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.
> 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.
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.
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.
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.
> 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
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.
> 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.”
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 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.
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.
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.
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.
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:
Tumblr is an hidden secret and totally underrated.
I run two niche blogs on tumblr since 2011 with full control of themes and content, https, social sharing, without compulsory ads and using my own domain. SEO was a negative point but nowadays is good enough. All of this for free. Wordpress offer, AFAIK, is not nearly as good.
I agree, I use it to look at paintings and to blog about painters I am researching and it’s wonderful the depth and breadth of content available on so many subjects. My feed is overflowing and I’ve only skimmed the surface.
As a long time Tumblr user, it's sad to see it's downfall.
I had hope that Automattic would change the content policies that brought the site down, but it seems that won't be the case.
But the fun isn't over just yet. I've launched Libr (https://librapp.com) to replace Tumblr. It's an installable Progressive Web App, getting around app store rules (recall when the Apple app store banned Tumblr).
There's a few hundred users on there that have given me good feedback on improving Libr and it's starting to slowly take off, although I'm not in any hurry and I'm taking my time to make it awesome before turning on the floodgates.
Please fix your site- it breaks the back button. This looked interesting, but I immediately hate any site that breaks back-button functionality; and once I notice that I instantly assume either malicious intent or incompetence.
I get that it's a PWA, but can't the welcome page just be a regular page?
Quick tip, the sign up doesn't trim emails and validates them against some rule that fails on 'blah@blah.com '. I strongly suggest not validating emails except by simply trying to send one, it's the worst case to lose an user that's willing to register due to a corner case your regex missed.
"Tumblr was an example of how to do social media right and we can learn a lot from it." I mean... maybe. Tumblr was also an example of maybe not pivoting the product to cater to the community properly, as there was a lot of other usage of Tumblr besides a strictly 'social media' use case. There was a lot of conversation around deeper feelings, and a community around self-discovery and self-awareness. I'm not 100% sure if Tumblr was able to properly capture that market and position itself there.
I’m still using it since 2009 everyday. For design inspiration. As a moodboard. And still works as in the good old days.
Tumblr made me a better designer. By catching up with the latest in print and graphic design and porting thse trends to web I had a work featured very early in Brutalist Websites.
I use no other social network. It’s simply too much. And yes a heart is good enough.
Mr. Wilson's understanding of Tumblr is flawed [0]. There's a simple objective test (now irrelevant) to tell if a platform is largely about porn or not:
Tumblr was one of the first platforms I felt had actively hostile UI/UX The ephemeral nature of the reblog, the dashboard awfulness, the impossibility of navigating thousands of likes/"comments"/... under a popular post. No way to, e.g. sort followed blogs by latest post time. I felt these things could have been easily fixed but deliberately weren't.
> But it is also true that Tumblr was bypassed by native mobile applications like Instagram and Snapchat where it was even easier to post about your life.
This. It's understated how much Tumblr's clunky composing hurt it as a platform. I know people connected to Tumblr, and from what I hear there was a lot of ideas but little direction.
There was a time when Tumblr was bigger than Instagram— Tumblr could've focused more on making it an amazing photo-sharing service. Snapchat was/is loved by its anonymity and ephemerality, but Tumblr was already an anonymous social network well before it. They could've added features for ephemerality and explored that market.
I used tumblr for consuming a lot of content, and it was great for that, but I always thought it had potential to be better for sharing too.
I think you are talking about current developments, but it is worth mentioning that when Twitter launched it was just as flip phones started to be replaced by smartphones. Most people were interacting with the service through SMS.
To me, it felt like the progress with further developing tumblr slowed after Marco Arment moved onto other projects.
From a historic perspective, this may an interesting article to some people.
That would be an interesting mobile app. There's nothing that does one to many ephemeral text messaging. I imagine they still have enough of a certain subgroup of adolescents to make a go of a new idea based on ephemerality. I don't know any young people that would use FB anymore than they would watch cable news. I imagine they'll screw up insta at some point too.
And this is ironic in how much Tumblr itself simplified the blogging experience, by having several pre-built formats (e.g. photo, text, video). I had a regular Wordpress blog but found it so much easier to casually post photos to my Tumblr.
“Tumblr was an example of how to do social media right and we can learn a lot from it.“
Except it lost, so by definition it can’t be right.
Update: there are clearly many definitions of right. Here I’m using right in the sense that it gets mass adoption (right in that people prefer it), and right in the sense that it also simultaneously does net positive for the world. Achieving both is difficult.
"Lost". It did not lose in term of being a better social experience. People after pale fame and instant gratification left to chase the "i wanna be famous", Total Drama Island style, but this has nothing to do with socially or morally better.
In 2017, Tumblr had ~400 employees. If each employee had a modest $50k retention bonus, that’s at least an additional $20M. So I’m not sure the total cost for the purchase as $3M- maybe that was just for the corporate assets.
I'd add that social media, done well, cannot and should not be monetized. There is simply no overlap between what makes a service engaging to use to the degrees needed to make advertising profitable, and the priorities set forth to grow a community that is a net addition to the lives of its members.
Call me starry eyed if you want, but I think while we do absolutely need a Facebook, that it shouldn't be a private business. It should be a public good, funded by the public, for the public and its interests.
I think this is very likely. The only way I can see companies like Twitter being worth as much as they are is their potential political power. A company like Twitter has a lot of influence over that, but I don't think they create such an enormous amount of value.
It’s easy to be sentimental about Tumblr now, but as we grow increasingly aware of the ability for social media to create echo chambers that radicalize people, it shouldn’t be forgotten that Tumblr is in many ways one of the worst examples of this phenomenon. And this was no more abundantly clear than during its porn heyday. I don’t regret the downfall of Tumblr one bit.
Twitter, IMO, is wonderful when you stop following journalists, politicians, and A list celebrities. What that leaves is mostly meme makers and minor influencers who generally wrap all the bad stuff inside of funny jokes and hot takes.
See I'm not saying I get rid of them completely. I'm saying by the time it reaches me it's usually filtered through a joking retweet or a meme. So it's not as bad. Another thing I look for is if the person I'm looking at defines their whole twitter presence in terms of their politics. So people with bios that read something like "Republican. Gun Owner. Dad." or "Slut. Dirtbag leftist. Bernie would have won." generally are shied away from by me.
Twitter is also excellent for following journalists, but i keep them sectioned off into their own list and try my best to limit the attention i pay to that.
I can see why people say twitter sucks, but really it only sucks if you're following a whole bunch of different "genres" in the same feed. the prolific tweeters like to talk about twitter in sections - "politics twitter", "black twitter", "meme twitter" etc and if that's how you use it, it's pretty good.
It's too bad that Twitter itself doesn't make this into a real abstraction. I'd love to treat my feed as mixed activity from a set of isolated communities, where one community can retweet something from another community into their own community, but where this retweet acts as its own object that doesn't inform anyone from the origin community about the activity on it in the destination community. Sort of like Slack, if there were teams but no channels, only threads, and your view was a unified all-threads-in-all-teams activity stream.
> I can see why people say twitter sucks, but really it only sucks if you're following a whole bunch of different "genres" in the same feed. the prolific tweeters like to talk about twitter in sections - "politics twitter", "black twitter", "meme twitter" etc and if that's how you use it, it's pretty good.
Twitter sucks for lots of reasons, but a big one for me is that it's really tough to follow a 'genre' or topic because so few people stick to tweeting about one genre or related genres.
I only really ever used twitter to follow small(ish) tweeters and a few corporate brand accounts that weren't interactive anyway. The brand accounts never responded to anything anyone wrote to them, so twitter is, in effect, just a newsletter delivery service for them so they got filtered off into their own list. I tried following a few prolific tweeters, but I got tired of checking my feed and the prolific tweeters completely drowning out everyone else I followed. The small tweeters were more interactive (they would actually respond to things I would @ them once in a while) but they usually posted in topics all over the place. I might have followed them because someone else I follow retweeted something that I was interested in on a particular topic, video games, say, but after following them for a while, it turned out that they veer off into politics or the economy or mental health issues or racism or some other realm. Not to say that those aren't important things, but they're not the thing I was following them for, and it cluttered up the feed with things that I wasn't interested in looking at that day.
Twitter would have been a lot more useful to me if I could somehow follow topics instead of people. Yes, I know about Tweetdeck and lists and hashtags, but that presumes that I want to bother continually setting up those things as the conversations flow and evolve, or that I'm following the correct hashtag or term (e.g. I was following #widget3a and most of the interesting conversations happen with #3awidget so I missed the whole thing), or that people manage to tag their tweets appropriately, et cetera.
You can't escape it, sooner or later someone you follow will start reblogging or talking politics and then you just end up playing the mute game.
Every time something happens political I find myself having to mute all sorts of things, peoples names, places, etc.
I used to only really use RSS but then when Google effectively killed it everyone (who were already twitter addicts) just told us "Just move to Twitter, whats the big deal?", now to get the same content I used to enjoy I have to sit through endless political hot takes and arguing.
Then Tumblr took a turn for the worse and everyone cried the same thing, "Just move to Twitter, whats the big deal?"
There are plenty of Mastodon instances revolving around almost any topic out there to join.
Having a successful social space does not necessitate, and I'd argue precludes, having a universal audience of everyone.
Also, you are currently on what would qualify as a social network, and between HN, Mastodon, and choice tech subreddits like I find myself well inundated with social forums to talk about stuff on. Thats even precluding how Github and Gitlab have turned into faux social networks around projects, how IRC and Matrix exist as real time chat options, etc.
"Stuck" is a slight exaggeration. I can still punch whatever I want into my address bar. Why is "widely used" required? Do you search/discover through Tumblr?
Before a bunch of artists were driven off tumblr due to the overly strict adult policy (the appeals process etc. was too much of a pain) Tumblr was my go-to for a lot of artists in the niches I followed. Through this, I found a ton of communities- fandoms for the characters created by the artists, collective worldbuilding, etc. Also, within niche fandoms I followed I also found artists that produced wonderful works.
There's still an ongoing webcomic (A Tale of Two Rulers) that's a world where Zelda and Gannon choose to marry instead of war on tumblr. It's incredibly awesome and part of what I'm on tumblr for.
The CEO of Tumblr David Karp made unilateral decisions which stifled its growth and utility. Any additional decision making input would have helped here, but qualified women, minorities and people accompanying David, Fred (the author of this article) and Marco (1st engineer) would have greatly helped so the winds here. Be more in tune with the audience that grew.
After the second sale to Verizon, after David left, different leadership could have understood how the erotic content community was flourishing on Tumblr in ways that the erotic industry has failed to attract. Many women liked tumblr for porn sharing, browsing, and curating because other porn-specific sites have unclean interfaces and distracting ads. There were people that could have told them that in the decision making process, and helped navigate the issues encountered since that is what was driving engagement.
Automattic also seems to fail to understand this, with CEO Matt Mullenweg's explanation seeming to complete miss the point, and looks more like a pet project than any interest in engagement.
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