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I had heard the "well below 20m" figure and couldn't believe it—and now Fred is saying they dumped it for $3 million? I suppose if Verizon is taking the tax deduction on an original $1.1 billion purchase by Yahoo, the value of the deduction so much dwarfs the sale price that the difference to Yahoo between a $3 million sale price and a $50 million sale price is pretty minimal—they just want to close the deal to take the deduction and stop the losses.

Still, considering the fact that Tumblr still does over 2.5 billion page views per month [1], not even counting their mobile usage, I can't help but gawk at what a steal Automattic got. Really drives home what their CEO Matt Mullenweg said on here the other day about adopting a "Berkshire model"—although he was referring to independent management, what he's really talking about is buying companies grossly undervalued for dirt-cheap. Just monetizing the web traffic 2.5 billions monthly hits at a $1 CPM alone would generate $2.5 million a month in revenue, $30 million annually.

What kind of business, let alone web business, sells for 1/10th annual revenue? For reference, Reddit does 6x the page views, but is valued at $3 billion. Reddit's prospects are obviously better, but are they 1000/6 = 166x times better per current page view? Mind-boggling.

[1] https://www.similarweb.com/website/tumblr.com

> said on here the other day about adopting a "Berkshire model"

This is not the Berkshire model at all. Berkshire buys businesses that have high cash flow models where money can compound over and over, usually in well established businesses that have operational issues that can be optimized for cash flow.

> Just monetizing the web traffic 2.5 billions monthly hits at a $1 CPM alone would generate $2.5 million a month in revenue, $30 million annually.

That napkin math doesn't take into consideration:

- hosting costs

- software maintenance cost

- sales & marketing required to drive $30M/year

- Decrease in traffic due to ads

- Ad-blockers

> What kind of business, let alone web business, sells for 1/10th annual revenue?

Retail does...retail. Hate to break it to you, but businesses aren't bought and sold on revenue (despite what TC tells you). It's usually on a multiple of earnings or discounted free cash flow. Note - it's important to remember that DCF can get real fuzzy and hence why its much easier for media to just revert to "revenue".

> Reddit does 6x the page views, but is valued at $3 billion.

And Tumblr's valuation was once $1.1B and they couldn't monetize it. How is that comparable a valuable reference point?

I run a web service that gets around 10m hits a month, and I serve one popup ad (yuk, I know) per day (or until cookies are cleared).

Compared to revenue, hosting cost is next to nothing for sites like Tumblr that serve text/image content. A similar video site would need to spend a ton of money on bandwidth, streaming CDNs, encoding servers, etc.

If you get 2.5 million hits a month, it is certainly possible to cover the said selling price of $3m in ads alone in a month.

> If you get 2.5 million hits a month, it is certainly possible to cover the said selling price of $3m in ads alone in a month.

How do you figure? That would be over $1 per hit.

I'm sorry a typo in my reply. GP mentioned 2.5 Billion hits/mo, not 2.5 mil.

Could you please email me to discuss a possible revenue addition?

home_project123 at protonmail dot com

It is non-yukky and does not affect your content/users

Yep, DCF is all about the multiplier.

IMHO Wordpress itself is grossly undervalued. I've done some whole-web analysis and they (including both the open-source project and the hosted service) account for roughly 18% of the web. The volume of content produced on them (in terms of # of words, not # of messages) is greater than on Twitter. If you look at comparables - with Twitter valued at $30B, Reddit at $3B, and Wordpress valued at $1.16B - it's pretty hard to justify those valuation disparities. Sure, it's open-source and non-hosted-by-them Wordpress installs don't really make much money for the company, but you could argue that they actually have more control over the greater Wordpress ecosystem than Reddit does over famously revolt-prone subreddits.

Unfortunately, they're private, profitable, and to my knowledge not seeking investment, otherwise I'd buy a slice of them in a heartbeat.

Another interpretation of your (insightful and valid) comment is that Twitter and Reddit are severely overvalued.

The valuations are fine. Firstly, WordPress is not valued at anything as it is not a private company. You are thinking of Automattic, which is a managed host that owns wordpress.com and makes their money on ads and subscriptions. Their share of and profit from the WordPress ecosystem is much smaller than you think, blogs / websites are commodities at this point, and there is no reason to think there is a relationship between volume of content and valuation.

Meanwhile, Twitter and Reddit are massive social networks with millions of daily active users.

I think investors like the fact that Twitter and Reddit control all of the user data and (mostly) where and how it's surfaced. The idea is they can somehow monetize this data (e.g., ad revenue).

Obviously they haven't been able to do that yet. There's a chance those platforms are very over-valued... but you can see where some people think the golden goose is.

> IMHO Wordpress itself is grossly undervalued.

It's kind of hard to put a monetary value on a product that is free

Assuming you want to keep Tumblr running, you are also buying the ~200 employees and the costs of running the site. Assuming the 200 employees cost $100k each (salary + benefits) and you are already at $20M in costs.

If I bought Tumblr in a $3 million fire sale, I don't think I'd keep 200 employees on the payroll, but yes, it combined with the tax write-off and infrastructure costs it's reasonable for Yahoo to want to dump it as fast as possible—they could easily be losing $5M a month on it. I'm just shocked there aren't more opportunists in the market that would have bid the price up to at least something resembling reasonable. That being said, even an extremely well-executed turn-around could be 6 months until break-even, which would require potentially upfront $30 million in losses, in which context the sale price is insignificant, and so the question becomes who has web business expertise + $30 million in cash to burn and desire to confidently make a $15-20 million annual profit business a year or two out. Apparently, not many people/companies.

> If I bought Tumblr in a $3 million fire sale, I don't think I'd keep 200 employees on the payroll

Keeping most of the 200 employees on payroll may have been a condition of the $3m sale price.

Such a condition would definitely explain the price—although that would still be a pretty surprising condition.

He specifically said they’d continue to employ all of them.

> it's reasonable for Yahoo to want to dump it

Verizon, not Yahoo.

> I suppose if Verizon is taking the tax deduction on an original $1.1 billion purchase by Yahoo

Yahoo wrote down almost the entire value of Tumblr before the Verizon acquisition[0]

> What kind of business, let alone web business, sells for 1/10th annual revenue?

A business that is losing a lot of money and shrinking. Automattic have to invest a lot more than $3M to keep Tumblr alive and turn it around (200 employees) - the total investment isn't just the acquisition cost

With the headline figure it might seem like a nobrainer but Automattic could end up spending years investing in a turnaround that never happens

[0] https://www.businessinsider.com.au/yahoo-tumblr-write-down-2...

Verizon didn't just fail to figure out what to do with Tumblr, it dealt what was nearly a death blow by changing its policy on adult content - one of the platform's biggest remaining pillars of core users. Tumblr doesn't still exist because of its features; it exists because of its communities. Leave it to Verizon to not just starve a golden goose, but shoot it in the head.

According to Matt Mullenweg, that's not true:

> One of the things that really surprised me is I thought — as probably many do — that Tumblr had kind of died under its variety of corporate parents. And then actually being able to see some of the numbers, including some the numbers post-when they changed the adult content policy. I was like, “Wow, this has still got a ton going on.”



Yeah ok, whatever.

I don't doubt that it's still a viable business, I don't care.

I feel a deep pain every time I think about it. Something beautiful was destroyed with no remorse. The world is worse off because of it. It feels like tearing down statues of the buddha. The one place on the internet where one could explore explicit sexuality without feeling gross and exploited. I will never forgive this destruction of a beautiful culture. The whole thing makes my blood boil.

Tumblr lost ~70% of its engagement in the 5 years prior to the adult content ban. The adult content ban was a drop in the bucket, numerically speaking. This graph is an accurate depiction: https://twitter.com/somospostpc/status/1161024458460712962

Also keep in mind a decent chunk of the adult content was literally automated bot spam.

Meanwhile, Statista's graph appears to be made of random numbers with no basis in reality whatsoever. They claim that even post-adult-content-ban, Tumblr has more MAUs than Twitter and Snapchat combined. Factor in Tumblr's 70% drop vs historic peak usage, and you'd end up with a number claiming Tumblr was once the most popular tech product on earth. This is quite obviously a complete fabrication.

If you want to be sad or angry about something, the loss of old peak Tumblr -- when it combined the best aspects of Twitter, Instagram, Pinterest, and Reddit -- is a better target in my mind. Its decline was long and slow over many years.

(Disclosure: I was one of Tumblr's first engineers, and later director of platform engineering. I had no involvement whatsoever in the adult content ban, but nonetheless find it frustrating when people significantly overstate the amount of adult content on Tumblr. At its peak it contained an extremely diverse set of communities, and I fear this is being completely lost in revisionist rhetoric.)

I don't think MAUs === how good a site is. I wasn't even a particularly active tumblr user at any point, I can't really say if it was much better 5 years ago. I do not want to be angry or sad about something. I'm just sharing my subjective experience and publicly mourning the loss of something that was valuable to me. I found a lot of positivity and value in the adult content on tumblr. It was of a flavor much more palatable to me than what I tend to find on the rest of the internet.

The ban might be a drop in the bucket overall, but the ban and the sometimes hilarious attempts at automated enforcement was a huge hit to reputation. What that means for Tumblr's future is uncertain.

Thank you for sharing, were you there when Yahoo/Verizon took over? IYO was the decline due to that or more that Tumblr itself just peaked like so many other social networks?

It's just porn, chill

It's not, and I won't.

It's about having a safe community for self expression through sexual art. It's about a set of deeply regressive (American) cultural norms that stifle sexual expression and further marginalize non-normative individuals. It's about the death of a vibrant community that made people feel included and valued. It's about sex-positivity. It's about destigmatizing overt sexual expression.

No, it specifically wasn't just porn; it was all adult content. Including anything about sex, including educational stuff.

According to the person with the single largest imaginable reason to sugarcoat it, you mean. The numbers look terrible.


The graph you shared shows daily posts published dropped to ~22 million around the porn ban. SimilarWeb shows tumbler has 380 million visits per month.


The steady drop over time is concerning, but these numbers show tumbler has still got a ton going on.

This is exactly what happened. Verizon probably didn't know that most of the traffic they were buying were because of adult content, and then they killed that. I wish they had sold it to Pornhub instead.

Verizon didn't buy Tumblr. Verizon bought Yahoo/Oath and ended up with Tumblr. It's a very different scenario.

It's important to remember that Tumblr never turned a profit; as far as I've been able to determine it never hit the break-even point. And the bottom line is that a giant service that's losing money is worse to own than a tiny service that's losing money. Verizon's attempt to kick out the NSFW parts wasn't simple-mindedness or prudishness, it was a calculated risk that a smaller but SFW Tumblr might be able to at least make enough money to pay for itself.

Having said that, it's also important to note that Tumblr still gets a lot of traffic; by most measures it's still in the top 100 most visited sites on the Internet, and gets more traffic than Wordpress.com -- Automattic's closest "competing" product -- does.

> Verizon bought Yahoo/Oath

Verizon had ATH - AOL, TechCrunch, Huffington Post, then bought and added yahoO to the group, hence the name.

Yes, that is exactly how uninspired these corporate names are.

You're widely overstating the importance of TechCrunch within Oath if you believe that that is the root of the name.

While it's obviously well known within these circles, engadget is approximately equivalently sized (see Alexa https://en.wikipedia.org/wiki/Engadget vs https://en.wikipedia.org/wiki/TechCrunch ), and even when the company was described internally by its components they were AOL, Yahoo and sometimes also VDMS (which had been transferred to AOL from Verizon pre-Yahoo acquisition).

The name is dumb, we all agreed. As clearly did Verizon, since the company has been renamed since. But it was dumb in the sense of the CEO had a dumb idea that didn't translate well to other markets and not "The CEO had an even dumber idea and marketed it as being a slightly less dumb idea"


I just remember seeing a bunch of press releases of how Yahoo would be folded into the group led by the former AOL CEO, and that that group also contained TechCrunch and HuffPo. It felt weird that just those two were often mentioned together with AOL, and the initials lining up...?

Do you have a source for that? I worked there at the time of this unholy merger, and that explanation for the name was never given.

From what I recall, Tim Armstrong claimed the name reflected Verizon's promise to do right by AOL and Yahoo, or some other such complete nonsense. Internally, everyone I knew thought it was on par with Tronc for worst rebrand ever.

No, I don't have a source, and it could of course be possible that someone got the idea for the name somewhere else, but the initials of the businesses matching the thing is just too much of a coincidence.

I was at Yahoo until just before the sale to Verizon, which happened because the first attempt at spinning off the Alibaba shares tax-free failed. In the first attempt, Yahoo created a new company called Aabaco, which super conveniently could reasonably apply for the stock ticker AABA. (Alibaba had BABA)

When the first attempt failed, they needed an ALTernative solution, so they sold the core business to Verizon, and promptly renamed the company from Yahoo to Altaba and changed their stock ticker from YHOO to AABA.

Meanwhile, the press were super confused about the name change and there were a bunch of articles with people speculating on the name change, wondering what the name meant, etc, etc, because noone apparently could imagine that the name change was exactly as lazy and uninspired and dumb as it was.

I am pretty sure the OATH name was thought up by the same fine minds, and that it was equally uninspired and dumb. If you and your colleagues inside Verizon smelled corporate bullshit, I think that just strengthens my case.

Yahoo proved that page views don’t really mean much. Yahoo was always one of the top ten sites but hasn’t been able to monetize its traffic for years.

The article with “well below $20 million” was later revised to be “$3 million”; this wasn’t revealed by Fred.

Off topic here, but reading this text blob, would it hurt HN to increase line-height a smidge? Like to ~1.5x? That would be 13pt and SO much easier to digest.

If you use Greasemonkey/Tampermonkey, here's a paste of the quick and dirty script I wrote a long time ago to fix the exact issue you're talking about:


It does indeed make HN much easier to read.

Broke it up into 3 paragraphs now >.<

You can do it yourself via Stylus extension, I have solarized dark theme applied.

> Just monetizing the web traffic 2.5 billions monthly hits at a $1 CPM alone would generate $2.5 million a month in revenue

Step 1: Generate 2.5 billion hits Step 2: ??? Step 3: Profit!

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