UPDATE: The Verge is reporting that Yahoo will be holding a "product-related" news event on Monday in New York City. Tumblr is based in New York City. This could be one of the biggest tech events of the year if Yahoo announces that they acquired Tumblr. Stay tuned...
Early reports say that Yahoo is in talks to buy Tumblr, the popular microblogging platform. Here's what you need to know.
1. Yahoo Wants Tumblr for $1 Billion
According to AllThingsD's Kara Swisher and Peter Kafka, Yahoo is interested in a "strategic alliance and investment in or outright buy of perhaps the coolest Internet company of late: Tumblr." So...basically...Yahoo just wants to be associated with Tumblr in any capacity, according to the AllThingsD report.
The most interesting statistic is $1 billion: the estimated valuation of Tumblr according to a yet-unannounced round of funding. Tumblr is aggressively attempting to increase it's valuation from $800 million, but no one knows why. If Yahoo were to acquire Tumblr, they would probably have to pay more than a billion, if Tumblr's latest round of funding comes through.
2. Yahoo Is Buying Up Startups
Yahoo has been buying up any startup the company can get its hands on. It all started with Summly — the news aggregation app created by Nick D’Aloisio, a 17-year-old from the United Kingdom. Since then, Yahoo has acquired a number of other smaller startups. You can get a full glimpse of all the startups Yahoo has bought above. The amount of Yahoo's acquisitions have already quadrupled the amount in 2012...and it's not even June yet.
3. Tumblr Is Finally Making Money
Tumblr struggled in the beginning to make any sort of revenue, as do many other startups. But now, finally, the company is finally gaining ground on the business side. Tumblr does appear to finally have some business momentum. Business Insider writes:
...Eight of the top 10 Hollywood studios are now buying campaigns on the network. Tumblr launched mobile ads earlier this week, and Karp tells us BC, GE, AT&T, Home Depot, Pepsi, Warner Bros are all agreeing to try the new product out. Karp says an ad for Warner Bros' new Great Gatsby movie received 140,000 "notes" in less than 24 hours. Botha tells us Tumblr revenues are within 10% of plan this quarter and 2X greater than Q4 (a small base to be sure). Notions that the business side of Tumblr is healthy, growing, and getting proper attention from Karp ride counter to whispers across the industry.
4. Yahoo Wants To Be "Cool" So Badly
Valleywag's Sam Biddle wrote about Yahoo's desperate attempt to be "cool." After years of being in the shadow of Google, Amazon, Apple, and other tech giants, CEO Marissa Mayer has been buying a ton of startups. They've even started buying up billboards in an effort to attract a younger demographic. Since Tumblr is "cool" and "hipster" according to AllThingsD, a potential acquisition should make them "cool" too...right?
5. It May Actually Happen
We hear about big companies buying popular apps and startups all the time. This time last year, there were rumors — started by this New York Times piece — that Apple was considering buying Twitter, one of the biggest social media companies in the world. In retrospect, it would have been an amazing purchase. Twitter has been raking in the cash recently with advertising and marketing pushes with various companies and industries, and is expected to make $1 billion in just mobile advertising this year. Quite a lot of money for a company that people were nervous to fund because they didn't understand Twitter's business model. But a Yahoo-Tumblr marriage makes sense. David Karp, Tumblr's CEO, may be a part time J Crew model and a brilliant innovator, but as Business Insider writes, not a business guy. But, Yahoo's Marissa Mayer is; she's been the guiding force behind Yahoo's renaissance and wants to push the company to unprecedented heights. By buying Tumblr, Yahoo can do just that.