Finance & Loans

The Yahoo Acquisition of Tumblr

Written by Samuel Phineas Upham

When Yahoo announced it would buy Tumblr in 2013, the tech world collectively gasped. The Tumblr platform has become ubiquitous around the Web, building a following through simple features and sharable posts. Yahoo, in the eyes of many in the tech press, was set to ruin all of that as they had already done with Flickr and GeoCities.

But Yahoo has stunned non-believers with actual growth. Tumblr’s audience has grown by 22% since the acquisition, and the company has doubled its staff under the guidance of Marissa Meyer’s Yahoo. Tumblr is visually compelling, and makes it easy for users to post short text blurbs, images and rich media. It’s managed to hold up against competition from the likes of Facebook and Instagram.

The CEO of the company, David Karp, admits he did have fears that Yahoo would fundamentally alter the culture he had worked to cultivate. In fact, Yahoo has let Tumblr largely run its own show. The company plays an advisory role to the young enterprise, which can no longer bill itself as a startup. Tumblr still doesn’t generate enough revenue to be a major player yet, though.

Some question whether or not the Yahoo acquisition was a good idea.

Tumblr lost many of its early employees during the acquisition, which led to some internal turmoil. However, the size of Yahoo has given Tumblr some much needed life (and time). Tumblr is currently testing promoted posts, and a private-label blogging service for large advertisers in an attempt to monetize the service.

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Samuel Phineas Upham is an investor from NYC and SF. You may contact Samuel Phineas Upham on his Samuel Phineas Upham website