Yahoo buys Tumblr for $1.1 billion, promises not to mess with a good thing

Daniel Bader

May 20, 2013 10:05 am

Screenshot_2013-05-19_1_29_PM

Yahoo! and its board have approved a cash-only deal to purchase Tumblr for $1.1 billion. The bigger-than-Instagram deal is significant not only for the perplexing match it has created, but for the price paid to a company that, despite its massive audience, has barely made any money.

Tumblr only recently started inserting ads into its 100 million blogs, and though the company gets upwards of 20 billion pageviews every month, it took home just $15 million in revenue last year. That number, according to 26 year-old founder David Karp, is set to soar to $100 million this year, but Yahoo is paying far more than the already-high $800 million valuation considered earlier this year.

Marissa Mayer promises not to mess with a good thing, saying that not only will the company stay independent, but their roadmap will keep the same course. Obviously this could change at some point, but it looks like they’re not going to kill the golden goose.

We promise not to screw it up.  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.  Yahoo! will help Tumblr get even better, faster.

But this could turn out to be one of the best moves the revamped Yahoo has made in recent years. Since coming on board as CEO, former Google VP Marissa Mayer has instigated the purchase of several large brands, largely with the intention of shutting them down and integrating their employees. Popular services like Astrid, a cross-platform to-do tool, was acquired earlier this much and will be shut down by the end of August.

With Yahoo keeping Tumblr independent for now, it will still likely begin pushing some mainstream Yahoo users towards the blogging portal, as a means to drum up advertising revenue. Instagram, for instance, has remained independent but has been more tightly integrated with the Facebook feed. Yahoo is clearly pushing for the same type of cross-demographic alignment, albeit at a scale befitting the web, not just mobile.

Tumblr CEO, David Karp, has apparently committed to staying at Yahoo for four years post-acquisition and will oversee the company he has built from nothing, likely until he is satisfied it is in good hands, or regrets the ones he left it in.

Source: AllThingsD, Yahoo

 

  • NoName

    Promised not to mess this thing? I doubt it.. You have already done it in the past… How can you resist not to mess the Tumblr up if you own Tumblr? It’s almost like.. “I won’t eat cookies, but I did… soon or later.” I am sorry, but I don’t quite believe you. Besides, the definition for “faster and better” is different from your point of view and mine.

    • gnote

      Agreed.

      “We promise not to screw it up.”
      Wow! What a vote of confidence!

      “Tumblr CEO, David Karp, has apparently committed to staying at Yahoo for four years post-acquisition and will oversee the company he has built from nothing, likely until he is satisfied it is in good hands, or regrets the ones he left it in.”
      And again… This doesn’t sound good.

      After hearing about Yahoo’s privacy issues recently, I’d stay the H-E-double hockey sticks away from anything Yahoo.

  • jackjiarocks

    Yes… Because Flicker worked out so well.

    I lost all hope of Melissa Mayer after she decided to spend $30 million buying a rich kid’s news app and its “algorithm” that have nothing except technology rented from a third party.

  • EvanKrosney

    A “good thing”?

    Tumblr: The only place on the internet where you can go from puppies to porn in under a second flat.

  • Rich

    Good purchase, but quite a valuation though. The company is valued at roughly $800 million so this a bit of a premium.

    As for Marissa Meyer, she’s done quite well as a CEO and has really started cutting the fat from Yahoo. Most of the bad rep that this company has are actually from the days before she came in — she’s been stellar.

    • Rio

      Yeah it is a premium but tumblr has HUGE potential.

      There is SOOOO much unused add space.

  • hoo dat

    Yahoo spent how much buying millions of teenage girls’ blogs???

  • kroms

    1 Billion. A few years from now the board will look at each other and wonder what the F there were thinking. This is totally dumb.