Three years ago, newly minted CEO Marissa Mayer spearheaded Yahoo’s purchase of blogging platform Tumblr for more than $1 billion. The valuation seemed high, especially considering that Tumblr was not bringing in a lot of revenue. It certainly wasn’t profitable. According to a thorough account of the ensuing slow-motion car crash from Mashable, Mayer’s mishandling of the site stemmed from being too hands-off and then too hands-on.
Tumblr under Yahoo should have been a slam dunk. Tumblr brought in hip, web-savvy millennial users who dictated a substantial proportion of the trending web, and Yahoo — whose average user resembles the Crypt Keeper — would use its ad-sales resources to bring Tumblr to profitability. Easy peasy.
Except it wasn’t easy peasy. According to Mashable, Tumblr’s $100 million sales goal in 2015, a high target announced publicly by Mayer, “was Marissa just picking a number” out of thin air.
The hands-off approach, similar to how Google initially managed YouTube after its acquisition, proved to be a problem. Tumblr was located on the East Coast and Yahoo on the West, and while they partnered on a few initiatives, the two cultures clashed (one suspect anecdote claims that younger Tumblr employees didn’t even know what Yahoo was before the acquisition).
The first rumblings of a collision between the companies came at the beginning of 2014 when Yahoo unveiled a suite of new “digital magazines,” powered by Tumblr, but lacking most of Tumblr’s usual built-in social functionality. The Tumblr and Yahoo ad sales teams began selling joint packages together, bristling against each other in the process.
In overcorrecting, Mayer shifted most of the ad-sales operation in-house, handing the role to people less familiar with the platform’s intricacies and alienating Tumblr’s own team. In the aftermath, many left the company. One source told Mashable that the $100 million goal had actually seemed in reach before the handoff.
Tumblr is now reportedly back in charge of its own sales operation. The so-called “lost year” of 2015 would be brutal in any regard, but it’s even more precarious now that Yahoo is on the auction block. Some employees have hope that the company will become independent again. At the very least, it might receive stronger corporate parentage than Mayer provided.