In Yahoo Deal, Tumblr Becomes the Next $1 Billion Startup
When David Karp founded blogging platform Tumblr from his mother's New York City apartment in 2007, he was just 20 years old and had dropped out of high school. Now, at age 26, Karp has sold Tumblr to Yahoo Inc. for approximately $1.1 billion in cash. The companies announced the mega-deal this morning.
Under Yahoo, Tumblr will be independently operated as a standalone business. Karp, meanwhile, will remain on board as chief executive. Following the deal, his net worth is reportedly about $220 million.
"The product, service and brand will continue to be defined and developed separately with the same Tumblr irreverence, wit, and commitment to empower creators," Yahoo said in its announcement of the deal.
Some numbers on Tumblr: The popular site hosts some 105 million blogs with more than 300 million monthly unique visitors. It attracts 120,000 new users every day and sees 900 posts per second, the company says.
In the deal, Yahoo is presumably after Tumblr's fast-growing audience and droves of user-generated content. On her own Tumblr page, Yahoo CEO Marissa Mayer said Tumblr could grow Yahoo's audience by 50 percent to more than a billion monthly visitors. She also made a hopeful assertion: "We promise not to screw it up."
Tumblr is the latest in a string of tech startups to be bought for $1 billion or more. Google notably ponied up $1.65 billion in stock for YouTube in 2006. Last summer, Facebook agreed to acquire Instagram for $1 billion. By the time the deal was complete, however, it was valued at about $740 million -- $300 million in cash and the rest in stock.
And Tumblr isn't the only tech startup Yahoo has acquired over the last several months. In March, it bought 17-year-old British developer Nick D'Aloisio's news gathering app Summly. More recently Yahoo gobbled up mobile task-organizing app Astrid, as well as GoPollGo, a real-time social polling tool that lets brands collect and analyze feedback.
Since launching in 2007, Tumblr had completed several funding rounds totaling $125 million. It was backed by several investment groups, including Union Square Ventures, Spark Capital and Sequoia Capital. Last summer, Tumblr was said to be valued at about $800 million.
Yahoo's acquisition of Tumblr is expected to close in the second half of the year, the company said.
From 2011, here's Karp on what to consider when scaling a business:
Jason Fell is director of native content for Entrepreneur, managing the Entrepreneur Partner Studio, which creates dynamic and compelling content for our partners. He previously served as Entrepreneur.com's managing editor and as the technology editor prior to that.