speaker 1: And this was one that had people scratching their heads. Yeah,
Speaker 1: because the question was why would an online auction site
Speaker 1: purchase a void company? And there were there were some
Speaker 1: talk of possibly incorporating it into the auction uh uh.
Speaker 1: The auction features itself so that potential buyers could speak
Speaker 1: with sellers while they were considering bidding on on objects,
Speaker 1: but that never really happened. And um also, eBay eventually
Speaker 1: started to move a little further away from the whole
Speaker 1: auction model and move more towards almost like an online
Speaker 1: retail center, so more like Amazon than it used to be.
Speaker 1: I mean, they still do the auctions as well, but
Speaker 1: that's not necessarily their primary focus anymore. So Skype uh
Speaker 1: seemed like it might have been a good idea to
Speaker 1: eBay early on, but I think a lot of people
Speaker 1: now think of the eBay purchase of Skype as one
Speaker 1: of the big mistakes in tech acquisitions and eventually eBay
Speaker 1: sold Skype off. Now, first they just sold off the
Speaker 1: controlling interest to a up of investors, and then eventually
Speaker 1: divested themselves of pretty much all of their interest in
Speaker 1: Skype to a little company that you might have heard of.
Speaker 1: It started off in a garage. It's called um Oh
Speaker 1: they like Conkiston wores Microsoft. That's it alright. So yeah,
Speaker 1: just just to provide some context, Um, when eBay acquired
Speaker 1: Skype in two thousand five, it's spent two point six
Speaker 1: billion dollars. But when when um, Microsoft bought it in,
Speaker 1: Skypes value had increased. Microsoft was willing to pay eight
Speaker 1: point five billion dollars. That's a eBay did well with
Speaker 1: that auction, Yes it did, I think. I think actually
Speaker 1: Microsoft sniped the that that at the very last second.
Speaker 1: Yes they are. I would say eBay as a power seller,
Speaker 1: we gotta think about it. I mean, Skype is a
Speaker 1: very popular voice over Internet Protocol UH service, right, and
Speaker 1: and that's a very valuable asset to have, and Microsoft
Speaker 1: had to be worried about other companies possibly jumping in there.
Speaker 1: I can think of two right at the top of
Speaker 1: my head that would have been very interested in Skype,
Speaker 1: Facebook is one and Google is the other. Yeah, yeah,
Speaker 1: definitely so um and possibly somebody else named after a fruit.
Speaker 1: Um commodore is not named. Uh. There was one other
Speaker 1: acquisition the eb eBay made, and this kind of ties
Speaker 1: into what we were talking about with Delicious and Yahoo earlier,
Speaker 1: which was stumble Upon, another discovery site, and they bought
Speaker 1: it for a seventy five million dollars and um, yeah,
Speaker 1: that's another one that kind of I mean it still exists. Yeah,
Speaker 1: they haven't. I don't. I wouldn't say they've necessarily mismanaged
Speaker 1: it or anything, but it hasn't. It's sort of neither
Speaker 1: taken off nor bombed. It's just sort of still there. Yeah.
Speaker 1: You know, there's sometimes where you you encounter multi bole
Speaker 1: companies trying to compete in the same space, and you
Speaker 1: might have one or two front runners and then everyone
Speaker 1: else is just kind of there. And this is one
Speaker 1: of those cases. So where where we want to go
Speaker 1: from here? Well, you know, it's funny because uh, as
Speaker 1: we've been talking, you know, we had quite a list
Speaker 1: of these um, some that I collected and some that
Speaker 1: you collected, and um, these are all kind of juicy,
Speaker 1: So we can you know talk about should we talk
Speaker 1: about the pound gorilla? Sure? Um being Google? Yes? Um,
Speaker 1: I was like, yes, Google has a pretty good track
Speaker 1: record of h well there there's some companies that are
Speaker 1: more acquisitive than others. Let's say that acquisitive acquisitive. Um yeah,
Speaker 1: I got to use that degree in English for something. Um. Yeah.
Speaker 1: So uh you know they've they've they pick up more
Speaker 1: than I would say just about any other tech company.
Speaker 1: Um and uh you know they're there. They tend to
Speaker 1: be more uh, let's say, flamboyant purchases, like, for example,
Speaker 1: Blogger back in two thousand three, which they picked up
Speaker 1: for twenty million dollars um. This was that was a
Speaker 1: good time. This was an example of a good purchase
Speaker 1: at a good time, because that was right as the
Speaker 1: blog thing began to take off among I would say
Speaker 1: the masses, yes, when it became kind of a phenomenon.
Speaker 1: Do do do do Do Do do do? I would have if
Speaker 1: he hadn't Um and you know they added they continue
Speaker 1: to add other Google is good at picking out services
Speaker 1: that complement existing services and and and companies they think
Speaker 1: that will fit well within their portfolio, like Picasa um
Speaker 1: in two thousand four, which they acquired for five million. Um.
Speaker 1: You know, Dodgeball in two thousand five was also on
Speaker 1: Mr Bao's list. I don't know him well enough to
Speaker 1: call him Andy. So yeah, Dodgeball done five million. Dodgeball
Speaker 1: and another service, Jaike, which they purchased in two thousand
Speaker 1: seven for twelve million. These are these are good ones
Speaker 1: to point out because these are failures really for Google.
Speaker 1: I I don't know that if I don't know how
Speaker 1: Google portrays them, right, but I know that you know,
Speaker 1: from the outside they look like failures because you've got Dodgeball,
Speaker 1: which sharing It was a location sharing application company, and
Speaker 1: in fact, the people who were behind Dodgeball eventually left
Speaker 1: Google and found it a different company called four Square.
Speaker 1: Wait don't you play that with it? No, it's different
Speaker 1: kind of four Square, not the game but the the
Speaker 1: check in service. So Dodgeball never really went anywhere, and
Speaker 1: in fact that the people behind Dodgeball were very frustrated
Speaker 1: by this, which is why they went on eventually to
Speaker 1: to found four Square, because that was probably something closer
Speaker 1: to what they had imagined when they started Dodgeball than
Speaker 1: what it turned out to be. Jaiku is a short
Speaker 1: messaging service kind of sharing uh, model sort of like, oh,
Speaker 1: there's another company that does this. Um, oh, that's right, Twitter. Yeah,
Speaker 1: so Jaiku was Google's well, Jaiku was Jaiku's answer to Twitter.
Speaker 1: But Google purchased Jaiku and then or Haiku if you prefer.
Speaker 1: But that never really went anywhere either. It had it
Speaker 1: had its you know, dedicated users who loved it, but
Speaker 1: it never really grew like Twitter did. Twitter exploded and
Speaker 1: Jaiku sat there and so that, um, Jaiku's no more. Right, Yeah,
Speaker 1: I went the other day actually before we discussed this,
Speaker 1: and it's it is gone. Hey guys, it's Jonathan from
Speaker 1: the future, and I just want to tell you. Sorry,
Speaker 1: I I'll have to tell you later. I'm getting acquired.
Speaker 1: Let's take a quick break. Perhaps the most famous acquisition
Speaker 1: Google has made, besides a Motorola mobility, which we're not
Speaker 1: really covering in this, uh, is YouTube two thousand, six
Speaker 1: one point six five billion dollars. Yeah, and that's a
Speaker 1: that's a lot of clams. But then YouTube had YouTube
Speaker 1: had a lot of users, like over over thirty four
Speaker 1: million active users when at the time of the purchase,
Speaker 1: and it was you know, Google was looking ahead saying
Speaker 1: in a way YouTube is also kind of a search engine.
Speaker 1: Yes it is. People go onto YouTube and they they
Speaker 1: will they might you know, browse around, but often you
Speaker 1: go in and you PLoP your cursor in the search
Speaker 1: bar and you type in some stuff and you hope
Speaker 1: that the videos that come up and pertain to what
Speaker 1: you're were typing in. And so, um it made sense
Speaker 1: in that in that respect. And uh, in fact, eventually,
Speaker 1: you know, Google had its own Google Video service for
Speaker 1: a while, and then they eventually got rid of that,
Speaker 1: and so YouTube is just the whole Google Video thing now.
Speaker 1: But it's uh, that event's one that was very controversial
Speaker 1: for a while because while the one point six five
Speaker 1: billion dollars wasn't the largest amount of money spent on
Speaker 1: a tech company, and it wasn't that they didn't have
Speaker 1: a lot of users, there was another problem, which was
Speaker 1: just that YouTube really wasn't making a whole lot of money.
Speaker 1: Like it's hard to make money when you're dealing with
Speaker 1: a service that's that's that big. Well, YouTube has another
Speaker 1: thing that's uh playing against it and making money, which
Speaker 1: is um that it requires I was gonna say boatloads,
Speaker 1: let's go with maybe shiploads of bandwidth and and not
Speaker 1: only that, but servers. Yeah, a lot of a lot
Speaker 1: of physical machines are required to keep YouTube going. And
Speaker 1: video video is resource intensive, um and takes it uses
Speaker 1: a lot of data, and especially now that they've got
Speaker 1: h D High definition video takes up even more space.
Speaker 1: So you've got lots of hardware using lots of electricity
Speaker 1: and lots of bandwidth. And somebody's got to pay for
Speaker 1: that if you're going to keep this stuff up, and
Speaker 1: if you if the users aren't paying for it, then
Speaker 1: the company is. And uh you know, I I a
Speaker 1: startup may not have been able to handle paying for
Speaker 1: it at the way that YouTube has grown, but Google can,
Speaker 1: and they can sell ads alongside it. Yeah, and they do,
Speaker 1: and yeah, it's it's you know, we talked about in
Speaker 1: our YouTube podcast, we talked about how uh these the
Speaker 1: company ends up seeing something like forty eight hours of
Speaker 1: material uploaded every minute on YouTube. It's probably even more
Speaker 1: than that by now. Uh So when you're talking about
Speaker 1: that level of of uploads and you know that quantity
Speaker 1: that's coming in, you need to have a nice, big
Speaker 1: company behind you to make sure that there's a a foundation,
Speaker 1: a solid foundation there, and uh, you know, YouTube is
Speaker 1: definitely one of those things that have has just become
Speaker 1: increasingly popular over the years. So you could say that
Speaker 1: it's a great acquisition in the sense that if it
Speaker 1: were to go away, that would be bad. But uh,
Speaker 1: it's probably still one of the ones that that vexus
Speaker 1: Google the most in that balancing the revenue issues versus
Speaker 1: the maintenance and overhead issues. Plus they're all the lawsuits
Speaker 1: that are related to YouTube that have to do with
Speaker 1: intellectual property theft, where you've got all these companies that
Speaker 1: are accusing Google and YouTube of harboring pirates and allowing
Speaker 1: people to upload pirate ID or or at least uh
Speaker 1: unlicensed copies of content to YouTube. And uh so we've
Speaker 1: been seeing a lot of that in the news recently too,
Speaker 1: about the the stories about the court cases involving whether
Speaker 1: or not YouTube knowingly harbored material that violated intellectual property rights,
Speaker 1: or if if the company was acting in the best
Speaker 1: interests of both its users and intellectual property rights owners
Speaker 1: by requiring people to take down videos or taking down
Speaker 1: the videos for them that violated those policies. There's it's
Speaker 1: a big mess right now. Yeah, yeah, okay, So I
Speaker 1: wanted to talk about the the uh some of the
Speaker 1: acquisitions that we don't necessarily think about as being exciting.
Speaker 1: One of those is, uh, what happened just last year
Speaker 1: when we're recording this, Uh, Texas Instruments bought National Semiconductor.
Speaker 1: That fails to excite me. Yeah, exactly. This is not
Speaker 1: the kind of thing that, um, you know, if if
Speaker 1: Apple bought Facebook. I mean, I'm just saying, like, two
Speaker 1: big names that lots of people are interested in. People
Speaker 1: love and hate both of these companies, Texas Instruments and
Speaker 1: National Semiconductor. That's that's big news. That's a big deal.
Speaker 1: Six point five billion dollars. That's a lot of money.
Speaker 1: But it doesn't make the same kinds of headlines as
Speaker 1: Too Popular. Uh, you know, companies that make the news
Speaker 1: every day and people will spend money on, and it
Speaker 1: lacks that emotional investment that comes from these other deals
Speaker 1: that are not as big when you look at it
Speaker 1: from monetary standpoint, but they seem to be bigger because
Speaker 1: they are impacting stuff that we interact with on a
Speaker 1: daily basis. Yeah. Then there was two thousand nine when
Speaker 1: Oracle bought Sun Microsystems seven point four billion. Um. That
Speaker 1: was that was huge news for anyone who knew what
Speaker 1: was going on. Yeah, like there were engineers who were
Speaker 1: freaking out. Yeah, absolutely absolutely. Well, Uh that that calls
Speaker 1: into question a lot of other stuff too. Um. Larry Ellison,
Speaker 1: head of Oracle, is another one of those. He's a character.
Speaker 1: That's a really nice way to put it. We're gonna
Speaker 1: have to do an episode on Larry Ellison, and I
Speaker 1: think half of it will be bleeped out and those
Speaker 1: will just be the quotes. Yeah, exactly. Um, he's yeah,
Speaker 1: he's he's definitely a character. And a lot of people
Speaker 1: who are fans of Sun, the traditional Sun Microsystems company,
Speaker 1: we're very upset that Oracle was was buying them for
Speaker 1: a number of reasons. But there was a lot of
Speaker 1: technology behind that too, some of it open source um
Speaker 1: that they were really afraid that Oracle was going to
Speaker 1: to do away with. UM. I remember Hewlett Packard buying
Speaker 1: Compact in two thousand one for twenty three point five
Speaker 1: billion dollars. I was a little I was a little
Speaker 1: stunned by that one. And then we got stunned again
Speaker 1: when when HP talked about spinning off it's uh, it's
Speaker 1: PC business. Well, then, of course, you know, Hewlett Packard
Speaker 1: bought three Com for two point seven billion back in
Speaker 1: two thousand nine, which ended up being a big mech
Speaker 1: um um, and it didn't really it wasn't a thing
Speaker 1: for a lot of people. Um, you know, um. Trying
Speaker 1: to look for something else that people might have been
Speaker 1: interested in, and I do have When j D s
Speaker 1: Unifhase bought SDL in two thousand four, almost forty one billion,
Speaker 1: that's a big chunk of change. But again, and it's
Speaker 1: a huge tech acquisition, but it's not the kind of
Speaker 1: thing that for a lot of us, those of us
Speaker 1: who listened to this tech podcast, um, you know, are
Speaker 1: more interested in sort of the uh tech end people thing.
Speaker 1: And yeah, it affects a lot of people, but it's
Speaker 1: on the back end of things indirectly. Yeah. Yeah, And
Speaker 1: so a lot of us are going, well, okay, yeah,
Speaker 1: that's interesting. That's a lot of money, but how does
Speaker 1: that affect me? And for a lot of us, it's
Speaker 1: it's not something that that we notice or touch on
Speaker 1: a daily basis. Yeah. So I did wanna we'll close
Speaker 1: this out really quickly here, and I didn't wanna say
Speaker 1: that we have to talk about news Core in MySpace
Speaker 1: because this is another one of those, uh those moves
Speaker 1: that at the time seemed like it made sense, but
Speaker 1: as as it played out, it just did not work.
Speaker 1: And that was that Newscore is the parent company of
Speaker 1: Fox News among other companies, and UH news Core purchased
Speaker 1: MySpace in two thousand five for five eight million dollars. Now,
Speaker 1: at the time, my Space was that seems like a steel.
Speaker 1: It was incredibly popular. It was the online social network,
Speaker 1: and it was the place where you would go if
Speaker 1: you wanted your eyes to bleed and less into terrible music,
Speaker 1: because that's what everyone seemed to do with their profiles.
Speaker 1: But that was user behavior, not the fault of the
Speaker 1: service itself. And then Facebook came around, and most people,
Speaker 1: I think at the time, maybe not most people, but
Speaker 1: a lot of people at the time bet on my
Speaker 1: Space beating out Facebook because it had a headstart. Facebook
Speaker 1: was was only open to college students when it first started,
Speaker 1: and it just, you know, it seemed like it was
Speaker 1: it's it didn't seem as feature rich as my Space did,
Speaker 1: So how could my Space lose to Facebook? Very effectively?
Speaker 1: Is the way that turned out. So News Corps sold
Speaker 1: my Space off uh in for thirty five million dollars
Speaker 1: to Specific Media, which is a group of investors. So
Speaker 1: from five million when they purchased it to thirty five
Speaker 1: million when they sold it, that's not a success story.
Speaker 1: And you know, news Score did try a couple of
Speaker 1: times to vitalize my Space, you know, they tried to
Speaker 1: make it more of a music discovery kind of social network.
Speaker 1: But by then I think it was too late because
Speaker 1: my Space was one of those places where bands, a
Speaker 1: lot of bands had made their web presence known. They
Speaker 1: used them because I had great tools. If you were
Speaker 1: a band and you wanted to share some of your
Speaker 1: music and build up a fan base, it was a
Speaker 1: good resource. But there are other resources online now that
Speaker 1: do that just as well or better in some cases.
Speaker 1: And uh, it just was too little, too late, and
Speaker 1: so news Corpse sold it off for million, eating that loss.
Speaker 1: And uh and we'll see what Specific Media does with it,
Speaker 1: if anything, or if they just end up cannibalizing it
Speaker 1: and turning it into something else. Honestly, we don't know
Speaker 1: right now. And uh, just one last little note how
Speaker 1: stuff works dot com We were we were acquired several
Speaker 1: years ago by Discovery Communications, so you know, we were
Speaker 1: part of another company for a while and we're acquired
Speaker 1: back shortly after I joined UM within a year that
Speaker 1: I joined I think, or maybe a year and a
Speaker 1: half UM two months for me. Yeah, so we we
Speaker 1: ended up getting acquired by Discovery Communications and now we
Speaker 1: are part of that company. So uh yeah, it's UM
Speaker 1: and it was interesting, you know, it was a it
Speaker 1: was a different culture, but it was very complimentary to
Speaker 1: what we already had. So I think as far as
Speaker 1: transitions go, ours was probably one of the smoothest I've
Speaker 1: ever seen. And that wraps up another classic episode of
Speaker 1: tech Stuff. The acquisition deal that was about to happen
Speaker 1: to me before that last commercial break kind of fell
Speaker 1: through at the last minute. It's a bummer. I was
Speaker 1: totally ready to get an Apple tattoo, but looks like
Speaker 1: I'm just gonna have to hold off for now. If
Speaker 1: you guys have any suggestions for future episodes of tech Stuff,
Speaker 1: send me an email. The address is tech Stuff at
Speaker 1: house stupp Works dot com, or draw me a line
Speaker 1: over on social media on Facebook and Twitter, it is
Speaker 1: text Stuff H s W. Pop on over to our
Speaker 1: website that's tech Stuff podcast dot com. You'll find links
Speaker 1: to all the old episodes there as well, and hey,
Speaker 1: check out our merchandise store. It's over at t public
Speaker 1: dot com slash tech stuff. There's also a link from
Speaker 1: our website. Every purchase you make over on that site
Speaker 1: goes to help our show, and we greatly appreciate it,
Speaker 1: and I'll talk to you again and really soon. Tech
Speaker 1: Stuff is a production of I Heart Radio's How Stuff Works.
Speaker 1: For more podcasts from my heart Radio, visit the i
Speaker 1: heart Radio app, Apple Podcasts, or wherever you listen to
Speaker 1: your favorite shows.