Whenever a spunky, growing startup gets sold to an established player, the cry goes out. Users won't like it. The culture will be ruined. The startup will be subsumed by its parent. Sometimes it's true, but in the case of the Yahoo YHOO +1.2 percent purchase of Tumblr, I think there's an argument to be made that everyone wins: Tumblr users, Yahoo users and the investors and staffs of both teams. Here's five reasons why critics are worried, and why they are wrong.
1. Yahoo will ruin Tumblr with ads.
Tumblr is a six-year-old company with $112 million in investor funds. There has been pressure, one presumes from the board, to get the site to profitability and ads went from zero to $13 million in 2012, and were projected to reach $100 million by 2013. Simply put, without a deep-pocketed parent, Tumblr was going to have to embrace ads, even as founder and CEO David Karp has said as recently as 2010 that ads "turn his stomach."
So, will Yahoo junk up the Tumblr experience with a ton of ads? No way. Yahoo needs Tumblr to remain pure, and to keep the core users happy. Yahoo has plenty of related ad supported pages to introduce to the Tumblr community, and tons of new video offerings that will come with pre-roll avails. What Yahoo needs from Tumblr is its powerfully engaged, and curation capable user base. So the Yahoo deal protects the Tumblr users from an onslaught of ads that otherwise were on the horizon. This is good for both.
2. Yahoo needs Tumblr's culture.
Yes it does. Unlike the acqui-hire of Summly -- whose founder Nick D'Aloisio is still in high school -- Yahoo is getting a smart, engaged and truly visionary leader in David Karp. Karp is signed on for the long haul, or at least four years with strong incentives for him to grow Tumblr inside the Yahoo corporate auspices. Yahoo needs youth, tech leadership, social skills and passion for content and community. Yahoo needs Karp, and now they've got him on the team. That's a good thing.
3. Yahoo has a terrible track record with acquisitions.
Critics are quick to cite the current state of Flickr (another startup without an 'e' at the end) when they postulate that the Tumblr acquisition will go south. Historians go back even further and point out that Yahoo had a bad time with Geocities -- a popular early web community that they bought and shuttered. But Yahoo under Marissa Mayer isn't the same old Yahoo. Mayer was a rock star at Google GOOG -1.1 percent, and she's seen her share of successful and failed acquisitions. It's fair to assume that she knows what not to do. Also, there's a rumored announcement in the wind about Flickr -- which folks have been calling on Mayer to re-invigorate. And that could happen too. And it seems like Mayer will truly let Karp run the show, so that should keep Tumblr humming along.
4. Yahoo overpaid for Tumblr.
This one is simple... nope. Tumblr had 184 million unique visitors, and 12.1 billion pageviews last month according to Quantcast. While revenue is light, Karp wasn't focused on revenue. He was focused on users and product, which is just what Mayer needs. And in fact, Tumblr has been killing it in mobile -- outperforming Facebook FB -2.94 percent and Yahoo. So getting Yahoo mobilized will be a key piece of this acquisition. With the Facebook purchase of Instagram at $1 billion hanging in the air, $1.1 billion for Tumblr looks like a bargain from where I'm sitting.
5. Yahoo will sanitize Tumblr content.
Tumblr users are pretty freaked out that Yahoo folks will come in and act like the new sheriff in town. Overall, some of the behaviors that Tumblr bloggers use might be looked at by Yahoo lawyers as copyright infringement. Users point to Tumblr Fandoms and gifs as potential IP violations. And lurking in the background is a pretty significant number of porn pages on Tumbr. But Yahoo has already signaled that it's going to leave Karp alone, and since a pretty significant piece of his four year buyout is based on user growth, it would make sense that he asked for autonomy in growing the brand. Let's hope he got it.