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  • Writer's pictureMagdalena Gołębiewska

From $1.1B to $3M for Tumblr. What happened here?

Not exactly FinTech, but so interesting case, that couldn't miss it. Automattic, the creator of WordPress, announced it had acquired Tumblr for “less than $3 million from its previous owner, Yahoo. It’s an inauspicious fall from grace for the site, which was previously sold to the search giant for $1.1 billion.

Why did Yahoo sell one of its prized possessions for a mere 0.27% of its original purchase price? It’s a question that’ll puzzle many, as unlike other faded social platforms, Tumblr still has a die-hard userbase, and continues to pull in a respectable amount of traffic.

Probably Tumblr was simply too troublesome to monetize and moderate, and that’s why Yahoo pulled the plug.

That leaves the question of what Automattic will do with the site. It already produces the world’s biggest blogging platform, and also operates a highly profitable hosting platform that’s geared towards individual and enterprise users alike.

In an interview Matt Mullenwegg, Automattic co-founder, said it’ll continue to operate Tumblr alongside WordPress.

“It’s just fun,”

Mullenweg told the Wall Street Journal.

“We’re not going to change any of that.”

And, for what it’s worth, I think Automattic can succeed where Yahoo failed, largely due to the fact that it has a less corporate working culture, and is therefore well suited to managing a youth-oriented, often anarchic blogging site. But I still can’t get over the fact that Tumblr sold for such a dismally small figure. For context, that’s about the same price as a modest family home in San Francisco.

To be honest - Tumblr was sold for an absolute pittance.

We saw it before. Yes - couple of times. Unfortunately, social networks seldom get a second chance.

Example 1: Friends Reunited.

Company was acquired by UK broadcaster ITV in 2005 for £120 million (then $208 million), and eventually was ditched to a Scottish printing house for £25 million. A few years later, it closed down for good.

Example 2: Bebo

Company which AOL acquired in 2008 for $850 million in cash, only to sell it back to its founder for a mere $1 million in 2013. Watch the Bebo case below!

What makes Tumblr any different? Well, Yahoo is selling Tumblr while it still has an active userbase, and is still culturally relevant. It’s the 77th most visited site in the world, according to analytics provider Alexa. In the US, it’s the 48th most popular site, ahead of Spotify and slightly behind PayPal.

So, it’s not exactly a lame duck. But if Automattic wants to see it thrive again, it’ll have to figure out some pretty challenging questions, mostly centered around moderation and monetization. Can it succeed where Yahoo failed? I guess we’ll just have to wait and see.

Source: TNW

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