Tumblr founder to get $81 million to remain at Yahoo | Hacker News Reader

Tumblr founder to get $81 million to remain at Yahoo

cnbc.com

78 pointscodegeek53 comments

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To me, the most fascinating aspect of the article is the list of Yahoo acquisitions since Mayer joined:

July 17, 2012 Marissa Mayer becomes Yahoo CEO

October 25, 2012 Stamped (Social Recommendation)

December 4, 2012 OnTheAir (Video Conferencing)

January 22, 2013 Snip.it (Social Network)

February 12, 2013 Alike (Social Recommendation)

March 20, 2013 Jybe (Social Recommendation)

March 25, 2013 Summly (News Aggregation, Summarization)

May 1, 2013 Astrid (Productivity)

May 9, 2013 GoPollGo (Real-time Surveys)

May 9, 2013 MileWise (Reward Programs)

May 10, 2013 Loki Studios (Mobile Gaming)

May 17, 2013 Tumblr (Blogging)

May 23, 2013 PlayerScale (Online Gaming)

June 12, 2013 GhostBird Software (Mobile Photography Apps)

June 13, 2013 Rondee (Video Conferencing)

July 2, 2013 Bignoggins (Fantasy Sports)

July 2, 2013 Qwiki (Automated Video Production)

July 3, 2013 Xobni (Address Book Apps/CRM)

July 18, 2013 Ztelic (Social Analytics)

July 31, 2013 Lexity (E-commerce App Platform)

Put another way: since March 20, Yahoo has averaged an acquisition every ten days.

Well, it's not like the ideas were gonna come from inside Yahoo.

Holy crap. Normally my reaction when "yet another social, mobile, recommendation" app company comes out is "why the hell..."

I now know why. There's serious exit money to be had.

It's like the wasp that lays her eggs inside a big juicy caterpillar.

I hadn't heard of a single one of those except for Tumblr. Why are they valuable?

I'm not sure about the others, but Lexity has an actual business model.

I found this Michael Wolff comment very interesting: http://www.usatoday.com/story/money/columnist/wolff/2013/07/....

Basically, an influential shareholder has resorted to spending company money (from deferred dividends and sale of the Alibaba stake, etc.) to drive up the company's stock, after which the shareholder cashed out, as the stock soared.

Thanks, that was an extremely interesting read.

There seemed to be no rhyme or reason behind the Yahoo acquisitions. For example, why Xobni? The two founders have already left Xobni. So if it was an acquihire, then who was Yahoo trying to acquihire? And if it wasn't, then why did they shut down their products?

But now I understand what was happening. It didn't matter what Yahoo was buying, or whether any of it made sense. In fact, the less sense it made, the more buzz got created, as people tried to figure out Marissa Mayer's master plan.

That was unreadable, I had to stop after a few paragraphs. Could he sound any more biased and un-objective?

I know an opinion piece doesn't have to be neutral, but that was way shrill.

Meyer has proven that she knows how to spend money. That might actually qualify as progress for Yahoo! Market seems to like it, but that can change quickly.

It's funny, i just summarized her davos talk last night and looking at these aquisitions, they all fall into her 'vision'. The only one that stands out is tumblr since she said they were looking to do small aquisitions, therefore she is following her vision and the market will decide if it is successful. If she succeeds, the media will be praising her to the moon and if she flops, we will hear ll the scathing blog posts. So far she has raised yahoo's stock price, which has taken some pressure off here especially from some vocal yahoo shareholders.

I'd correct: If she succeeds, she will be praised to the moon, and if she fails, most people will say "heh, Yahoo! was doomed to irrelevance anyway" and forget about it in a few months.

I'm starting to believe more and more (although not fully convinced yet) that the former is the most likely outcome; she's in a good position right now.

What's her vision?

The stock price has been driven by share buybacks, and the appreciation of Alibaba.

It's more accurate to say that financial markets, past acquisitions, and activist investors have driven up the share price.

That said, the share-price uptick has extended her "honeymoon." Hopefully, all of these acquisitions, cultural changes, etc. add up to something.

Doubt it's about his talent (even though he is very talented). Think it's more of a PR move. It'd look pretty bad for Mayer & Co if he ditched Yahoo in a couple months, and a ton of people would notice / company would get bad press. Keep him & you never have the negative press. Plus the scope of the negative press would dwarf the type of press this blurb is getting.

Question is, is the difference between the $81 million and the amount they would have paid him strictly for talent over the course of the contract justifiable on those PR grounds?

Well, at $20 million a year that puts him in the company of the 100 highest compensated CEOs (despite being, well whatever his position is.)

http://www.aflcio.org/Corporate-Watch/CEO-Pay-and-You/100-Hi...

It is for them. Mayer doesnt want Tumblr to go down the drain and for that to work she needs Karp on board. 80M to keep the original visionary on board seems justifiable given the 1.1B total transaction price.

I have no problem with him getting 81m. The fact that all of the other employees combined get 29m combined while he gets that is pretty lame though.

Not really. Karp is worth orders of magnitude more to Yahoo! than the rest of the team.

Yahoo!'s always had engineers who could bring products to market. Their deficiency has long been with executives and the product groups.

... and Jacob Bijani has left the company.

Don't know whether he was offered anything to stay, but he was (is) a huge design talent.

Gut reaction tells me he probably got something small offered but nothing substantial. Designers in tech not named Jonathan Ive rarely get notable compensation.

Unless you know exactly who each person is on the team, that's making a lot of assumptions. I've seen enough companies that have key people who aren't co-founders that don't get a lot of public recognition but significantly make major contributions to the company. Some would even later become CEOs.

That's a valid point. I assume if those key players exist then they received a disproportionate % than other team members. Noting close to Karp though I'm sure.

I stand by my generalization though. Yahoo! doesn't need future CEOs. They need founders with the vision to execute on an idea.

Karp is worth orders of magnitude more to Yahoo! than the rest of the team.

So you know the other members of the team and what value they bring? Would love to hear a breakdown from your end since you clearly know their capabilities.

Edit: yeah asking for someone to explain an absurd generalization sure is grounds for downvotes...?

I up voted you. It's a valid question. See my response to one of the other sibling comments to yours.

Keep in mind that the majority of the Tumblr staff have been here a year or less.

You are entitled to have these problems only after you start a company and sell it off for a billion dollars.

I wonder if there is a performance component to this, or if it's based solely on him sticking around for the long haul.

I just finished up an earn out with performance goals on both revenue and margin, and found it to be very challenging. We ended up making product decisions with only the near-term implications in mind, and I feel it actually stunted our growth in both the near and long-term.

Given my experience, I strongly feel companies should base earn outs on length of time, while giving founders the autonomy to try new things while they are there. I heard Google shifted toward that model over time, but can't confirm. Hopefully Tumblr's founder got similar terms...

You've just discovered the reason our investment banking system is so screwed up. Earn $20M on your trades this year? Take $500K as a bonus. Those same investments lose $30M the year after? Well, now your bonus is just $30K and maybe you'll do better next year.

That is dated; deferreds and clawbacks are pervasive now

It strikes me that the guy in Minnesota walked away with $86M free and clear from buying a Powerball ticket. :-)

Its a pretty nice retention package, always nice to hear when someone 'wins' like this. I hope he continues to innovate going forward.

I suppose we're just wired to overestimate the value of individuals. I just hope he spends a lot of that money, whereby it might actually do the world some good (rather than 'investing' it) .

He'll just buy gold with it.

I don't think you understand what "investing" is. Investing is giving money to someone (or even just a bank) in exchange for something which might change value. That person is then going to go spend the money somewhere else. There's pretty much no way to prevent money from moving around other than turning it into cash and burying it.

This move of Mayer and Yahoo to buy a bunch of startups at difficult to justify valuations reeks of desperation. I think it's the continued downfall of Yahoo.

If you compare with Google acquisitions each of them are strategic and the aquihire acquisitions are at more reasonable valuations.

How are these contracts usually written with regards to the event of firing?

Disclaimer: I fully realize that's not statistically likely at all, but I want any answers to narrowly focus on the legal language in the contract around that event.

I think it's really more just a way to give a bit of incentive to sticking around longer. With the money he now has personally he could do anything he wants - so we can assume that he at least in part wants to keep seeing Tumblr move forward.

In my experience even if the retainee is fired they get the whole thing, the retaining company seems to often end up with a clause that says is parting ways is the retainee's idea they forfeit their retention package.

Usually it says "fired without cause" they get the whole thing, but if fired with cause then they don't.

My particular package it didn't matter why they fired me but anecdotes aren't data. There was a carve out that if I was convicted of a felony they could evaluate whether or not to pay me. I asked about the firing or not clause to our CEO at the time, and he said, "Oh, they won't fire you, if they want to get out of the obligation they will make you quit."

Which I supposed was probably true.

I wonder if he'd be allowed to work remotely.

The article mentioned that Tumblr would still be run independently from Yahoo in New York (Yahoo is in SV). Fun fact: SV can mean Silicon Vally or Sunnyvale in this case :-).

good for him. hope he's worth it - founders rarely work well within a corporate environment where suddenly you have people managing you.

looking forward to him exiting in a few months/years, then doing something new and cool. should have enough fuck you money by then.

Good for him to be so driven, I would've retired long ago.

What about this article has to do with his drive? It's about Yahoo paying him $81MM to retain him for the next four years.

Think about it: you spent years upon years building a blogging platform, which I guess pretty much anyone would agree is not that much captivating, and you finally got an exit. And we're talking about Yahoo, with that scale you can be sure that whatever the future needs of the company might be those will be satisfied. Basically you brought the company/platform where you wanted it to be, so $81MM or not I think anyone would be about done with the whole thing. Retire, find some hobby, move on to better things. Yet he remained, so I guess he must be very driven and passionate about blogging, that's all I'm saying.

> so I guess he must be very driven and passionate about blogging

Or he just wants to retire in 4 years $80 million richer

Or take it easy for the next 4 years. A couple of acquired CEO's I met at Google when I was there seemed a bit useless if you know what I mean. Great people but basically putting in their time until their retention clause was met, or at least it seemed that way. I don't discount the possibility that I was just envious though.

We are all founders now!

$81 million sounds kinda low for the value of Tumblr.

Err, that's just the money that the founder got IN ADDITION to the sale, in order to stay with Yahoo.

Tumblr was sold for 1.1 billion.

still think its low,

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