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Delicious In Purgatory

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On December 16 Yahoo accidentally told the world they were shutting down popular bookmarking site Delicious. They fired most or all of the Delicious staff. Then they untold that story, saying they intended to sell it off and that the press got it all wrong.

Ok great. So how’s that sale process going?

Not so well, according to a handful of interested buyers I’ve spoken with. I know of five companies and venture firms that have reached out to Yahoo to talk about buying Delicious. Three of them have confirmed to me that Yahoo either hasn’t responded, or hasn’t responded with any serious level of engagement. According to one source, Yahoo has told people that they are planning on starting a sale process in mid-January.

One venture firm we’ve confirmed has expressed interest in Delicious is Spark Capital, although they haven’t responded to my request for comment.

Part of the problem may be price. Yahoo turned down a $15 million offer for Delicious in 2009, we’ve heard. And they may be looking for that much or more now. Most of the buyers I’ve spoken recently with say their interested in the sub-$5 million range.

That makes it a big who-cares for Yahoo. I imagine they are trying to focus on much bigger acquisitions, sales, strategies and cost cutting maneuvers that actually move the needle for them financially.

Another problem is how to pull Delicious out of the Yahoo infrastructure. Former Delicious product manager Stephen Hood wrote earlier this month:

Selling Delicious to a third-party

This certainly seems like the best option for Delicious and its users, and I hope that Yahoo is able to pull it off. But it’s not a straightforward proposition. As mentioned above, most of the team is now gone. Last week’s leak (and the subsequent fallout) also did unfortunate damage to the Delicious brand, sending panicked users to competing products.

But ultimately the real challenge here will be the technology. During my time at Delicious we rebuilt the entire infrastructure to deeply leverage a number of internal Yahoo technologies. It’s all great stuff but not exactly easy to remove or replace. Yahoo may have to license some of this technology to the buyer. I’m not sure they’ve done that before.

In the end it may be easier for a buyer to simply rebuild Delicious from the ground up, and then import all the data, say people with knowledge of the Delicious back end.

There’s one person out there who certainly wants to see Delicious live on – founder Joshua Schachter. I’ve asked him if he’s interested in taking Delicious private in a deal similar to how StumbleUpon was spun out of eBay and returned to it’s orignal founders.

Schachter says he’s busy working on his new startup and won’t be running Delicious again any time soon. But he does say he’s willing to help keep Delicious alive. He tells me “I’m watching this develop and am hoping Delicious ends up in a good place. I’m willing to spend time to help make that happen.”

Eventually Delicious will almost certainly be spun off from Yahoo. Not because Yahoo seems to particularly care what happens to the service, but because it’s just good PR for them to do this the right way. As a Delicious user, that’s good enough for me.

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