Yahoo-Tumblr: It’s Not What You Buy, It’s What You Do With It

Yahoo has a long record of buying cool companies — and failing to benefit from that coolness. Here's hoping history doesn't repeat itself with Tumblr.

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When Yahoo first approached us eons ago, we were pretty skeptical. But after meeting the people on the Yahoo team and getting a picture of where they were going, we got religion. Maybe that’s too strong. We realized we were all eating at the same church potluck.

The things that were important to us were: being open, building innovative stuff and kicking ass. Were these people our people? Yes. See the stuff Yahoo’s announced recently [including, of course, this]? They’re evolving in really interesting ways — and from our look inside, we know that there’s a lot more coming.

Yahoo won’t be the Yahoo you’ve come to take for granted.

Nope, that isn’t David Karp, CEO of Tumblr, talking about Yahoo’s $1.1 billion acquisition of the microblogging service he co-founded. Kara Swisher of All Things D is reporting that the deal is done and that her sources say it’ll be announced on Monday. We’ll hear from Karp then, presumably.

[image] Flickr

Flickr in 2004, before it was a Yahoo property

But the sound bite above is from March 2005, and the start-up founder who’s explaining a Yahoo buyout is Caterina Fake, the co-founder of Flickr. At the time, the photo-sharing start-up was as cool as any site on the Web; just as buying Tumblr is allegedly a gambit to make Yahoo cool again, buying Flickr was supposed to help reboot Yahoo, a company that was feeling a tad shopworn even eight years ago.

The Flickr acquisition came at a time when Yahoo was snapping up interesting small companies by the carload — among the other ones it purchased in 2004–05 were Dialpad,, Konfabulator, Musicmatch, Stata Labs and All came with cool reputations, innovative services and smart people.

Some of the acquisitions instantly stopped mattering under Yahoo ownership; others did O.K., at least for a while. (Flickr continued to boom at first, but eventually became staid and backward-looking; it was only in December that it released a really first-rate iPhone app.) None of them had a transformative effect on Yahoo, which is why the company still needs reinventing today.

[image] GeoCities

Even earlier, in 1999, it had bought GeoCities, the build-yourself-a-home-on-the-Web service that was pretty much the Tumblr of its time — and one of the top 10 Web properties of its era. In a perfect world, GeoCities might have evolved into Tumblr, but instead it became an anachronism under Yahoo ownership and disappeared altogether in 2009.

Sad but true: there’s a long history of Yahoo making companies it buys uncool, rather than acquisitions making Yahoo cool.

Which doesn’t mean that I’m predicting the same for Tumblr. Marissa Mayer, Yahoo’s current leader, is a very different sort of tech-company CEO from the folks who have run Yahoo in the past. As a former Googler, she also has behind-the-scenes knowledge of Google’s 2006 acquisition of YouTube for $1.65 billion. That remains shining proof that a big Web company can buy a cool, small Web company without messing it up: Google let YouTube continue to be YouTube, and more than six years later, it’s tough to imagine that either company would be better off if the merger hadn’t happened.

Google, of course, was in a stronger position in 2006 than Yahoo is now. It was plenty cool on its own, even if owning YouTube made it cooler still. But that deal is still a far better template for what Yahoo should do with Tumblr than any past acquisition Yahoo has actually made. And what happens to Tumblr over the coming months and years will speak louder than anything Mayer or Karp might say on Monday.


I think Marissa Mayer has her work cut out, what with a) trying to convince Tumblr users that the service is secure in Yahoo's hands, b) trying to convince everyone else that Yahoo won't screw up Tumblr, c) trying to work out how to make money from Tumblr. A tall order, if you ask me. I'm a Tumblr user, but I'm predicting that a lot of folks will be moving elsewhere, particularly those whose content is even remotely adult. Depending on how the new Tumblr decides to handle advertising and copyright matters, an ever larger exodus could be on the cards.


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Yahoo poised to buy Tumblr for rumoured $1.1bn

Reports claim board has approved move to buy blogging platform site that could catapult Yahoo back into top flight web firms

Charles Arthur, technology editor

The Guardian, Sunday 19 May 2013 13.45 EDT
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It has been reported that the Yahoo board has approved a$1.1bn deal to buy New York-based blogging platform Tumblr Photograph: Justin Sullivan/Getty Images

Marissa Mayer, the former Google executive who is now in charge of Yahoo, is poised to create yet another nothing-to-riches tale in the web industry with the $1.1bn (£720m) acquisition of the blogging site Tumblr.
Mayer called Yahoo's board together on Sunday afternoon to discuss the firm's latest attempt to regain its former glamour and reports indicated the board had given its approval. Tumblr was founded in 2007 by David Karp, then 21, in a bedroom in his mother's apartment in New York. Within a fortnight it had 75,000 users; by January 2012, there were 42m blogs on the site; today, there are about 110m, and the investors who have poured $125m into the company include Sir Richard Branson.
With a press conference due on Mondayfor Monday afternoon in New York's Times Square, just a couple of miles from Tumblr's headquarters, nobody expects Mayer will turn up empty-handed. According to the Wall Street Journal on Sunday evening, the Yahoo board have agreed to pay $1.1bn for Tumblr and will let it continue to operate as an independent business.
Yahoo declined to comment before the announcement, but pointed out that it would be streamed live. That is something the company has previously only done (in audio) for its quarterly financial results. For Yahoo, capturing the white-hot blogging site could catapult it back into the top flight of contenders in a web world that has become hugely more complicated since it was set up in March 1995 – before Google and nearly a decade before Facebook.
Tumblr's attraction is how easily it allows users to create their own web presence: they can go from zero to blogging in less than a minute, posting pictures and text effortlessly. Unlike Facebook, it is anonymous, yet has a powerful search engine for finding "similar" content, which is often reshared. As the network grows, that internal sharing grows and grows.
The web measurement company Quantcast says Tumblr has had 217m global users in the past month, and was the US's 24th most popular site, with about 75m American users. This gives Tumblr a user base on a par with Yahoo's own.
But for Tumblr, Yahoo could bring the ability to attract advertising it has been sorely missing. It also looks like something of a shotgun marriage. Tumblr has only a few months of cash left, according to industry gossip, and has been shopping itself around for a while. It pulled in $13m of advertising in 2012, but is spending far more than that.
Tumblr hoped to hit a $100m revenue target for 2013 but that now seems unlikely, making the purchase a potential lifesaver for investors.
Unlike Facebook, Tumblr has been slow to pull in advertisers. Speaking to the Guardian in January 2012, Karp expressed disdain for how other sites use ads. Of the Google-owned YouTube, he said: "They take your creative works – your film that you poured hours and hours of energy into – and they put ads on top of it. They make it as gross an experience to watch your film as possible. I'm sure it will contribute to Google's bottom line; I'm not sure it will inspire any creators."
Mayer was appointed 10 months ago as Yahoo's chief executive in a move that looked both audaciously clever, and a last throw of the dice. She was at the time one of the longest-serving staff at Google, having been there 13 years, but had apparently been bypassed for the high-profile jobs. Yahoo, meanwhile, had seen its revenues slump and a revolving-door procession of CEOs.
The big fear for Yahoo is that Tumblr will turn out to be an updated version of Geocities, the third most visited site on the internet when Yahoo bought it in January 1999. Though it became famous for users' garish choice of page colours, Geocities was also a resource many loved. But the company arguably never got back the $3.57bn it paid – entirely in stock, at $36 per share. In 2009, Geocities was shut down, and the entire site simply wiped from the internet. For Mayer and Karp, and millions of Tumblr users, the hope must be that history won't repeat itself.

...and I am Sid Harth @elcidharth

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