Outbrain Buys Surphace From AOL

outbrain israeli startup logo outloudOutbrain bought the content recommendation system Surphace from AOL for an undisclosed sum. Surphace is a reincarnation of Sphere, a startup founded by Martin Remy and Steve Nieker in 2006 as a related content plugin and was later acquired by AOL in April 2008 for a rumored sum of $25 million. In October 2009, AOL re-branded the service to Surphace and launched  a self served solution for related content called S4. Since launch, the self served solution has attracted over 3,000 publishers and around 1 million page views a day.

Outbrain, one of my favorite related content widgets (as you can see in action on VC Cafe), is a related content plugin as well. About a year ago, Outbrain launched Outloud , a paid re-circulation service that enables publishers to attract viewers from the Outbrain network of publishers, for a flat fee. Outbrain has raised approximately $17 million in VC money, from Gemini, Greylock and private investors.

More details on the acquisition as posted by Peter Kafka on All Things D:

Tim Armstrong has disposed of another asset that AOL bought before he showed up: The company has sold Surphace, its content recommendation engine, to Outbrain, which does the same thing.

I don’t have the deal terms, but my hunch is that no cash is involved, and that AOL’s compensation could come in the form of equity in privately held Outbrain, or a tax benefit, or both.

“In keeping with the AOL strategy, any place where we are not a leader in the category or profitable, we are going to look at partnerships or other alternatives. This is one of those businesses. We are pleased we found a great home for the Surphace technology and its employees,” AOL venture and local head Jon Brod said in a statement.

Outbrain CEO Yaron Galai declined to comment.

AOL acquired Surphace for something north of  $25 million in 2008, when it was called Sphere, and Armstrong was still running ad sales at Google. Co-founder Tony Conrad left AOL in 2009, but has since come back as part of the About.me acquisition late last year.

Both Surphace and Outbrain do roughly the same thing: They allow publishers to automatically present related pieces of content to Web surfers, based on the very straightforward  theory that a visitor interested in a certain kind of story would stick around if offered similar stuff. (AllThingsD is a Surphace customer, so you can see it in action at the bottom of this post).

AOL reports earnings early tomorrow morning.

Disclosure: I used to work for AOL as principal product manager of Search in Europe.

Eze Vidra
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Eze Vidra

Chief Innovation Officer at Antidote
Eze is the Chief Innovation Officer at Antidote, a startup helping patients search and match to clinical trial, to accelerate medical breakthroughs. Previously, Ezewas a General Partner at Google Ventures Europe. Before GV, Eze founded and led Campus London, Google's first physical hub for startups, and was the Head Google for Entrepreneurs in Europe. He's an experienced product manager and startup mentor. In 2012 Eze founded Techbikers, a non-for profit supporting children education in developing countries.
Eze Vidra
Follow me

Eze Vidra

Eze is the Chief Innovation Officer at Antidote, a startup helping patients search and match to clinical trial, to accelerate medical breakthroughs. Previously, Eze was a General Partner at Google Ventures Europe. Before GV, Eze founded and led Campus London, Google's first physical hub for startups, and was the Head Google for Entrepreneurs in Europe. He's an experienced product manager and startup mentor. In 2012 Eze founded Techbikers, a non-for profit supporting children education in developing countries.

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