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Yahoo goes after fashionistas with acquisition of Polyvore

July 31, 2015, 10:25 PM UTC

Geek chic

Jess Lee
Age: 30
Co-founder and CEO, Polyvore
40 Under 40 rank: 32 When the Hong Kong native started her career at Google in 2004, her mentor, Marissa Mayer, taught her to "always take the more challenging path." Lee heeded that advice four years later when she decided to leave to join the fledgling fashion website Polyvore. Lee was uniquely qualified for the job, with her computer science background, love of fashion (she was already a Polyvore addict), and quirky creative side (she loves Japanese manga comic books and hopes to write a graphic novel). Lee moved into the CEO spot this year -- and the company added "cofounder" to her title -- but her eccentric side still comes through. While being photographed in Marin Headlands, Calif., she spontaneously chose to climb a tree. "Was that creepy?" she asked after she climbed down. "Whatever. I like creepy." --D.R.
Photo: Peter Yang

After buying up the teen haven Tumblr in 2013, Yahoo is going after fashionistas. The tech giant has acquired Polyvore, a company best-known for letting its users create collages of outfits, beauty, and lifestyle items.

The two companies announced the deal on Friday; financial terms were not disclosed. Founded in 2007, Polyvore has become a force in the e-commerce world through its visual collages (Polyvore calls them “sets”) of items that users can purchase through the site. By 2012, it had more than 20 million users and was driving significant social commerce to retailers. It’s also developed a range of products, largely centered around advertising, and has a long-term aim to become the first stop for any fashion purchase, whether the customer is in the research-and-planing phase or ready to buy.

But perhaps what really made Polyvore a winner is that it built a search and discovery engine for fashion and lifestyle items, something that’s key in those categories but traditional engines like Google weren’t serving well (and arguably still aren’t), as Matrix Partner’s Dana Stalder, who led the firm’s investment in Polyvore in 2009, tells Fortune.

So the move by Yahoo is about tapping into Polyvore’s revenue hose through e-commerce. Expect the company to also use Polyvore to beef up Gemini, Yahoo’s new native advertising network. The deal will also help bolster Yahoo’s “MaVeNS” — or mobile, video, native, and social — numbers, which CEO Marissa Mayer has made her new focus. In the most recent quarter, the MaVeNS category brought in $399 million in revenue, up from $249 million a year ago, and now representing 35% of Yahoo’s traffic-driven revenue.

The acquisition reunites old friends — Before Polyvore CEO Jess Lee joined the fashion site, she worked for Mayer at Google and has called her a mentor. In addition, three of Polyvore’s co-founders were former Yahoo engineers. In 2012, Lee made Fortune‘s 40 Under 40 list.

Stalder also shared that while Polyvore wasn’t looking to sell — it’s been profitable or nearly almost every quarter — another public company approached it with talks of an acquisition, which ultimately led to Polyvore’s deal with Yahoo.

As part of the acquisition, Polyvore’s teams will join Yahoo’s offices in Sunnyvale, San Francisco, and New York City, and Lee will report directly to Yahoo SVP of publisher products Simon Khalaf. Though Polyvore’s product will continue to operate on its own, some of its technology and presence will be integrated into Yahoo’s fashion and lifestyle properties.

Polyvore has raised a total of $22.1 million in funding from Matrix Partners, Goldman Sachs, Benchmark Capital, DAG Ventures, Harrison Metal, and others.

(The story has been updated with comments from Dana Stalder, partner at Matrix Partners, one of Polyvore’s investors.)

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