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Will Yahoo Use Tumblr to Get Its Mojo Back, or Just Ruin It?
Posted on May 21st 2013
Days after Yahoo announced it would be integrating Tweets into its newsfeed the aged Internet giant has now completed a $1.1 billion acquisition of Tumblr.
Tumblr, the micro-blogging site that’s risen to popularity on a wave of GIFs, over-sharing, and porn, was previously valued at around $800,000 million dollars. However many insiders regarded even this number as high, considering David Karp, Tumblr’s CEO and founder has often expressly stated that he’s not interested in making money.
Yahoo’s Quest for Fountain of Youth
Nonetheless, the $1 billion dollar transaction is the biggest the web has seen since Facebook bought Instagram in 2012, and appears inline with many of the moves Yahoo has made since Marissa Mayer took over as CEO last year.
Since then, Yahoo has been looking to cover up a few grey hairs and reconnect with the coveted 18-24 year old demographic. Yahoo CFO Ken Goldman, speaking recently at JP Morgan’s Global Technology conference in Boston explained “One of our challenges is we have had an aging demographic. Part of it is going to be just visibility again in making ourselves cool, which we got away from for a couple of years.”
Mayer’s Eye for Tumblr
Yahoo’s acquisition of Tumblr comes not completely out of the blue. Mayer has already acquired around 10 smaller startups since taking over as Yahoo CEO in July of 2012. But those other acquisitions were much smaller and only added up to about $16 million in total, chump change by the standards of Internet megaliths. And back when Mayer was a Google exec she kept a close eye on Tumblr’s rapid growth.
Yahoo is banking on the notion that the acquisition will lead to some of Tumblr’s cool factor rubbing off on what many perceive as an aging network that’s struggled to remain relevant in recent years. Tumblr meanwhile, will likely be looking to benefit from Yahoo’s ad network and business savvy, in the hopes of emerging with something like a workable business plan or strategy for monetization.
King Midas in Reverse?
Of course, there is also the danger of a kind of King Midas in reverse syndrome, in which Yahoo short circuits Tumblr’s cool factor, either by tinkering with things too much or just by absorbing something that’s perceived as cool and cutting edge into a larger organization that’s regarded as passé and institutional in tech terms.
Yahoo also has a well-publicized history of failure when it comes to such acquisitions, that stretches all the way back to Geocities and includes more recent missteps like Flickr. But this time the aging Internet monolith has promised, “not to screw it up.”
While there is plenty that could go wrong, Yahoo need only look as far as Facebook’s acquisition of Instagram to see how things could go right. Instagram, although a property of Facebook, has largely been left on its own and Yahoo seems intent on doing the same with Tumblr, porn, GIFs, and all.
(Yahoo & Tumblr: good luck / shutterstock)