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.
