The Best and Worst Tech Buyouts In History


The Best and Worst Tech Buyouts In History

It was the ultimate businessman's dream; yesterday, a tiny company called Instagram sold their product for $1 billion to Facebook and walked straight into early retirement.

But Instagram isn't the first huge tech buyout that's stopped the world, even if the phrase 'one billion dollars' does seem excessive and starts reminding you of Austin Powers.

Dozens of other companies have bought out little start-ups that could over the years, some to remarkable effect and others to quite spectacular failure. We've rounded up seven of the best (and worst) so you can get inspired for the next application you create  - and which small island you feel like purchasing to race your Ferrari around in 2017. 


Founded by Sabeer Bhatia and Jack Smith in 1996, Hotmail was one of the first web-based mail services out there. It was snapped up only a year later by Microsoft for a cool $400 million.

At 364 million users, it's still ahead of Gmail and Yahoo!Mail and remains the world's largest, despite issues with spam and hacking. Not bad for a fifteen year-old service.


Oh, and everything was going so well! Pointcast came out the same year as Hotmail and blistered onto the scene as a prehistoric version of the RSS feeds and news aggregators that we know today.

In 1997, Muroch's NewsCorp offered them a whopping $450 million, but internal squabbles and issues with their CEO, who would soon be replaced, the deal didn't go ahead.

By the time it was purchased (and killed soon after) in 1999, that figure had dropped to $7 million. That's got to hurt. 

Draw Something

If Instagram revives our childhood love of pointing and shooting, then Draw Something is way ahead in that regard.

The app, which allows users to scribble pictures to each other using 3G connection, was a phenomenal hit this year. Yes, this year. It's gone from inception to purchase all in the first quarter of 2012.

It took Instagram two years to be bought out. It took the developers of Draw Something less than five months to be downloaded 50 million times and bought for $180 million big ones by Zynga. 

How quickly can you draw a gigantic pile of money?


YouTube is seven years old in 2012, and is now one of the biggest schoolkids we've ever seen.

The video broadcaster has become an institutional part of daily, computerised existence, something Google recognised early on when they invested in the platform.

Acquiring YouTube cost the search giant $1.65 billion, but it's paid off in spades. When Google bought it, it had 50 million users. There's now nearly 500 million - per month.


One of the great nosedives of the Internet age, MySpace has recently undergone a second transformation.

The premium social network, at least until Zuckerberg and the F-word gang came along, MySpace had over 100 million users across the world and was valued at $12 billion in 2007.

A year earlier, Rupert Murdoch bought it for $580 million dollars, only to see that money disappear before their eyes as Facebook left MySpace in its dust from 2008 onwards.

The site's users abandoned it en masse, thereby limiting the amount of eyeballs FOX Networks content and causing Murdoch considerable angst, could advertise to. Staff were laid off, add-ons shut down.

By the time he sold it in 2011, to pop star Justin Timberlake no less, MySpace was valued at a pithy $35 million.

However, a successful rebrand and stripping of the site's features has soon users return to MySpace in their thousands in the last few months. 


Many younger adopters of the Internet won't remember the time when AOL pretty much was the Internet. Founded in the mid-80s, it ruled the space with an iron fist for years.

By controlling portals to the Internet through rationed hours, AOL was a juggernaut that everyone wanted a piece of. When it merged with media giant TimeWarner right before the .com bust, it was, at the time, one of the biggest deals ever struck online. The value of their stock was close to $350 billion.

These days, it's shed over half its subscribers, and fallen out of favour with almost everyone (Time split from them in 2009), except The Huffington Post, which it bought last year. But despite Google redefining their space, they're still kicking.  


Around the same time is Tamagotchis was allowing children in high-rises to pretend they had animals to look after, Neopets was an online platform which let them create fantasy animals to romp around in a virtual world.

It was a huge hit and managed to keep users glued to the site for extraordinary amounts of time. Entertainment company Viacom banked on this when they bought the site from the married designers Adam and Donna Powell for $150 million.

At the time, Neopets was already six years old. Today, it's practically a dinosaur, but has spawned a franchise that extends way beyond the browser to console gaming and merchandise.  

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