What would have happened to Tumblr without Yahoo? Trouble | Hacker News Reader

What would have happened to Tumblr without Yahoo? Trouble

gigaom.com

38 pointsprostoalex18 comments

It's interesting too, because previously Karp had claimed that it would be easy to reach profitability. He said all they'd have to do is put one ad spot on the dashboard, and that would do it based on views. Color me skeptical that it would have been that easy.

The article doesn't clarify running costs for Tumblr. Might help us put things in perspective-- why is $13,000,000 in advertising revenue troublesome?

Hard to say what their infrastructure costs are, but just salaries for 178 employees is way more than $13MM.

The real question being why did they have 178 employees?

It sounds almost like they were following the Digg engineering approach rather then Reddit's.

http://www.linkedin.com/vsearch/p?f_CC=1668979

A lot of "brand strategists"

The number of people with "brand" in their title is amazing.

Is that a fancy title for someone who interacts with the tumblr community? I noticed they're located all over the place.

In ad sales lingo, 'brand' is pay per view or sponsorship advertising. These people will be looking after the big clients, think music labels, movie studios, TV networks...

Hey, do you have a link/url to the Reddit's Engineering Approach article/post. I'd very much like to read it. Thanks.

Sorry I don't. That comment was based on knowing the history of both of them. I believe that Digg had something like 80 employees vs reddit's 5 or so. That's based on from memory. Interviews with Owen Byrne (Mixergy), Kevin Rose (I think it was mentioned on TWiT when he was on), and places like HighScalibility are where I got those basic numbers.

I wish I could point you at some better sources but that's the best I can remember sorry.

I'm not sure how to guesstimate salary costs but $13MM/178 = $73,000 per year per employee. Paying $73,000 per year means that you are paying salary, payroll taxes, and any benefits. The actual salary, for example, might be $55,000 with ~$10,000 tacked on for payroll taxes and another ~$8000 in various benefits/costs.

An average salary of $55,000 seems a bit low but not by too much. I'd guess that $13m is right around their employee cost. If that's true, the rest of their cash must be funneled towards tech and advertising.

Not sure what the breakdown would have been for technical vs. non-technical people, but $55,000/year in New York City (where Tumblr is) is a pittance. You'd be lucky to hire a decent programmer in New York for under $100,000.

$55k at a mature startup like Tumblr would be an insult to a good programmer, who is being flooded with six-fig offers from hedge funds and banks. In NYC, it's almost about what a grad student who interns in the summer would gross in a year.

I'm guessing that we have different assumptions as to what the 178 people employed there do. Instead of having 178 programmers (thus skewing my original guess), I would expect that a company like Tumbler has probably 50-75 "tech" people (programmers, sysadmins) with the balance being either management or lower level people (brand awareness folks, customer service, assistants, etc). There are going to be fewer management people than others, which means the bulk of their 178 employees in my guess would be lower-level employees. I'm curious to think why you guys think they have most/all of their employees as programmers/devs...

If they raised $85m in September 2011, and were down to $16.6m upon acquisition, that implies a pretty substantial burn rate, even being generous.

Tumblr almost certainly had other options – another bidder or possible bridge/follow-on funding.

You can't have follow-on funding for all eternity.

$80 million cash out for 4 years of servitude? Bad deal.

I wouldn't sell my baby for that.

I wouldn't sell my baby for that.

Heh, well first you'd need to have a baby. A baby worth $1bn of which you owned 20-25% equity.

Reply on news.ycombinator.com