Yahoo in Talks to Buy App Developer Tomfoolery for $16 Million
Yahoo is in talks to acquire business app developer Tomfoolery for about $16 million, according to two people familiar with the negotiations. — The discussions are at an advanced stage but the deal isn't yet final, the people said
Context & Ripple Effects
The reported $20-$30 million IntoNow deal in spring 2011 set the template for Yahoo's small acquisitions, and the same day this story broke the company confirmed it is pulling IntoNow from the app stores nearly three years later — the clearest evidence yet that these buys are about people more than products. The 2013 Summly purchase, widely read as paying $30 million for an entrepreneur rather than an app, extended that pattern.
Against confirmed Q4 2013 numbers showing total revenue down 6% and display advertising down 6%, the reported ~$16 million price for a business-app maker like Tomfoolery is consistent with Yahoo's recent cadence — the reported $80 million Aviate buy earlier in January, plus Cloud Party days ago — of stacking mobile teams quickly while the ad core shrinks.
First-order effects
- If the advanced-stage talks close at the reported ~$16 million, Tomfoolery's team moves to Yahoo and its business app becomes Yahoo property — following a track record where acquired apps are frequently wound down rather than grown, as IntoNow's confirmed shutdown shows.
Second-order effects
- Yahoo is effectively bidding against itself in a market of small mobile-team deals it has run repeatedly since 2011, keeping founder-level exit prices alive for tiny startups even as its own display revenue contracts.
Third-order effects
- The pattern points toward Yahoo functioning as a consolidation endpoint for early-stage mobile teams, with its acquisition pace set by how much runway a declining advertising base allows.
The trend: Yahoo is running a high-frequency acqui-hire strategy, buying small mobile teams at regular intervals while its confirmed Q4 2013 revenue decline narrows the margin for error.