In a move that made quite unlikely bedfellows indeed of two minor celebrity CEOs, it was announced last week that the Yahoo (minus exclamation mark!) behemoth would acquire the younger, hipper, cooler, and way more tech-savvy brand known as Tumblr (with a small "t" but no "e", by the way) with no lengthy engagement and more or less an instant marriage. Not quite a shotgun marriage though, especially as Yahoo was shelling out in excess of a cool one billion dollars as the dowry!
To say that this sent some shockwaves reverberating around the industry would be more of an understatement than Yahoo without its "!", and the media jumped onto the story immediately. The business wedding of David Karp (CEO of Tumblr) and the inestimable Ms. Marissa Mayer (CEO of Yahoo!) seemed to make no sense at all to many (usually the more impassioned blogger types on Tumblr) and yet simultaneously made a lot of sense to perhaps more business-minded individuals with a wider vision. Pick your side!
Let's cut to the chase on this deal. Our Marissa knew that her Yahoo wasn't in any position to compete with the Googles, Facebooks and Tumblrs of this world, and let's not forget that she came from Google, where she made quite a name for herself as an engineer and product developer/manager. She knows. She was acutely aware that Yahoo had become known as much for the "call it in"culture (telecommuting) pervading the company as it had for the appalling quality of the Yahoo blogs, among other thorns in its side. Too many people at home, under no supervision, with no boss, providing less-than-average content, does not a media giant make.
I lost count of the number of times I saw users moaning below a blog that it had only a title, with zero (yes, zero!) content below it. This was a case of calling in the title, and somehow being allowed to promise to provide actual content to fit in, later. I also lost count of the number of times I was offended by bad grammar, typos, incorrect spelling, incomplete sentences, jumbled text and outright sloppiness across the board of their blogs. It was shameful!
In today's world, and in consideration of the competition, it was a total insult to the end user, demonstrated an incomprehensible arrogance towards the bottom line and was an astounding testament to how Yahoo had become totally out of touch with the very culture it was weakly attempting to be a part of - it wasn't so much that they wanted in on the "cloud", with the in-crowd, it was more a case of the light being blocked out completely by ominously black clouds. I for one, and I was one among many, refused to be insulted further and stopped using Yahoo even as my browser's homepage.
But Ms. Mayer did one very good thing upon gaining control of the mothership, and that was to call in all the "calling it in" and demand that they returned to the office, pronto, or else. So it seemed that she was serious. She knew that the Facebooks and Googles weren't run by people feeding the baby at home while trying to write yet another blog, but rather, there were a bunch of young people in wide open spaces all interacting and firing off each other's creativity and ideas. Probably wearing hoodies, too, as did Karp in the "wedding" picture above!
So, it was quite natural that the ambitious Mayer would use the resources of the behemoth to actually buy herself some "cool". Unquestionably, the Yahoo brand becomes a lot more "Yahoo!" when it has assimilated the hip of a Tumblr, along with its young, trendy CEO David Karp - who will be remaining in his post at Tumblr, by the way. She didn't just want the technology asset; she bought the entire team, its product roadmap/business ethos and intends to keep it all. Smart.
Does Yahoo really need Tumblr and is it worth >$1B? A clear yes, and a definite no. But a billion is simply the cost of doing business, and Karp probably needed to see an exuberant payday for all concerned, including and/or particularly for his investors, to get him to jump into bed with Mayer (uhm, make that Yahoo!) without prolonged negotiations. Her over-the-top offer carried the day, and it was all over with no histrionics.
As to why Yahoo wanted them, well, Tumblr hosts an astonishing 105 million blogs that draw some 300 million unique visitors per month, and new subscribers are added at the hefty rate of about 120,000 on a daily basis. That is really something, and you can easily see how this audience of media-comfy tech-savvy ideas-rich creative forces could help to grow the Yahoo audience and brand considerably, and give them a seat at the table with the other big boys.
Marissa Mayer has quite a challenge ahead of her but it is true that Yahoo has the resources and reach that also appealed to Tumblr, and Karp saw the opportunity to grow his brand now, and get a healthy payday for doing so - holding out for too much longer could have burnt him in the long run, and he has seen that happen to other likeminded but shortsighted entrepreneurs in the industry.
For a company currently seeing some 900 posts per second, Tumblr definitely can use the search infrastructure and media know-how of Yahoo! to spread their message far and wide, and achieve Karp's goal of making the internet the ultimate canvas on which creators can illustrate their passion, convey their ideas/message and tell their stories to the world. It's called synergy, and the co-branding of Tumblr with Yahoo! is something in which both Mayer and Karp believe and both clearly envision a potentially huge synergy.
Marissa Mayer did say one thing in the press release that immediately raised a few hairs on the back of the neck, and that line was - "We promise not to screw it up" - which could look like an attempt to appease the Tumblr users who reacted badly to the deal, but may also be a rather frank admission of and nod to the faded glory of the previously glamorous Yahoo brand. Whichever it is, it is a very telling statement and one that displays a frankness and appreciation for the end users that is rather reassuring - at least for now.
She's a very smart gal, and for now I think we should give her the benefit of the doubt, praise her for forking out the checkbook and for not being cheap on what is an incredible deal for all concerned, and let her get on with the job of amazing us all. That's what I hope is going to happen, and who knows, maybe even Evergreen Umbrella will ship its blog to a new virtual location one day. But we aren't quite there yet! ;) - Kevin Mc
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