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The $3B+ Exit Tumblr Could Have Had

daniellemorrill.com

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Re: The $3B+ Exit Tumblr Could Have Had

#51

Post by justincormack »

hkmurakami wrote: post #26
goronbjorn wrote: post #19

Earlier quoted context omitted.

I would argue that, in this case, long term irrelevance is a "major threat" to Yahoo!'s existence, and this is one of few ways to circumvent that. There's going to be the same seemingly irrational price pinned on this acquisition because it's a long term life or death situation.

Sure, but "Tumblr" is not an existential threat to Yahoo!. That kind of dynamic where you're such a pain in the ass to some big company that they have to buy you to maintain their status quo business as usual is one of the best ways to get acquired. When you don't have that dynamic, Yahoo! doesn't have to buy Tumblr. Maybe they have to buy something but it doesn't have to be Tumblr and it doesn't have to be now , rig…

Irrelevance is the existential threat. At that point buying anything that people like and use becomes valid.

Re: The $3B+ Exit Tumblr Could Have Had

#52

Post by neya »

dmor wrote: post #16
pkmehta wrote: post #14

Earlier quoted context omitted.

Exactly. What makes it worse is that Tumblr has lots of soft core porn and other unsavory content which brand advertisers don't want to touch with a 10 foot pole. Plus, the P/S of 10x looks pulled out of ye' olde arse. Google's trailing P/S is 5.6x and Yahoo's is similar. AOL is 1.31x. What media company that might be a "comp" trades for 10x.

HuffPo, and I said it was steep not what people should expect to get. Huffington Post, a media company, was purchased by AOL for $315M @ $30M rev. That's 10x. Stop trolling.

Not a very professional way to respond, Danielle. Especially being the author of the article in question. Stop accusing people as trolls just because you disagree with them.

Re: The $3B+ Exit Tumblr Could Have Had

#53

Post by azifali »

The Pricing that Danielle has quoted - $10-15 RPM is extremely high.

First - Tumblr is not a "Premium" Property. NBCNews.com and Business week is.

Second - Porn which is plentiful on Tumblr is the opposite of premium. It tends to be cheap and not easily monetizable.

Third - A better metric to use would be CPM. Un-targeted ads deliver Targeted ads such as search / display targeting, retargeting typically deliver between $2.5 - $5.00 which represents the best case.

Fourth - The ad platforms tend to take a revenue cut + platform fee which easily amounts to 30-40% of that.

Fifth - I am assuming that Tumblrs ads are direct buys in which case it is highly unlikely that they can quote CPMs given in my earlier statements. This is because they probably don't have enough technology to deliver those kind of media buys yet.

Net net..your numbers are off. The $3b title is a nice bait but the valuation numbers are off.

Re: The $3B+ Exit Tumblr Could Have Had

#54

Post by dakrisht »

This is another one of those SV deals that simply DO NOT make sense whatsoever.

So Yahoo! wants the young audience (check), but what are they going to do? Throw ads at young teens (who browse porn and nail art on Tumblr)? Have a "bigger" presence in mobile? Integrate Flickr with Tumblr? Don't get this.

And how does Yahoo! still have cash? Jesus

The acquisition just makes zero sense, Tumblr price (valuation) makes even less sense:

- $15M in revenue (down $85M from the projected 2013 of $100M) - 175 employees (for what? 150 of them are probably useless with regard to the company) - Running out of cash (so hey, let's sell for $1B since we'll be worth $100M in 6-months anyway)

Why is SV rushing in to buy this company as, like another user said, the wheels are falling off? Where is the value, yet alone $1B value?

Just stupid SV math.

Re: The $3B+ Exit Tumblr Could Have Had

#56

Post by nikcub »

dakrisht wrote: post #55
davidm wrote: post #49

Earlier quoted context omitted.

Quick answer: Freemium +

Quick rebuttal: Flickr barely makes any money.

and the freemium model was in place before Yahoo bought them

I was a pro user, cancelled when Yahoo bought Flickr and forced us all to use Yahoo accounts.

Re: The $3B+ Exit Tumblr Could Have Had

#57

Post by notahacker »

mtgx wrote: post #50
goronbjorn wrote: post #8

> In the end Tumblr won’t see a bigger exit because they didn’t prove they could monetize their massive traffic before time (and money) ran out. Instagram had $0 in revenue when they were acquired for $1 billion in cash/stock. The price paid in that instance was for potential , and it's likely to be the same in the case of Tumblr.

I don't remember where I heard this, but it was something along the lines "it's better to have $0 revenue, than to have $100 revenue (or some other low number you want to use)". Because at $0, you could sell the company on potential, while at $100 you're making it seem like a very poor business. If Tumblr wasn't making any money at all, maybe they could've sold it for $3 billion, but since they already have a monetiz…

I recall seeing this as well, and it's a sad indictment of SV management if it's true that companies estimate higher revenue potential for potential acquisitions with a pitch of "we've got pageviews you can always stick ads on" than "we've gradually started to monetise at a low CPM relying mainly on excess inventory ads from a third party platform due to a limited sales team, but CTRs are good and user attrition near nonexistent and our one premium brand advertiser is very happy, so how much more revenue do you think you'll make?"

It's like investing more in the "idea guy" than the good team with a developing product whose traction isn't stratospheric yet.

Re: The $3B+ Exit Tumblr Could Have Had

#58

Post by michaelt »

pod4369 wrote: post #23

"According to Forbes Tumblr is targeting $100M revenue in 2013 but, according to sources I spoke to who are familiar with the company, actual Q1 revenue growth was flat and Tumblr is on track to do only $15M in revenue this year." This is unbelievable. I can't believe they're running out of the $85M so soon after raising it, and have basically nothing to show for it. I'd be pretty outraged if I were an investor.

I've seen plenty of business news articles where 'estimated' numbers or numbers from anonymous sources 'familiar with the company' were out by an order of magnitude.

Re: The $3B+ Exit Tumblr Could Have Had

#59

Post by jacquesm »

azifali wrote: post #53

The Pricing that Danielle has quoted - $10-15 RPM is extremely high. First - Tumblr is not a "Premium" Property. NBCNews.com and Business week is. Second - Porn which is plentiful on Tumblr is the opposite of premium. It tends to be cheap and not easily monetizable. Third - A better metric to use would be CPM. Un-targeted ads deliver Targeted ads such as search / display targeting, retargeting typically deliver betwe…

Porn is not just 'not monetizable', it is toxic to regular advertisers.

You really don't want that ad for the new car next to grandma in her see-through... bad associations.

Re: The $3B+ Exit Tumblr Could Have Had

#60

Post by jacquesm »

mratzloff wrote: post #37
pod4369 wrote: post #23

"According to Forbes Tumblr is targeting $100M revenue in 2013 but, according to sources I spoke to who are familiar with the company, actual Q1 revenue growth was flat and Tumblr is on track to do only $15M in revenue this year." This is unbelievable. I can't believe they're running out of the $85M so soon after raising it, and have basically nothing to show for it. I'd be pretty outraged if I were an investor.

They have 175 employees, so it's not too surprising they blew through $85 million in 8 months.

85000000/175=485714, that's actually quite surprising unless the averge flickr employee grosses more than 50 K per month.

$85 million is a lot of cash.

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