“We promise not to screw it up.”
This is how Yahoo CEO Marissa Mayer introduced the news of her company’s Tumblr acquisition in the first post of her own Tumblr blog. In addition to being a lighthearted way to comfort the hundreds of millions of Tumblr users who may be wondering about the ramifications of the takeover of their beloved blogging platform, Mayer’s comment conveys her understanding of the importance of a smooth transition between Yahoo and Tumblr.
In her blog post, Mayer lays out the mutual benefits for both companies. She points to Tumblr’s 300 million unique monthly visitors when explaining that the purchase of the company — for a reported $1.1 billion — could grow Yahoo’s audience by 50 percent and traffic by 20 percent.
Tumblr’s leaders want something in return: Yahoo’s web advertising experience. Tumblr introduced its first ads — or “sponsored posts” — in May 2012 and, 10 days after the Tumblr acquisition, they announced in their own feed that the ads would appear in users’ desktop feeds. Mayer says even though Tumblr will continue to operate independently, the two companies will join forces to “create advertising opportunities that are seamless and enhance user experience.”
This is the highest-profile example of Yahoo’s acquisitions and also something of an anomaly, since many of the startups the company has purchased recently have focused more on the skills of the people involved than on the product itself. Known as “acqui-hires,” Yahoo reportedly purchased nearly a dozen startups to tap into the talent of respective employees before announcing the Tumblr venture.
This type of business activity is not confined to Yahoo. Facebook’s purchase of Instagram — for a reported $1 billion — was its highest profile startup purchase; the social media site has also purchased a slew of other companies. Like Yahoo, the degree to which companies were acquired for talent versus product has varied.
Many startups originate with the goal of being acquired by a larger company. Yahoo and Facebook represent the to-date pinnacle of the potential money a successful startup can earn, and both companies have much to say about the future of acquisitions in the digital age.
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