I know very little about David Karp. But after reading this, I'm a bit surprised that he decided to sell Tumblr.
The way Marco talks about David's disinterest in money, and his singular obsession with Tumblr, made me think he wouldn't even consider selling it to someone else.
I'd be curious to hear his reasons for selling, as oppose to doing a strategic investment like Facebook did with Microsoft at one point.
I think that's actually the point of the piece: David is so focused on product that he doesn't want to deal with things like operations or revenue that the deal makes sense. Yahoo will take care of those things, and David can focus on the only thing he cares about, product.
This seems disingenuous to me. A key part of creating a great "product" is that it continues to support itself. Having a great product without having some sort of a revenue stream isn't being hyper-focused - it's being negligent.
Congrats to David on everything, but it seems very odd to try & separate "product" from the revenue that it should generate if it's going to be a business.
Not so much to me. There are legions of artists creating non-software works/products/pieces/whatever that have to worry about non-existent revenue stream (or don't worry about it at all). Greatness in their craft is not really linked to the money at all. Some people may link the two with software, but there's really no innate reason to do so (see many OSS projects). Exterior costs such as servers, software, hardware etc create the impression of a link, but innately, I don't think there is one.
Let me rephrase your sentence that makes more sense to me: A key part of creating a great "business" is that it continues to support itself.
"features and experience" are still contingent, in a very large way, on how the business runs.
e.g. ad-driven vs freemium vs subscription, quantity and types of advertising, etc.
Focusing on making the best product/"features and experience" without paying (enough) attention to how it's supposed to make money to sustain itself and fit into the world at large, is exactly how NeXT wound up with fantastic computers and software that no-one bought.
That's what he has Yahoo's executives for, right? In a big company you need not one, but many voices/advocates of different disciplines. His role is important, because else they end up with a steaming pile of marketing gags with no awesome product to make up for them. I would also not call Ad-Driven/Freemium/Subscription mode "features and experience". Yes, this can make or break the user experience - well if it would, then David would stop them.
You can't argue it both ways. He either still has power over what the suits come up with for revenue, and thus hasn't actually abdicated any responsibilities at all (just given some biz dev guys a little more autonomy) or he has given up those responsibilities and the day the suits press forward with an experience-damaging move he doesn't like, he will discover he doesn't actually have full control over his product's features/experience.
e.g. if they say "tumblr's going freemium" the follow-on questions of "how do we differentiate the experience of free vs paid and how do we communicate the value of the upgrade?" are experience questions that need to be answered and designed in a holistic and considered manner. [1]
[1] And that's why I say those modes are absolutely part of 'features and experience'. Flickr just switched between two fairly-similar freemium models and we power-geeks had a hundreds of comments debate over whether the experience/value jived with the offering and/or was communicated cleanly.
That's just from the business perspective. From the consumer perspective revenue does not matter at all.
The art of business is to make the greatest product you can without revenue _detracting_ from it.
The Steve Jobs mindset here is that if you just disregard the revenue all together and just focus on building the most absolute great product you can imagine people will use it and love it.
Making a revenue of that is not 'product' it is business, and it seems perfectly reasonable to hire a businessman for that (and not let him influence you too much, and try not to get fired for that like Steve did..).
> The Steve Jobs mindset here is that if you just disregard the revenue all together and just focus on building the most absolute great product you can imagine people will use it and love it.
That's not what Steve Jobs did at all. He first and foremost saw Apple as a business opportunity - who pushed Woz to actually make revenue.
Apple had a revenue model built in from the start.
Their revenue was selling the product at more than its cost price. He pushed Woz to build a great product. I think it was Woz himself who was obsessed with also making it cheap to manufacture.
I am not saying that Steve Jobs did not intend to have profit, I'm saying that reasoning about revenue was not a limiting part of the product establishment.
If it was, how do you explain the launch of the iPod?
With Apple, the revenue model is always clear - even with the iPod - Steve Jobs just knew he could create something that people would buy. He didn't launch the iPod and then worry about how he was going to make money off of it - it was always very clear to him - he was going to sell a ton of them.
Tumblr still hasn't figured out a revenue model. They still have to fit that into their product. Being able to do so & do it successfully is integral to their product - otherwise it's just a cool tool that they're letting millions of people use for free.
I believe they were running out of money and needed to do more work to bring revenues appropriately up. Yahoo allows them to not need to focus on revenues, as they already have a large and established an ad sales team.
Probably not based on their numbers. VCs wanted an exited. They are on the board. People don't consider how little control the founders of this company had post-rounds. It was the VC's play.
Seems like a free lunch though - isn't Yahoo buying them presumably because they foresee a way to monetize Tumblr, possibly in contradiction to David's desired direction of the product?
I believe David is ok with advertising. He just doesn't want it to be the main focus of his effort. The fact that Tumblr has huge growth and Yahoo has one of the largest Ad Sales teams in the world, means that this merger will in-my-opinion be v.successful.
My bet/hope is that with more resources from Yahoo, David will pick and influence more parts of Yahoo than just Tumblr.
My guess is a twenty something riding a billion dollar wave into yahoo hq isn't going to make friends quickly. Influencing yahoo as one person might prove difficult. All the best though.
Silicon valley now rivals Hollywood at creating entitled, pampered douchebags. Thank you that anonymous blogger on tumbler at so skillfully capturing that in one brilliant work of deconstruction.
What a sad state we find ourselves in. The past decades were by no means free from such poisonous personalities (see: Tyco), but we seem to have reached a whole new level. I guess humility doesn't pay the bills anymore.
That interview can't be real. Surely he was satirically making light the whole bro-grammer meme? Right? Hard for me to believe you can condense so much "douchiness" without it being in jest and intentional.
it's a reference to a segment on the Accidental Tech Podcast (hosted by Marco, John Siracusa and Casey Liss) where at one point they brought up a guy (sorry I can't recall the name) who has two iPhones: one for day use and another for night use. The idea is separation of private info and work info. IIRC Marco could see some merit to it, but certainly couldn't justify the price for himself.
I bought a Samsung something-or-other Duos so that I could have a business number and my private number route to the same phone. It takes two SIM cards.
OK that is cool. I would have gone with Google Voice or some other proxy, but dual SIMs is awesome. Can you manage do-not-disturb and ringtones/notifications per SIM?
The post says he won't make "yacht-and-helicopter money"... I think helicopters are cheaper than he thinks. On a billion-dollar acquisition, I can't imagine the near-cofounder having less than 1% (hopefully quite a bit more). This means at least $10M, which should be plenty for a helicopter. Maybe I'm reading his comment too literally.
For a helicopter, you need a hangar, a pilot, regular maintenance, insurance, fuel/oil as well as membership/pad fees if you actually want to fly anywhere besides airports. You could do a small helicopter for $200,000-$400,000 and then about $30,000-$40,000 a year in recurring costs before pilot, fuel and oil. You can expect $300-$400 per hour of flight time. If the 10 million is invested and has a return of 4% annually, the helicopter will cost 10% of the max you can pull out without depleting principle. That also doesn't include loan payments if you didn't buy the helicopter outright.
So, helicopter money is a lot higher than it looks.
You can become your own pilot and mechanic, buy a big plot of land and build your own hangar and helicopter museum, get a helicopter that runs on diesel, open a McDonald's franchise and use the oil to run your helicopter. I ran some numbers and this turns a profit. You can also sell helicopter tours of your helicopter museum for more $$$ and possibly be the first McDonalds to offer delivery by helicopter. With the profits you can buy a 2nd helicopter which, by my number, doubles everything!
Full disclosure: I'm a bad mather, but I'd be a great rich person
My sense is Marco is looking at the money in terms of: "how much yearly income can my money generate, and what kind of lifestyle would that be?" (kind of like thinking about a retirement account). In that sense $10M in savings is not enough to start buying yachts and helicopters assuming he doesn't want to blow all the money at once like a stereotypical lottery winner.
More importantly, he makes it clear he'll never have any money worries if he's careful. That implies a decent amount of money, and I think that's what most people on Hacker News really wish they had.
Charles Simonyi would commute to the MS campus via helicopter and we all know about Paul Allen's yachts. I think it's more about it being similar to buying a second home or a nice car to normal people. I.e., you may or may not notice the expense, but it makes your life easier or more pleasant.
Are you implying that he is predisposed to blow it like a lottery winner given the fact that hasn't worked there for years and was really just the beneficiary of luck and inflated valuations?
I took the implication to be exactly the opposite of your line of thought. Given that his article is about all the work he put into Tumblr, I'd say he is not likely to have a "lottery winner" relationship with money.
If he wasn't a real founder, it would be very rare for him to start with more than 1% and that wouldn't be anywhere near that after ~5 years. I doubt he has more than .25% after all the VC funding rounds and the associated dilution.
Then there are the likely VC liquidation preference multipliers where they'll get a larger piece of the pie.
He's been gone since 2010 so I'm guessing any options he had were exercised so it should be long term capital gains. Figure in taxes and take away any previous exercise costs and I bet it's around 1-1.5 million that he's cleared. A nice sum, but definitely not "yacht-and-helicopter money".
I think he was referring to a yacht so large that you can land your helicopter on it (ie. http://www.youtube.com/watch?v=jynvdeg6uWw) in which case it's not the helicopter that's expensive...
Dock fees, fuel repair costs, insurance, and the salary for a licensed captain if your Yacht is over a certain size add up. Boats are not cheap. Even "small" (anyone with a automobile license can drive it) 40ft ones. My buddy's family owns a 45 ft Yacht and the joke at the harbor is BOAT = Break Out Another Thousand. Where they dock it they pay $10 per foot per month in dock fees which is cheap for the area. 5 miles down the coast it's $30/foot/month.
Congratulations Marco, to you and your team. Your writeup is great to read-- the history and growth of Tumblr firsthand. I'm excited to see what you all build.
That actually makes me more wary of reddit than tumblr. For others, the llinked-to reddit seems to be mostly about laughing at and sometimes harassing people on tumblr that have pride in alternative lifestyles or viewpoints.
r/tumblrinaction was great in pointing out the ridiculous beliefs and lengths others would go to in the name of "social justice." However, I've seen a surge in activity of making fun of overweight people[1] and even the mods breaking rule one[2]. I'm not surprised by these activities because I expect such group mentality to bring about the same kind of people that social justice warriors did. People make a mockery of "others," it's human nature.
If you spend all your time inside emacs[1], you know that you can change anything you consider less-than-ideal. If you can't, or don't feel enough pain to make it worthwhile, the original rule 34 (which is really just rule #1, in the way that 'water is wet') will lead you to someone who has made an emacs package for it.
>>>Even though Tumblr was never a one-person company, it usually felt like a one-person product.
That.
I didn't stay with Tumblr long -- the limitations eventually got to me -- but I always had the sense this was a product with a personality behind it, not a committee.
I'm pretty sure Karp announced their funding at the Nov. 2007 New York Tech Meetup, if I recall correctly.
That was a darn awesome Tech Meetup (presented my 1st thing there & Marco graciously took pictures of the event, some of me presenting too; thanks Marco) as there were only two unknown start-ups presenting that night amongst giants.
"David would come in with a grand new feature idea, and I’d tell him which parts were infeasible or impossible, which tricky conditions and edge cases we’d need to consider, and which other little niceties and implementation details we should add."
"Acquisitions on this scale usually work well." I don't know what planet Marco's on -- despite his citation of Youtube, acquisitions hardly ever work well, let alone on this scale.
But he does have a habit of writing things with a straight face that other people never would.
An inspiring story written in a humble perspective. A story of keeping focus in the face of funding problems that are all too common in early startups.
It reminds me of the Facebook story where some of the early founders wanted to introduce advertising very early on.
Lovely article. Glad to have read it. Suspect Marco is a little modest about his contribution, but great to hear he came out ahead, and then some.
Truly hope Tumblr can maintain its independence from the Yahoo hive mind/wholesome image, just like Conde Nast has let Reddit's less-than-family-friendly stuff thrive (smartest decision ever).
Despite all that, the $1B valuation is batshit, not unlike the housing market in NYC these days ($1.6MM for his Brooklyn one bedroom?) I'm glad to be escaping the clutched of NYC in several weeks from now. A yard!
I still have my doubts, on more than one front, but that was definitely an interesting and worthwhile read. I haven't been part of the Tumblr community -- rather just seeing individual items when they are cited elsewhere -- so this provides a bit of perspective especially as to its genesis.
Is it just me or it looks like another Instagram/Facebook deal? For sure, they got great payouts, although it seems more like a lottery to me - how many of those swinging for the fences actually manage to do that?
No, he did not. If you listen to his podcasts Marco's career is an open book. Basically, college -> unremarkable first job -> Tumblr employee nbr 2 -> Instapaper -> The Magazine.
The way Marco talks about David's disinterest in money, and his singular obsession with Tumblr, made me think he wouldn't even consider selling it to someone else.
I'd be curious to hear his reasons for selling, as oppose to doing a strategic investment like Facebook did with Microsoft at one point.