Speaker 1: Brought to you by the reinvented two thousand twelve camera.
Speaker 1: It's ready. Are you get in touch with technology? With
Speaker 1: tech Stuff from how stuff looks dot com. Hello again, everyone,
Speaker 1: and welcome to tech Stuff. My name is Chris Pelett
Speaker 1: and I'm an editor at how Stuff works dot com.
Speaker 1: Sitting across from me, as always a senior writer, Jonathan Strickland,
Speaker 1: Mrs Dallaway said she would buy the flowers herself. All right,
Speaker 1: then 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 acquisitions.
Speaker 1: To me, um, there are things like the uh, the
Speaker 1: acquisition that you were just talking about, the Facebook purchase
Speaker 1: of Instagram for one billion dollars um and this is
Speaker 1: kind of this is a big deal for a number
Speaker 1: of reasons. It kind of struck me as funny, this
Speaker 1: this deal. We'll get into that a second. I want
Speaker 1: to finish my thought um and and but in this case,
Speaker 1: you have a situation where both companies are well known. Um.
Speaker 1: Instagram has a lot of buzz going on about it
Speaker 1: right now. Plus you know everybody knows Facebook is UM.
Speaker 1: But then there are these other tech acquisitions where it's
Speaker 1: something like infrastructure. You know, some big company and it's
Speaker 1: a big company, but it's somebody who makes something that
Speaker 1: people don't rush out and buy off store shelves. UM
Speaker 1: gets acquired by somebody else who's sort of in the
Speaker 1: same vain. And you know, this is the kind of
Speaker 1: thing that investors talk about but is not common UM.
Speaker 1: And that was one of those things that kind of
Speaker 1: struck me as I started doing research for this podcast.
Speaker 1: Is you've got the big names, and you go so
Speaker 1: and so acquired such and such, Oh my gosh, what
Speaker 1: is this gonna mean? And then you have somebody else
Speaker 1: who goes, wow, that was a billion dollar purchase. Okay, yeah,
Speaker 1: so um yeah, But the big news the week that
Speaker 1: we're recording this is the Facebook acquisition of Instagram for
Speaker 1: one billion dollars, a princely sum to be sure. UM.
Speaker 1: And it's might actually be that might actually be a
Speaker 1: kingly sum at that point. UM. I got got promoted.
Speaker 1: Uh yeah, the uh And and for those who don't know,
Speaker 1: just so that we can get this uh all on
Speaker 1: the table. Instagram is a photo app used to be
Speaker 1: iOS exclusive and then opened up recently for Android. I
Speaker 1: have it on my Android phone. I as well have
Speaker 1: it on my Android phone. And it is both an
Speaker 1: app that allows you to take photos and apply different
Speaker 1: filters to those photos so that you can make a
Speaker 1: good photo suddenly look really bad or uh, that's just
Speaker 1: me making some editorial comments. Well, no, I mean it's
Speaker 1: supposed to the idea is that you grunge it up
Speaker 1: so it looks appears as though we're taken on an
Speaker 1: older camera or maybe it's a former paper photo that's
Speaker 1: gotten stepped on and rubbed in the dirt. I mean
Speaker 1: it's it's done on purpose. Yeah, it's it's it's kind
Speaker 1: of it's kind to be bad distressed if you will.
Speaker 1: But yeah, it does. It gives it gives things a
Speaker 1: neat little twist really um, and it's made a lot
Speaker 1: of iOS fans happy that they can it can do
Speaker 1: some some very simple filters, color filters on top of
Speaker 1: their photos that give it an appearance as if it's
Speaker 1: been edited, uh, you know, by someone who's fairly skilled
Speaker 1: in photo editing. But it's all you're doing is just
Speaker 1: choosing a filter. It's really really simple, very easy interface
Speaker 1: and um uh. And it's also not just an app
Speaker 1: lets you take photos, but lets you share them as well.
Speaker 1: So it's got a social aspect to it where you
Speaker 1: can follow people on Instagram and then you can see
Speaker 1: as they up owd more photos, as they take more
Speaker 1: photos using Instagram, you can see them in a feed,
Speaker 1: So that way you can kind of keep up with
Speaker 1: what's going on in that person's life. And that is
Speaker 1: the key I think to this, to this acquisition. That's
Speaker 1: why Facebook was interested in Instagram. Because Facebook is all
Speaker 1: about you know, social and photos as well, but it's
Speaker 1: mobile interface has not been widely regarded as being easy
Speaker 1: to use or good if we want to if we
Speaker 1: want to really boil it down. I mean, I personally
Speaker 1: don't have any problem with the Facebook mobile interface, but
Speaker 1: I know a lot of people who use Facebook even
Speaker 1: more extensively than I do, which is hard for me
Speaker 1: to imagine, but they find that it's just not as
Speaker 1: robust as they would like. And part of that is
Speaker 1: the photo functions. Now I use a lot of other
Speaker 1: apps that will allow me to automatically push a photo
Speaker 1: to various social networks, including Twitter or Facebook. So for
Speaker 1: me it wasn't as big a deal. But for people
Speaker 1: who don't use that or don't have that option, Instagram
Speaker 1: gave them the ability to take a photo, put this
Speaker 1: filter on, share it with uh the social network, and
Speaker 1: now with Facebook's purchase, they're gonna be able to share
Speaker 1: it with Facebook itself. Or maybe Facebook will just integrate
Speaker 1: Instagram's UH functionality into its own mobile apps. Well, from
Speaker 1: what I've read, the whole idea is to leave Instagram
Speaker 1: sort of on its own um, and Facebook actually has
Speaker 1: a reasonably good track record of doing that. I remember,
Speaker 1: um being a fan of friend feed when Facebook acquired
Speaker 1: that uh some time ago, and they said, um, oh, well,
Speaker 1: we're pretty much gonna leave it alone. We just want
Speaker 1: to incorporate some of this technology into Facebook as well,
Speaker 1: and that we wanted to get these guys for their
Speaker 1: expertise and add some of this functionality Facebook and a
Speaker 1: lot of people on friend feed were going, well, this
Speaker 1: is the end, This is the end. And really they
Speaker 1: didn't mess with it uh um as much. But uh,
Speaker 1: but It is kind of funny because different companies have
Speaker 1: different takes on it. Um. Jonathan and I first started
Speaker 1: talking about this podcast as being our take on Instagram,
Speaker 1: but I think it's kind of been um done in
Speaker 1: pretty much every tech channel. Why they were doing it
Speaker 1: and 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 gonna 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 take 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 and uh, and we've got
Speaker 1: a whole bunch here. I wanna I wanna credit someone
Speaker 1: before we get too far into this, because a lot
Speaker 1: of the pretty much all the information I pulled I
Speaker 1: pulled from a spreadsheet that a Wired writer named Andy
Speaker 1: Bayou created. He created this amazing spreadsheet where he he
Speaker 1: just sort of uh trolled the Internet, not in the negative,
Speaker 1: you stink kind of way, but rather the right getting
Speaker 1: all the information you can for info about various big
Speaker 1: tech acquisitions. And these are the ones that are really
Speaker 1: the kind that that get the notice of users because
Speaker 1: it's the recognizable brand names. But he pulled them all together,
Speaker 1: and he went so far as to even compare how
Speaker 1: much the reported acquisition amount was versus how many users
Speaker 1: the service that was acquired, how many users it had. Uh,
Speaker 1: he broke down what the cost per user was based
Speaker 1: on that information, and even how many employees the service had,
Speaker 1: and what the cost per employee was. Because when you
Speaker 1: think about it, these acquisitions, some of them like Instagram
Speaker 1: that's a billion dollars, Instagram did not have a lot
Speaker 1: of employees. Uh, that thirteen employees according according to Andy's research,
Speaker 1: so thirteen employees and a billion bucks. He estimated that
Speaker 1: that was about seventy seven million dollars per employee. Now
Speaker 1: that doesn't mean that each employee of Instagram is is
Speaker 1: taking home a cool seventy seven million, because the CEO
Speaker 1: and the head of Instagram are taking down about half
Speaker 1: a billion dollars together. So that's so about fifty of
Speaker 1: that purchase price went to the uh, the guys in
Speaker 1: charge of Instagram. But still you're thinking, that's like winning
Speaker 1: the lottery. You know, you're working, you're working for this,
Speaker 1: you're working in a small, tight group, and you get
Speaker 1: acquired for a massive amount of money. That's kind of
Speaker 1: like that was the dream of the whole dot com
Speaker 1: bust too. There are a lot of companies that were
Speaker 1: starting up that we're trying to be really small and
Speaker 1: nimble and get acquired by bigger companies. And some of
Speaker 1: the some of the stories we have, some of the
Speaker 1: um the acquisitions we can talk about happened before the
Speaker 1: dot com crash, including a couple from Yahoo that I
Speaker 1: wanted to talk about. So back in nineteen Yahoo made
Speaker 1: two really big acquisitions. The first was in January of
Speaker 1: when Yahoo purchased geo Cities. Now, geo Cities was sort
Speaker 1: of a place where you could build your own web
Speaker 1: page and it was laid out like a city, like
Speaker 1: they had neighborhoods and everything, and and it was kind
Speaker 1: of a uh it was kind of like the place
Speaker 1: where people would build a website before there were really
Speaker 1: social networks. Yeah. Yeah, Now, UM, maybe some of you
Speaker 1: don't remember necessarily what what the World Wide Web was like.
Speaker 1: I was gonna say the Internet, but let's go stick
Speaker 1: with the Worldwide Web. Um, back in in the mid
Speaker 1: to late nineties. Um, people didn't necessarily uh intend to
Speaker 1: go I mean, and the Internet was still sort of
Speaker 1: a new concept for people, and they wanted to know
Speaker 1: what can you do with this? I mean, emails a
Speaker 1: fairly reasonably easy concept to understand, um, and you know,
Speaker 1: there were others. There were more difficult things like using
Speaker 1: net for example, um, and then databases that weren't the
Speaker 1: most intuitive. Yeah, as far as user interfaces are concerned. So,
Speaker 1: I mean, at the time, geo Cities was kind of
Speaker 1: a neat deal because it allowed people to create their
Speaker 1: own websites without having to learn how to code HTML.
Speaker 1: And there weren't a lot of tools, um, you know,
Speaker 1: things like a WordPress dot com or blogger or you
Speaker 1: know the journaling sites, which is I think sort of
Speaker 1: what a lot of Geo cities pages were like. Or
Speaker 1: even wizzy Wig editors, yeah exact, which is grain Weaver
Speaker 1: or before that go live, so even even page mails
Speaker 1: stuff 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, you what you're
Speaker 1: looking at on the screen, and your edit mode is
Speaker 1: you can be reasonably confident that's what's going to show
Speaker 1: up if you were to navigate there through a browser.
Speaker 1: Back in the old days, we had to do everything
Speaker 1: by code. Yeah, well I should clarify too, because I
Speaker 1: was using some Whizzywig editors back in the late nineties.
Speaker 1: But they for the most part, they were They came
Speaker 1: in two flavors, um fairly trustworthy, but very expensive, uh
Speaker 1: like like like a couple of hundreds of dollars or
Speaker 1: you could you could buy um, there were a couple
Speaker 1: of them that were you know, in the forty fifty
Speaker 1: dollar range, but they inserted junk code and the pages
Speaker 1: would break depending on what browser you were using or
Speaker 1: sometimes not depending on what browser you're using. Um, and
Speaker 1: they were just and you'd have to do this and
Speaker 1: upload it to a server. Not everyone is comfortable with
Speaker 1: FTP and knowing how to do this, and Geo Cities
Speaker 1: was sort of a pioneer in this space. Hey, throw
Speaker 1: this content out there and make new friends in your neighborhood. Okay,
Speaker 1: So the acquisition went for reported about all three point
Speaker 1: five 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 earlier, So that was that
Speaker 1: was significant. So here's the problem is that Geo Cities
Speaker 1: that was probably right at the peak of geo City's popularity.
Speaker 1: Uh and then before too much longer, there was a
Speaker 1: shift in the way people use the web. Because before
Speaker 1: the dot com crash, a lot of the websites on
Speaker 1: the web were very static. So you would build a
Speaker 1: web page and it would pretty much stay that way
Speaker 1: for months at a time. You wouldn't necessarily add new
Speaker 1: material 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 inasmuch as, um, the idea really of g O
Speaker 1: c d s really did propel things forward in the
Speaker 1: social space. Um. But yeah, in a way, you go, Okay, well,
Speaker 1: they spend a lot of money and then the service
Speaker 1: shutdown in that in that regard, you know, strictly on
Speaker 1: that place. Then yeah, I know that whenever you look
Speaker 1: at at yeah Who as an analyst today, because Yahoo
Speaker 1: is a company that has has been struggling over the
Speaker 1: last couple of years. Um, and you start looking back
Speaker 1: 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 a an
Speaker 1: internet radio company. Broadcast dot Com was so back in
Speaker 1: the nineties. Uh, there were there were a couple of
Speaker 1: people who were thinking about the possibility of broadcasting radio
Speaker 1: over the Internet, and I, you know, started looking into
Speaker 1: what they would need to do in order to do that,
Speaker 1: and eventually this company began m the company that would
Speaker 1: become Broadcast dot Com. And Uh, I had a fellow
Speaker 1: eventually leading it named Mark Cuban. I feel like I've
Speaker 1: heard that name somewhere. Yeah, you might have anyway. Cuban
Speaker 1: he uh he was leading Broadcast dot Com, and yah
Speaker 1: Who approached to purchase the company for a amazing five
Speaker 1: point seven billion dollars. And when I say amazing, there
Speaker 1: are a couple of reasons for that. First of all,
Speaker 1: that's that's a whole lot of money. But second of all,
Speaker 1: the uh, the company had about According to Andy, over
Speaker 1: at Wired had about five hundred and twenty thousand active users,
Speaker 1: so just over half a million active users five point
Speaker 1: seven billion dollars to essentially acquire those half million users.
Speaker 1: Keeping in mind that, you know, the idea was that
Speaker 1: these services would be rolled out into other parts of
Speaker 1: Yahoo and become a bigger role. But um but still,
Speaker 1: if you were to break that down as Andy did,
Speaker 1: I like to call him Andy Uh, as Andy did
Speaker 1: for for the purposes of his article, he determined that
Speaker 1: that means that they spent almost eleven thousand dollars per
Speaker 1: user buying that that company. And um uh so that's
Speaker 1: you know, that's just it's crazy how how much money
Speaker 1: that is. I mean, it's for per user. Like you
Speaker 1: could have walked up to each person and said, if
Speaker 1: I give you ten grand, will you come to my
Speaker 1: side every day? The person yes, And that might have
Speaker 1: been more effective because the broadcast dot com features they
Speaker 1: did get rolled out into some other Yahoo features. But
Speaker 1: most of that stuff no longer exists either, not as
Speaker 1: not as it did then. No, it got incorporated into
Speaker 1: other things. It's it's essentially lost now, like it's it's
Speaker 1: so buried in other other products that you can't even
Speaker 1: recognize it anymore. And I think the Yahoo Broadcast acquisition
Speaker 1: by many is regarded as the biggest mistake and acquisitions ever.
Speaker 1: And that's up against some pretty stiff competition. Well, it
Speaker 1: did give the Dallas Mavericks another shot, since Mark Cuban
Speaker 1: bought them and has spent a lot of money on them,
Speaker 1: it's gotten quite good. But yeah, five point seven billion
Speaker 1: dollars for that company, and um uh, I should add
Speaker 1: that there's something else we need to talk about, just
Speaker 1: very very briefly. I'm just I just want to address this.
Speaker 1: Some people may be thinking, hey, what about oh, well
Speaker 1: and Time Warner. That was that was that was often
Speaker 1: talked about the worst deal in tech ever. But we
Speaker 1: should point out that was a merger. That was not
Speaker 1: an acquisition. It was a merger and it was a
Speaker 1: it was sort of a tech non tech thing because
Speaker 1: you know, it merged if you will, the uh digital
Speaker 1: world with the um old media world O L D
Speaker 1: E 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: by these things, but they were you know, pre dot
Speaker 1: com bubble bursting, uh situations too, because this was the
Speaker 1: late nineties, which was right before the bubble burst. It's
Speaker 1: definitely frustrating in a way because you look at what
Speaker 1: Yah Who was doing and you think they were moving
Speaker 1: in the right direction. It was just it was just
Speaker 1: slightly the wrong. It was bye bye by the end
Speaker 1: the number of like a year and a half if
Speaker 1: it had been a year and a half later after
Speaker 1: the dot com bubble had burst, And y'all who assuming that,
Speaker 1: Yeah Who had been able to weather the dot com
Speaker 1: bubble well enough. And I mean the company is still
Speaker 1: 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 Yahoo down? Sure we can talk a
Speaker 1: little bit more. Yeah, they they've made some other purchases
Speaker 1: that actually did quite well for them, or at least
Speaker 1: are still very popular or like Flicker, Yes, that's you
Speaker 1: know the photo sharing and photo album uh database site,
Speaker 1: and Flicker I think is one of the more popular
Speaker 1: ones that's out there. Yeah. Um, although I did read
Speaker 1: in uh in my research that some people have been
Speaker 1: upset that Yeahoo didn't really do anything with Flicker, like
Speaker 1: they were expecting them to take it the next step
Speaker 1: and Flicker sort of stayed the same red much. That's true,
Speaker 1: it hasn't changed much. And and as other social networks
Speaker 1: like Facebook and Google Plus have become more popular and
Speaker 1: even Twitter, a lot of that photos sharing and photo
Speaker 1: storage stuff has been offloaded onto those so sites like
Speaker 1: Flicker and also Google's Picasa, which never I don't think
Speaker 1: it was ever anywhere near as popular as Flicker was. Um,
Speaker 1: but Google's Picasa also have have sort of taken ahead.
Speaker 1: I guess Google Picasa less so because that is what
Speaker 1: Google Plus uses as its foundation form for photos photo
Speaker 1: bucket one of the two. Yeah. Well, as a contrast,
Speaker 1: we're talking when yeah, who was spending billions of dollars
Speaker 1: for these acquisitions in two thousand five, And I would
Speaker 1: argue that Flicker in a way, it's probably way more
Speaker 1: popular than either of those two products, where that they
Speaker 1: acquired for multibillions of dollars. Um Flicker was acquired for
Speaker 1: thirty million, but that's a big change, much more modest
Speaker 1: acquisition compared to the billions of dollars they spent just
Speaker 1: a few years earlier. And I think, yeah, I think
Speaker 1: that was much more wisely spent in that case. And
Speaker 1: the the acquisition the same year of Delicious for thirty
Speaker 1: million dollars, to which I think was done again with
Speaker 1: 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 they were 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: say 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 there are a couple
Speaker 1: of these links sharing sites that are on these acquisitions
Speaker 1: that what we can talk about and and and a
Speaker 1: lot of them have kind of faded a way. There's
Speaker 1: still there's still I think Reddit is really the only
Speaker 1: one that I habitually go to now. I don't I
Speaker 1: don't tend to use dig anymore, and I don't don't
Speaker 1: really use stumble Upon and I don't really use Delicious
Speaker 1: so well. Delicious was one of the early sites like this,
Speaker 1: and I think Yahoo had intended to make something big
Speaker 1: out of it, but they ended up, uh planning on
Speaker 1: shutting it down until people complained about that so much
Speaker 1: that 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, pass right on through. So why don't we
Speaker 1: talk about some other Is there another company would like
Speaker 1: to move to from Yahoo? Or do you want to necessarily?
Speaker 1: How about we talked about eBay because eBay's also made
Speaker 1: some pretty big acquisitions in the past. One of them
Speaker 1: was in two thousand two and eBay bought PayPal. Yeah,
Speaker 1: that was the most synergistic of all of these, if
Speaker 1: you'll pardon the corpse speak, right, Yeah, it's the one
Speaker 1: that fit 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: We only had the half million, so that purchase actually
Speaker 1: seemed like it was a pretty good idea, you know.
Speaker 1: And there are plenty of people who still use PayPal now. Granted,
Speaker 1: PayPal over the last couple of years has had a
Speaker 1: couple of controversial news stories pop up, generally about There's
Speaker 1: been some about PayPal offering money, not offering money, but
Speaker 1: PayPal uh administering over payments to illegal sites or sites
Speaker 1: that are selling uh what pirated stuff or um uh
Speaker 1: that kind of thing. And then there's also uh, some
Speaker 1: other arguments about PayPal requiring people to go through some
Speaker 1: pretty crazy steps in order to get money back. Like
Speaker 1: you've heard the story about the violin, right, So a
Speaker 1: guy purchased a violin, purchases an antique violin, and uh
Speaker 1: it is truly an antique violin for a couple of
Speaker 1: thousand dollars, as I recall, and then in 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 purchase Skype, the VOIPE client
Speaker 1: voice over Internet Protocol 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 voipe company? And there were there was 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 toward 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 or really on. But I think a lot of
Speaker 1: people now think of the eBay purchase of Skype as
Speaker 1: one of the big mistakes in tech acquisitions. And eventually
Speaker 1: eBay sold Skype off. Now, first they just sold off
Speaker 1: the controlling interest to a group of investors and then
Speaker 1: eventually divested themselves of pretty much all of their interest
Speaker 1: in Skype to a little company that you might have
Speaker 1: heard of. It started off in a garage. It's called
Speaker 1: um oh, they like conquistadores 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 uh,
Speaker 1: skypes value had increased. Microsoft was willing to pay eight
Speaker 1: point five billion dollars. eBay did well with that auction,
Speaker 1: Yes it did, I think. I think actually Microsoft sniped
Speaker 1: the that that at the very last second. Yes they are,
Speaker 1: I would say, as a power seller, we gotta think
Speaker 1: about it. I mean, Skype is a very popular voice
Speaker 1: over Internet Protocol UH service, right, and and that's a
Speaker 1: very valuable asset to have, and Microsoft had to be
Speaker 1: worried about other companies possibly jumping in there. I can
Speaker 1: think of two right off the top of my head
Speaker 1: that would have been very interested in Skype. Facebook is
Speaker 1: one and Google is the other. Yeah, yeah, definitely so
Speaker 1: um and possibly somebody else named after a fruit. Um
Speaker 1: commodore is not named. Uh. There was one other acquisition
Speaker 1: the eb eBay made, and this kind of ties into
Speaker 1: 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 multiple companies
Speaker 1: trying to compete in the same space, and you might
Speaker 1: have one or two front runners and then everyone else
Speaker 1: is just kind of there. And this is one of
Speaker 1: those cases. So where where we want to go from here? Well,
Speaker 1: you know, it's funny because as we've been talking, you know,
Speaker 1: we had quite a list of these, um, some that
Speaker 1: I collected and some that you collected, and um, these
Speaker 1: are all kind of juicy. So we can you know,
Speaker 1: talk about should we talk about the pound Gorilla? Sure?
Speaker 1: Um being Google? Yes? Um, I was like, yes, Google
Speaker 1: has a pretty good track record of well there, there's
Speaker 1: some companies that are more a quiz ative than others.
Speaker 1: Let's say that acquisitive acquisitive. Um, yeah, I got to
Speaker 1: use that degree in English for something. Um. Yeah, so
Speaker 1: uh you know they've they've they pick up more than
Speaker 1: I would say just about any other tech company. Um,
Speaker 1: and uh, you know they're there, they tend to be
Speaker 1: more uh, let's say, flamboyant purchases, like, for example, Blogger
Speaker 1: back in two thousand three, which they picked up for
Speaker 1: twenty million dollars UM. This was that was a good time.
Speaker 1: This was an example of a good purchase at a
Speaker 1: good time, because that was right as the blog thing
Speaker 1: began to take off among I would say the masses,
Speaker 1: when it became kind of a phenomenon, Do do? Do do do?
Speaker 1: I would have if he hadn't um and you know,
Speaker 1: they added they continue to add other Google is good
Speaker 1: at picking out services that complement existing services and and
Speaker 1: and companies they think that will fit well within their portfolio,
Speaker 1: like picasa um in two thousand four, which they acquired
Speaker 1: for five million UM. You know, Dodgeball in two thousand
Speaker 1: five was also on Mr Bo's list. I don't know
Speaker 1: him well enough to call him Andy, so yeah, Dodgeball,
Speaker 1: Dodgeball and another service, Jaiku, which they purchased in two
Speaker 1: thousand seven for twelve million. These are these are good
Speaker 1: ones to point out because these are failures really for Google.
Speaker 1: I as I don't know that if I don't know
Speaker 1: how Google portrays them, right, but I know that you
Speaker 1: know from the outside, they look like failures because you've
Speaker 1: got Dodgeball, which the location is sharing. It was a
Speaker 1: location sharing application company. And in fact, the people who
Speaker 1: were behind Dodgeball eventually left Google and found it a
Speaker 1: different company called four Square. Wait, don't you play that
Speaker 1: with it? No, it's different kind of four Square, not
Speaker 1: the game but the the check in service. So Dodgeball
Speaker 1: never really went anywhere, and in fact, the people behind
Speaker 1: Dodgeball were very frustrated by which is why they went
Speaker 1: on eventually to to found four Square, because that was
Speaker 1: probably something closer to what they had imagined when they
Speaker 1: started Dodgeball than what it turned out to be. Jaiku
Speaker 1: is a short messaging service kind of sharing a model,
Speaker 1: sort of like oh there's another company that does this. Um,
Speaker 1: oh that's right Twitter. Yeah, so Jaiku was Google's well,
Speaker 1: Jaiku was Jaiku's answer to Twitter, but Google purchased Jaiku
Speaker 1: and then or Haiku if you prefer. But that never
Speaker 1: really went anywhere either. It had it had its you know,
Speaker 1: dedicated users who loved it, but it never really grew
Speaker 1: like Twitter did. Twitter exploded and jaik who sat there?
Speaker 1: And so that, um, Jaiku's no more? Right? Yeah, I
Speaker 1: went the other day actually before we discussed this, and
Speaker 1: it's it is gone. But perhaps perhaps one of Google's
Speaker 1: most famous, perhaps the most famous acquisition and Google has
Speaker 1: made besides a Motorola mobility, which were not really covering
Speaker 1: in this, uh, is YouTube two thousand six one point
Speaker 1: six five billion dollars. Yeah, and that's a that's a
Speaker 1: lot of clams. But then YouTube had YouTube had a
Speaker 1: lot of users, like over over thirty four million active
Speaker 1: users when at the time of the purchase, and it
Speaker 1: was you know, Google was looking ahead saying in a way,
Speaker 1: YouTube is also kind of a search engine. Yes, it is.
Speaker 1: People go onto YouTube and they they will they might
Speaker 1: you know, browse around, but often you go in and
Speaker 1: you PLoP your cursor in the search bar and you
Speaker 1: type in some stuff and you hope that the videos
Speaker 1: that come up and pertain to what you were typing
Speaker 1: in and so, um, it made sense in that in
Speaker 1: that respect. And uh, in fact, eventually, you know, Google
Speaker 1: had its own Google Video service for a while and
Speaker 1: then they eventually got rid of that, and so YouTube
Speaker 1: is just the whole Google Video thing now. But it's
Speaker 1: uh that that's one that was very controversial for a
Speaker 1: while because while the one point six five billion dollars
Speaker 1: wasn't the largest amount of money spent on a tech company,
Speaker 1: and it wasn't that they didn't have a lot of users.
Speaker 1: There was another problem, which was just that YouTube really
Speaker 1: wasn't making a whole lot of money. Like it's hard
Speaker 1: to make money when you're dealing with a service that's
Speaker 1: that's that big. Well, YouTube has another thing that's uh
Speaker 1: playing against it and making money, which is um that
Speaker 1: it requires I was gonna say boatloads, let's go with
Speaker 1: maybe shiploads of bandwidth and and not only that but servers. Yeah,
Speaker 1: a lot of a lot of physical machines are required
Speaker 1: to keep YouTube going. And video video is resource intensive. Um,
Speaker 1: it takes it uses a lot of data, and especially
Speaker 1: now that they've got h D High definition video takes
Speaker 1: up even more space. So you've got lots of hardware,
Speaker 1: using lots of electricity and lots of bandwidth. And somebody's
Speaker 1: got to pay for that if you're going to keep
Speaker 1: this stuff up, and if you if the users aren't
Speaker 1: paying for it, then the company is. And uh, you know,
Speaker 1: I I a startup may not have been able to
Speaker 1: handle paying for it at the way that YouTube has grown,
Speaker 1: but Google can and they can sell ads alongside it, yeah,
Speaker 1: and which they do, and yeah, it's it's you know,
Speaker 1: we talked about in our YouTube podcast, we talked about
Speaker 1: how uh these the company ends up seeing something like
Speaker 1: forty eight hours of material uploaded every minute on YouTube.
Speaker 1: It's probably even more than that by now. Ah So
Speaker 1: when you're talking about that level of of uploads and
Speaker 1: you know that quantity that's coming in, you need to
Speaker 1: have a nice, big company behind you to make sure
Speaker 1: that there's a foundation, a solid foundation there. And uh,
Speaker 1: you know, YouTube is definitely one of those things that
Speaker 1: have has just become increasingly popular over the years. So
Speaker 1: you could say that it's a great acqu position in
Speaker 1: the sense that if it were to go away, that
Speaker 1: would be bad. But it's probably still one of the
Speaker 1: ones that that vexes Google the most in that balancing
Speaker 1: the revenue issues versus the maintenance and overhead issues. Plus
Speaker 1: they're all the lawsuits that are related to YouTube that
Speaker 1: have to do with intellectual property theft, where you've got
Speaker 1: all these companies that are accusing Google and YouTube of
Speaker 1: harboring pirates and allowing people to upload pirate ID or
Speaker 1: or at least uh unlicensed copies of content to YouTube,
Speaker 1: and uh so we've been seeing a lot of that
Speaker 1: in the news recently too, about the the stories about
Speaker 1: the court cases involving whether or not YouTube knowingly harbored
Speaker 1: material that violated intellectual property rights, or if if the
Speaker 1: company was acting in the best interests of both its
Speaker 1: users and intellectual property rights owners. I requiring people to
Speaker 1: take down videos or taking down the videos for them
Speaker 1: that violated those policies, there's it's a big mess right now. Yeah, yeah, okay,
Speaker 1: So I wanted to talk about the the uh, some
Speaker 1: of the acquisitions that we don't necessarily think about as
Speaker 1: being exciting. One of those is, uh, what happened just
Speaker 1: last year when we're recording this, Uh, Texas Instruments bought
Speaker 1: National Semiconductor. That fails to excite me. Yeah, exactly. This
Speaker 1: is not the kind of thing that, um, you know,
Speaker 1: if if Apple bought Facebook. I mean, I'm just saying, like,
Speaker 1: two big names that lots of people are interested in.
Speaker 1: People love and hate both of these companies, Texas Instruments
Speaker 1: and 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 a monetary standpoint, but they seem to be bigger
Speaker 1: because they are impacting stuff that we interact with on
Speaker 1: a daily basis. Yeah. Then there was two thousand nine
Speaker 1: when Oracle bought Sun Microsystems number seven point four billion. Um,
Speaker 1: that was that was huge news for anyone who knew
Speaker 1: what was going on. Yeah, like there were engineers who
Speaker 1: were freaking out. Yeah, absolutely absolutely. Well, Uh that that
Speaker 1: calls into question a lot of other stuff too. Um.
Speaker 1: Larry Ellison, head of Oracle, is another one of those.
Speaker 1: He's a character. That's a really nice way to put it.
Speaker 1: We're gonna have to do an episode on Larry Ellison,
Speaker 1: and I think half of it will be bleeped out
Speaker 1: and those will just be the quotes. Yeah exactly. Um,
Speaker 1: he's yeah, he's he's definitely a character. And a lot
Speaker 1: of people who are fans of Sun, the traditional Sun
Speaker 1: Microsystems company, we're very upset that Oracle was was buying
Speaker 1: for a number of reasons, but there was a lot
Speaker 1: of technology behind that to some of it open source
Speaker 1: UM that they were really afraid that Oracle was going
Speaker 1: to to do away with UM. I remember Hewlett Packard
Speaker 1: buying Compact in two thousand one for twenty three point
Speaker 1: five billion dollars. I was a little I was a
Speaker 1: little stunned by that one. And then we got stunned
Speaker 1: again when when HP talked about spinning off it's uh,
Speaker 1: it's PC business. Well then, of course, you know, Hewlett
Speaker 1: Packard bought three Com for two point seven billion back
Speaker 1: in two thousand nine, which ended up being a big
Speaker 1: mech 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 listen 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. Yeah yeah, And so
Speaker 1: a lot of us are going, well, okay, yeah, that's interesting.
Speaker 1: That's a lot of money, but how does that affect me?
Speaker 1: And for a lot of us, it's it's not something
Speaker 1: that that we notice or touch on a daily basis. Yeah,
Speaker 1: So I did wanna we'll close this out really quickly
Speaker 1: here and I didn't wanna say that, Um, we have
Speaker 1: to talk about news Core in MySpace, because this is
Speaker 1: another one of those, uh, those moves that at the
Speaker 1: time seemed like it made sense, but as it played out,
Speaker 1: it just did not work. And that was that. News
Speaker 1: Core is the parent company of Fox News, among other companies,
Speaker 1: and uh. News Core purchased MySpace in two thousand five
Speaker 1: for five eight million dollars. Now, at the time my
Speaker 1: Space was that seemed like a steel. It was incredibly popular.
Speaker 1: It was the online social network, and it was the
Speaker 1: place where you would go if you wanted your eyes
Speaker 1: to bleed and listen to terrible music, because that's what
Speaker 1: everyone seemed to do with their profiles. But that was
Speaker 1: user behavior, not the fault of the service itself, and
Speaker 1: then Facebook came around, and most people, I think at
Speaker 1: the time, maybe not most people, but a lot of
Speaker 1: people at the time bet on my Space beating out
Speaker 1: Facebook because it had a headstart. Facebook was was only
Speaker 1: open to college students when it first started, and it
Speaker 1: just you know, it seemed like it was it's it
Speaker 1: didn't seem as feature rich as my Space did. So
Speaker 1: how could my Space lose to Facebook? Very effectively? Is
Speaker 1: the way that turned out. So news Corps sold my
Speaker 1: Space off uh Inn for thirty five million dollars to
Speaker 1: Specific Media, which was a group of investors. So from
Speaker 1: five million when they purchased it to thirty five million
Speaker 1: when they sold it, that's not a success story. And
Speaker 1: you know, news Coore did try a couple of times
Speaker 1: to revitalize my Space. You know, they tried to make
Speaker 1: 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 I heard that we
Speaker 1: were acquired several years ago by Discovery Communications, So you know,
Speaker 1: we were part of another company for a while and
Speaker 1: we're acquired back shortly after I joined UM, within a
Speaker 1: year that I joined, I think, or maybe a year
Speaker 1: and a half, UM two months for me. Yeah, so
Speaker 1: we we ended up getting acquired by Discovery Communications and
Speaker 1: now we are part of that company. So uh yeah,
Speaker 1: it's UM. And it was interesting. You know, it was
Speaker 1: a it was a different culture, but it was very
Speaker 1: complimentary to what we already had. So I think as
Speaker 1: far as transitions go, ours was probably one of the
Speaker 1: smoothest I've ever seen. I've seen other companies where, you know,
Speaker 1: they get acquired by another one and one culture ends
Speaker 1: up dominating over the other. And it can be messy. Yeah. Well,
Speaker 1: reading a lot of the transcriptions of these um these
Speaker 1: acquisitions too, you can tell that some of them were
Speaker 1: like oil and water and others were less. Yes, some
Speaker 1: of them went together, like like wine and cheese, because
Speaker 1: I always wine and never have each cheese. And on
Speaker 1: that note, we're going to wrap this up. If you
Speaker 1: guys have any topics you would like us to tackle
Speaker 1: in future podcasts, like how bloopers work, so you can
Speaker 1: you can write in, you can send in a note
Speaker 1: to our email address that's tech stuff at Discovery dot com,
Speaker 1: or let us know on Facebook or Twitter are handled.
Speaker 1: There is tech stuff hs W and Chris and I
Speaker 1: will talk to you again or really soon for more
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