This is StumbleUpon’s first acquisition since it was founded in Calgary in 2001.
The move comes just eleven months after CEO Greg Isenberg launched the platform.
5by, a shortened version of the old radio term “five-by-five,” curates videos into different categories, such as humour and something else. Isenberg, 24, started the company in November 2012. Its video service is free to users. Ads are inserted occasionally between videos.
5by will be run independently and Isenberg will remain CEO.
The company’s six-member team is expected to join StumbleUpon’s current 70 employees in the coming months, pending visa applications. Isenberg said that it would be easier to work in the same office with StumbleUpon’s employees than in different cities.
StumbleUpon CEO Mark Bartels described the deal as “a directional bet on mobile and video” — that’s where advertising is moving, and he said StumbleUpon believes video will account for the majority of online content consumed by 2016. This is an area where the company faced a “build versus buy” decision: “We saw how fast video was growing, and we wanted to move faster.” Ultimately, he’s hoping to link 5by’s “corpus” categorizing different types of video content with StumbleUpon, so that the core StumbleUpon product gets smarter about video, too.
In addition to its 30 million registered users, StumbleUpon has 100,000 advertisers placing ads on its site and offices in New York and San Francisco. The 12-year-old company had $30 million revenue in 2012 and projects to have between $35 to $40 million revenue in 2013. It also recently launched its Android app in eight different languages.
“We’re trying to move beyond the desktop to mobile and tablet,” Bartels said. “We’re constantly thinking about how people access content.”