An acquisition of Tumblr seems very much like the acquisition of reddit by Advance Publications. They both have huge audiences that are passionate and growing fast but have great difficulty monetising their audiences effectively and are providing no real value to the parent company (other than the potential for the sites to become profitable). If Yahoo bought Tumblr how would they ever convert the audience into Yahoo users?
I guess it comes down to: what value is there to any company in "owning" an audience if that audience has no interest in becoming the audience of the parent and will actively resist it? People would get very angry if AP started pushing their ownership of reddit onto reddit users, having Wired articles automatically frontpaged, things like that would drive everyone away, how will Yahoo avoid that?
The way the article is phrased (though we must remember it's third-hand at best) leads me to believe the strategy may be to go the other direction, to meld core Yahoo strengths (whatever that may be) into Tumblr. That is, integrate Yahoo offerings into Tumblr rather than the other way around.
Yes, because they can find the billion offered elsewhere, right?
I call BS. Tumblr would accept even if Yahoo wants to turn it into Zombo.com.
iirc yahoo's strongest services are sports, news, finance, and mail. these would all seem to disrupt the feel and information purity of tumble if done carelessly.
maybe encouraging sharing/linking and extrapolating on yahoo assets by means of great tumble integration into yahoo services and vice versa could benefit both yahoo and tumblr users?
I think we're all inured a bit to site shutdowns through acquisitions, meaning that acq's have taken on a largely negative set of assumptions, but it doesn't have to be that way.
You say that "it doesn't have to be that way" w.r.t. acquisitions having a negative impact on an acquired service, and I agree that in theory, there really is no way the product has to be damaged. But there are agendas and incentives, and more often than not, we have seen first hand that the acquired products do get damaged. Maybe we can get lucky at times like Youtube, but our scar tissue didn't form from nothing.
1. Stupid pre-rolls everywhere.
2. DMCA takedowns / country restrictions.
3. Weak community.
4. Nagging for Google+ integration.
The UX is pretty horrible. They just get away because content is king and are 1st movers. Nowadays I increasingly find more, or higher quality, stuff on Vimeo though.
Just got to hope they can do a good job of it. I have no particular attachment to Yahoo!, but the sentimental side of me would like to see some old giants make worthy comebacks.
If they acquire tumblr and shut it down, or make changes that result in a receding of the user base, then they are unlikely to acquire talent. If they acquire tumblr and improve it, they will improve they position in the talent acquisition market.
If HN is any indicator, the tech industry can already see that Marissa Mayer is just trying to use all these acquisitions to make Yahoo look hip agian.
I, for one, am not falling for that crap. I want to see some real innovative shit coming out of Yahoo before I change my (decidedly negative) opinion of them.
* I live in New York, thus don't mean this as slight.
equally cryptic. Care to explain further? I am curious.
If yuhong is indeed a Yahoo employee and could give an inside view in the changes Marissa is making, I'd love to read a blog post with more details on that.
If he can make Marissa sign off on it, that would bode even better for Yahoo as an employer.
Flickr has much more power than Tumblr. And they just maintain it for 6 years with same design with ugly looking arrows that used to look nice like 10 years ago.
I don't think Yahoo has a good vibe. They just buy and kill. Flickr is the only one that could survive, which can't be considered as success.
I wonder which will be a bigger deal for Marco...
[Edit - I also wonder whether he had an inkling that these conversations were taking place. He has been discussing his tumblr roots a bit more than usual recently, including his undocumented podcast easteregg that he built into tumblr, and the fact that the tumblr source code was open source, but not public, which allowed Marco to use it for future endeavors...
Edit 2: And this little hint from his Blog on May 11th.
"I ended up joining Davidville instead, for less money, because David would let me work on a brand new Mac with any keyboard I wanted and more than three feet of desk space. A few months later, we started Tumblr. Turned out to be the right move. "
Wikipedia attributes cofounder status to Marco. Let's assume that he got a raw deal from Karp and had a potential 30% stake in the business. He worked on it for 3 years and 7 months. Let's just assume he fully vested (not quite accurate, but the math is easier). Over the course of five rounds of funding, maybe the final ownership stake of the founders was diluted from 100% to 10%. Marco owns 3% of the company, and walks away with a hair over $30 million pre-tax.
 Handy infographic: http://www.bothsidesofthetable.com/2011/10/14/understanding-...
"...Marco Arment, Karp’s first and, for a long time, only employee at Tumblr."
I've listened to pretty much all his podcasts, and while Marco is pretty wide open when it comes to financials (in one memorable episode, he detailed pretty much every line-item costs associated with instapaper, and he's been even more open with "The Magazine" - discussing all of the revenue and cost elements), I don't ever recall him discussing his equity stake in tumblr, though, he did mention that he's been chatting with David recently...
Also - he's a talented developer, and tends to get shit done (as demonstrated via Instapaper, ATP, The Magazine) - and those people command a higher return.
Also - David Karp wasn't a well known entrepreneur back in the day, and Marco came in at the genesis.
5% would have been generous if it had been after a round of funding, but pre Series A/Angel Round, it's what any top level developer should ask for when going into the same situation as Marco. Tumblr might not have existed where it not for him.
and it doesn't sound like he harbors any ill will, regret, bad feelings, negativity, or insult by the distinction.
Given that most (everyone?) would rather be the employee with 6% equity, it brings into focus what's really important at the end of the day.
All else equal, the founder/cofounder label might be worth something to the ego, but, having been one of 100 or so "founders" of Opsware, and also having worked at a company where the "Founding CEO" joined almost a year after I did, I've grown to recognize that "Founder" is nothing more than a label, doesn't really signify that much.
Total Compensation Package (inclusive of equity) is what's important.
[Edit: I guess some people might consider "Founder' of a successful company to be a proxy for their reputation, and reputation is very, very important, as it can be leveraged during salary negotiations, or, raising money/hiring. So, from that perspective, being known as the "Co-Founder of Tumblr" might be relevant]
Simply drawing a salary doesn't mean you aren't a founder - the vast number of founders of companies I know of in the valley draw a salary. Not investing money, also, doesn't mean you aren't a founder.
My definition of a founder? Someone who's idea's shaped what the company would be, who started work on the project prior to there being an actual company, brought a lot to the table (whether that is engineering, marketing, money, leadership) that made the company successful, and had an equity stake in the company.
In Marco's case, all four are true. He was there before tumblr existed, helped shape what tumblr would do, did much of the engineering that made tumblr what it is today, and he had an equity stake. He could reasonably be called a founder.
With that said, being known as a "Founder" is also subject to negotiation, and sometimes an employee can come on up to a year after the company is started, invest no money, but still be called a "Founder." It's really quite nebulous.
bigger monetary deal - tumblr hands down
Very reminiscent of Google's way of going about things, actually. :)
It has a 4.5 out of 5 star rating in iTunes.
Flickr and Tumblr are great assets to have.
Whether it turns out great for them or not though, we have yet to see. It's certainly interesting to watch though.
"The company finished 2012 with $13 million in revenue; the hope in this “leap” year is that it’ll get to $100 million."
2012 - Operating Expenses: $25 million, Revenue $14 million (that's an $11 million loss on paper)
For 2013, they're saying they'll need to hit 4x revenue growth in order to hit profitability?
Does that mean 4x the ads for their (fickle) userbase?
Not exactly the same thing, but in a way it's similar to buying a broadcast license. Companies pay millions/billions for the right to project some media onto eyeballs.
So, let me rephrase the question:
Isn't something really weird going on in the world when you can sell a company with almost no revenue (let alone profit) and no obvious business model in the horizon for $ 1.1B,
no bloody potential for that kind of profit either, similar to endless other deals that got nowhere for the buyer, or is it just me?
> It's really nothing like buying a broadcast license.
Both provide access to eyeballs, and both are bought with the intention of monetizing that somehow... usually with advertising. That's a similarity in my book.
Then again I'm a giant noob when it comes to startups, funding and acquisitions. Regardless, the numbers are out of this world.
Or, put another way: put a dollar value on a speculative Yahoo effort to attract a user base the size and demographic composition of tumblr's. Don't forget to price in the risk of failure.
What kind of bizarro logic is this?
For one, something being worthless doesn't mean it is also common. There are rare and difficult to attain things that are also worthless.
Second, we're discussing monetary worth here. That is, if you get something back for your 1.1 billion dollars.
A service giving you free money would also have 100k+ monthly page views and fantastic engagement numbers. But it would be worse than worthless.
Just to add some context, overall up 20%+ first quarter over prior year Q1. Granted flat in the first world and I could believe a small net loss but I don't see it in these numbers.
I'm sure FB does their best to lean on their metrics and spin the best story but at the end of the day they are publicly traded and those charts are not too ambiguous.
But sure, some of those accounts are fake every year. So a nearly flat gain in the US/Canada could well be a loss in actual humans using the service like they are meant to. I don't have a FB account myself because reasons and so I'm sympathetic to the idea that they may have peaked. Just wanted to give some balance.
Global churn affects your userbase when you have a userbase as insanely massive as Facebook's.
Also, according to all statistics, Facebook has actually been GROWING. They have 1.11 billion users now compared to less than 1 billion last year. Something like a 26% growth if I recall.
Come on people, there are only a finite number of internet connected human beings on this planet. Growth HAS to slow down at some point. They're not gonna double their userbase YoY if they already have over 1bn people on their service....that'd literally be impossible.
"In September 2011, Reddit was split from Condé Nast, and now operates as a subsidiary of Condé Nast's parent company, Advance Publications."
It's just too important to give up over; a half-baked solution is better than none.
Look at how big of a lead on photography Flickr when Yahoo purchased them. After the purchased they were told to focus on integration.
Flickr is a shadow of its former self
It's not just that I've grown older, it's that fundamentally Flickr no longer delivers the content and community, and blame for that must lie at Yahoo's door and their failure to innovate with photo.
Maybe Yahoo is afraid that offering say ~$400MM in stock would dilute the existing shares and irritate existing shareholders?
please don't make the product suck by jamming yahoo products that don't match the tumble user ecotone.
> Tumblr is a media company at the core.
Tumblr is a glorified blog hoster.
It seems a bit odd, and everybody knows how these Hollywood style "romances" tend to end..