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Yahoo almost did not want to buy Ptch - report

December 7
12:00 PM 2013

According to a report by Business Insider, the acquisition of mobile app Ptch by Yahoo Inc was not the typical acquisition-hire strategy the tech giant had applied in most of its acquisitions this year. With information obtained by multiple sources, Business Insider deemed Ptch's acquisition was a raw deal.

The tech news source said several sources confirmed that Ptch was sold to Yahoo for USD.5 million. Moreover, only three members from the mobile app's team was absorbed by the tech giant, which would mean that majority of the mobile app's early employees who could have an equity stake in the startup might have ended with nothing, the tech news source deduced.

The team behind the mobile app was a spin off company of DreamWorks Animation, which was founded in 2011. DWA Investments received USD10 million in investment funding from DreamWorks, said one source to Business Insider. DWA at that time considered its spin off from DreamWorks as a breakout moment, and also for the latter, which was its first time to launch a consumer tech startup.

Dubbed as the "Instagram for videos" by technology media, Ptch lets users edit their videos with music and effects. The mobile app was the brainchild of DreamWorks chief technology officer Ed Leonard, who also left his employer to become the startup's head. Leonard was said to be instrumental in leading DreamWorks CEO Jeffrey Katzenberg to invest in DWI. Leonard's excess hiring had led DWI's co-founders to axe him, said Business Insider.

After Leonard's departure, the developments leading to Ptch's acquisition were puzzling to Business Insider. According to information it obtained from its three sources, Ptch initially had merger plans with another mobile startup called QWiki, with the latter ending up being one of Yahoo's acquired companies for a whopping USD50 million. Yahoo chief Marissa Mayer only wanted to buy Ptch's technology, and was not interested with the company. The structured deal left out employees who had an equity stake in the Ptch, said one source to Business Insider.

"No founder or employee received anything out of the Yahoo deal, only potential job offers," the source said.

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