Why Did Yahoo Buy A 17-Year-Old’s Startup For $30 Million?

Image via Flickr/ LeWeb3

Do you remember Summly? If you don’t, the quick… sum-up (haha) is that it’s some application invented by a kid named Nick D’Aloisio in the UK. It picks up news stories, makes short snippet summaries and gives people feeds of these little snippets.

Or, it did. Because last month, Yahoo bought the startup for something like $30 million, knowing that:

–          The CEO was 17

–          Summly wasn’t very popular and wasn’t making any money

–          SRI International owned the technology behind the app itself and

–          The Summly team didn’t even build the app (Somo did).


What the hell, Marissa Mayer? No telecommuting employees and now this?

A few hours ago, Mayer came out with the reason why Yahoo bought it in the first place. Summly was simply an “incidental side effect” of a Yahoo/SRI deal made a while ago. The technology is called “summarization technology,” and SRI had a bunch of equity in Summly because of it. So… Yahoo bought Summly to rid its technology of any SRI hold at all.

You know the other big technology in which SRI held equity way back when?

Are you ready?

Can you guess?

Probably not.


Of course, we all know who got THAT piece of technology in the end, now don’t we?

Yahoo is calling Summly “Yahoo’s Siri,” although I’m not sure why, because it’s obviously not nearly as advanced or interesting as Siri, who will indeed argue with you and keep you company on lonely nights.

Anyway, Mayer thinks that this summarization technology is going to be the big winner for Yahoo, especially since it means more personalization on its mobile Yahoo Web sites. And we all know there’s money in personalization – people are quite fond of their bubbles and often don’t want to leave them, especially on mobile devices where screen space is limited and use of that space is extremely important.

Summly’s CEO isn’t going to be involved in implementing the technology, either. That’s been assigned to Adam Cahan, a Yahoo employee, even though Nick is supposed to be staying at the company for another 17 months.

Nick did do something, though, so let’s not sell him too short. Nick invented and wrote the original code for Summly, which was basically the rough draft. He just didn’t have the tools to make it any bigger, so he decided to find someone who could. Entrepreneurs, this isn’t a bad idea when it comes right down to it, especially when you really want to get something off the ground. Asking for help is never a shameful thing, and in this situation, it made some kid a millionaire for life.

So good job Nick, and I think… er, good job Yahoo? I think information on that win is yet to come. I expect to see an app that knows my name, Yahoo, before the year is up.