College Startup Success Story, Revisited

In 2007, Garrett Camp pulled off an entrepreneurial accomplishment of a lifetime: He sold his college startup--StumbleUpon, a discovery engine that finds the best content on the web for each unique user--to eBay for reportedly $75 million, a mere year after graduation.

But Camp's entrepreneurial spirit shone even brighter in April 2009 when, unsatisfied with the results of the sale, he bought the company back. Since then, he has restored the energy of a college startup to what had become a corporate entity, tripled StumbleUpon's revenue and grown its user base 118 percent, to 10 million.

It's a story every college startup thinking--or dreaming--of selling should study. It began when Camp was a grad student at University of Calgary in 2002, writing a thesis on information discovery. While researching how to help people search the internet, he and his friend Geoff Smith began tossing around ideas for creating an easy way to find interesting websites.

"Our idea was to make it like channel surfing on TV," says Camp, now 31. "You just click a button and it shows you something based on your interests."

Their website initially offered users a basic way to "stumble" through websites that they might like. But as interest in StumbleUpon grew, so did their ideas for making the recommendation engine more accurate: They harnessed the power of crowdsourcing, allowing people to "thumbs up" or "thumbs down" pages they saw, and they used those ratings to create recommendations for other users with similar interests.

"We offer this kind of serendipitous discovery experience," Camp says. "You end up finding cool stuff you'd never even thought to search for."

After graduating in 2006, Camp moved to San Francisco and raised angel funding from Google board member Ram Shriram, Half.com founder Josh Kopelman and several Silicon Valley investors. A few months later, several companies showed interest in acquiring StumbleUpon.

The speed was entirely unexpected, Camp says, "and when we finally decided to accept one of the offers, it became a big transition to go from an independent company to part of a much larger one."

eBay wanted StumbleUpon to operate autonomously within the corporate umbrella. But, Camp says, "I feel like getting eBay stock was not as attractive to a lot of young entrepreneurs as getting stock in other early-stage companies, which had an impact on recruiting. I also think that over time, the motivation of some employees decreased because we were no longer in a startup environment."

As the corporate effect became more negative, Camp assembled a syndicate of investors and, after a few months of negotiations with eBay, he says, he bought back StumbleUpon for less than what he had sold it for.

The company's head count doubled, revenue tripled and the site attracted millions more users. "It was definitely back to startup energy," Camp says.

What's his exit strategy with StumbleUpon next time around? "For the next year, I'm not even really thinking about it," he says. "We're just focused on expanding our lead in the personalized content discovery space. If we execute well against our plan, there will be plenty of options."

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This article was originally published in the October 2010 print edition of Entrepreneur with the headline: Sorry, But No Sale.