Yahoo to Acquire Tumblr
finance.yahoo.com
finance.yahoo.com
They have this image (which they rightly deserve) of being a big, bumbling ancient Behemoth of a company which provides no real use or purpose to the internet, but this could well be part of a bigger revitalization.
Cutting off the fat of the company, bringing in new properties with the intention of keeping them alive, changing the company dynamics to make it a better place to work, bringing in more talent and having a much more youthful outlook on things... These are all good things.
It remains to be seen whether or not Yahoo can perform this transition but things look good for them, if they stick to their guns and simply improve Tumblr without lowering its value to the community, I can see a real future for Yahoo, one where it isn't just irrelevant, but where it makes it's own products and creates new and exciting applications.
What I really want to see, is whether Yahoo is capable of making the move to generation XI and what it brings to the table now it's finally left the time warp it was stuck in.
HN has had an anti=Yahoo bias for a long time; the reasoning behind the bias keep changing ("layoffs", "delicious", "WFH", etc.), but it always seems to be there.
Your comment doesn't make it clear if you realize just how much bigger Google is than Yahoo. Google is worth $300B, Yahoo around $30B.
The reasoning doesn't change, just the examples.
See Also: snide comments about Microsoft.
Generalisations are dangerous, but I think the people on HN generally aren't Yahoo fans because traditionally they don't appear to value good engineering.
PG summarised it quite well:
But Yahoo also had another problem that made it hard to change directions. They'd been thrown off balance from the start by their ambivalence about being a technology company....The worst consequence of trying to be a media company was that they didn't take programming seriously enough....Yahoo treated programming as a commodity....One obvious result of this practice was that when Yahoo built things, they often weren't very good. But that wasn't the worst problem. The worst problem was that they hired bad programmers.
I fail to see the connection between the acquisition of Tumblr and your vision of Yahoo suddenly becoming able to create new and exciting applications on its own as a consequence.
According to Wikipedia, Yahoo's main source of revenue is search and display advertising (by far). By purchasing web sites without any business model and trying to monetise their traffic, they remove value from these sites (for the user) and add nothing that these sites couldn't have done by themselves, in exchange for huge amounts of cash that could instead be spent on developing those "new and exciting applications".
They might get some value out of the talent they are acquiring with Tumblr on the long run, but I doubt that it'll be worth that much.
Honestly, I don't believe this is a 'Buy Tumblr and stick an advert in every <div>' deal, it just doesn't make sense, they know from experience it will destroy the ecosystem of Tumblr. It would make so much more sense to integrate Tumblr with their own products and build on top of it.
Just ask AOL.
Or ask Yahoo.
Or talk to HP about Compaq. Or ask Gateway how their success beget success.
Or talk to HTC about how their early Android success beget even more success.
Or ask Borders and Blockbuster.
Or AltaVista and Lycos and Excite.
Or travel back in time to 1992, and ask IBM how all their success delivered them a massive wave of red ink.
Or Netscape.
Or ask Sun what happened to their incredible sales momentum circa 1999.
The list is extraordinarily long in tech alone.
Case in point, look at how badly JCPenney fared after Apple retail exec, Ron Johnson, became CEO for just 17 months: http://www.nytimes.com/2013/04/09/business/ron-johnson-out-a...
The fact that Yahoo can lay down $1.1 billion in cash is a show of how big the company is. That is both an asset and a liability, when it comes to the existing corporate power struggle.
edit: I'll give an example of which I'm familiar with, as a user: Flickr. I joined Flickr after Yahoo acquired it and have been a happy, paying user for nearly 4 years. However, I'd be at a loss to count all the new drastic feature additions that have come in all that time:
1. A new mobile app (which I don't use)
2. a nicer horizontal-masonry-like gallery layout...which, flabbergastingly, only applies to some collections of photos and not others
3. HTML5 uploader
And yet still, I count myself as a happy Flickr user, which means that prior to Yahoo's acquisition, Flickr was a great service to begin with. From what I can tell, as a data-minded person, Yahoo has done very little with all the interesting data that comes in these voluntarily organized and submitted photos. I don't get much help with auto-tagging or auto-grouping of collections. The Flickr logged-in homepage is nothing but a short list of the last few people who "favorited" a photo...there's been almost nothing done in four years to get me to engage more with the Flickr network.
And Flickr's domain covers items of a very discrete nature...easier to do interesting analysis and data-operations on than I feel one could do with Tumblr.
So while Flickr's relative stagnation is not Meyer's fault...the fact that we can say, "Well, it's not her fault that Flickr is meh five years in a row" goes to show you how massive a company Yahoo is and how hard it is for everything to move/change even when a new CEO comes in.
The Ron Johnson story is interesting, as he was so successful at Target and Apple. There was definitely alot of ego and refusal to adjust to the signals the market was giving JCP. But the store within a store concept and lack of clutter is a big deal and will ultimately serve the company well.
Not that I'm disagreeing with anything you're saying, but I would like to point out that the changes Johnson implemented are now widely seen as terrible mistakes on his part, alienating huge swaths of the existing customer base. The problem wasn't that "fiefdoms" got in the way of reform, it's that the reforms were actually just poor choices.
Conversely, you could argue that Apple was similarly a huge dying behemoth when Jobs took the reins.
A CEO can make a huge difference on the upside and the downside (and of course they can also make no difference at all).
Yes, it's the CEO's job to make decisions based on what she has at hand and what she knows of the ship she's steering. But I think this underscores the point that the nature of the ship is as important to the CEO's initaitives as the quality of the initiatives themselves.
So to say, "let's ignore that Yahoo (in the opinion of some) has been a creaky, slow-moving ship for the last 10 years and see it as an entirely new ship now that it has a new CEO" simplifies the situation a little too much.
First, get rid of the stragglers and people who don't believe in your vision. MM did this by ending remote work at Yahoo, and Steve Jobs did it by gathering everyone up and telling anyone who wasn't on board to "get the hell out" [1]. This will get rid of all the unmotivated and/or pessimistic people who might hold the company back.
Next, focus heavily on rebranding and spend a crapload of cash to convince the public that your company is different now. Steve Jobs did this with his famous "Think Different" ads [2], and Marissa Mayer seems to be doing this by making big PR waves with big acquisitions of mobile-centric startups. Hopefully this will make your company "cool" again and make the "A players" actually want to work for you (again).
And then of course, build a bunch of awesome products and then TAKE OVER THE WORLD as Apple did. We'll see if Yahoo can do the same.
[1] http://ecorner.stanford.edu/authorMaterialInfo.html?mid=3067
"Anyway, so Steve said 'You know what, we're going to build a great company. We're going to reinvent the world. And anybody who believes me, like let's get moving. If you don't believe that will happen then get the hell out."
Another thing that seems interesting to me is that whenever someone exits into an acquisition it's like this space becomes open again for new startups. Someone should make a new microblogging platform that now disrups Tumblr/Yahoo. It's kind of like the dragon Ouroboros, eating its own tail, around here sometimes.
As always, when two technologies are battling, the one porn picks will win.
Edit: Just thinking about the business of porn, this is probably a decent heuristic for simplicity and cost effectiveness. Porn is usually very low budget (compared to other mass market media), with a very high volume of consumers. From my experience in non-profit oceanographic research, nothing focuses an engineering effort like trying to succeed on a shoestring budget (wow, I never thought that'd compare to working in the porn industry).
http://history.tamu.edu/faculty/coopersmith/coopersmith%20pe...
For better or worse, FB could be a good example of "platform success" that partially relies on that. It's not porn per se, just beach/bikini photos of one's lady-friends, or his work-mates, or the wife's friends.
I think tumblr was easier for people to post stupid pictures of cats and porn. The friction to entry was lower IMHO.
Of course, the issue with Tumblr is the make some money off it part, but Yahoo is from the '90s, so they know not to expect to make money off things.
I have 12 blogs on Tumblr (and counting), almost all of which I post to frequently - and the only thing I ever use the dashboard for is to make those posts. The only social action I have ever taken was to reblog a recent post I found on reddit, mostly just to see what would happen.
Tumblr had a vastly superior product for the market it has been focused on.
As part of our research, we interviewed Alan L. Wurtzel, the Level 5 leader responsible for turning Circuit City from a ramshackle company on the edge of bankruptcy into one of America's most successful electronics retailers. In the 15 years after its transition date in 1982, Circuit City outperformed the market 18.5:1.
We asked Wurtzel to list the top five factors in his company's transformation, ranked by importance. His number one factor? Luck. "We were in a great industry, with the wind at our backs." But wait a minute, we retorted, Silo -- your comparison company -- was in the same industry, with the same wind, and bigger sails. The conversation went back and forth, with Wurtzel refusing to take much credit for the transition, preferring to attribute it largely to just being in the right place at the right time. Later, when we asked him to discuss the factors that would sustain a good-to-great transformation, he said, "The first thing that comes to mind is luck. I was lucky to find the right successor."
Luck. What an odd factor to talk about. Yet the Level 5 leaders we identified invoked it frequently. We asked an executive at steel company Nucor why it had such a remarkable track record of making good decisions. His response? "I guess we were just lucky." Joseph F. Cullman III, the Level 5 CEO of Philip Morris, flat out refused to take credit for his company's success, citing his good fortune to have great colleagues, successors, and predecessors. Even the book he wrote about his career -- which he penned at the urging of his colleagues and which he never intended to distribute widely outside the company -- had the unusual title I'm a Lucky Guy.
At first, we were puzzled by the Level 5 leaders' emphasis on good luck. After all, there is no evidence that the companies that had progressed from good to great were blessed with more good luck (or more bad luck, for that matter) than the comparison companies. But then we began to notice an interesting pattern in the executives at the comparison companies: they often blamed their situations on bad luck, bemoaning the difficulties of the environment they faced.
Compare Bethlehem Steel and Nucor, for example. Both steel companies operated with products that are hard to differentiate, and both faced a competitive challenge from cheap imported steel. Both companies paid significantly higher wages than most of their foreign competitors. And yet executives at the two companies held completely different views of the same environment.
Bethlehem Steel's CEO summed up the company's problems in 1983 by blaming the imports: "Our first, second, and third problems are imports." Meanwhile, Ken Iverson and his crew at Nucor saw the imports as a blessing: "Aren't we lucky; steel is heavy, and they have to ship it all the way across the ocean, giving us a huge advantage." Indeed, Iverson saw the first, second, and third problems facing the U.S. steel industry not in imports but in management. He even went so far as to speak out publicly against government protection against imports, telling a gathering of stunned steel executives in 1977 that the real problems facing the industry lay in the fact that management had failedto keep pace with technology.
The emphasis on luck turns out to be part of a broader pattern that we came to call the window and the mirror. Level 5 leaders, inherently humble, look out the window to apportion credit -- even undue credit -- to factors outside themselves. If they can't find a specific person or event to give credit to, they credit good luck. At the same time, they look in the mirror to assign responsibility, never citing bad luck or external factors when things go poorly. Conversely, the comparison executives frequently looked out the window for factors to blame but preened in the mirror to credit themselves when things went well.
The funny thing about the window-and-mirror concept is that it does not reflect reality. According to our research, the Level 5 leaders were responsible for their companies' transformations. But they would never admit that. We can't climb inside their heads and assess whether they deeply believed what they saw in the window and the mirror. But it doesn't really matter, because they acted as if they believed it, and they acted with such consistency that it produced exceptional results.
-- Good to Great, Jim Collins, 2001
However, that does not change the manner in which the leadership of the companies viewed their contemporary success and how it came about.
I found it extremely interesting that such high-level leaders could swallow their pride and attribute success to good fortune. It is trivially simple to dismiss luck as a huge factor due to our own egos being in the way, and the fact that these people were so publicly adamant about their lucky streak suggests to me a level of humility rarely seen in that echelon of executive power.
This is getting OT, but this paragraph in the article was particularly interesting:
> Computers have become a pinnacle part of everyday life, and research has shown that individuals may subconsciously treat interactions with computers as they would treat a social situation.[26] This finding combined with what is known about the self-serving bias in interpersonal relations indicates that consumers that use a computer to buy products will take personal credit for successful purchases but blame the computer for negative purchase experiences. It was also found, however, that consumers are more willing to attribute successful purchases to the computer and not ascribe blame to the computer for failed purchases if they have “intimate self-disclosure” with the computer, which Moon describes as revelation of personal information that makes the discloser feel vulnerable.[6] Another reason is that people are so used to bad functionality, counterintuitive features, bugs, and sudden crashes of most contemporary software applications that they tend not to complain about computer problems. Instead, they believe it is their personal responsibility to predict possible issues and to find solutions to computer problems. This unique phenomenon has been recently observed in several human-computer interaction investigations.
- Tumblr is easier for photoblogging
- Tumblr has a social network
- Tumblr somehow encouraged (or at least did not care) about NSFW
Yahoo! to Acquire Tumblr
Promises not to screw it up
Instagram is not going to replace Flickr for Flickr's core audience.
So yes you're right, they don't compete. But thats the problem. Hypothetical one, and I wouldn't blame the CEO for it. Its just one of the many things up the road they didn't travel up.
My guess is that flickr was being run by a bare-bones team in strictly maintenance mode, and the profits were funneled into other (money-losing) parts of the company.
Meyer seems determined to change this, though. Impossible to tell how much headway she's made from the outside, but she's certainly saying the right things here. We shall all see in due time.
Mayer appears to be doing everything she can to drag Yahoo back to being relevant, and to me that sounds like an interesting (and potentially rewarding) challenge.
I just hope she is looking for innovation from within as well as from acquisitions.
Yahoo is not going to be relevant again because they bought Tumblr. They cant even make their own product relevant.
I cant even understand why anybody would buy Tumblr 1 billion or more.
Dailymotion would have been a good deal, this service is relevant and people are starting to be willing to pay to watch videos. They could have bought loads of usefull stuff for 1 billion.
To me it just feels like a publicity stunt to make the stock go higher for a few days , but what is the long term strategy ?
At that rate Mayer will be out in 1 year from now.
The problem is that the valuable asset of tumblr are its users. And users are fickle bunch.
That line is a winner. Hahaha. It's a good thing though that they recognize the general sentiment that they do tend to screw up the products they acquire.
Also, TechCrunch reports that the price is $1.1B http://techcrunch.com/2013/05/20/its-official-yahoo-is-buyin...
They'd get more out of their money by selecting 1,000 open source projects on GitHub at random, and investing $1M into each.
So Yahoo now has Mayer running the ship, and Karp involved ostensibly with Tumblr but I'd wager he'd have some input with the direction of Yahoo. He comes across as being a smart, focused guy in profiles, so he might have some bearing on where Yahoo is going.
The two companies will also work together to create advertising opportunities that are seamless and enhance the user experience.
"to create advertising opportunities...that enhance the user experience."
Yahoo is so unhip that they don't even realize what they've gotten themselves into, probably.
I'm sure some sane people have blogs on tumblr, but they're vastly outnumbered by the "social justice" retards who think that screaming about how all straight white men should be auschwitzed for their sins is some sort of legitimate activism. (Where sins = having been born.)
A lot of the tumblr community's response to the acquisition has been downright hilarious, naturally. They're pretty offended that someone bought "their" blogs without their permission. Any explanation of how the world works is, of course, met with accusations of "privilege" and shouting about how the poster/yahoo/etc is trying to "oppress" their precious PEE-OH-CEES.
http://andycroll.com/2013/05/20/tumblr-founder-shares-and-di...
These companies, especially the biggest ones and the ones that are acquired by them; they all seem to have one thing in common. They are all not at all about what they built, but, once you control for the variables, what you are left with is that it all comes down to users. These acquisitions have zero interest in the "product" as it is rarely unique or even innovative (image filters, "micro"-blogging, task management, etc.); it is all about acquiring the users.
Is there anything that could point to these and most other acquisitions not being solely about the users. I find it hard to believe that Google, Facebook, Microsoft, Yahoo, etc couldn't build what are, essentially, usually, rather simple technologies.
It seems like it all comes down to the human factor and that changing versus creating new habits is rather difficult and costly, i.e., more than $1 billion dollars costly.
Sorry for the redundancy. I had to throw it together while being interrupted with work. Damn work.
It helps that the Tumblr demographic is most likely different from Yahoo's - although that may hurt them when trying to monetize since a different approach may be required. We'll see what happens.
As a general rule, companies rarely[0] win because of superior technology. Rather, they win because they use their tech in a way that provides superior value to their users.
This is something all aspiring entrepreneurs should keep in mind. Nobody cares if your company uses incredibly elegant code or highly sophisticated Machine Learning/NLP/Functional Programming/whatever. All users care about is whether your product provides value. And remember that "value" is highly subjective-you may not think that Facebook is useful, but many people will disagree with you.
[0]: there are certainly exceptions. If you know that the problem you're solving has major market demand, then you can win with superior execution. Viaweb is a good example, as pg tells it they won mostly because they could roll out features much faster than their competitors.
So we have option: a) cry about it online all day, make petitions ... and the whole system closes in a couple of months and you end up with nothing OR b) yahoo buys it and the site lives on
I just don't understand all this talk about Tumblr remaining independent of Yahoo. Yahoo is mostly a pretty stagnant company that needs new ideas and ways of thinking and doing business. Tumblr offers that opportunity - making the central point of interaction a user-defined dashboard rather than an overly-programmed portal that fewer and fewer people visit out of inertia.
Sure, let Tumblr be Tumblr so you don't scare off its audience. But unless Yahoo itself becomes more like Tumblr, what's the use of spending $1.1 billion?
David Karp?
Marco Arment?
Marissa mayer?
Union Square Ventures?
Greylock Partners?
Sequoia Capital?
Marco Arment hasn't had anything to do with Tumblr in years. He might hold some equity as a result of his time there, especially since he was there at the very beginning, but certainly not more equity than Karp.
Mayer/Yahoo has a long way to go to prove that this was a smart idea. Two years from now they might be the biggest winners, but they're also taking on all the risk at this point.
And as for the investors, this should be a big win for them (although I don't know how much they invested, so hard to say how big of a win), but they are investment firms who have to spread the profits around, opposed to Karp, who is one guy who just got a huge check.
Can yahoo repair the broken Flickr experience?
Can yahoo do some interesting product that delight users?
If not, what is the point?
I loved the focus he put on the market sector he was serving, and I share his hatred of intrusive advertising, but he didn't present a realistic alternative. It's a shame - we keep losing innovative businesses that don't think enough about long-term business models, so we have to hop onto the next big thing until it too gets snapped up. Much as I dislike Facebook, you have to respect Zuckerberg for not selling out... at least he's tried to build something sustainable.
Spending 1.1 billion on a company that says it's "not turning purple" may have some impact on morale in Sunnyvale and on Wall St.
I think there's precedent for letting a subsidiary group retain its own branding and culture, and for that to not cause morale to drop.
I should point out WordPress is far too heavy for a Raspberry Pi, I need something lightweight.
Remember people thought Facebook was crazy to pay $1 Billion for Instagram. Now it's probably worth several times that...
Is it though? As far as I can tell it still has $0 revenue.
Facebook acquired Instagram because they were worried about the rapid growth of a photo sharing app that didn't involve Facebook. The Instagram purchase was a very expensive insurance policy.
Will Yahoo smother Tumblr with integration projects like single sign-in, leaving insufficient resources to do anything new? Or will it be benign neglect? Or will they actually invest in it as a social platform (instead of as a database like they did with Flickr)?
With new CEO, hopefully bad history won't repeat.
Yes, they promise they won't screw it up Officially
http://www.ipetitions.com/petition/stop-yahoo-from-buying-tu...
Disclosure: I work for iPetitions.
It's funny how when there's news of a company acquiring another people think straight away that it'll change drastically and overnight, making the huge assumption that the company is A) going to change anything B) doesn't know that changing something will break trust with users making their billion dollar purchase useless.
Or maybe Yahoo will change things on tumblr who knows? I'd like Yahoo to add a feature to change your primary blog on tumblr. That would be nice to have..
To be more precise, they don't like this:
"Stop Yahoo! from buying Tumblr!! If this happens, the entire interface will be changed, and millions of users will delete their accounts - me being one of them. Please, please, please sign this to stop this!!"
... which isn't the same as Yahoo buying Tumblr. They don't want Yahoo to negatively change Tumblr (there's a difference).