It's said often that where there is smoke, there is fire. In early July, I tried to read the smoke signals emanating from Brizzly co-founder Chris Wetherell and investor Mike Hirshland on Twitter about a myterious "buyout offer" and "legalese", incorrectly guessing the social media client was going to be joining up with Foursquare. It turns out that my hunch correctly had sniffed out fire, but completely whiffed on the suitor. Instead of a 2010-era nimble startup, Brizzly's acquirer is the 1990s-era AOL, who can now be confirmed is picking up Thing Labs (makers of Brizzly), including the company's well-respected small team, and all company assets, from the Brizzly Web and iPhone client, the Brizzly Guide, the URL shortener, and even its colorful mascot, Phineas T. Brizzly the bear.The acquisition is said to be at $18 million guaranteed, with potential earnouts to near $30 million. The company's founders, Jason Shellen and Chris Wetherell will be running AOL Instant Messenger and the company's lifestream service - giving the pair high profile roles that could impact millions of users immediately.
It was this acquirer that set off the curious tweets in July, putting the team in an odd position of having to deny they were being sold to Foursquare. What was not said, however, was that no sale was taking place, period - because, indeed, those gears had started to turn at an Old Media company speed.
Follow the Bouncing Ball! (Not to Foursquare, but to AOL)
That Thing Labs would be the target of potential M&A activity is no surprise. Shellen and Wetherell are given a good amount of credit for their work at Google on Reader and Blogger, with Shellen's work dating prior to Google's acquisition of the Ev Williams-co-founded Pyra Labs back in 2003. The team is very sharp, and had created not just "yet another" Twitter client, but one that had deep ties into the social graph across multiple networks, and a lightly heralded, but very cool, collaboration system called Picnics.
Mike Tipped Us M&A Was On, But It Took Months to Bake
It's Picnics that has AOL ready to take Brizzly out for more than a mere lunch.
The combination of a top-notch team and intriguing technology saw Thing Labs enter into potential acquisition talks with multiple partners this summer, some who eventually found the product not to be a perfect fit with their portfolio, and still others, who were rejected by the company's team out of fear they would be part of a soulless "talent buy" who would take Brizzly off the map. Meanwhile, as these distractions emerged, the company retained the opportunity to initiate the raise of a Series B round of funding, following their $600k Series A round completed in late 2009. Other potential acquirers included Yahoo! and Google, both of which Thing Labs was said to have turned down.
Yet the somewhat unlikely partner of AOL, a media giant with a damaged brand, especially in the mind of Silicon Valley and startup entrepreneurs more specifically, has emerged as the victorious buyer, following due diligence not just from their team to see if Thing Labs would be a solid complement to their still-popular with millions of people Instant Messenger client, but also from the Thing Labs developers, who wanted to be sure of the quality of AOL's development team, especially as some of them had experienced less than satisfactory relationships with younger gung-ho teams at large Web services previously in their career.
As has been reported by AOL-watchers like Kara Swisher and Mike Arrington over the last couple years, the company is trying to gain a respectable presence in Silicon Valley, under the leadership of former Googler Tim Armstrong. But with company headquarters in Dulles, Virginia, and much of the leadership in New York, AOL is struggling to attract and retain top talent in the Bay Area. The prospect of being acquired by a Web 1.0 property like AOL initially tugged at Thing Labs' leadership, while recognizing the financial benefits for the company's 7 employees, who for the most part, excluding the cofounders, could be seeing a tax bracket upgrade after this transaction settles. While the deal is officially being reported as $18 million, the contract calls for significant earn-out clauses, which could drive the eventual price up to as much as $30 million, serving to provide Golden Handcuffs to the team's talent and locking them up to the company that once flooded the USPS with floppy disks promising free hours each month of dial-up service and a walled garden.
AOL is obviously on an acquisition spree, rivaling only Google in terms of buzz in the last few months. The Thing Labs acquisition follows news today that the company also picked up TechCrunch itself, bringing the tech blog titan into the content-focused Web pioneer. The company also purchased 5 min yesterday.
Interestingly, with the TechCrunch acquisition, AOL has Crunchbase, and with the Thing Labs acquisition, AOL also has the Brizzly Guide - a more real-time directory, edited by users. The two could be complimentary, separate or one could be retired. It's said the Brizzly Guide will be used for real-time home page news curation.
Additionally, the work with Foursquare turned out not to be completely empty after all. While not part of the M&A transaction, Brizzly announced integration with Foursquare overnight, letting you view checkins alongside updates on Twitter and Facebook in the service.
As a sidenote, this continues the unique career path of Thing Labs' Ben Darnell, who in the space of just a little over a year, has worked at Google Reader, then FriendFeed, then Facebook, then Thing Labs and now, AOL. But this time, he probably made a little bit of money. Ben has recently been known for his contributions and leadership to the Tornado Web server project. AOL might be seen as old tech, but it picked up some serious new media leadership here.
Official word of the deal should break soon.