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Is Tumblr Really Worth $1.1 Billion?

Yahoo Wants To Be Cool Again

The Internet world was buzzing Sunday about Yahoo’s board approving the acquisition of Tumblr. An official announcement took place Monday morning.

Tumblr, a microblogging platform and social networking website, is a popular property on the Internet today, and with the gain Yahoo is attempting to revamp its image as a relevant company again. They may have just gotten their mojo back with this deal.

Since Marissa Mayer’s tenure as CEO at Yahoo last July, the company has bought out several companies, including Summly, Astrid and Jybe. Mayer’s goal is to incorporate the Yahoo brand into the daily routine of its users while attracting a younger audience – millennials.

Dropout Becomes Billionaire

David Karp founded Tumblr in his mother’s Manhattan apartment in 2007. Since then, Karp has built Tumblr into one of the top web services. Not bad for a high-school dropout who taught himself HTML at age 11. Look at him now, ma’.

Tumblr has cultivated a substantial fan base, hosting 108 million blogs, something that Yahoo is looking to tap into. With such a considerable young user base, Yahoo hopes to seize and capitalize on the momentum and translate that into something monetary through advertising.

Yahoo logo

 Mayer Gives Her Word

The deal is not all peaches and cream, however. Many Tumblr users are apprehensive of the acquisition because Yahoo has gained a reputation for buying out high-profile assets – GeoCities and Flickr – and not properly utilizing them. The latter, purchased by Yahoo in 2005, has fallen behind the popular upstart Instagram, a competitor photo-sharing platform. Facebook critics faced similar sentiments when Instagram was sold to the online giant last December for $1 billion.

To reassure Tumblr users and put to rest any potential major backlash, Mayer tweeted Monday, “We promise not to screw it up.” Yahoo plans to leave Tumblr alone as an independent operation and keep Karp on as CEO.

The Cost Of Relevancy

Only time will tell if Mayer’s high-stake move will benefit Yahoo and produce any sort of significant payoff. This is a huge investment that the company has embarked on. One thing for certain though is if Yahoo wants a turnaround, then the company must be better than its competition at attracting users and keeping them engaged and happy.

Many users are curious to see what Yahoo does with Tumblr, and in an Internet environment now dominated by Google, Facebook and Twitter, it will be a long trek for the company to gain any clout and market share with it’s services.

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