PayPal shells out $135 million for Boston's Where Inc., to foster local buying on mobile phones

By Scott Kirsner, Globe Columnist

Employees of Where Inc. got an e-mail yesterday asking them to show up at the company's North End offices by 9 AM sharp this morning for an important "board update." The news? They were being acquired by PayPal, a division of auction giant eBay Inc. They heard the details from Where CEO Walt Doyle and Don Kingsborough, a recently-hired PayPal exec who is in charge of nudging PayPal more into the offline retail world. "Welcome to the eBay Family!" a PowerPoint slide shouted jovially.

I was told by an individual close to the deal that the purchase price was roughly $135 million in cash, and that's what other outlets have been reporting today. (The company had raised about $20 million in venture capital since being founded as uLocate in 2004.) Where Inc. executives say that the company will maintain an office in Boston, and will likely add to its current employee count of 120. Doyle says the company grew from 30 employees to 120 over the past 18 months.

Where Inc. had originally tried to sell a service that would enable family members to get information about one another's location using their mobile devices; more recently, it has been focused on operating an advertising network that reaches mobile phone users, and promoting its own mobile app to help consumers find relevant businesses around them (and also potentially delivering discounts.) Doyle is the company's third CEO.

"This is a very strategic acquisition by eBay," says Charley Lax, managing partner at Grand Banks Capital in Wellesley, which originally incubated the start-up in its offices. "This is a company that was at the dance with a lot of people over the years," Lax says, suggesting that several other players had made attempts to acquire the company. Lax told me that the $135 million purchase figure was wrong, but he wouldn't say whether it was high or low.

"We just don't disclose any terms of the deal," says eBay spokesperson Kathy Chui.

PayPal executive Amanda Pines explained the acquisition this way in a blog post this morning:

Local commerce companies like WHERE are blurring the lines between in-store and online shopping. By giving people hyper-local, relevant retailer information and deals on their mobile phones, we see a huge opportunity for local merchants to reach more buyers, and for consumers to get more choice and value when they shop.

Where CEO Doyle says that the company will be focused going forward on using its mobile app to "drive foot traffic to merchants," and presumably using PayPal to consummate transactions. "It's about frictionless and contextual commerce for the consumer," Doyle says. He says he'll remain in Boston, rather than moving to PayPal's San Jose headquarters: "This is all about Boston. I lived out west for eight years. I did my Valley time."

Boston has seen a string of five major mobile acquisitions over the past few years, Doyle notes, including Apple buying Quattro Wireless for $275 million and VeriSign buying m-Qube for $250 million. "Boston is a tremendous hub for mobile development," Doyle says. (I'd ask: is "hub" the right term, or "shopping mall for big tech players"?)

Here's PayPal's blog post on the deal, along with coverage from Mass High Tech, TechCrunch, and BostInnovation.

eBay's most recent prior purchase in the Boston area took place in 2003, when the company bought the assets of the publicly-traded auction site FairMarket for $4.5 million in cash; that company's Web site no longer exists, and the phone number no longer works.

eBay also picked up Boston-based "flash sale" site Rue La La last month, as part of an acquisition of GSI Commerce, but eBay plans to spin that company out again.