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PayPal Is Buying StackMob For Christmas

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[UpdatePayPal is buying StackMob. Original post follows.] Mobile backend service provider StackMob is being acquired in a deal expected to be announced soon, according to multiple TechCrunch sources. We’ve heard from a few people the acquiring company is “down south,” meaning Silicon Valley or the South Bay. Some names that have been tossed around include Oracle and EMC, but we’ve yet to confirm. StackMob, a competitor to now Facebook-owned Parse, had raised $7.5 million in Series A funding in 2011, but was struggling to raise a B round, leading to the acquisition discussions.

Many have been hearing similar rumors of a StackMob acquisition in recent days, but we’ve confirmed with several sources that the deal has, in fact, closed. [Update: Following this article's publication, PayPal confirmed that it is the acquirer, saying in a subsequent statement this afternoon that StackMob's team will put their skills and expertise toward enhancing PayPal’s technology stack.]

“We believe that with the addition of the talented team from StackMob, we’ll move even faster in creating, testing and deploying products that aim to transform payments for customers around the world,” wrote PayPal CTO James Barrese on the company’s blog.

“By joining PayPal, the StackMob team will maintain its focus on developers and extending innovative mobile technologies that aim to allow consumers to access the rich capabilities of the PayPal global network,” StackMob CEO Ty Amell added in a statement. “We believe that our work at PayPal will make it easier for developers to create seamless payment solutions that span online, mobile, and in-store experiences.”

The company, for background, had offered freemium tools that made it possible for developers to more easily build scalable mobile applications, with support for things like custom code, HTML5 hosting, push notifications, location-based services, social authentication, a datastore for apps, API metrics. StackMob’s suite also includes a Marketplace, which allows developers to quickly add modules to integrate additional features from other third-party services into their applications. (StackMob, in turn, would earn a 20 to 30 perfect referral fee on these).

This year, StackMob also begin to court enterprise developers by touting its integrations with other software and platforms-as-a-service companies, API infrastructure providers, and others, initially including services from AT&T, Alfresco, Box, Braintree, GoodData, Mashery, Mulesoft, New Relic and Rackspace. We hear that effort had little traction, however.

At the time, CEO Ty Amell said the company was generating revenue, but would still need another round to grow the sales team and expand faster. “The dirty secret with backends-as-a-service is that it takes a lot of time and money, especially when you’re talking about enterprise. It takes a lot of time to become profitable,” he said in February, adding that the company was not yet “revenue-positive.”

StackMob also tried to capitalize on competitor Parse’s acquisition by Facebook, hoping to woo disgruntled developers to its platform via a Parse migration tool. That acquisition may have validated the overall space, but it seems that only a vocal minority were griping about the change, or frustrated enough to actually leave. In the months since, Parse grew from 60,000 apps at the time of the acquisition to 100,000 apps by this June, and has continued to roll out features.

Meanwhile, signs of StackMob closing up shop have also appeared in recent days:

Furthermore, since publication we’ve learned that StackMob reportedly hired a banker this summer in an effort to help it find an acquirer. We’ve also learned from sources that Yahoo was one of the companies to kick StackMob’s tires, however, in spite of the added incentive of a reportedly low asking price, Yahoo opted not to make a deal.

So, while PayPal and StackMob declined to share details on the acquisition price, it doesn’t sound like this was a blockbuster deal. Furthermore, while StackMob had a good run, it doesn’t come as a complete surprise that StackMob struggled in its efforts to reach profitability and scale to the degree it had initially hoped.

Ultimately, it seems as if StackMob’s early hype ended up working against it, as the initial buzz was followed by lack of momentum — a trend that also seems increasingly endemic to the mBaaS (mobile backend-as-a-service) space as a whole these days. Companies have had issues monetizing — even Parse, which sold to Facebook for a reported $85 million, at times loses money on higher volume applications, we’ve heard. And on the enterprise side, there are security concerns around exposing corporate data to the various mBaaS platforms.

In the end, it seems the time has come for some consolidation among mBaaS players, and StackMob is the latest to pull the rip cord. Let’s see who’s next.

Additional reporting by Alex Williams