SiliconBeat: Sony buys video start-up Grouper for $65 million

Grouper, the Mill Valley (near San Francisco) video sharing start-up that for a while skirted dangerously near also-ran status, has been acquired by Sony.

This is one of the more impressive management turnaround stories in Silicon Valley's short Web 2.0 history. We've followed the team and its strategy since it was founded in 2004, as a peer-to-peer company that offered a software where small groups of people could share things like photos and videos. But finding that its traffic wasn't growing, co-founder chief executive Josh Felser made a really tough decision in December of last year:

Felser

He reoriented the company toward online video sharing, even though he'd hired all these engineers with the promise he was doing peer-to-peer. We remember meeting him at a dinner part at the time, and noting his determination: Even as YouTube's lead was already quite substantial, even humiliating, Josh kept fighting. It was the title on one of our posts. He created funny videos, of Grouper beating up YouTube (scroll down). He pushed new features hard, like video comments.

We talked with Josh and co-founder David Samuel this afternoon. They said Sony Pictures Entertainment, headquartered in Los Angeles made the acquisition of the 26-employee team after partnership talks transformed into an acquisition offer.

This is a great return, considering the company only swallowed $5.25 million in venture capital.

Also, this is the first Web 2.0 company this year, apparently, where the acquisition amount has been made public -- perhaps because it is not embarrassingly small, like most other acquisitions.

Posted by Matt Marshall on August 22, 2006 9:00 PM | Linking Posts

Tags: Grouper Josh+Felser Sony

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CONGRATULATIONS!!!
I know the Grouper team is very happy about this and this is a strong validator for our space. I had a feeling Sony was about to make a move, and am happy to hear they bought a great player like grouper.

Adam on August 23, 2006 9:20 AM
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The Grouper guys built real technology, a great team, a significant audience, and kept experimenting and tacking as the market changed around them. Then, in a very crowded field, they managed to differentiate and close a transaction. It really is a great managment story.

James on August 23, 2006 1:07 PM
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I'm not surprised at Josh Felser's splendid success. He has always been graced with a go-for-it spirit complimented by his intelligence, humor and integrity. By the way, I'm his mother!
maggie.

maggie silverstein on August 24, 2006 2:57 PM
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Dear Josh,
I am so proud to be related (albeit by proxy-marriage) to you. My mother-in-law's mother was a Karelitz and the family is wonderful, but I do believe, aside from CHAZZON ISH, you top the list!!!!!
Congratulations many times over. This isn't the first time you have done yourself and those dear to you proud!
Best,
Estelle Reingold

Estelle Reingold on August 24, 2006 4:18 PM
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I've known Josh and Dave from the Spinner days; both as a friend and investor. I am very happy for them and the rest of the team; lots of hard work, mental flexibility, strategy agility, and a dose of creatvity jelled to make this venture happen. Thanks again for another payday guys, best of luck with Sony going foreward!
Fritz

Fritz on August 25, 2006 10:43 AM
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Josh - on behalf of the guys at DAG Ventures, I'll echo Fritz's comments as well as thank you and the team for making this a great investment. Well done man.

John on August 25, 2006 11:52 AM
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Draling Josh,
WOW! you are a clever boy, and deserve all the happiness and success you get. John and I are so pleased for you. Next time I`m sure a little british influence would be helpful!!!
We miss you. Come visit soon when you are not being so mega!
Love Tania xxxxx

Tania Keeling UK on August 31, 2006 1:11 AM
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