The Herald Bulletin

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May 20, 2013

Yahoo looks to regain its cool with Tumblr deal

SAN FRANCISCO — After falling woefully out of fashion, Yahoo wants to be cool again while catering to the capitalistic demands of its shareholders. That goal led CEO Marissa Mayer to make a $1.1 billion bet on online blogging forum Tumblr in a risky acquisition that revolves around the vision and instincts of a 26-year-old entrepreneur who dropped out of high school to pursue his dream of bringing more beauty and creativity to the Internet.

The deal announced Monday is Mayer's boldest move since she left Google 10 months ago to lead Yahoo's latest comeback attempt. It marks Yahoo's most expensive acquisition since it bought online search engine Overture a decade ago for $1.3 billion.

While hailing Tumblr as a fount of creativity that attracts 300 million visitors each month, Mayer told analysts Monday that she is "making a sincere promise to not screw it up." Yahoo said its founder, David Karp, will remain in charge and will keep Tumblr's headquarters in New York to retain the same "irreverence, wit and commitment to empower creators."

Tumblr's audience, which boasts a large concentration of teens and people in their early 20s, is already fretting that the service is going to become more stodgy and commercial under the ownership of an 18-year-old company that seems ancient by Internet standards. Advertising largely has been a missing ingredient so far as Tumblr, like many online services in their early stages, focused on building a loyal audience before turning its attention to making money. By purchasing Tumblr, Yahoo will have more opportunities to sell ads.

"I can't help but be concerned that Yahoo will 'Yahooize' Tumblr and make it as irrelevant as the mother ship," said Jennifer Grant, 36, who has a Tumblr blog.

Founded in 2007, Tumblr emerged as a trendy online hangout by providing a blogging service that makes it easy to share posts, photos, video and other content in an enthralling mosaic of interlocking information. Tumblr forums are devoted to such diverse topics as art, architecture, food, politics, pets and fashion.

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