
The Yahoo board has approved a deal to pay $1.1 billion in cash for Tumblr - gbuckingham89
https://twitter.com/WSJ/status/336152689211756544
======
zaidf
This makes it pretty simple to judge Marissa Mayer's performance at least in
the next year. If Tumblr shows any sign of failure, its pretty much equivalent
of Marissa Mayer failing at Yahoo. If tumblr shows signs of progress not seen
Pre-acquisition, it's a sign of an ex-Googler making a smart acquisition AND
making it succeed in the long run.

Google is the best company when it comes to making large acquisitions work out
for the parent company. Just see Analytics, YouTube etc.

Yahoo is probably one of the worst if you see how many of their 100M+
acquisitions have resulted in complete failure.

~~~
gnok
I disagree. We don't know what Yahoo wants to do with Tumblr. All we have are
rumors, a WSJ report and tons of idle speculation. Without knowing what the
intended end game is, I don't see how we can call the acquisition a "success"
or "failure", much less the CEO's. I also don't agree that "a sign of
progress" is "making it succeed in the long run".

Google is no genius with large acquisitions either. Motorola and Blogger come
to mind immediately, but there are others too.

I think we can all agree that Yahoo has been mismanaged at least until
recently. I just don't think a CEO's performance is a boolean value that
depends on an undefined "any sign of failure" on a large acquisition with a 1
year time frame.

~~~
zaidf
Google _is_ a genius at acquisitions IMO. To qualify as a genius you don't
need a 100% of acquisitions to work out. You do need a few to work out
tremendously. Google has those. Meanwhile, what's the last yahoo acquisition
that didn't turn into disappointment soon after the acquisition? We can go
back 15 years and be hard-pressed to find one. On the other hand there are
plenty of disaster acquisitions including broadcast.com, geocities,
bluelithium etc.

~~~
gnok
I don't mean to imply that Yahoo is more successful than Google at
acquisitions (We know that isn't the case). I just don't think Google is a
good benchmark for acquisitions. I think they as good or as bad as Yahoo.

I think Yahoo's problem with acquisitions has been that they are moderately
successful initially and then drift away over time. ViaWeb, GeoCities,
Musicmatch Jukebox, Konfabulator, delicious and Ludicorp (of Flickr fame) come
to mind. Other than Flickr, none of the others are still around, but they
weren't disappointments soon after acquisition either.

~~~
ensignavenger
ViaWeb was re-branded Yahoo Stores, and is still alive and, presumably,
healthy.

~~~
damncabbage
Of a sort. It was rewritten in C++ and Perl
([http://people.csail.mit.edu/gregs/ll1-discuss-archive-
html/m...](http://people.csail.mit.edu/gregs/ll1-discuss-archive-
html/msg02367.html)), but is still an active product in its new form.

------
orangethirty
A business without a proper model, lack of revenue, losing money, fighting off
pornography and spammers is worth 1.1 billion in cash to Yahoo. The users will
flee, they always do. The engineering dept. will be hired out, it always is.
All that Yahoo will have is a domain, a database filled with cats and naked
people, and a real problem on its hands. Bad move, Yahoo. The way to re-build
Yahoo is not to buy zombie businesses. It is to give the engineering dept.
freedom to innovate.

~~~
return0
As always? is this the rule? Given precedents of instagram etc, it doesn't
seem like an improbable price.

However, how is tumblr fighting porn? I thought they actively encouraged it.
It's a big part of tumblr for sure (and big part of the value yahoo pays for).

~~~
burgreblast
Instagram was growing rapidly and threatening FB as the place to share pics.
Tumbler is declining.

------
bambax
Maciej Cegłowski: "Marissa Mayer secretly named Google employee of the month
for third month running".

------
minimaxir
Per AllThingsD, "There were no other competing bids, despite reports, to snap
up the New York-based hipster blogging service."

[http://allthingsd.com/20130519/yahoo-tumblrs-for-cool-
board-...](http://allthingsd.com/20130519/yahoo-tumblrs-for-cool-board-
approves-1-1-billion-deal/)

~~~
pkmehta
Can someone explain to me why you spend $1.1B on this if the company was
running out of cash, had investors skittish about funding a new round and
there were no competing bids.

Why didn't Yahoo just let them get desperate and buy them then? With an all-
cash deal, it seems they're less interested in the team than the platform so
seems they could have picked that up in a few months for significantly less.

What am I missing in this? I hope the answer is not that doing that would
create enmity between Yahoo and Tumblr's investors or something like that?
That would strike me as a gross violation of their fiduciary duty to their
shareholders, no?

~~~
diego
If you and Marissa Mayer want the last burger in the world, how much is it
worth? What if you're Mark Zuckerberg, and it's really important to her that
you don't get a taste of that burger? Maybe she doesn't even like burgers.

Factors like the cost of the burger, or how fresh/tasty it is, become less
important.

Also, all-cash doesn't mean what you think it means. The currency used to pay
for a company (cash, stock, pork bellies, whatever) is independent of the
vesting schedules of the employees/founders acquired. Typically investors
receive most stock/cash immediately, while employees receive some up front and
the rest over a period of time that is negotiable. 3-4 years is standard. Some
deals are front-loaded (more than 50% in the first half) and others are back-
loaded (the reverse).

~~~
alan_cx
Well, if you are British, you'd want to check that burger doesn't contain
horse meat.

And as amusing as that might or might not be, there is also a point there.

~~~
icebraining
There's nothing wrong with horse meat.

~~~
robotmay
There are far fewer controls and standards for horse meat in much of the EU,
meaning a lot of the meat which was being passed off as beef could potentially
contain dangerous drugs not fit for human consumption.

If it's properly regulated though, you're right that there's no problem with
it.

------
sethbannon
This is great news for the NYC startup ecosystem, which had been lacking in
the billion dollar exits that create the next generation of entrepreneur-
investors.

~~~
jcampbell1
The Double Click acquisition spawned a ton of investment and led to companies
like Gilt and 10gen. It will be interesting to see what Marco Arment does with
a cool $100 million or so. He seems to have a golden touch. Tumblr,
Instapaper, and The Magazine makes him 3 for 3.

~~~
dmor
Considering Marco left Tumblr a year before [1] they raised their last $85M
round at $800M valuation [2] do you you think it realistic/possible that he
had 1/8th the company after that deal?

[1] <http://techcrunch.com/2010/09/21/marco-arment-instapaper/>

[2] [http://techcrunch.com/2011/09/26/tumblr-raises-85-million-
ro...](http://techcrunch.com/2011/09/26/tumblr-raises-85-million-round-from-
richard-branson-vcs/)

~~~
jcampbell1
My rule of thumb is co-founders have 2/3, employees have 1/3, and investors
cause a 75% dilution per round. Thus since their are 4 rounds, .75^4 * 2/3 =>
21% between the founders.

However, in this case it appears that Marco wasn't a co-founder, but rather a
first employee with an equity grant. If it were for 5%, it is probably worth
~1-2% now, and so I'd reckon he will see $15M. That is a lot of money, but not
enough to change the startup landscape.

------
seiji
How does it feel to work at a company when it pays over a billion dollars to
20-somethings working on the opposite coast?

It's not mentally reconcilable. The only way not to go crazy is if you don't
think about it at all, but that's just denying the reality of you being
exploited while getting few of the benefits.

Some people say, "Well, I have 'job security!'" Is "job security," the
greatest corporate-serving propaganda of our generation, really worth $800,000
per year in surrendered earnings?

~~~
icebraining
Frankly, I don't get your position.

If you believe that price should be determined by supply and demand based on
perceived value, like it mostly is in these cases, then there's no
exploitation.

If you believe that price should be attributed based on Labor expended, then
the Yahoo! workers are already extremely disproportionately paid relative to
the average worker, so it makes no sense for them to feel exploited.

How exactly are the Yahoo! workers exploited?

~~~
seiji
_How exactly are the Yahoo! workers exploited?_

I think that's between the employee and their own view of the world. If you
worked at Yahoo for six years doing something, anything, and then Yahoo buys a
six year old company run by a 26 year old for a billion dollars — what were
you doing the past six years? Couldn't it have been you? Why not?

Every computer person employed by a company isn't generating a million dollars
a year in value, but most _could_ if they were pointed in the right direction.
Even those who _are_ generating 10x to 1000x the value of their salary aren't
compensated proportionally (hence, why startups exist).

~~~
jiggy2011
There's no foolproof way to know what will generate value ahead of time.
Sometimes in order to use their skills to generate value a developer requires
resources ahead of time that only a large company can provide.

If you work on a failed project as an employee, then at least you got paid a
salary during that time. As a startup founder you walk away with nothing.

~~~
seiji
_As a startup founder you walk away with nothing._

That's kinda the problem these days. Failed startups have social connections
making founders millionaires even when their venture was worthless. Some
startups (not in the tumblr case) are essentially projects where you show the
world Hey I Can Do Stuff then you get a few million dollars as a hiring bonus.

~~~
icebraining
_Failed startups have social connections making founders millionaires even
when their venture was worthless._

They do? Where does all that money come from and why would its owners give it
away like that?

 _Some startups (not in the tumblr case) are essentially projects where you
show the world Hey I Can Do Stuff then you get a few million dollars as a
hiring bonus._

Yes. And for each, there are a bunch from which the founders walk away with
very little.

Maybe instead of assuming the Yahoo! workers are all idiots who are exploited
because they're unable to see that they should all be working at startups, you
should try to start from the principle that they're not idiots and understand
why they don't.

------
minimaxir
I'd recommend watching the #yahoo! feed on Tumblr in order to watch the Tumblr
community's reaction, and see the inevitable hilarity.

(Not providing a link due to high probability of NSFW content. Search for
#yahoo! on Tumblr.)

~~~
lucisferre
They've started a petition... [http://www.ipetitions.com/petition/stop-yahoo-
from-buying-tu...](http://www.ipetitions.com/petition/stop-yahoo-from-buying-
tumblr/?utm_medium=email&utm_source=system&utm_campaign=Send%2Bto%2BFriend)

~~~
_ak
Has any internet petition ever worked?

~~~
LinaLauneBaer
Yes. It more or less saved Germany from internet censorship.

[http://www.netzturbine.de/en/internet/zensursula-
deutsches-i...](http://www.netzturbine.de/en/internet/zensursula-deutsches-
internet-ist-gegen-zensur-und-epetitioniert-bundestagzensursula-german-
internet-rises-against-censorship-and-does-epetition-bundestag)

~~~
_ak
I was actually thinking about petitions about private companies and their
business decisions, not politics. If Tumblr or a Yahoo had their own corporate
petition platform, then yes, but comparing a petition on some random website
with a petition on the website of the German Bundestag is like comparing
apples to orangutans.

~~~
LinaLauneBaer
Sorry. This was not clear to me. I thought you were talking about any internet
petition. :)

------
jamescun
I wonder how this will pan out for Tumblr with Marissa Meyer at the helm. If
we look at Flick (bought by yahoo in 2005), it hasn't seen much innovation or
new features in the last 8 years and has been mostly coasting. I wonder if
this will be the case for Tumblr under Marissa's leadership.

~~~
dave5104
And wasn't one of Marissa's plans when she came aboard to try and revive
Flickr, since she saw it as a big asset? Not that it's jumped leaps and bounds
since then, but I would think that she'd want to nurture tumblr a bit.

~~~
pavs
According to the verge there is a flickr redesign coming up soon: (check
update2: [http://www.theverge.com/2013/5/17/4341144/yahoo-to-hold-
mond...](http://www.theverge.com/2013/5/17/4341144/yahoo-to-hold-monday-press-
event-nyc-tumblr-acquisition-rumors))

------
benackles
We're starting to see another destructive trend in acquisitions. First we saw
a trend in acquihires. This clearly is bad for users and only serves founders
interests. Now we're starting to see a trend towards acquiring relevance. For
example, Facebook bought Instagram for "$1 billion" before it made any money
for the sake of remaining relevant. In Facebook's defense, they bought it on a
cash/stock (reportedly 30% cash/ 70% stock) deal. The stock ended up being
worth much less. Yahoo buying Tumblr may work out, but it's very unlikely it
will have any direct financial return on investment. The only return on
investment is the slight chance Tumblr stays a relevant brand and in return
keeps Yahoo's brand afloat. Yahoo needs to make some big bets, but I'm not
convinced this is the right one.

What do you think would be their best bet? My guess is it would be something
less trendy since most of those end up being fads. Google's best acquisition
was clearly Applied Semantics; not YouTube.

------
inmygarage
Thoughts on why this was an all-cash deal as opposed to similar comps
(Instagram, YouTube) which were cash/stock mix?

~~~
keiferski
My best guesses:

1\. Yahoo would rather spend cash than stock (possibly because they anticipate
Yahoo stock going up in the future). If Yahoo thinks that $1 in stock _today_
will be worth $2 in _3 years_ , it might make more sense to spend cash. This
is a huge gamble, of course.

2\. Cash is intrinsically more valuable than stock; in other words $1 cash !=
$1 stock. Yahoo may feel more comfortable spending $1 Billion cash than
spending $2 Billion stock.

3\. The obvious, but maybe too obvious, answer: Tumblr doesn't see a future in
Yahoo stock.

~~~
steven2012
This doesn't make sense. Which CEO doesn't believe that their stock won't go
up in 3 years? If they don't believe it, they should be fired.

Cash is much more valuable than stock. Any CEO worth their salt would ALWAYS
issue stock and never cash, since stock is essentially free (with some GAAP
repercussions, but better that then spend cash). But it sounds like tumblr
wanted cash instead of cash/stock.

It doesn't matter to the employees, they get paid out from the purchase, and
then will all get YHOO retention stock options when they join.

Great deal for tumblr, terrible deal for YHOO, it's a waste of cash and as
someone else pointed out last week, it's reminicient of Geocities from the
dotcom days. Every employee from tumblr will start exiting, maybe after 2-3
years, and the entire thing will fall apart.

I'm disappointed in Mayer.

~~~
rgbrenner
"This doesn't make sense. Which CEO doesn't believe that their stock won't go
up in 3 years? If they don't believe it, they should be fired."

This is clearly untrue. Which moron CEO at the head of a newspaper anticipates
anything more than a very modest increase in their stock over the next few
years? Most newspapers are very much aware of their problems. Do you think a
CEOs job is to bury their head in the sand and ignore all of the company's
problems? Because that's the only way your statement could even come close to
being true.

And 2.. as far as Yahoo.. keiferski is right.. it depends on how rapidly yahoo
anticipates to grow. Obviously a stock growing at 50% is worth more than one
growing at 10%.. and maybe Mayer is incredibly bullish on Yahoo, and believes
Yahoo stock is worth more than what the market thinks it is.

~~~
steven2012
A CEO's job is to increase shareholder value. End of story.

This means increasing the stock price. So yes, I do believe that this
statement is absolutely true. The CEO needs to figure out a way to increase
shareholder value, whether they are Yahoo, or Washington Post, or New York
Times, or Groupon. They are not supposed to sit around and maintain dividends.
Whether it's breaking into new businesses, selling their current
underperforming businesses, etc, that is why they are CEO, to think of new
ways to make money and increase stock price. Not to sit on their laurels and
collect their paycheck.

3 years is MORE than enough time for any CEO to execute a strategy that
increases shareholder value. If they can't, then they should be fired.

~~~
6d0debc071
If you knew that stock was never going to pay dividends, then why would anyone
ever want it? :/

~~~
mortehu
For a small enough company; because it might be bought. For example,
Activision Blizzard might be bought fully by Vivendi.

------
DigitalSea
I still think this is a bad acquisition. I mean don't get me wrong, Tumblr has
potential to be something great but at present it feels like a more modernised
version of Geocities complete lots of animated GIF's, memes and soft
pornography. It's definitely not worth $1.1B (but what do I know?).

They have the traffic, but it won't be easy to monetise. It might be good for
Yahoo! to tackle a large challenge and let Meyer truly show them she has the
moxie to turn the fledging company around.

Considering Yahoo! have a nice cache of PHP based websites, it makes sense the
purchase of Tumblr is as much as a talent hire as it is an acquisition of a
high-trafficked website with potential. Will be keeping an eye on this, if and
when Yahoo! buy Tumblr. The deal isn't even concrete yet, but it's still
highly likely given Tumblr has months left to choose a buyer and finalise a
deal.

------
lizzard
This reminds me of Excite@Home buying Blue Mountain Arts and Webshots because
they got a lot of hits. How incredibly not useful!

------
mani27
Yahoo hasn't done much justice to their past buyouts. I feel like this going
to be a waste. Yahoo isn't doing much for their existing products. They should
really focus on what they have. No doubt the apps and all have been updated
but desktop UI still remains same. No consistency in UI across different
products. The new ymail still isn't that great. Another thing is why can't
yahoo come out with own such product - they do have some brilliant engineers.

~~~
pavs
I am thinking that the problem with yahoo is that most likely Mayer doesn't
have much faith in the present crop of developers/managers. Recently she did a
lot of acqu-hires, because traditionally really good developers are less
likely to join Yahoo over better choices.

Maybe improving existing products and making new impressive products are in
the plans for Mayer, but to get there she needs capable people and she needs
to make Yahoo seems like a good/profitable/fun place to work at.

For a long term sinking ship like Yahoo I think major changes in direction
will need some time.

------
adventured
This is the time to start the next Tumblr, as the last Tumblr is now dead.

For the same reason that Flickr was replaced by Instagram (and missed the
entire mobile wave), Tumblr will lose traction over the next couple of years
and be replaced. They'll stick around, but their traffic will fall by half in
24 to 36 months. Flickr for example has been losing traffic for two straight
years.

Nothing less cool than using a Yahoo blogging site if you're a teenager. That
isn't going to change soon.

------
mani27
The rate at which Yahoo is buying out companies for talent acquiring , I
wonder what must be going through minds of engineers at yahoo.

~~~
k_kelly
As an outsider it looks like Yahoo is saying it will back big crazy
engineering projects if they have potential. To me Yahoo went from being the
last place I'd ever want to end up to being an exciting company. It's an
amazing turnaround.

~~~
Choronzon
However big crazy engineering projects require money which is been sunk into
dumb social purchases instead.I can imagine it killing internal engineering
morale also.

------
_ak
How pre-posterous (pun intended).

------
sudonim
How is this becoming public information so quickly? Is this being leaked? It
seems like it's not beneficial for this to become public knowledge for anyone
except Tumblr if they are trying to start a bidding war.

~~~
jcdavis
Yahoo is leakier than most - Kara Fisher seems to know anything that happens
there

~~~
randall
*swisher

~~~
pt
Heard Kara "Fisher" for the first time, and not sure why, but I like the sound
of it.

------
uthgard
Does anyone know how they get traction the _very first_ time ? It's
interesting how they got this far while the initial reception seems cold [1].
What kind of marketing they do ? what's the vertical ? answer from quora[2]
doesnt satisfy me.

1\.
[https://www.hnsearch.com/search#request/submissions&q=tu...](https://www.hnsearch.com/search#request/submissions&q=tumblr&sortby=create_ts+asc)

2\. <http://www.quora.com/Tumblr/How-did-Tumblr-get-traction>

------
dmor
The original headline from WSJ was “Yahoo to Buy Tumblr for $1.1 Billion”
which is obviously questionable since they state in the same article that
Tumblr has not actually confirmed the deal.

Now other outlets are reporting it as a done deal when it isn't.
[http://www.daniellemorrill.com/2013/05/in-race-to-be-
first-o...](http://www.daniellemorrill.com/2013/05/in-race-to-be-first-on-
tumblr-acquisition-by-yahoo-wall-street-journal-publishes-questionable-
headline/)

------
Zigurd
Yahoo has to make acquisitions like this.

There is room for more full-service Internet ecosystems. Microsoft has under-
invested in their ecosystem. Or maybe they can't decide if they want a full-
service consumer-oriented ecosystem.

No overseas-based ecosystems are strong enough to enter the US market. Yahoo
is strong in some markets in Asia. If they can buy a couple more top brands
and shine-up Flikr, Yahoo Finance, and some others, they will be in good
shape.

------
SimianLogic2
Seems smart--most of what I use Yahoo for nowadays is content (Y!Sports,
Y!Finance), and Tumblr adds a lot of content.

------
gdilla
Wow, in light of the recent (rumor?) that FB was going to snap up Waze for
$1B, this seems like a steal.

------
DocG
I most curious what does it mean for me, as tumblr poster. Couple of months
ago I started OC artwork blog on tumblr.

Now I must probably wait until this things settles, to know is it worth
investing my time or not, what changes they are going to make etc.

------
carbocation
Assuming this is true, does the 1.1 billion _in cash_ tell us that this is
purely about the property and not in any way about the team, or is that over-
reading / misreading the tea leaves?

~~~
lmm
Nope, there could still be vesting periods/golden handcuffs etc., this just
means it was cash rather than Yahoo stock. It tells us that Yahoo preferred to
spend cash than stock, or Tumblr's founders wanted cash rather than Yahoo
stock, or a combination of the two, which can be a starting point for any
amount of speculation.

------
elorant
R.I.P. Tumblr

------
jasonlingx
Will they let the porn stay?

------
camus
I dont understand why Yahoo would need Tumblr , nor i got why they bought
Summly the price they paid.

Is it to look relevant ? Yahoo has a ton of services, a ton of engineers and
apps that could do better if they were made better. Yahoo still feels like it
is 1999. Why not work on yahoo mail and make it relevant ? groups and make it
relevant ? what about their ugly homepage ? I mean there is a ton of things to
do, instead of buying things like Tumblr.

Marissa is cute and intelligent , but what's her strategy for Yahoo? At that
rate , she'll be out in a year.

~~~
blankenship
What does cute factor have to do with anything in this thread?

“Ballmer is rotund and intelligent, but what’s his strategy for Microsoft?”
sounds just as silly.

~~~
ebf
Seems like the OP's sentence has a sexist undertone to it.

~~~
unlogic
Because CEO is company's main representative and being charismatic/attractive
certainly wouldn't hurt company's image. This applies to both male and female
CEOs.

And since when calling a person pretty qualifies as sexism? Or is it the lack
of "women in IT" threads lately that makes people throw the S-word around
irrelevantly?

------
fatjokes
(╯°□°）╯︵ ┻━┻

