Scribd Has 100M Users And A Mobile App It Needs To Rethink (After Yahoo Walked Away From A Deal)

Started originally as a ridesharing service, then pivoting to become a document uploading and reading service, Scribd now has 100 million registered users, with 90 million monthly active users. That makes it probably the biggest effort of its kind, but leveraging that size hasn’t always been easy.

Scribd, TechCrunch has learned, is at a crossroads in mobile — a crossroads that almost saw the company sell its iOS mobile news aggregation app, Float, to Yahoo.

When Float launched in July 2011, it was off to a good start: 150 partners at signup, including biggies like the AP; with that number eventually growing to 200. It has also regularly made the top-15 rankings for reading and news apps on the App Store, and in the last three months has seen the number of active engaged users of the app go up 30 percent month over month.

And then there is that Yahoo approach: According to our sources, Yahoo approached Scribd with an offer of between $2 million – $8 million for the mobile app, among interest from a “few other companies.” (Those discussions did not progress and Yahoo apparently walked away in February; more on that below.)

But all that demand still didn’t stack up against bigger issues: formidable and buzzy competitors; and how much the app was actually used — which (even with the growth) is not enough to drive the business model Scribd had wanted to attach to it: advertising plus all-you-can-read subscriptions — the “Netflix of reading” as Jason K. wrote at the time of launch.

The story is a kind of cautionary tale about what it takes to make an app a hit, and just how crowded the market really is for new apps.

“When we originally launched Float, Scribd wanted it to be Instapaper and Read It Later and Readability: all of those things and more,” a person close to the company told me. “But in the fall we had a zillion more competitors on top of all of them.” Also not helping things: Flipboard upgrading and expanding to the iPhone, Zite getting re-infused when it got bought by CNN, and Pulse continuing its partnerships and content expansion.

Now, with no one else knocking on the door, Scribd is rethinking Float, folding the effort back into the main Scribd operation. Already, most the staff that had been assigned to work on the app have been redeployed back to the main company. A spokesperson says that there haven’t been any layoffs, though: there were 40 full-time before Float, and there are as many now.

Scribd is also getting ready to release a new version of the app, with Float’s branding sinking (ahem) in favor of Scribd’s own name. (And, unless Scribd always wondered if Float would eventually spin off anyway, that was probably what they should have done in the first place.)

No firm date has yet been set for the relaunch, TechCrunch understands.

There have been some developments at the company that hint at what Scribd plans to do next in mobile: it has apparently now converted everything to be HTML5-friendly, a project it had started in 2010. That opens the door to the company creating an app that lets users access all of Scribd, not just a selection of sources, and across a range of screens.

And after last raising a Series C round of $13 million in January 2011, the company is “very close to breakeven” on its main business. That potentially gives it the flexibility to focus a bit more on what happens in mobile, but in a way that is an extension of what it already does on the web, rather than as a separate venture.

The coda to this story: why would Yahoo want to buy Float? The likely reason was to complement the more visually-led reading app that it has created with Livestand, and to continue its attempt to make itself relevant in the new mobile world.

On one side, the idea of buying a reading app makes complete sense for Yahoo, still a popular destination for news, to think about better ways of delivering that to mobile users — especially since it has cleared the decks of 10 apps, including its news app, that weren’t working so well for the company.

On the other side, it points to some curious thinking that doesn’t seem to be in line with CEO Scott Thompson’s emphasis on focusing on harnessing the talent it already had in house.