The blogosphere likes to report rumors as facts and edit post title accodingly in real-time as information changes. Om has some coverage (with the required hedging) while techcrunch is not hedging at all.

I have some random thoughts, not very coherent at all, but all pertaining to the transaction.

First of all, I love stumbleupon. I installed it about 4 years ago when I read about it in PC Mag, and I sincerely believe “browsing” is beginning to take shares away from search (more here and here) as a discovery methodology. So I say this is a smart move.

However, I did hear from my Yahoo buddies that they took a look at StumbleUpon (for an acquisition) and found that the active user base to be much lower than downloads. (sour grapes? ) For whatever its worth, I would think 3-6M users would be a $xxxM transaction but the rumored price is a little bit lower.

I also talked to some smaller websites and they have been telling me that StumbleUpon has been increasingly becoming a major source of traffic. (biggest ramp was 6 month ago, and now its a little flat). However, the traffic themselves are not very sticky (just stumbling through).

As Om mentioned, eBay beat out Google for the the acquisition. I wasnt surprised at all. Josh K. of First Round Capital is an eBay alumni (Half.com founder) and the driving force behind StumbleUpon’s board. David Feller (co-worker and friend from eBay) is StumbleUpon’s VP of Marketing and is also an eBay & Half alumni. Josh and Dave knows eBay inside out and have access to the very top of the company as well as the very buttom. Transaction among friends are usually more honest and straight forward . . . who wants to deal with Google’s cocksure M&A team? and un-certain integration strategy?

Ok so lastly, what can eBay do with StumbleUpon . . .

- eBay auction toolbar is one of the stickiest applications eBay has. This could potentially give the functionalities in the eBay toolbar some distribution on the SU toolbar. (wanna stumble on some auctions?)

- Phishing is THE reason user trust on eBay and PayPal is so hard to improve. Paypal and eBay are working overtime on creating industry working groups and blacklist databases to solve this problem. SU is the missing link to the end user to allow for distribution of the warning systems to the browser.

- Skype + SU toolbar are ways with which Paypal can creat a persistent wallet on the “browser-top” which would be significantly more convinient than hunting down the wallet. (as always I believe Paypal is the main benefitiary of most eBay acquistions)

- eBay can exert more leverage in the search game . Firefox generates $100M+ in revenue a year simply because google is the default homepage. Having the search box on the toolbar makes eBay in control of the user relationship while making search engines depend on it (for once!) for traffic. (there is some HBS case study on this. . . I think its called the “judo strategy”)

- I wonder how the Skype ToolBar is doing. Maybe its doing really well and StumbleUpon would be a good source of distribution for its functionalities too.

- I’m unsure what eBay is planning to do with SU’s small but growing advertising inventory. But maybe eBay does have grand ambitions on running its own ad network.