In a bid to increase its portfolio of advertising real estate, Yahoo has acquired Polyvore, an e-commerce startup founded by three ex-Yahoo employees in 2007.
Yahoo made the announcement on its investors website, saying that the acquisition is largely fueled by Yahoo's need to increase advertising space to sell to advertisers. No word has been made on how much Yahoo spent to close the deal, but sources close to TechCrunch say the deal is worth $25 million in cash, $20 million in restricted stock units for employees and $15 million worth of tranche for Polyvore's senior executives.
Polyvore is a social e-commerce website that allows users to shop for clothes and accessories but also create collages of items they want to purchase, similar to what users on Pinterest do. Under Yahoo as its parent company, Polyvore will continue to operate as a standalone service, and Polyvore CEO Jess Lee, a former Google employee heavily influenced by Yahoo CEO Marissa Mayer, will be assimilated into Yahoo as well.
Mayer, who is said to have been instrumental in the acquisition, says advertising played a large part in the decision to purchase Polyvore. The social commerce website currently has 350 retailers, all of which are also advertisers, and Mayer says Polyvore's native ad model will be integrated into Yahoo Gemini, Yahoo's own advertising network. Native ads are ads that look like the website's main content, and they are believed to gain more attention precisely because they do not look like ads.
"The combination of Yahoo's exclusive, premium content with Polyvore's expertise on community-driven experiences and retailer-supported commerce has amazing potential," said Mayer. "The acquisition will accelerate Yahoo's digital content growth strategy across the areas of social, mobile and native."
Once the leading portal on the Internet, Yahoo is now struggling to ramp up its mobile and advertising businesses after being outpaced by the likes of Google and Facebook. The company, which is valued at $4 billion after the spinoff of its Alibaba stake, has made around one-third of its entire revenue around its Mavens business, which comprises mobile, social, video and native advertising, in the last three months, and Mayer is setting her sights on these divisions to drive growth for the aging Internet firm.
Polyvore was founded in 2007 by Jianing Hu, Guangwei Yuan and Pasha Sadri, former engineers at Yahoo. Lee, who began as a product manager at Google at Mayer's advice, was an avid Polyvore user who complained to the Polyvore team about the site's issues. She was asked to join the company to solve these issues herself. Under Lee's watch, Polyvore raised a total of $22.1 million in funding from investors including Goldman Sachs, DAG Ventures and Matrix Partners.
