[LINK] "How Yahoo!’s Identity Crisis Infected Tumblr"

[rfmcdonald]

Bloomberg's Joshua Brustein suggests that Yahoo has made a mess of its acquisition of Tumblr.

When Marissa Mayer announced in May 2013 that Yahoo! was buying Tumblr, she immediately swore “not to screw it up.” Yahoo's chief executive officer was seeking to dispel fears that the company would suck all the life out of Tumblr in an attempt to increase its financial value. Instead, Yahoo seems to have left the site alone and somehow squandered much of Tumblr’s financial value in the process.

Yahoo paid $1.1 billion for Tumblr, the biggest acquisition in Mayer’s shopping spree for dozens of startups. As has been endlessly repeated, Wall Street values Yahoo’s core business at negative $8 billion. (You get this number by taking the full value of Yahoo shares and subtracting its stakes in Alibaba and Yahoo! Japan.) In this light, it’s hard to see many bright spots. Yahoo’s struggles to capitalize on Tumblr’s potential offer a window into what has gone wrong with the company as a whole.

“If there’s a knock on Yahoo, it’s that they haven’t made the decision to say ‘Who are we?’ and how that’s articulated,” said Noah Mallin, a senior partner at MEC, a media agency that regularly works with the company. “There’s a bit of that to be seen in Tumblr as well.”

When Yahoo came knocking, Tumblr was at a crossroads. It was a small company that was growing fast without a clear vision of how to turn its vast audience into a viable business. David Karp, its then 26-year-old co-founder, faced hard decisions about hiring business-minded executives and making money from the audience he had amassed. Yahoo promised to take on those responsibilities. It also said it would leave Karp and his team alone. That offer, paired with huge paydays for Tumblr’s early employees and investors, was too tempting to pass up. Tumblr declined to comment.