Ex-Kelkoo CEO Rips Yahoo, Blames Its Culture for Failed Deal

by: Tech Confidential November 21, 2008 | about stocks: YHOO    
Tech Confidential

Tech Confidential

About this author:
Become a Contributor Submit an Article
  • Font Size:
  • Print

Banexi Venture Partners earned six times the firm's investment in Kelkoo SA when Yahoo! Inc. (YHOO) bought the French comparison shopping site in 2004 for $575 million. Which is many times better than Yahoo! will do now that it's reportedlychappaz.jpg selling Kelkoo to a private equity firm. TechCrunch says U.K.-based Jamplant Ltd. is buying Kelkoo for less than €100 million ($125 million). 

In confirming the sale on his blog, Former Kelkoo CEO Pierre Chappaz (pictured sitting to the left of Internet entrepreneur Loïc LeMeur) rips Yahoo! (in French) for what he describes as its poor management of the shopping company. Interestingly, he echoes a common critique of Yahoo!: it's culture. He also cites Yahoo!'s trouble integrating search company Overture, which it bought in 2003 for $1.6 billion.

"The resale of Kelkoo by Yahoo!, after the difficulties and problems of Overture (ie, missed agreement with Google (GOOG) Adwords), illustrates the inability of this company to develop itself in the transactional universe. It's a cultural problem: Yahoo! is traditional advertising, the good old CPM, it is not the click (CPC) and the merchants. One must also admit that Yahoo!'s management hasn't shown great ability to manage teams located outside American borders (which motivated my own departure as president of Yahoo! Europe in 2005)."

Chappaz also pins blame for the large financial loss Yahoo! is taking on the sale of Kelkoo on "the incompetence of a management that has brought Yahoo! [shares] below $9."

Kelkoo was a 1999 spinout out of Inria, the French National Institute for Research in Computer Science and Control. Banexi general partner and chairman Michel Dahan Dahan helped Kelkoo founder Maurizio Lopez launch the company, with the firm investing $1 million in a first round of funding that also drew in Innovacom SA, France Télécom SA's venture capital unit, as a co-investor. Paris-based Banexi later led and syndicated a $28 million round in Kelkoo to a group of European investors consisting of BBVA Funds, Société Générale Asset Management, Grupo Ahorro Corp., Caja de Ahorros Guipúzcoana y San Sebastián (Kutxa), Turenne Capital Partners and Cita.

In 2000 Kelkoo was generating annual sales of $2.5 million. By the time Yahoo! bought the startup in 2004, it had annual revenue of roughly $40 million, making it among the more successful comparsion-shopping site of its time. That Yahoo! is selling it for less than $125 million highlights, as Chappaz says, just how badly Kelkoo stagnated under the company. It also raises questions about how much of Yahoo!'s current woes owe to its inability to get the most out of its many acquisitions in recent years.

--Alain Sherter

See Nov. 21 post on Yahoo!'s sale of Kelkoo from TechCrunch

For more see CNet News.com and Startup Meme

Related Articles
Top Rated Comment Streams:

Numbers are net rating-

See all Top 100 »
More by Tech Confidential

Investment Resources
Money Management
Research
Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
e-Commerce
e-Finance
Internet Advertising
Internet Content/Community