I had heard the "well below 20m" figure and couldn't believe it—and now Fred is saying they dumped it for $3 million? I suppose if Verizon is taking the tax deduction on an original $1.1 billion purchase by Yahoo, the value of the deduction so much dwarfs the sale price that the difference to Yahoo between a $3 million sale price and a $50 million sale price is pretty minimal—they just want to close the deal to take the deduction and stop the losses.
Still, considering the fact that Tumblr still does over 2.5 billion page views per month [1], not even counting their mobile usage, I can't help but gawk at what a steal Automattic got. Really drives home what their CEO Matt Mullenweg said on here the other day about adopting a "Berkshire model"—although he was referring to independent management, what he's really talking about is buying companies grossly undervalued for dirt-cheap. Just monetizing the web traffic 2.5 billions monthly hits at a $1 CPM alone would generate $2.5 million a month in revenue, $30 million annually.
What kind of business, let alone web business, sells for 1/10th annual revenue? For reference, Reddit does 6x the page views, but is valued at $3 billion. Reddit's prospects are obviously better, but are they 1000/6 = 166x times better per current page view? Mind-boggling.
IMHO Wordpress itself is grossly undervalued. I've done some whole-web analysis and they (including both the open-source project and the hosted service) account for roughly 18% of the web. The volume of content produced on them (in terms of # of words, not # of messages) is greater than on Twitter. If you look at comparables - with Twitter valued at $30B, Reddit at $3B, and Wordpress valued at $1.16B - it's pretty hard to justify those valuation disparities. Sure, it's open-source and non-hosted-by-them Wordpress installs don't really make much money for the company, but you could argue that they actually have more control over the greater Wordpress ecosystem than Reddit does over famously revolt-prone subreddits.
Unfortunately, they're private, profitable, and to my knowledge not seeking investment, otherwise I'd buy a slice of them in a heartbeat.
I think investors like the fact that Twitter and Reddit control all of the user data and (mostly) where and how it's surfaced. The idea is they can somehow monetize this data (e.g., ad revenue).
Obviously they haven't been able to do that yet. There's a chance those platforms are very over-valued... but you can see where some people think the golden goose is.
Grossly undervalued? Wordpress isn't in the same league as Twitter or Reddit. Wordpress has multiple profitable businesses driving it. Something that can't be said for any of this crap VCs are so excited about lately.
Tumblr is a bonfire of money. Why anyone thinks its some huge accomplishment is beyond me.
> said on here the other day about adopting a "Berkshire model"
This is not the Berkshire model at all. Berkshire buys businesses that have high cash flow models where money can compound over and over, usually in well established businesses that have operational issues that can be optimized for cash flow.
> Just monetizing the web traffic 2.5 billions monthly hits at a $1 CPM alone would generate $2.5 million a month in revenue, $30 million annually.
That napkin math doesn't take into consideration:
- hosting costs
- software maintenance cost
- sales & marketing required to drive $30M/year
- Decrease in traffic due to ads
- Ad-blockers
> What kind of business, let alone web business, sells for 1/10th annual revenue?
Retail does...retail. Hate to break it to you, but businesses aren't bought and sold on revenue (despite what TC tells you). It's usually on a multiple of earnings or discounted free cash flow. Note - it's important to remember that DCF can get real fuzzy and hence why its much easier for media to just revert to "revenue".
> Reddit does 6x the page views, but is valued at $3 billion.
And Tumblr's valuation was once $1.1B and they couldn't monetize it. How is that comparable a valuable reference point?
Assuming you want to keep Tumblr running, you are also buying the ~200 employees and the costs of running the site. Assuming the 200 employees cost $100k each (salary + benefits) and you are already at $20M in costs.
If I bought Tumblr in a $3 million fire sale, I don't think I'd keep 200 employees on the payroll, but yes, it combined with the tax write-off and infrastructure costs it's reasonable for Yahoo to want to dump it as fast as possible—they could easily be losing $5M a month on it. I'm just shocked there aren't more opportunists in the market that would have bid the price up to at least something resembling reasonable. That being said, even an extremely well-executed turn-around could be 6 months until break-even, which would require potentially upfront $30 million in losses, in which context the sale price is insignificant, and so the question becomes who has web business expertise + $30 million in cash to burn and desire to confidently make a $15-20 million annual profit business a year or two out. Apparently, not many people/companies.
Verizon didn't just fail to figure out what to do with Tumblr, it dealt what was nearly a death blow by changing its policy on adult content - one of the platform's biggest remaining pillars of core users. Tumblr doesn't still exist because of its features; it exists because of its communities. Leave it to Verizon to not just starve a golden goose, but shoot it in the head.
> One of the things that really surprised me is I thought — as probably many do — that Tumblr had kind of died under its variety of corporate parents. And then actually being able to see some of the numbers, including some the numbers post-when they changed the adult content policy. I was like, “Wow, this has still got a ton going on.”
I don't doubt that it's still a viable business, I don't care.
I feel a deep pain every time I think about it. Something beautiful was destroyed with no remorse. The world is worse off because of it. It feels like tearing down statues of the buddha. The one place on the internet where one could explore explicit sexuality without feeling gross and exploited. I will never forgive this destruction of a beautiful culture. The whole thing makes my blood boil.
Tumblr lost ~70% of its engagement in the 5 years prior to the adult content ban. The adult content ban was a drop in the bucket, numerically speaking. This graph is an accurate depiction: https://twitter.com/somospostpc/status/1161024458460712962
Also keep in mind a decent chunk of the adult content was literally automated bot spam.
Meanwhile, Statista's graph appears to be made of random numbers with no basis in reality whatsoever. They claim that even post-adult-content-ban, Tumblr has more MAUs than Twitter and Snapchat combined. Factor in Tumblr's 70% drop vs historic peak usage, and you'd end up with a number claiming Tumblr was once the most popular tech product on earth. This is quite obviously a complete fabrication.
If you want to be sad or angry about something, the loss of old peak Tumblr -- when it combined the best aspects of Twitter, Instagram, Pinterest, and Reddit -- is a better target in my mind. Its decline was long and slow over many years.
(Disclosure: I was one of Tumblr's first engineers, and later director of platform engineering. I had no involvement whatsoever in the adult content ban, but nonetheless find it frustrating when people significantly overstate the amount of adult content on Tumblr. At its peak it contained an extremely diverse set of communities, and I fear this is being completely lost in revisionist rhetoric.)
It's about having a safe community for self expression through sexual art. It's about a set of deeply regressive (American) cultural norms that stifle sexual expression and further marginalize non-normative individuals. It's about the death of a vibrant community that made people feel included and valued. It's about sex-positivity. It's about destigmatizing overt sexual expression.
This is exactly what happened. Verizon probably didn't know that most of the traffic they were buying were because of adult content, and then they killed that. I wish they had sold it to Pornhub instead.
Verizon didn't buy Tumblr. Verizon bought Yahoo/Oath and ended up with Tumblr. It's a very different scenario.
It's important to remember that Tumblr never turned a profit; as far as I've been able to determine it never hit the break-even point. And the bottom line is that a giant service that's losing money is worse to own than a tiny service that's losing money. Verizon's attempt to kick out the NSFW parts wasn't simple-mindedness or prudishness, it was a calculated risk that a smaller but SFW Tumblr might be able to at least make enough money to pay for itself.
Having said that, it's also important to note that Tumblr still gets a lot of traffic; by most measures it's still in the top 100 most visited sites on the Internet, and gets more traffic than Wordpress.com -- Automattic's closest "competing" product -- does.
Do you have a source for that? I worked there at the time of this unholy merger, and that explanation for the name was never given.
From what I recall, Tim Armstrong claimed the name reflected Verizon's promise to do right by AOL and Yahoo, or some other such complete nonsense. Internally, everyone I knew thought it was on par with Tronc for worst rebrand ever.
Off topic here, but reading this text blob, would it hurt HN to increase line-height a smidge? Like to ~1.5x? That would be 13pt and SO much easier to digest.
As a long time Tumblr user, it's sad to see it's downfall.
I had hope that Automattic would change the content policies that brought the site down, but it seems that won't be the case.
But the fun isn't over just yet. I've launched Libr (https://librapp.com) to replace Tumblr. It's an installable Progressive Web App, getting around app store rules (recall when the Apple app store banned Tumblr).
There's a few hundred users on there that have given me good feedback on improving Libr and it's starting to slowly take off, although I'm not in any hurry and I'm taking my time to make it awesome before turning on the floodgates.
Please fix your site- it breaks the back button. This looked interesting, but I immediately hate any site that breaks back-button functionality; and once I notice that I instantly assume either malicious intent or incompetence.
I get that it's a PWA, but can't the welcome page just be a regular page?
Tumblr is an hidden secret and totally underrated.
I run two niche blogs on tumblr since 2011 with full control of themes and content, https, social sharing, without compulsory ads and using my own domain. SEO was a negative point but nowadays is good enough. All of this for free. Wordpress offer, AFAIK, is not nearly as good.
"Tumblr was an example of how to do social media right and we can learn a lot from it." I mean... maybe. Tumblr was also an example of maybe not pivoting the product to cater to the community properly, as there was a lot of other usage of Tumblr besides a strictly 'social media' use case. There was a lot of conversation around deeper feelings, and a community around self-discovery and self-awareness. I'm not 100% sure if Tumblr was able to properly capture that market and position itself there.
Mr. Wilson's understanding of Tumblr is flawed [0]. There's a simple objective test (now irrelevant) to tell if a platform is largely about porn or not:
I’m still using it since 2009 everyday. For design inspiration. As a moodboard. And still works as in the good old days.
Tumblr made me a better designer. By catching up with the latest in print and graphic design and porting thse trends to web I had a work featured very early in Brutalist Websites.
I use no other social network. It’s simply too much. And yes a heart is good enough.
“Tumblr was an example of how to do social media right and we can learn a lot from it.“
Except it lost, so by definition it can’t be right.
Update: there are clearly many definitions of right. Here I’m using right in the sense that it gets mass adoption (right in that people prefer it), and right in the sense that it also simultaneously does net positive for the world. Achieving both is difficult.
"Lost". It did not lose in term of being a better social experience. People after pale fame and instant gratification left to chase the "i wanna be famous", Total Drama Island style, but this has nothing to do with socially or morally better.
In 2017, Tumblr had ~400 employees. If each employee had a modest $50k retention bonus, that’s at least an additional $20M. So I’m not sure the total cost for the purchase as $3M- maybe that was just for the corporate assets.
> But it is also true that Tumblr was bypassed by native mobile applications like Instagram and Snapchat where it was even easier to post about your life.
This. It's understated how much Tumblr's clunky composing hurt it as a platform. I know people connected to Tumblr, and from what I hear there was a lot of ideas but little direction.
There was a time when Tumblr was bigger than Instagram— Tumblr could've focused more on making it an amazing photo-sharing service. Snapchat was/is loved by its anonymity and ephemerality, but Tumblr was already an anonymous social network well before it. They could've added features for ephemerality and explored that market.
I used tumblr for consuming a lot of content, and it was great for that, but I always thought it had potential to be better for sharing too.
I think you are talking about current developments, but it is worth mentioning that when Twitter launched it was just as flip phones started to be replaced by smartphones. Most people were interacting with the service through SMS.
To me, it felt like the progress with further developing tumblr slowed after Marco Arment moved onto other projects.
From a historic perspective, this may an interesting article to some people.
That would be an interesting mobile app. There's nothing that does one to many ephemeral text messaging. I imagine they still have enough of a certain subgroup of adolescents to make a go of a new idea based on ephemerality. I don't know any young people that would use FB anymore than they would watch cable news. I imagine they'll screw up insta at some point too.
And this is ironic in how much Tumblr itself simplified the blogging experience, by having several pre-built formats (e.g. photo, text, video). I had a regular Wordpress blog but found it so much easier to casually post photos to my Tumblr.
Twitter, IMO, is wonderful when you stop following journalists, politicians, and A list celebrities. What that leaves is mostly meme makers and minor influencers who generally wrap all the bad stuff inside of funny jokes and hot takes.
Twitter is also excellent for following journalists, but i keep them sectioned off into their own list and try my best to limit the attention i pay to that.
I can see why people say twitter sucks, but really it only sucks if you're following a whole bunch of different "genres" in the same feed. the prolific tweeters like to talk about twitter in sections - "politics twitter", "black twitter", "meme twitter" etc and if that's how you use it, it's pretty good.
It's too bad that Twitter itself doesn't make this into a real abstraction. I'd love to treat my feed as mixed activity from a set of isolated communities, where one community can retweet something from another community into their own community, but where this retweet acts as its own object that doesn't inform anyone from the origin community about the activity on it in the destination community. Sort of like Slack, if there were teams but no channels, only threads, and your view was a unified all-threads-in-all-teams activity stream.
"Stuck" is a slight exaggeration. I can still punch whatever I want into my address bar. Why is "widely used" required? Do you search/discover through Tumblr?
Before a bunch of artists were driven off tumblr due to the overly strict adult policy (the appeals process etc. was too much of a pain) Tumblr was my go-to for a lot of artists in the niches I followed. Through this, I found a ton of communities- fandoms for the characters created by the artists, collective worldbuilding, etc. Also, within niche fandoms I followed I also found artists that produced wonderful works.
There's still an ongoing webcomic (A Tale of Two Rulers) that's a world where Zelda and Gannon choose to marry instead of war on tumblr. It's incredibly awesome and part of what I'm on tumblr for.
I'd add that social media, done well, cannot and should not be monetized. There is simply no overlap between what makes a service engaging to use to the degrees needed to make advertising profitable, and the priorities set forth to grow a community that is a net addition to the lives of its members.
Call me starry eyed if you want, but I think while we do absolutely need a Facebook, that it shouldn't be a private business. It should be a public good, funded by the public, for the public and its interests.
I think this is very likely. The only way I can see companies like Twitter being worth as much as they are is their potential political power. A company like Twitter has a lot of influence over that, but I don't think they create such an enormous amount of value.
The CEO of Tumblr David Karp made unilateral decisions which stifled its growth and utility. Any additional decision making input would have helped here, but qualified women, minorities and people accompanying David, Fred (the author of this article) and Marco (1st engineer) would have greatly helped so the winds here. Be more in tune with the audience that grew.
After the second sale to Verizon, after David left, different leadership could have understood how the erotic content community was flourishing on Tumblr in ways that the erotic industry has failed to attract. Many women liked tumblr for porn sharing, browsing, and curating because other porn-specific sites have unclean interfaces and distracting ads. There were people that could have told them that in the decision making process, and helped navigate the issues encountered since that is what was driving engagement.
Automattic also seems to fail to understand this, with CEO Matt Mullenweg's explanation seeming to complete miss the point, and looks more like a pet project than any interest in engagement.
Still, considering the fact that Tumblr still does over 2.5 billion page views per month [1], not even counting their mobile usage, I can't help but gawk at what a steal Automattic got. Really drives home what their CEO Matt Mullenweg said on here the other day about adopting a "Berkshire model"—although he was referring to independent management, what he's really talking about is buying companies grossly undervalued for dirt-cheap. Just monetizing the web traffic 2.5 billions monthly hits at a $1 CPM alone would generate $2.5 million a month in revenue, $30 million annually.
What kind of business, let alone web business, sells for 1/10th annual revenue? For reference, Reddit does 6x the page views, but is valued at $3 billion. Reddit's prospects are obviously better, but are they 1000/6 = 166x times better per current page view? Mind-boggling.
[1] https://www.similarweb.com/website/tumblr.com
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