Stumbleupon Management

April 28, 2009 by Dave Clough.

I read an article recently where the founders of a 2001 startup were considering buying the company back from eBay.  My initial reaction is that this is a bad idea, though I don’t have all the details.  Let me explain…

 StumbleUpon started with $1.5M in venture funding and sold out to eBay for $75M.  Great story — so far so good.  Then after 2 years and very little progress, eBay needs money and starts shopping it around.  So three founders look to buy it back from eBay.  Why is this a good scenario?

While I am not an expert in their business, nor do I know the true influence eBay had on the company over those two years, there are many things that raise questions.  Is this is good decision for the founders?

The serial entrepreneur is not typically the right person to run a large company.  The right personality for a small team startup is not usually the person well suited to run a bigger company.  The singular focus of the team to achieve the vision and reach the payday is usually gone after the sale.  It appears the founders still have the drive, so are they going to pull it back and sell it again, or keep it private.  This decision will impact the hiring and employee motivation going forward.   It seems they can motivate startup people, but can they motivate people working at an “older” company.  These people have very different motivators (passion & risk vs. a job & security).

The next big question is whether eBay left the company alone for those two years or if they brought them into the fold.  Either way, there are other important managerial questions.  If they left StumbleUpon autonomous (scenario 1), why did the company stagnate?  Maybe the management team has already peaked.  If they brought them into the eBay fold (scenario 2), then it is likely that many of the original employees left and they hired more “big company” people who are more security minded.  So depending on the answer, either you have to make changes at the top (scenario 1) or bring in more “startup employees” (scenario 2). 

In either case, from the outside looking in, it seems that StumbleUpon needs to augment their staff with a good turnaround guy either on staff or as a consultant.  Doing what they have done over the past two years in not an option if they want to see the growth they experienced before selling to eBay.

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