Team Pelago (Photo via Carlos Paradinha Jr.)

Groupon is pushing deeper into the mobile world today, gobbling up Seattle startup Pelago for an undisclosed price. Tricia Duryee at All Things D has more details, noting that co-founder Jeff Holden will take over as Groupon’s product development head.

Started by Holden and Darren Vengroff, both former Amazon.com employees, Pelago raised a ton of cash over the years. But it never quite hit its stride after services such as FourSquare and Gowalla gained momentum.

It looks like the acquisition may be more about the company’s talent anyway, since Pelago’s Whrrl service will be shut down April 30th.

In 2008, the company raised $15 million, which followed a $7 million round shortly after it was founded.

The 5-year-old company had said its mission was to “revolutionize the way people explore and experience the physical world.” The Whrrl app has been available on the iPhone, Android and Blackberry, with users of the service able to form “societies” around specific areas of interest or places.

Backers included Kleiner Perkins Caufield & Byers, Bezos Expeditions, T-Venture, Trilogy Equity Partners and Reliance Technology Ventures.

Here’s more from Groupon CEO Andrew Mason, who writes that they’ve “always liked CEO Jeff Holden, the Whrrl team and the technology they’ve developed.” He continues:

“Their obsession with real-world serendipitous discovery, or “Anti-Search,” is core to Groupon’s mission. It’s about discovering what you didn’t know you didn’t know, right in your own backyard. Jeff intimately gets consumer buying behavior and the importance of a great user experience, and his team is this awesome combination of data-driven creatives…the people who create smart products that are really fun to use.”

Meanwhile, Holden offers his take in this blog post:

“The mission alignment of the two companies and the fact that we’ve taken very different approaches is a big part of what makes this marriage non-strange, and in fact, very complementary and compelling.  And what made this a no-brainer was Groupon’s massive adoption and meteoric growth.  The opportunity to take the collective brain power and technology of our two companies and point them at a phenomenon already at huge scale is virtually impossible to refuse.”

John Cook is co-founder of GeekWire. Follow on Twitter: @geekwirenews and Facebook.

Comments

  • Jonathan Alford

    Congratulations Jeff and team!

  • Anonymous

    2008…when the going was good….$22million in….wonder how many investors get their money back…

  • Skeptic

    I’m a bit surprised to learn that Pelago is still in business. Either they were sold for way below the $15M that was put in or Groupon is going slap happy with their $950M worth of cash. I’d love to be proven wrong. At least they’re doing the right thing in immediately killing Whrrl (and letting users download all their data, a classy move), so it’s at least clear that isn’t what the acquisition is about.

    • Anonymous

      Yeah….Groupon has been known to do lowball buyouts of struggling firms. My guess is if it had been a successful exit, the number would have been shared, as has been done with other successful exits.

      • Guest

        Looks like Groupon bought a Seattle development office. Welcome to the Facebook Zynga club. Probably a $2-4 million deal. Total loss for the investors. Minor win for the developers who get to remain a team and get a little pre-IPO stock in exchange for their worthless Pelago shares.

        • johnhcook

          It does look like the Pelago deal is a “talent acquisition,” and establishes another tech giant here. I’ve reached out to CEO Jeff Holden for additional info on what this means and whether he’s planning on staying here, and I’ll update if I hear more.

        • Lurker

          Rumor has it only one Pelago dev has been kept by Groupon (along with the executive staff).

  • Guest

    Congratulations to Bezos Expeditions for two successful exits today! First Kosmix and now Pelago. Will there be free caviar at all Amazon buildings tomorrow?

  • Guest

    I doubt this would be considered a successful exit. Pelago has a few patents that could be nice, but in terms of employees, I believe they were around 20 people when acquired. Even if you were very generous, I fail to see how they could have made back the $22M that was invested.

    And, not to sound snarky or anything, but the Whrrl app went through 2-3 major iterations (depending on how you look at it, I’d say “three”), each massively different from the last, with no clear direction. Despite each release being trumpeted as an iteration and improvement over the last, each was really a new attempt to see if they could find something that might actually resonate.

    In the end, Whrrl became a “me too” application that was late to the party. I don’t think I’d want the guy who made this (along with an incredible amount of employee turnover) to head up my product development.

  • http://www.daniellemorrill.com Danielle Morrill

    Wow, this is a much better outcome than I ever expected and I’m very happy for the team, especially those who will be taking jobs at Groupon or stuck it out for years and might have made money on their stock options. I’m sad, but not surprised, to hear the product is being shut down — and I think its really cool they’re letting users retrieve all their data.

  • http://twitter.com/InfiniteHoops Tosh Meston

    Really cool news. I really thought Whrrl’s design was great with lots of attention to detail — like the animated clouds moving on the background view and hidden message. It’s sad to hear the app will be shuttered. Congrats to the team.

  • Viv

    Holden is a genius. Let him sell his home. Time to fire? He will become intern at GroupOn.

  • http://www.facebook.com/moniguzman Mónica Guzmán

    Whrrl is a beautiful app. Congrats to the team for sticking it out!

  • http://pulse.yahoo.com/_NKQ7WXNMZIYQZYYE6M3VOURNFE megamelfina

    Groupon’s newest acquisition is going to be beneficial to them. Hopefully it will make them able to reach out to more customers in all locations across the country.

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