Yahoo: Not the Startup Killer TechCrunch's Arrington Thinks It Is

Last Updated Apr 21, 2010 2:11 PM EDT

Yahoo (YHOO) made waves last week with an offer of more than $100 million for the trendy geo-social network Foursquare. The move set off alarms in the blogosphere, which compared Yahoo to a startup serial killer. But the facts don't bear that accusation out.

The loudest objection to Yahoo came from Michael Arrington over at TechCrunch: "Yahoo is a horrendous choice for Foursquare. It's where startups go to die. They've bought so many companies that were so promising, only to see them wither on the vine." That's a bold statement, and the evidence Arrington supplies to back it up is pretty thin.

Arrington only points to a single large acquisition that didn't work out, the video network Maven, that Yahoo acquired in early 2008 for $160 million and shuttered 17 months later. For other examples of failure he directs readers to a history of Yahoo's acquisitions and asks, "How many of these were successful?"

Well, if he had bothered to check his own stats, Arrington would have seen that just 3 out of 53 companies on Yahoo's Clusterbase page are listed as closed, and another two by my count have been shuttered. The majority of Yahoo's acquisitions are still alive and kicking, some as independent websites, most behind the scenes.

There is a great roundup of Yahoo's many purchases here, written after the infamous peanut butter manifesto, in which a Yahoo exec complained the company was spreading itself too thin. While most of these startups never became household names they often acted as the building blocks for Yahoo's successful forays into arenas like fantasy sports, online games and advertising.

Arrington also points to two of Yahoo's more successful acquisitions, Delicious and Flickr, noting that, "The founders always leave in disgust." Well, duh. Working for a corporation is not as fun as inventing your own site, building up buzz and making a bundle on the sale. But that's not specific to Yahoo.

In fact, Foursquare's founder and largest stakeholder, Dennis Crowley, has already experienced this. His previous venture, Dodgeball, was acquired by Google (GOOG), and an unhappy Crowley left shortly thereafter. Right now Yahoo's offer gives Crowley leverage with the horde of prominent VC firms courting his company. And the truth is that Foursquare needs to make a play for size soon, before vastly larger sites like Facebook get a stranglehold on the geo-social game. Yahoo's peanut butter approach to acquisitions certainly hasn't played out well for the corporation as a whole. But the startups it acquired have been handsomely rewarded and, for the most part, are still alive to tell the tale.

Image from Flickr user Michelle

  • Ben Popper

    Ben Popper writes at the intersection of culture and technology. His work has been published in the NY Times, Washington Post, Fast Company, Rolling Stone, The Atlantic and many others. He lives at www.benpopper.com.