Following up to the Wall Street Journal story, Tumblr has now been officially acquired by Yahoo! for $1.1 billion. The cash deal will go through in the second half of the year.
Tumblr will behave independently, says Yahoo! CEO Marissa Mayer. Here’s a transcript of the official announcement,
Tumblr is incredibly special and has a great thing going. We will operate Tumblr independently. David Karp will remain CEO. The product roadmap, their team, their wit and irreverence will all remain the same as will their mission to empower creators to make their best work and get it in front of the audience they deserve.
Tumblr is a microblogging platform and social networking website. It’s a sort of fusion of Twitter and a blogging platform whereby you can follow other blogs who’s new posts appear on your dashboard. Creator David Karp founded site with developer Marco Arment back in February 2007 and since then the site has grown fervently.
Tumblr is now home to over 105 million blogs cranking out an astounding 900 posts every second which 300 million monthly unique visitors then spend a monthly 24 billion minutes browsing. The site also entertains 120,000 sign-ups every day of the week.
Tumblr was doing pretty well, not financially though. Despite spending over $25 million in operation costs throughout 2012 the site made just $13 million in revenue. The advertising program kicked-off in 2012 so no point in bothering about what the site generated before.
Now that Mr. Karp has made an odd $1.1 billion for his art project I doubt if generating revenue is his primary concern. It’s an all-cash deal so unless something goes wrong his company should net exactly $1.1 billion unlike the Instagram acquisition.
Also nice is the fact that Marissa Mayer, in her statement, has promised to “not to screw it up”……WOAH! DID SHE ACTUALLY SAY THAT IN A PRESS RELEASE!?
I think so. And that too in a second line.
Apparently she thinks that we think that Yahoo! has a tendency to “screw it up”. Which brings me to the point, will Yahoo! screw it up?
The Part Where I Let History Do The Talking
GeoCities:
Remember them? No… Well then I rest my case.
The web hosting service was the third most visited site during the acquisition which made Yahoo! shell out a cool $3.57 in stock. The site has now been shutdown stateside and is only available in Japan.
Kelkoo:
The European price comparison service was fancied by Yahoo! and acquired for $680,000. It has now been sold off to a private equity firm. Whatever happened during the 4 years of Yahoo! ownership…
Broadcast.com:
Not 1…not 2…but $5.7 billion were spent to buy the internet radio company Broadcast.com
The services were later split with Yahoo! Launchcast taking care of music and Yahoo! Platinum taking care of video. Yahoo! Platinum is defunct now while Launchcast still soldiers on.
What we observe here is Yahoo!’s less than satisfactory track record with huge acquisitions.
The Part Where I Talk About Tumblr
To put it mildly, Tumblr is very very popular. It shows early signs of being the next big big thing. Users sign up in hundreds of thousands and they’re all pretty happy with it.
Financially, Tumblr is in a complete mess. They don’t earn much and David Karp feels that ads “turn his stomach”. Good for users, bad for someone who wants to make a billion dollar investment. And then Yahoo! have promised that they would leave the details mainly to Karp’s benevolence so I’m getting the feeling that the deal has got something to do with the cool-factor thingy Yahoo! desperately wants to project itself as.
The Part Where I Tell You To Keep Calm
On closer inspection the positives quite outweigh the negatives…
Failed Acquisitions:
Yes, all those terribly deals took place in a different era. Under Marissa Mayer Yahoo! has assumed a new identity, an identity which somehow is an extension of the Tumblr culture. Hearing Mayer talk about Tumblr and her plans is a tad reassuring. The people responsible seem to know what they’re doing.
Content:
Search isn’t a viable business option for Yahoo! at this moment and hence we see the company aggressively expanding in media. What better way to bring a flurry of media than Tumblr. Not only will Yahoo! inherit some amazing art but in the process they will also bring home some of Tumblr’s culture and work ethic.
Better Faster:
Tumblr will be benefited by better personalisation and search technology. “We’re not turning purple”, Karp points out, “Simply, Tumblr gets better faster. The work ahead of us remains the same – and we still have a long way to go! – but with more resources to draw from.”
A Good Deal:
If Instagram was considered worthy of a billion dollars then $1.1 billion for something as huge as Tumblr is simply an amazing deal. On mobile, Tumblr currently outperforms Facebook and Yahoo itself. Its a bit shy when it comes to revenue but Yahoo! gets to effectively overtake Facebook when it comes to mobile. Not a bad deal now eh?
There we have it, the most significant takeover we’ve seen this year. If done right, Tumblr could be a pretty good feather in Yahoo!’s cap. We are promised that David Karp would be still be in charge of Tumblr so yeah, one less thing to worry about. Now back to the grumpy cat memes on Tumblr that I just can’t get enough of.
BOMBAYNERDS 