Seattle Pi’s Venture Blog has the full story from the start to the end.
Farecast was started by University of Washington computer scientist Oren Etzioni, initially bankrolled by Madrona, built with people from local companies such as Alaska Airlines and AdRelevance and, ultimately, acquired by Microsoft.
Though Farecast had multiple bidders, McIlwain said Microsoft was a good fit since the two companies had worked together in the past and had a similar vision for online search. The proximity of the two companies also played a part, he said.
The acquisition follows the merger of Kayak.com and SideStep, the market leader in next generation travel search. That deal led to new opportunities for Farecast, including discussions with Microsoft which heated up in the past 90 days.
“That consolidation presented opportunities for Farecast … partly differentiated because of their predictive capabilities but also because of who they might have been able to align with in the industry to be a strong and differentiated number two, hoping some day to overtake and become number one,” he said.
Madrona has produced a number of hits recently, with the sales of ShareBuilder, World Wide Packets and iConclude.
Also a quick analysis from Motel Fool on this buy -
Microsoft needs more deals like this one, especially if the Microhoo deal comes undone, and the software giant has the means to go shopping. I’ve suggested that Microsoft pursue potential buyout candidates like The Knot (Nasdaq: KNOT) and Bankrate (Nasdaq: RATE) for the same reason that Farecast works. Whether it’s wedding planning, home refinancing, or booking that flight to visit your parents in Chicago, this is the quality traffic that Microsoft and Yahoo! lack right now.