Yahoo‘s parent company, Verizon has agreed to sell Tumblr for less than 2 percent of its original cost.
Back in 2013, aging web titan Yahoo made a string of high-profile acquisitions to rejuvenate its fortunes. The biggest purchase in the shopping spree was the staggering $1.1 billion acquisition of Tumblr, a teen-friendly social network.
Yahoo’s chief executive at the time described the site as “the internet’s fastest-growing media frenzy” and concluded:
“We promise not to screw it up.”
Unfortunately, that was exactly what they did.
Six years after the purchase, Verizon announced that it was selling Tumblr to WordPress‘ parent company, Automaticc. While the company did not state a price, reports are saying that the transaction could be worth as low as $3 million.
In a blog post, chief executive of Verizon, Guru Gowrappan, said:
“We are proud of what the team has accomplished and are happy to have found the perfect partner in Automattic, whose expertise and track record will unlock new and exciting possibilities for Tumblr and its users.”
Expressing excitement at acquiring the social media platform, chief executive of Automaticc, Matt Mullenweg, called Tumblr an “iconic brand.” In a statement to the Wall Street Journal, Mullenweg said that he would explore ways to integrate Tumblr with WordPress.
Automattic is expected to take possession of Tumblr, including its 200 employees, and the collection of dan arts, memes, and curated photo walls posted by over 555 million users.
Acquiring and Reselling Tumblr
The 2013 Tumblr acquisition was supposed to help Yahoo compete with rising social media services such as Twitter, Google+ and Facebook. But, it soon became apparent that it would fail.
Tumblr’s young founder, David Karp reportedly had a deep aversion for advertising. There was also multiple management reorganizations, as well as a cultural clash between Tumblr’s young team and Yahoo’s veteran executives.
The site was also plagued with tons of scandals over harmful content and user safety. As a result of these, the social media company consistently failed to meet its sales target.
By 2016, three years after its purchase, Tumblr’s value had dropped to $290 million.
Speaking to Digiday, a departing executive said:
“Nobody at Yahoo ever understood what they bought and what Tumblr was. That fundamental issue is the core of lots of problems. If you don’t understand something, how can you sell it?”
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