Los Angeles Business Journal

AOL Buys Santa Monica’s Gravity for $90 Million

By Tom Dotan Friday, January 24, 2014

Gravity, a Santa Monica startup that sells a content discovery service for news sites, has been acquired by AOL Inc. for $90 million in cash.

In an interview with tech site Re/code, AOL Chief Executive Tim Armstrong announced the move, saying he planned on incorporating the technology into the company’s portfolio of content sites.

Among the sites licensing Gravity’s technology, which personalizes a page’s content based on what it determines would be best suited to a readers’ likes, is AOL’s Huffington Post. Similar to online advertising, Gravity trawls through a person’s recent browsing history and develops what it calls an “interest graph.” That measurement also takes outside factors into account, such as how many times an article has been read or shared.

Amit Kapur, Gravity’s co-founder and an early employee at MySpace Inc., said 2013 had been a breakout year for the service. It was handling more than 1 billion page views a month and had partnerships with major content sites, including the Wall Street Journal, Word Press and Disney. He added that revenue had begun to increase significantly during the year, but would not disclose specifics.

Kapur said he and executives at AOL had initially been talking about continuing their arrangement strictly as a client, until discussions turned toward a deeper partnership. In his view, it’s one based on shared interests.

“We mutually believe the Web has evolved from search to social where we’re really getting into the era of the personal Web,” Kapur said. “It was an opportunity to leverage our interest graph with AOL, which is the company with biggest and best content network on the Web.”

The union glimpses a day in the near future where a site like Huffington Post will arrange the stories on a page based on what it determines is the best fit for an individual reader. And as part of the deal with AOL, Gravity will continue to operate as a separate company, with the 40-person team remaining in Santa Monica and still selling its services to other sites.

Gravity had raised $20.6 million in a Series A and B rounds, with investments from Redpoint Ventures, August Capital and Santa Monica firm Upfront Ventures.