How StumbleUpon Went From Scrappy Startup to Social Media Powerhouse

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In 2001, StumbleUpon was launched as a part-time project. Its CEO, Garrett Camp, was a graduate student who thought it was cool when 50 people whom he didn’t know started using the service after reading about it in a small regional magazine.

Today, StumbleUpon is edging its way into the ranks of top social media services. More than 14 million people use the service to flip through pages of the web as if they’re channel surfing on a television that anticipates their preferences — and 500,000 new users are signing up each month. It’s the ninth most popular social media site on the Internet, according to the measurements of digital marketing agency Zeta Interactive.

We recently chatted with CEO Garrett Camp about how the startup scaled from a college apartment project to a dominant web presence.

Phase 1: Project Mode

Camp and co-founder Geoff Smith were graduate students at the University of Calgary when they started working on StumbleUpon in 2001. At that point, the service existed as an unknown Firefox extension with no social features other than the ability to “subscribe to,” or follow, friends. Since Firefox itself wasn’t yet that well known, and the founders were busy with other projects (e.g. graduate theses) to spend time spreading the word, users trickled in slowly.

After a small Canadian magazine wrote the article that netted StumbleUpon its first handful of users, British magazine PC Pro UK gave the service its first big story. The exposure resulted in a spike of users disproportionately located in the UK, but it wasn’t enough popularity to build a company upon.

“Nothing explodes overnight,” Camp explains. “There were years of working in our bedrooms before we saw any kind of growth.”

Throughout the next four years, he and Smith kept StumbleUpon alive with their own money and some small donations they collected from users.

Phase 2: Venture-Backed Startup

With a graduation date in sight, the StumbleUpon team considered whether to pursue StumbleUpon or get a job. The service had about 600,000 users at that point, and the founders decided to look for funding.

They found it in Silicon Valley, and they put together a $1.5 million seed round in 2005. Investors included Ram Shriram from Sherpalo Ventures (and a board member of Google), Lotus founder Mitch Kapor, super angel Ron Conway, TechValidate co-founder Brad O’Neill and serial entrepreneur Ariel Poler.

“Three people who have done it before all invested in a week,” Camp says. “That’s when I thought, there’s something to this. There’s an idea and a product that I like, but it also has a lot of validation.”

Along with the funding, StumbleUpon picked up advisors whom Camp says were vital to the company’s success. Many of them stopped by every week for several hours, and they lent the young company operational experience that it lacked at that point.

StumbleUpon moved its operation to San Francisco, set up their first offices and started to hire people. It took some work to assemble a good team with the founders’ few connections in the U.S. and to explain a relatively novel product in terms that everyone could understand. Eventually, StumbleUpon accomplished both feats. StumbleUpon soon landed a spot on Firefox’s top ten extension page, which kept new users pouring in.

Phase 3: Property of eBay

In 2007, eBay acquired StumbleUpon for $75 million. The arrangement — which seemed bizarre to many — only lasted until 2009, when StumbleUpon and many of its original investors purchased the company back from eBay. At that point, its value had depreciated to a reported $29 million.

“I wanted [StumbleUpon] to be huge, and it’s kind of hard when you’re within a large company to be really nimble, really agile and flexible,” Camp says about the decision to make StumbleUpon an independent company once again. “The bigger a company gets, the more people are involved in decisions, the slower decisions get made. Look, the whole theory of startups is that three motivated people can go and do something that every company can’t.”

Phase 4: To Be Continued

After barely changing their product during two years under eBay, StumbleUpon started developing new features rapidly once it became independent again.

The same month of the company’s self-purchase, it launched web stumbling, which allowed users to stumble without downloading a Firefox extension. In August 2010, it released a mobile product whose user base is growing 40% every month.

In the last 12 months, StumbleUpon has also launched an Android app discovery feature, integrated third-party support into its video feature and created a URL shortener for content publishers. Earlier this week, it launched a new paid discovery ad system.

“We have such a backlog of things that we want to do,” Camp says. “We feel like there’s a backlog of things StumbleUpon can be applied to — almost every vertical, every device.”

StumbleUpon has plenty of cash to continue checking items off that log at a rapid pace. Last week, the company announced a $17 million Series B round of funding.

“We’re planning on hiring a lot of engineers in the next six months,” Camp says.

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