Can Tumblr Survive Yahoo's Buyout? A Look at Four Failed Startup Acquisitions While Yahoo's acquisition of Tumblr may be on the minds of many young entrepreneurs these days, keep in mind not all buyouts are successful.

By Adam Toren

Opinions expressed by Entrepreneur contributors are their own.


Yahoo's recent $1.1 billion acquisition of Tumblr continues to have tongues wagging, as everyone seems to have an opinion about the deal.

Some balk at Yahoo buying a company with little revenue and others are wary of Tumblr being acquired by a media company with a track record of failed acquisitions -- Flickr, GeoCities and Delicious are all a shadow of what they were before their buyouts.

And this isn't just a Yahoo curse. Often, startups actually fold, as large corporations are unable to meld the startup into their strategy. Before you start daydreaming about landing under the umbrella of an enormous corporation, keep in mind these acquisition fails.

Related: Tumblr's David Karp on Why NYC Beats Silicon Valley

If you grew up in the '90s, you remember Excite. Developed by Stanford graduate students, the web portal was one of the most recognizable brands around. In 1999, @Home Network, a high-speed internet company, ended up buying Excite for $6.7 billion.

A scant two years later, the dot-com bubble had burst and the team filed for bankruptcy protection. Ask Jeeves picked up the pieces for Excite in another acquisition in 2004, but its current platform is not nearly what it was in the heyday. We all loved Excite, but investing large sums of money into a peaking platform is a risky endeavor.

One of the first digital giants, search engine Lycos' unsuccessful buyout is more the fault of timing than anything else. Spanish internet company Terra Networks bought Lycos during the web boom for $12.5 billion in October of 2000.

As the dot-com bubble burst, things went downhill. Lycos was resold for $95 million to a Korean communications company in August of 2004 and again later to an India-based marketing company called Ybrant Digital for a mere $36 million.

Down but not out, Lycos has reformed and refocused its energy toward mobile and casual gaming. Young treps take note: Adjusting your business model, even after an unsuccessful buyout, could ensure the continued survival of your venture.

Related: Founders Fund's Geoff Lewis on Getting Acquired, on Your Terms

Rupert Murdoch's News Corporation acquired MySpace in July of 2005 for $580 million, and the investment seemed too good to be true. That is until college social media website Facebook expanded their marketing initiatives to include everyone, including high school loving MySpace students, to sign-up.

There has been a new iteration of MySpace. But it still hasn't really caught on, as its revival came too late in the market.

One reason MySpace was a major fail is due to inability to pivot and the clunky technology the site was built on. To remain on the forefront of users' minds, you must continue to reinvent and stay on the cusp of technology.

Related: 4 Tips for Creating an Exit Strategy for Your Startup

The quintessential '90s community, GeoCities enabled new internet users to homestead a simple website about a specific subject. Sites were organized according to geographic location and growth was explosive -- it was the third most visited site in the world.

Thinking the site would provide a substantial amount of users, Yahoo acquired it in 1999 for $3.57 billion. They were wrong. In 2009, Yahoo announced it would be closing the doors on GeoCities in the U.S, as the acquisition was deemed not a profitable venture. Today, it only operates in Japan.

Bottom line: Popularity doesn't always guarantee long-term success.

I don't believe we are close to another dot-com bubble, and I don't think Yahoo is going to sell Tumblr off for pennies. Micro-blogging may or may not have peaked, but the climate of nimble startups means that someone is probably already vying for Tumblr's spot. Keeping Tumblr cool, customizable and user-driven will be important for the acquisition's success.

What would you consider before being acquired by another company? Let us know with a comment.

Wavy Line
Adam Toren

Serial entrepreneur, mentor, advisor and co-founder of

Adam Toren is a serial entrepreneur, mentor, investor and co-founder of He is co-author, with his brother Matthew, of Kidpreneurs and Small Business, BIG Vision: Lessons on How to Dominate Your Market from Self-Made Entrepreneurs Who Did it Right (Wiley). He's based in Phoenix, Ariz.

Editor's Pick

'Catastrophic': Here's What You Should Know About the Debt Ceiling Crisis — And How a Default Could Impact Your Business
I Helped Grow 4 Unicorns Over 10 Years That Generated $18 Billion in Online Revenues. Here's What I've Learned.
Want to Break Bad Habits and Supercharge Your Business? Use This Technique.
Don't Have Any Clients But Need Customer Testimonials? Follow These 3 Tricks To Boost Your Rep.
Why Are Some Wines More Expensive Than Others? A Top Winemaker Gives a Full-Bodied Explanation.

Related Topics


The Real Reason Why The Return to Office Movement is Failing is Revealed in New Study

There is a vivid sign of the disconnect between employees and their workplace, a glaring indication that companies need to revise their scripts to improve their hybrid and remote work policies.

Money & Finance

3 Ways to Create Multiple (Big) Streams of Income

Here are three ways to create multiple streams of income. These strategies require effort and resources but offer significant financial potential.


'That '70s Show' Star Convicted on Two Counts of Rape. He 'Drugged' His Victims.

Danny Masterson was accused of forcibly raping three women at different times between 2001 and 2003. The jury reached a verdict on two counts but was deadlocked on the third.

Business News

7 of the 10 Most Expensive Cities to Live in the U.S. Are in One State

A new report by U.S. News found that San Diego is the most expensive city to live in for 2023-2024, followed by Los Angeles. New York City didn't even rank in the top 10.

Business News

Raccoon Adorably Orders A Donut From Dunkin' Drive Thru: 'Little Gentleman'

The hilarious clip has garnered over 21.3 million views on TikTok.


12 Good Reasons to Explain Why You Left a Job During an Interview

Not sure what to say when asked why you left your last job? Check out these reasons so that you have a great answer on your next interview.