The story of Nick D'Aloisio, the 17-year-old whiz kid who sold his company to Yahoo yesterday for a reported $30 million, is a genuine feel-good tale about a talented young person being rewarded for his (extreme) persistence with the kind of riches most tech entrepreneurs can only dream of. I've never met D'Aloisio or used his news-summarizing app, Summly, but I assume he's talented enough that Yahoo wants to buy his services outright, rather than just ripping Summly off, à la Facebook and Snapchat.
That said, it's clear that Yahoo has other reasons for wanting D'Aloisio in its corner — reasons that have more to do with his age, looks, and personality than the app he came bearing.
Vibhu Norby has already outlined a few of the reasons why, from a purely strategic and financial view, Yahoo's purchase of Summly makes no sense. But I think Norby (who values the press Yahoo got out of the acquisition at $1 million) is significantly underestimating how much Yahoo needed D'Aloisio, or someone very much like him.
After all, the free publicity Yahoo got out of the Summly acquisition, including a front-page Times story, was the kind of PR home run most companies can only dream of. (The only other similar acquisition I can remember getting the A1 treatment from the Times was when Facebook bought Instagram, at a price tag more than 30 times higher.) With each story about Yahoo making a 17-year-old rich overnight, the company looks more adaptable, more aggressive about embracing new technologies, and less stuck in its ways.
The backdrop to all of this is that for most of the last year, ever since it installed Marissa Mayer as CEO, Yahoo has been engaged in a desperate image-rehab campaign. It has bought young start-ups, brought free food to its cafeteria, switched from BlackBerries to iPhones for employees, and taken dozens more steps to show that it is a growing, thriving company — not a Silicon Valley dinosaur on the road to obsolescence.
The company's efforts have paid off when it comes to mainstream observers and the tech press. (Witness the sheer number of "Yahoo is back" stories.) But Silicon Valley engineers — the people Yahoo desperately needs to hire — have been tougher to convince. When Mayer began sending recruiting packets to former Yahoo employees, trying to woo them back, the reaction was decidedly cool. “I’ve heard they literally cannot buy people,” one person who got the packet told TechCrunch.
Yahoo is already signaling that it plans to use D'Aloisio as HR bait. ("Nick will be a great person to put in front of the media and consumers with Mayer to make Yahoo seem like it is a place that loves both entrepreneurs and mobile experiences, which in turn will presumably attract others like him," a source inside the company told Kara Swisher.) And while having a British teenager who looks like a One Direction member extol Yahoo's virtues might not convince every code jockey in Silicon Valley to jump onboard, it's probably going to result in at least a few more applications for open spots.
Viewed as a recruiting move, rather than a purely strategic acquisition, the $30 million Yahoo spent on Summly starts to look like a better and better deal. If just one 14-year-old coding prodigy reads about D'Aloisio's sale in the Times and decides that Yahoo, and not Facebook or Google or Oracle, is where he wants to build his earth-shattering products, then yesterday's acquisition will have been worth it. In fact, it might be the smartest $30 million a Silicon Valley tech company has spent in quite some time.