‘‘It Was the Biggest Game of Chicken I’ve Ever Seen.’’

Photo: Platon. Grooming by Marco Braca at Kramer + Kramer.

Founded: 2007
Age of CEO: 27
Number of Tumblr users: 140 million
Lesson: Youth can be worth more than $1 billion to a twenty-year-old Internet company.

In mid-May, a few days before Yahoo announced it would be acquiring Tumblr, there was a housewarming party in Greenpoint. A Tumblr employee was moving into an apartment with a friend who happened to be dating another ­Tumblr employee, and the overlapping social circles resulted in a room full of Tumblr people. It was Saturday night. Late the previous afternoon, a cluster of posts had appeared on tech blogs with the announcement that Yahoo’s board would be meeting on Sunday to approve a $1.1 billion offer for Tumblr, and though everyone at the party had read the posts—or fielded texts from someone who had—nobody had really paid attention. Rumors skittered around the office on a weekly basis. Employees always joked that it didn’t matter what kind of options you had because Tumblr was never going to sell.

Plus: Yahoo? Really? When a similar idea circulated back in 2009, Tumblr’s then–lead developer, Marco Arment, summed up the party line in a scornful blog post: “I hope they let me work on some of the many exciting projects at Yahoo … I want to move to California and get stuck in traffic every day on the way to my midlevel engineering job where I sit in a cubicle all day and can’t make any product decisions while working on something nobody will ever see to manage regional ad clickthrough stats tracking.” Thanks, but no thanks. Yahoo was a lumbering Sunnyvale company with irrelevant products that no one used. Tumblr was a nimble startup in the nation’s greatest city with a boy-genius founder. An acquisition wasn’t just unlikely, it was insulting. The only company to whom they might have sold, an early employee said, was Apple (if Apple had asked).

Yahoo’s reputation as a wet blanket may have been allayed by the arrival of Marissa Mayer as CEO, but an acquisition still struck employees at the party as too icky to be true. (One guest summed it up: “No one who works in tech wants to work at Yahoo.”) As more wine and whiskey were consumed, however, the incredulity turned into fidgety speculation. One employee pointed out that Mayer had been dropping into the Tumblr office as far back as December; he remembered peering into the fishbowl conference room to see her meeting with their CEO, David Karp, and head of product, Derek Gottfrid. Nothing secret about it. Other employees were aware that after a hiring spree and floor-to-ceiling office remodel, the amount of cash left in ­Tumblr’s coffers was dwindling. At some point, partygoers who worked on the engineering side began forecasting how shitty the company would become if Yahoo were to buy it, and by the end of the night, guests were running numbers, trying to figure out how much their options might be worth. On Monday, Karp called an all-team meeting to announce the deal.

If low- and mid- and even some high-level employees were shocked—“I don’t think anyone saw it coming necessarily,” says Gottfrid—anyone paying attention to Tumblr’s burn rate should have been expecting an exit. Despite its popularity (it is the fourteenth-most-visited site in the U.S., according to Quantcast, a few slots above Wikipedia), Tumblr was a six-year-old blogging platform with disappointing revenue targets, no clear path to profitability, and alarmingly little cash in the bank (just $16.6 million when it was purchased). To stay afloat without selling, it would have needed a sixth round of funding, which, given the situation, might have led to a “down round,” and to Karp ceding a substantial chunk of his equity. As one person watching the deal unfold put it: “It was the biggest game of chicken I’ve ever seen in a startup. Literally months away from bankruptcy, and he manages to find an angel in Marissa Mayer.”’

On a smotheringly hot morning a few months after the acquisition, Tumblr’s 27-year-old CEO took a train from the Williamsburg duplex he shares with his girlfriend and bulldog into Manhattan’s Gramercy Park neighborhood for breakfast. Maialino—the Danny Meyer version of a Roman trattoria, with tourists and egg-white frittatas—is not a place Karp would have chosen for a social occasion. For that he prefers the Brooklyn outpost of Cafe Mogador, where he orders an “Über-breakfast” of pancakes, eggs Florentine, avocado, and bacon. But for work-related meals, Maialino is perfect: two blocks from the Tumblr office, with tables spaced far enough apart to furnish guests with privacy and the general sense that it has been zoned for high-net-worth individuals. (Mark-up on eggs: 5,000 percent.)

Karp and Mayer in May.Photo: Emmanuel Dunand/AFP/Getty Images

Karp showed up late and wearing a blue button-down shirt that billowed in the places where other men might have arm muscles. The enormous features that read so well in photos looked cartoonish in person: Chiclet teeth, rubbery grin, duck-feathery hair. Flustered, he apologized for his lateness and sat; a waiter immediately appeared with a latte, which Karp frowned at. He doesn’t drink coffee these days. “It’s way too spiky for me,” he said. “It was screwing up my sleep. I was exhausted in the afternoon. And when I did have coffee, I’d have to run around the block a few times to wear it off.” The jumpy metabolism is a product of spending hours on the computer as a kid, when he taught himself the skills that would get him hired as CTO of a site called UrbanBaby at age 16. “It’s just hacker culture. If you grew up as an insomniac coding all the time, it’s hard to get on a good eating schedule.” Karp is six-foot-one, 145 pounds. “Rachel, my girlfriend, if she’s an hour behind on having dinner, she’s bouncing off the walls, grumpy, needs food. I don’t need any meal.”

Karp has been something of a New York microcelebrity since 2008, when Gawker began reporting on his dating activities, net worth, and habit of cuddling with male friends (there was even a term for this species of renown: Internet fameball). Since the Yahoo acquisition—the biggest venture-backed exit of a New York company in the city’s history and one that left its founder worth around $200 million—Karp has notched up into a different kind of notoriety, posting selfies with the musician Grimes, posing for photos with Heidi Klum, partying in Cannes with Sean Combs (New York Post headline: NIGHT WAS A BLR) and blogging “I think I’m friends with Spike Lee now.” He has appeared on Charlie Rose, The Colbert Report, and Good Morning America, greeting fame the way he greets everyone, which is politely and wearing a tight sweatshirt-shaped armor of affability. This includes the editor of Fortune, who interceded at breakfast to introduce himself:

EDITOR: “I’m sorry to interrupt. Love to catch up with you at some point. I don’t want to interrupt.”

KARP: “Oh, pleasure to meet you! Love to! I really appreciate it. Thank you so much! Bye-bye!”

The interaction between dark-suited editor and smiley Karp looked less a power move than that of a bar mitzvah accepting congrats on his big day; you could see Karp applying himself, but he hasn’t quite grown out of his executive-puberty stage. When asked a question that bores him, his eyes go unreactive, and there’s a nearly audible shutdown noise as he disengages. Among the topics that bore him are cars (“I don’t like cars anymore”); Internet comments (“Gross”); his company’s colossally expensive infrastructure (“I have a very rudimentary understanding of how Tumblr actually works these days”); and management (“I’m not super-passionate about how we run the company”).

This final aversion is borne out by a stream of high-profile departures from Tumblr over the past couple years—including a president, two executive vice-presidents, a V.P. of engineering, and a V.P. of tech support—which has raised the question of whether Karp is actually capable of running the business he created. To be fair, most young people do not found start-ups because they are passionate about management, and when conversation turns to a subject that interests Karp, his personality returns.

Among his latest obsessions are drones: “I’m obsessed with drones right now. I fly my drones all over Brooklyn. These things are amazing. These things are not regulated. I keep destroying them. I’ve had five of them.” He spoke rapidly as he ate, bouncing both feet and palpating a knee. “You get them from China, so they all come HK Post, which means that you have to wait for them for, like—you’re lucky if they come within two months. So I usually have a few on order at any given time. Here, I’ll show you.” He took out his iPhone and brought up a homemade video scored with trippy music. “See? The Domino Sugar Factory. Flying. Water.” He brings a smaller drone—one with eight minutes of flight time and “a decent range”—to the office for indoor use. “I can have it over on the other side of the office, bothering people while I’m at my desk. Usually I send it straight over my lawyer’s head.” It is, Karp said, “really pretty frickin’ cool.” He worries they’ll be regulated soon.

Tumblr’s appeal can be summed up in one word, which is “easy.” If you traveled back in time to 1996 and took a grandmother whose understanding of the web was AOL and wormholed her to 2013, she’d be able to create a Tumblr blog in less than three minutes with no direction. The site’s posting icons are big, the fonts are big, everything is big: The whole thesis is that there’s no fine print and no learning curve. Generating new blogs is so easy that Tumblr limits the number that users are allowed to create in a single day. (The limit is ten.)

If the “easy” mandate feels unimaginative today, it was less so in 2007. Karp has talked a lot about his frustration with tools like Wordpress and Blogger, and he is shrewder these days in his framing of Tumblr as “a novel alternative” rather than a middle finger. Blogging in 2007 required too much work: “I had all sorts of things I wanted to share, but they were screenshots, jokes, poorly formed ideas, videos that I had just watched that were hilarious, and things that I was working on.” Karp’s idea was to create a little portal to Internet heaven, with George Takei videos, Homer Simpson quotes, pictures of Italian luxury cars, dream logs, self-portraits, observations, Lost trailers, and porn (which makes up around 11 percent of the site’s content). The new blogging would be less about writing and more about declaring a personal sensibility. Thanks to an innovation called the reblog, users wouldn’t even need to create anything themselves; they could just post what they scavenged elsewhere and, Karp says, “use that curation to tell their stories.” He sees Tumblr as a tool for “the most talented people in the world.”

One issue with couching this behavior in artistic terms is that Tumblr has yet to produce anything that is especially popular outside of its own network. It has not given us a Justin Bieber, who started on YouTube, or a Kelly Oxford, the comedienne who first gained notice on Twitter. But by harder metrics, the platform is cleaning up: from three full-time employees in early 2008 to 183 today, from thousands of blogs to just below 140 million. One survey from earlier this year shows more 13-to-25-year-olds using Tumblr than Facebook.

A good measure of your influence in the tech community is how well you’ve succeeded in changing user behavior en masse, and by this metric, Karp might as well fold up his laptop and retire. His creation of reblogging in 2007 invented and then codified a behavior that everyone on the Internet now engages with, which is that of appropriating content from other users and attributing that content natively. In other words, Karp is to thank for the retweet and the repin, and he takes full responsibility: “Reblogging came first,” he says. “It was a few months into reblogging when retweeting started to become an idea.”

Users on Tumblr reblog by clicking on a symmetrical arrow button, which has the intuitive ease of Facebook’s LIKE button but doesn’t look like a weird pixelated thumb. It’s a useful point of contrast: Both Karp and Mark Zuckerberg, a fellow developer turned CEO, appreciate a cleanly designed site, but Zuckerberg is obviously more interested in using design to further Facebook’s imperial ambitions of connecting the entire world. Karp sees Tumblr’s cultural panache as the product itself. “Any successful early-stage tech company needs someone who’s strong on product, someone who’s strong on design, and someone who’s strong on development, and occasionally you find someone like David, who has all three in the same brain. That’s really, really rare,” says David Lifson, the G.M. of engineering at General Assembly. Everything at the Tumblr office is just so: exposed brick, hardwood floors, art on the walls, potted plants. Everything about Karp is just so, too; a uniform of cotton work pants, Converse or Jack Purcells, and button-down shirts is what he wears to awards ceremonies, to spray Champagne in Cannes, to ride a Segway in the park, and to meetings at Maialino. He has confidence in the authority of his taste.

Karp stopped coding two years ago, but he remains almost solely responsible for the company’s personality—a fun, slightly self-satisfied, lightly subversive disposition summed up in Tumblr’s “fuck yeah” meme, which is also the phrase Karp used to sign off his announcement of the Yahoo deal. There is beer on tap at the office and monthly parties and the kind of health-care package that pays for employees’ bikes. People get pied in the face at team meetings. At an earlier office, a law firm sharing Tumblr’s floor accused its employees of littering paper towels and posted a sign in the bathroom: PLEASE PUT YOUR PAPER TOWELS IN THE GARBAGE. Each day Tumblr employees replaced the sign, which had been printed in 48-point Times New Roman, with a sign printed in slightly smaller font, so that the text gradually vanished.

On the morning of July 11, the team collected in Times Square to ring NASDAQ’s opening bell in celebration of the acquisition. Later, a Tumblr office manager passed out plastic gift bags to employees: purple American Apparel T-shirts printed with the Yahoo logo, buttons that played the Yahoo yodel when pressed, and branded water bottles. “There was $10,000 cash inside, too,” says Peter Vidani, Tumblr’s creative director. “And a cell phone with Marissa’s number already dialed, so you just had to hit SEND.”

Not actually, but that was how things felt: Vidani and nine other early employees received around $6.2 million each. Those further down the org chart were less ebullient about the situation. “It got way less fun,” says one former employee about the past year. “Over time, they hired more HR people and all these policies came into place.” It got trickier to reach Karp, who mostly stopped going to company parties and answering e-mails. “There’s gonna be more meetings,” another former employee predicts. “I’m sure Derek and David will want to keep the core operational things the same, but Yahoo is beholden to shareholders every quarter.”

Those shareholders should be pleased that Tumblr addresses some of Yahoo’s more urgent weaknesses, offering up a cool brand, a massive community of users, a strong mobile presence, and engineering talent. Still, whether Mayer’s bet will pay off comes down to one thing, which is ads. Yahoo is good at ads; Tumblr has strenuously tried to avoid them. The company’s attempts to generate revenue began in 2010, when users could pay to get their blogs featured in a directory that no longer exists, or to purchase prettily designed premium themes, though most of the money went to the designers rather than Tumblr. In early 2012, the company offered options allowing users to stick a label on “extra-important” posts for $1 or “pin” posts for $5; it subsequently disabled both features. Meanwhile, a competitive site, Pinterest, had popped up out of nowhere offering a similar image curation service but with an obvious profit engine (driving users to e-commerce sites and charging a toll for the service) and a mammoth valuation to show for it: $2.5 billion as of February.

“Pinterest ate their lunch in a lot of ways,” said one person close to the company, who suggested that the timing of that valuation may have pushed Tumblr further along toward the road to an exit. Early 2013 was a fragile, scary time for the company, and while Karp was loath to muddy his platform with ads—it “really turns our stomachs,” he said in 2010—he also didn’t have much choice. In April, mobile users began to see promotions pop up in their dashboards. Ten days after the acquisition, Tumblr expanded those ads to hit desktop users as well. It was the first decision Karp made that prioritized revenue over the user experience; in a way, his first real decision as CEO.

When asked when he expects Tumblr to be profitable, the CEO hat comes off. He doesn’t know, Karp said recently at his office; profitability “has never been a particularly important milestone” to him. “My philosophy toward that has always been, like, the guy on the corner selling fruit is running a profitable business. There are many profitable businesses out there. There are only so many very large networks.” He’s confident that “if the media network supports the creators, then the creators will make that their home. They’ll build an audience, and more creators will show up to reach that audience. More creators will see it as the land of opportunity for them to bring their work. And then an even bigger audience will show up.” He flung his arms out to their full wingspan for emphasis, smacking the laptop of a person sitting next to him. “That,” Karp said, “will make Tumblr important for a long time.”

Karp is fond of comparing his company to YouTube, noting that both “are really supporting creators and building big audiences without ever asking for permission.” Transitioning relatively quickly into a serious moneymaker, as YouTube did after being swallowed by Google, would be a best-case scenario. But Tumblr is now officially an advertising platform, and advertising platforms live and die by their fickle users. It is easy to think of sites—MySpace, Friendster—that gained and lost millions of them overnight. There is also the not irrelevant matter of Yahoo’s rotten acquisitions record, which is cluttered with duds like Geocities and ­Broadcast.com—both sold for billions, both now ghosts that simply redirect to Yahoo.

At noon on a recent Friday, Tumblr employees seeped into the office’s communal area for their weekly All Team Meeting. It was a familiar crowd of startup workers: frail young men in Vibram shoes, frail young women with pixie cuts and statement nails. All had the unweathered complexions and drooping posture of indoor plants, including their boss, who kicked off the meeting with updates on ad accounts (cool stuff), new projects (super-exciting stuff), and notable press mentions (some really incredible stuff). Twenty minutes in, the building’s fire alarm went off in the middle of a PowerPoint slide about some pretty awesome stuff done by Tumblr users, and everyone laughed. Karp, dressed in a red plaid shirt, moved the meeting right along—a model of executive efficiency. Or maybe distractedness: Ten minutes later he cocked his head and asked, “How long has this fire alarm been going off?”

Everyone laughed again, but this time in a way that was reverent, and that captured the quality that best explains how a drone-piloting 27-year-old can lead the most successful start-up in New York. If charisma is rare in humans, it is practically nonexistent in blogging platforms, and charisma is how Tumblr has won the game. The little red hearts and infinite GIF streams and fuck-yeah-everything add up to something very precious to its users, and it’s this same precious something that makes Karp an idol to his employees.

Joining the meeting that afternoon was Chris Poole, who founded the website 4chan but had stopped by Tumblr’s meeting to talk about his current venture, an image-sharing website called Canvas. Karp, who left the Bronx High School of Science after his freshman year, cheerfully introduced Poole to the Tumblr workforce as a “fellow dropout,” to which Poole fired back, “I dropped out of college twice. Beat that.”

Bona fides notwithstanding—and dropping out is definitely a bona fide—Tumblr’s employees didn’t seem particularly interested in Poole. Instead of listening fixedly to the visitor’s spiel, as Karp did, their attention wandered to the catered lunch of hamburgers, to their Instagram feeds, to their seaweed snacks.

In addition to being nerd royalty, Karp and Poole have a lot in common: They are both in their mid-twenties, both grew up in New York, both created magnificently robust online communities without necessarily intending to. But as they chat, it became clear that Poole lacks the magnetism that Karp has cultivated, in his own fashion, over the past couple of years. Poole’s vision, or maybe his delivery, felt small. He didn’t read as CEO material. Somehow, Karp does.

‘‘It Was the Biggest Game of Chicken I’ve Ever Seen.’’