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Yahoo acquisition rumor: Imgur

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It is unclear that Imgur would sell to Yahoo, but it is clear that Yahoo is interested in Imgur:

Imgur has actually grown larger than Reddit. The site crossed the 100 million user mark in September. That's bigger than Reddit's audience of 85 million, and up from 30 million at the beginning of 2012.

Those stats are according to The Atlantic's Megan Garber, who just wrote an excellent 3,000-word story about Imgur (the kind of positive, access-given story that comes out about a startup when it is fundraising or on the block).

Imgur is now based in San Francisco, where 10 people work for the company. It's not a huge business, but does generate some revenue through ads, memberships, and a new product its testing: sponsored images. Imgur also sells image-hosting capacity to other companies. One of its clients is Yahoo.

We don't know how much Yahoo wants to pay for Imgur.

Schaaf hasn't taken any venture capital, so he doesn't need to hold out for an Instagram-sized offer to make as much money as Instagram CEO Kevin Systrom  or Tumblr CEO David Karp made selling their venture-backed startups for ~$1 billion each. (Sometimes its better to sell a startup for $20 million than $200 million.)

But it's unlikely Imgur can be had for cheap.

Three reasons:

  • Imgur would not be an aqui-hire for Yahoo. Acqui-hires are something failed startups do when they have cool technology but not very many users. Imgur has decent technology and design (it's very easy to use), but it's main asset is all those users.

  • Imgur is "social." Barber's story on Imgur begins with an Atlantic story on Imgur begins with anecdote about how to users met and started dating through the site. Every image on Imgur accumulates "points" through votes up or down by its community of users. Schaaf told Barber, the average amount of "points" every image gets on the site is between 6,000 and 10,000.  

  • Imgur isn't going to run out of money any time soon. All Things D's Liz Gannes reports VCs are "are literally—literally—sliding term sheets under their door.”

Our guess is Yahoo would have to offer something between $100 million and $500 million. But who knows in a world where Snapchat supposedly turned down a $3 billion offer from Facebook.

Acquisition talks fall apart all the time, and so could discussions between Imgur and Yahoo. It's unclear if Imgur wants to sell. Schaaf hasn't been looking for an exit. Before Yahoo came calling, Imgur hadn't even hired an investment bank.

$100 million to $500 million?! For Imgur?!?!?!

Why Yahoo would want to buy Imgur:

1. Buy a big, great audience.

2. Make it MUCH cheaper to host Tumblr images.

If you’re a frequent browser of community news site Reddit, then you already know that Imgur is the preferred image hosting site for all submissions. The startup itself launched years ago by then Reddit user and Ohio State college student Alan Schaaf (aka MrGrimm) after Reddit users’ constant complaint that there was no simple service that let you host images. Since then, Schaaf has relocated Imgur to San Francisco. And while content hosted on Imgur certainly gives the Reddit community plenty to discuss, Imgur now has its own community of self-labeled Imgurians. Imgur also has plenty of features that cater to that community, such as a meme generator, messaging service, and front page of popular submissions.

“Honestly, I could care less about business development,” Schaaf told VentureBeat in a previous interview. “As long as we continue to bring in more traffic, I’m much more concerned with building a good user experience and developing tools that will help grow the Imgur community of users.”


Liz Gannes mentioned in October that Imgur has many suitors:

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