eBay Stumbles on StumbleUpon

Another cool Web 2.0 gets suck into the M&A vortex as eBay has apparently acquired StumbleUpon, one of the most useful discovery services around, for $40-million to $45-million. First blush, I don’t get it but, then again, I didn’t get eBay acquiring Skype so what do I know. Om Malik suggests eBay could turn jump-start Skype by bolting on StumbleUpon’s toolbar, which lets you kill hours of time online by randomly looking at new Web sites.

By marrying the toolbar to Skype client, eBay can do an end run around Google’s dominance of the search business,” Om writes. “A simple search box inside Skype client is all it would take. It is not that far fetched: Skype has been slowly integrating various different services (including PayPal) into its client, and slowly becoming eBay’s desktop backdoor. Now this is just a hypothesis, and I would love to hear what you folks have to say about the logic behind this deal.

Not sure that I agree with Om’s theory but I do know this is a huge score for StumbleUpon’s investors who sunk $1.5-million into the start-up. (These investors include Google advisor Rajeev Motwani, Google advisor; Ram Shriram, an early Google investor and a board member; and Lotus founder Mitch Kapoor.) StumbleUpon’s acquisition is yet another indictment on the Canadian venture capital community’s unwillingness to finance Web start-ups given the company started in Calgary but moved to Silicon Valley after failing to attract any financing north of the border – not even some of the oil bucks flowing around Alberta these days.

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