Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options. HOMEPAGE

StumbleUpon Trying To Move From Web 2.0 Novelty To Real Business

stumbleupon-logo.gifWeb exploring service StumbleUpon -- press a button in your Web browser to get a seemingly random site picked and loaded for you -- has done pretty well for itself: The site boasts 6 million users -- triple its 2 million when eBay bought it in April, 2007 -- who "stumble" onto some 350 million Web pages a month through the service.

And business isn't bad, either: We estimate the company could be on a run rate for $10.5 million in annual sales, which would make it profitable, or at least close to being profitable. But all of those figures could get a bump soon, thanks to new features the site is introducing.

Starting today, you won't need to install a special toolbar in your Web browser to use StumbleUpon anymore -- you can stumble on pages directly through its Web site, now. This is great news; the toolbar requirement has limited growth for several reasons:

  • Most people just won't want to install something special to use a Web service -- see: Joost.
  • Some browsers, like Apple's Safari, don't support add-ons.
  • Many people don't have permission to install stuff on their work computers.

So this should help pick up some of the 50% or so of people who visit StumbleUpon but run away when they find out they need to install software to use it, according to general manager Michael Buhr.

stumbleupon-no-toolbar.gif

Another potential growth driver: Partnerships with sites like The Huffington Post, Rolling Stone, and National Geographic, which will put StumbleUpon widgets onto their sites so people can "stumble" onto other pages they might like on the site. For instance, a Huffington Post reader who has given the thumbs-up to a bunch of Sarah Palin stories could stumble onto another popular Sarah Palin story. This is beneficial for all parties: The user, in theory, sees more neat stuff; the publisher, in theory, gets more pageviews; and StumbleUpon, in theory, gets more users to sign up.

Advertisement

And more users could make StumbleUpon more attractive if eBay's really trying to sell it, as was rumored last month. (Buhr declined to comment on the rumors, but noted that San Francisco-based StumbleUpon is run very independently; if he wanted to put the rumors to rest, this wasn't the way to do it.)

The good news: Even before the new growth drivers, business looks pretty solid already. To make money, the company mixes in sponsored pages for a "single-digit percent" of requests, for five cents each. Our back-of-the-envelope math: Assuming it delivers sponsored results 5% of the time, that's about $875,000 in revenue a month -- or a $10.5 million annual run rate -- over 350 million monthly stumbles. Assuming a $150,000 all-in cost for each of its 35 employees -- $5.25 million annually -- and some server costs, if StumbleUpon isn't yet profitable, it could be soon. (Unless it's only delivering sponsored results 1% or 2% of the time.)

How many other ad-supported Web 2.0 services can you say that about?

Earlier: Report: eBay Trying To Ditch StumbleUpon. What About Skype?

Advertisement
Advertisement
Close icon Two crossed lines that form an 'X'. It indicates a way to close an interaction, or dismiss a notification.

Jump to

  1. Main content
  2. Search
  3. Account