Same Story, Ten Years Later?

Some historical parallelism struck me this morning as I was thinking about yesterday's acquisition of Maven Networks by Yahoo, for $160 million.

Almost ten years ago, Maven founder and CEO Hilmi Ozguc sold an earlier company, Narrative Communications, to @home Corp. Narrative harnessed new technologies, like animated and interactive banners, to make ads more compelling; Maven focuses on delivering video, and integrating advertising into it.

The purchase price of Narrative was $89 million (in stock).

Around that time, the Web portal Excite was in play, and the two suitors were Yahoo and @home. (Running Excite at the time was George Bell, now a partner with General Catalyst, the Cambridge venture capital firm that originally backed Maven.) @home, which had just bought Narrative, prevailed, and the merger took place in early 1999. It's now widely considered one of the worst combinations of the dot-com era. The newly-renamed Excite@Home saw its stock plummet, and declared bankruptcy in October 2001.

Kind of interesting, don't you think, that the latest acquirer of a Hilmi Ozguc start-up, Yahoo, is also in the thick of some merger discussions of it's own...

Behind Yahoo's $160M Acquisition of Maven: Maven CEO and Board Member Discuss

What do you ask for in February 2008, when you sell a company to Yahoo?

Cash, baby.

Yahoo paid $160 million for Cambridge-based Maven Networks -- almost all of it in greenbacks, not Yahoo stock. (Here's the AP story...and the official press release.)

"There's no way to arbitrage Yahoo's stock price when Microsoft may be buying them, or may not be buying them," says Woody Benson, managing general partner at Prism VentureWorks, which invested in Maven's most recent round of financing. (Yahoo rebuffed Microsoft's $44 billion purchase attempt on Saturday.)

Benson told me this morning that there was more than one company interested in owning Maven, but acknowledged that he was a bit anxious about whether the deal would go ahead once Microsoft started to make a run at Yahoo: "Anxious would be one word for it," he said.

Benson said that Maven and Yahoo signed a letter of intent around Thanksgiving, and that due diligence proceeded until Microsoft made its unsolicited offer to acquire Yahoo on February 1st. Benson says that the Microsoft offer didn't necessarily cause Yahoo execs to slow down or speed up the final negotiations in the Maven deal; I'd earlier speculated that it could hang in the air for a while. The final papers were signed on Sunday.

"There's a reason why they're buying us," Maven CEO Hilmi Ozquc said, when I suggested that Yahoo (and Microsoft) had missed the boat on the online video explosion. "The tech innovation has been happening at start-ups to date. But as the giants jump in, the fastest way to get there is through acquisition."

Ozguc and Benson both say that Yahoo's big advertising salesforce will help Maven vault ahead of other video players, like Brightcove (and perhaps even put it on an even footing with YouTube, which has been slow to integrate ads with videos.)

My last question for Ozguc was whether he'd be surprised if Microsoft now bought Brightcove: "I would not be surprised," he said. "But if they're going to buy Yahoo and get Maven for free, why?"

Update: Will Richmond has a longer Q&A with Ozguc on his site, Videonuze.

The NY Times Bits blog offers a critical take on the purchase...and here's the Globe coverage of the deal.

IDG's Jeff Bussgang on the Exit Window

I was wondering back in November about some of the things that could make the Web 2.0 investing bubble go 'pop.'

Jeff Bussgang at IDG Ventures looks at that question again, in light of a possible combination of Microsoft and Yahoo. What'll be the impact on venture-backed start-ups, which are more often bought than taken public?

(I have to wonder whether the Microsoft take-over offer is already stalling one possible Web 2.0 deal -- Yahoo's rumored acquisition of Maven Networks.)

Ray Ozzie's role in Microsoft's Yahoo offer

Bloomberg has a good piece explaining the role Ray Ozzie is playing in Microsoft's bid for Yahoo.

Ozzie, you'll remember, was running Groove Networks up in Beverly until 2005, when Microsoft bought him (whoops, his company) and made him one of its CTOs. He now fills Bill Gates' shoes as Microsoft's chief software architect.

From Crayton Harrison's piece:

Ozzie, 52, plans to use the Internet to complement Microsoft's software for consumers and businesses, marrying programs with information available online. When Microsoft held a video conference for employees today about the Yahoo bid, it was Ozzie who explained how the companies' technologies would fit together, spokesman Bill Cox said.

``He really understands technology and where it's going,'' said Ken Allen, a portfolio manager at T. Rowe Price Associates Inc. in Baltimore, the fifth-biggest institutional holder of Microsoft shares.

Ozzie blogs (he was one of the first Boston tech execs to do so), but not very regularly.

Will Yahoo buy Maven?

(This is in danger of turning into the all-General-Catalyst-all-the-time blog...)

But the buzz yesterday was that Yahoo was on the verge of a deal to buy Cambridge's Maven Networks for about $150 million.

Wonder how that deal will be affected by Microsoft's unsolicited offer to buy Yahoo for $44 billion?

I suspect if the ink isn't yet dry on the Maven acquisition, CEO Hilmi Ozguc and his investors (which include GC, Prism VentureWorks, and Accel) may be biting their nails for a little while...

(A few months back, I wrote about the rivalry between Maven and Brightcove, Cambridge's two video delivery start-ups.)