From the Crowd
Yahoo's $1.1 billion acqui-hire of David Karp
May 20, 2013: 8:14 AM ET
Yahoo is formally buying Tumblr, but it's really buying Tumblr's leader.
By Charlie O'Donnell
FORTUNE -- You can do the math on Tumblr's pageviews, throw in some expected CPM, weighted average cost of capital, and try to justify the $1.1 billion that Yahoo (YHOO) is spending on Tumblr.
I think you'd be kidding yourself if that's what this was all about. The Tumblr community isn't going anywhere, but that's really not the asset Yahoo bought. It bought Tumblr founder David Karp.
If you're spending a billion dollars on something, you have to be taking the long view -- and I don't think we'll be sitting here 10 years from now focused on display ads on webpages. By then I'd hope someone will have figured out something more interesting. The next 10 years of the Internet will be won by great product minds.
Great product minds don't work by committee. Like Steve Jobs, all roads lead to one, singular decision maker with not just a vision, but an uncompromising one. The iPhone was a revolutionary product because of all the prototypes Jobs probably threw against walls until people got it right.
How many web entrepreneurs in their early 20s would have ignored Fred Wilson when he said they should include comments in their blogging platform early on?
Answer: One ... David Karp.
MORE: All Yahoo's spending can't make it cool again
In December of 2007, I wrote the following e-mail to Fred Wilson, Brad Burnham, and Bjian Sabet (when I worked with Union Square Ventures, an original Tumblr investor):
"I met with David the other day about using Tumblr to power Path 101 career blogs. I didn't know what to expect, because it wasn't obvious what the biz dev or business philosophy was there.
His response to the idea could not have been more perfect ... and his ideas for letting other communities use the Tumblr platform, particularly the nitty-gritty details of the integration were really top-notch and very forward thinking. He even had some great insight about Path 101's relationship to its crawled resume owners.
And today, a bunch of us went over to help Nate Westheimer with the BricaBox product strategy and David was just as impressive. His feedback was brilliant, but not in the least bit condescending ...
I hadn't had much of a chance to talk to David before ... He is a rare product mind, and I just wanted to pass on how impressed I was with my interaction with him this week.
Enjoy your weekends ..."
They all responded, and Fred wrote:
"A beautiful mind is a wonderful thing."
David Karp is one of the best product minds I know, and if anyone can make Yahoo into a compelling product experience, it's him.
For Yahoo to survive and be relevant, it doesn't just need more pageviews. It needs product direction and vision -- and that can't just come from Marissa Mayer. Product, just like at any startup no matter the size, is a full-time job. Marissa needs to run Yahoo. David Karp has been leading product at Tumblr from the beginning and leaning on others for everything else. It's the same way with Zuckerberg at Facebook (FB), Anthony Casalena at Squarespace, Scott Belsky at Behance, and Jason at Fab.
It's why Google (GOOG) tried to throw $100 million at Dave Morin at the beginning of Path, to lead all social efforts on the web. Google knew that to transform its web properties into a coherent vision for the future, it needed centralized decision-making. It wasn't about having Path at all. It was about having a product leader.
MORE: 5 reasons why Yahoo is making a $1.1 billion mistake
So all that stuff about how many advertisable pages Tumblr has, porn, no porn, etc ... It doesn't matter. This is so much bigger, and there's so much more at stake.
My brother once told me a bit of fantasy baseball advice that holds true: Overpay for the thing that is toughest to get.
There aren't too many David Karps on the market these days, and if you have three billion of cash sitting around, and great product is going to win the Internet one day, it's a no brainer to spend a billion of it on someone like that.
And it couldn't happen to a nicer guy, to be honest. He's one of the most polite, personable, down to earth people I've ever met in tech, and I don't imagine having a few hundred million in the bank is going to change that one bit.
Charlie O'Donnell (@ceonyc) manages Brooklyn Bridge Ventures, working on very early-stage investments in the New York City area. He blogs regularly at This is going to be BIG!
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5 reasons why Yahoo is making a $1.1 billion mistake
There is a good case for Yahoo to buy Tumblr. But there's a better case for it not to.
By John Saroff
FORTUNE -- It looks like Yahoo has offered to buy Tumblr for the sticker-shock price of $1.1 billion.
Maybe we shouldn't be surprised, since just a few days ago Yahoo CFO Ken Goldman spoke about the need for the company to be "cool" again. But Yahoo (YHOO) shareholders invest for returns, not for cool. Yahoo employees MORE
May 19, 2013 3:24 PM ET -
What's missing from tax reform debate: A level playing field
Businesses organized as partnerships account for 35% of all sales. So why are we taxing them at higher rates than other corporations?
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Bonuses are toxic at startups
Startups should keep employee upside in equity.
By Eric Paley
FORTUNE -- Venture-backed startups are incredibly ambitious. A startup team comes together to try to create something highly improbable and well beyond what can reasonably be expected given the scarce resources at hand. Once financed, everyone at the startup should have a reasonable salary, but the real compensation for achieving the improbable is equity.
Inevitably, I get into a discussion with my MORE
May 6, 2013 2:53 PM ET -
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May 6, 2013 7:11 AM ETPosted in: Glenn Solomon, Venture Capital -
Apple ad shows why Kodak never had a chance
Kodak was killed by phones, not film.
By Andrew Parker, contributor
FORTUNE -- Apple (AAPL) is running a new ad in which there is one simple line of dialog: "
Every day, more photos are taken with the iPhone than any other camera."
Simple, tight, concise message. And the ad is beautiful.
When I saw this ad, my first reaction was a simple, emotional response to the raw, human editing style.
But then on further reflection, I MORE
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Do's & don'ts for newly-public tech companies
Advice for the post-IPO life.
By Glenn Solomon
FORTUNE -- When a venture-backed tech company goes public, their life becomes much tougher. Even for strong companies like Marin Software (MRIN), the key is successfully managing the shift of their shareholder base from VCs to public funds. Failure to do so can be punishing.
If you're a growth-stage entrepreneur looking to go long, you'll have a similar challenge when you go public. New analysts MORE
Apr 22, 2013 1:23 PM ET -
Current fiscal policy harms U.S. competitiveness
We're focusing too much on the present, and too little on the future.
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Apr 11, 2013 10:04 AM ETPosted in: David Walker, deficit, deficit reduction, Economy, Robert Kaplan, United States federal budget -
5 steps for handling an acquisition offer
Even if your company is 'going long,' you need to be prepared for possible suitors.
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A 4-step guide to landing a startup job
Aim high, seek out key networking meetings, and pick yourself a winner.
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Apr 3, 2013 3:14 PM ET
