US tech giant Yahoo has snapped up Tumblr in a major US deal that will reportedly net the blogging site’s 26-year-old founder a $250m (€194m) fortune six years after he started it.
The $1.1bn deal makes New Yorker David Karp – who attended high school for only a year – the latest internet whizkid to scoop an astronomical windfall from a web start-up.
The move will give Yahoo its own social media platform as it seeks to attract younger and trendier internet users in a bid to match rivals Google and Facebook.
Yahoo, led by chief executive Marissa Mayer, said: “Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business. David Karp will remain CEO.”
Best known for its clean, simplistic design, Tumblr today claims to host more than 108 million blogs, with over 50 billion posts. Its roster of celebrity users features pop singer Beyonce and media mogul Rupert Murdoch.
In his blog on Tumblr, Karp announced: “I’m elated to tell you that Tumblr will be joining Yahoo.”
The message went on to promise users of the site that it would not “compromise” on its vision of making the site the “ultimate creative canvas”.
Described as “one of the fastest-growing media networks in the world”, Tumblr boasts more than 300 million monthly unique visitors and 120,000 sign-ups every day
But it has struggled to convert a fast growing user base into revenues – a common feature among even the most popular social networks.
Yahoo has 700 million customers worldwide and employs 11,500 people in 26 countries, including the UK where it has an office in London. Its services include a search engine and an email client called Yahoo! Mail.
But it has been under pressure to innovate to better compete with its internet rivals, and brought in former Google executive Mayer as chief executive in 2012 to shake up the company.
Since then Yahoo has bought half a dozen technology groups, recently acquiring Summly, a mobile app created by British teenager Nick D’Aloisio for US $30m.
Executives believe yesterday’s deal will grow Yahoo’s audience by 50% to more than a billion monthly users, and grow traffic by around 20%. It will also result in “seamless” advertising opportunities, the company said.
Mayer said: “On many levels, Tumblr and Yahoo couldn’t be more different, but, at the same time, they couldn’t be more complementary.
“Yahoo is the internet’s original media network. Tumblr is the internet’s fastest-growing media frenzy.”
Karp said: “Our mission – to empower creators to make their best work and get it in front of the audience they deserve – certainly isn’t changing.
“But we’re elated to have the support of Yahoo and their team who share our dream to make the internet the ultimate creative canvas.”
Speaking at an event in New York with the city’s mayor Michael Bloomberg, Mayer said Yahoo had acquired “one of New York’s most successful start ups”.
“Tumblr is an phenomenal company and we couldn’t be more excited,” she said.
“We are not going to screw this up.”
Mayer said Tumblr would continue to work independently but would complement Yahoo by providing younger users interested in “art and fashion, architecture, food and travel”.
As part of its investment in the site, Yahoo will make it easier for users to find content among Tumblr’s 50 billion posts, Mayer added.
During the event, Yahoo revealed changes to the photo service Flickr, which it bought for a reported $35m in 2005.
Flickr’s website has been redesigned to put a greater emphasis on photographs with fewer words and the site’s mobile application has been improved to look similar to the webpage.
Flickr will offer one terabyte of storage to users – equivalent to more than 537,000 photos, according to Yahoo’s calculations.
Mayer admitted Flickr had “languished” in recent years but was now “awesome again” following the revamp.
Yahoo also announced it is to move moving its New York headquarters to the former home of The New York Times, where more than 500 of its employees will be based.
Tumblr staff will remain at their current New York offices, Mayer said.