In a move that seemed to catch everyone by surprise, Automattic/WordPress acquired WordPress yesterday. A merger that was quite the opposite of an incredibly hyped acquisition by Yahoo.
It was only 2014 when Tumblr was acquired by Yahoo and newly hired CEO Marissa Mayer at a valuation of $1.1B. At the time the deal looked very positive, Yahoo was trying not to look old in Silicon Valley, and capture a new audience and Tumblr had users. And content.
What could go wrong?
Mayer was in charge of AdWords when she was at Google, and it looked like Tumblr was going to give Yahoo’s ad products a boost.
There were other opinions that Yahoo should have been cashing in on investments, like Alibaba, rather than taking on large acquisitions. Marissa Mayer seemed determined to make Yahoo into a place people wanted to work and be proud of. People had the highest of hopes for a bright talented CEO to sort out Yahoo’s problems.
Unfortunately, no one destroys value like Yahoo. It would be difficult to find a company with more missteps, like not buying Google’s search engine when they had the chance. Or when Yahoo turned down Microsoft’s acquisition offer of $44B before finally being acquired by Verizon for $4.4B.
After four years of management at Yahoo, Tumblr was sold for less than $2 million. A scant fraction of its acquisition price, it’s practically giving it away. Yahoo is dead and gone; Verizon wants to focus on their own content. There aren’t many people who would be interested in a blogging platform. Most larger brands have their own software for a blog site.
Tumblr was a really unique platform when it came out. Especially if you could code and add customizations to your theme. But what really made Tumblr great was how content was shared across the network and especially how it was linked. Reblogs and Likes generated links. And all of the likes and weblogs are either from Tumblr.com or a custom domain.
We set up our Tumblr as a subdomain of this site and all the weblogs, likes, and shares get indexed as links to my root domain. We haven’t bothered to reconnect the site, but after this recent news we are going to be giving our Tumblr a third chance.
We are a lot more optimistic about Automatic acquiring Tumblr. There are going to be issues with content moderation, and those users will likely get nudged to develop their own WordPress install.
Tumblr showed us the risk involved allowing Free Speech on someone else’s soapbox and handing them a social megaphone. Tumblr showed content moderation doesn’t scale (especially if you don’t try).
And they also showed us that it isn’t too late to change your principle course, no matter how large the ship may be. That was a brave move in the users are currency era, and they deserve some credit for that even if they had already been bit by scandal and new corporate owners had less tolerance for bad news stories.
Why Did Automattic/WordPress Buy Tumblr?
It’s about the cheapest way to boost their ad network available.
For under $2 million that is pennies on the dollar for 475,000,000 sites, 171 billion posts, 22,499,430 new posts daily, and approx. 345 million active Tumblr users, which will almost double WordPress.com with 409 million users.
WordPress.com has 1,441,127 sites, 70 million new posts per month, and and 20 billion page views a month.
Tumblr also has a key advantage in the number of page views per visit, which isn’t surprising given how much simpler their content creation system is. You don’t even need to create it yourself! Seriously though, you can see how adding some stability and leadership to Tumblr is enticing. And it would look great for WordAds.
Is Tumblr Fool’s Gold or a Gold Mine? It is starting to resemble the Curse of Oak Island more than anything else. Maybe there is a payoff at the end, but until then we just keep telling you the same story over and over.
Why did Automattic buy Tumblr?
To compete with Google Ads, same as Yahoo, same as Verizon. Selling ads requires data, how many people will see my ad? how many clicks how much business? You need favorable stats to help sell.
We sourced our statistics from the official source whenever possible. And we did verify their numbers with third-parties such as builtwith, alexa, quantcast, statista, and similarweb.
I wasn’t able to find any data on Word Ads and how much revenue they generate or other metrics. If you know of a source please leave it in the comments.
Matt Mullenweg was interviewed by The Verge Podcast recently and helped confirm some of the reasoning that we outlined here. Mullenweg is privy to much more information than the general public when it comes to metrics for Tumblr and WordPress.com.
I think their [Verizon] top priority was not to trying maximize the purchase price, in fact there may be a corporate reason for the purchase price to be lower, for taxes or something; they were really looking for where the best home was going to be.https://megaphone.link/VMP5205969836
So that was where we tried to optimize the deal. Especially in terms of bringing on close to 200 hundred people. We’re taking them all on.
And I am aware of the details of some of the other bidders and they were not planning to keep much, if any of the team.
We are taking a Berkshire Hathaway approach. We want to bring over the management, and the team, take what was working well, which was Tumblr’s engagement, and grow from there.
Mullenweg also added that Tumblr has more daily active users than WordPress.com has monthly active users. That is pretty remarkable. Although Mullenweg never said this was about the Word Ads, whoever is in charge of that program must be pretty excited.