How to Sell a Yahoo-Tumblr Deal: Point to Facebook-Instagram
But if you want to make the “pro” case for the deal, here’s how to do it: Pretend that Yahoo is Facebook, and Tumblr is Instagram.
The Facebook/Instagram deal is just over a year old, which means it’s still pretty early to gauge it. But so far it seems to have worked perfectly.
Facebook promised that Instagram would operate autonomously after the acquisition, and from the outside it appears to have kept that promise. People who read sites like this know that the two companies are linked, but lots of other people don’t, which is a huge plus for Instagram. (See: Parents who won’t let their kids use Facebook, but are okay with Instagram. For giggles, tell them the two are owned by the same company, and watch their faces turn ashen.)
And we’ve yet to see Instagram clutter up with lots of ads — or any ads at all. Result: The app is still growing like a weed, which helps mollify critics who worry about Facebook’s inevitable slowdown.
So that sounds like a pretty good model, right? Can Yahoo do the same thing with Tumblr?
Maybe. Tumblr is a much more mature company than Instagram, with a much bigger infrastucture. Kevin Systrom had about a dozen employees when he sold his company. After keeping his staff super lean for many years, David Karp has been on a hiring spree, and Tumblr’s head count is on track to hit something like 200 this year, with its own sales staff. So it will be harder to just tuck that away in the Yahoo org chart.
The crucial difference between the two scenarios, though, has less to do with the seller than the buyer.
Facebook bought Instagram because Mark Zuckerberg wanted to remove an obstacle. If Marissa Mayer buys Tumblr, it’s because she’ll be looking for a boost.
That makes it much less likely that she’ll be able to resist leaving Tumblr alone, and letting it figure out how to sell ads. Zuckerberg can drop a billion (or so) on Instagram, leave it unmonetized for a year, and Wall Street shrugs. Hard to imagine investors reacting the same way to this one.