Yahoo spends a cool billion on cool

Queena Kim May 20, 2013
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Yahoo spends a cool billion on cool

Queena Kim May 20, 2013
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Yahoo paid over a billion dollars to acquire the micro-blogging site Tumblr. The social platform has more than 100 million users — most of them young and, well, cool.

When did being “cool” become essential to success in tech?

“I’ve been studying tech for a long time, and it’s kind amazing to get calls asking, ‘What’s cool?’” said Ethan Mollick, a professor at the Wharton School.

Mollick says for most of his career, it’s just not a question anybody asked. But with ads being the main way tech giants like Google, Facebook and Twitter make money, he says “advertising is about reaching the right set of people, reaching the influencers and so that’s when cool matters.”

And that brings us to Tumblr. Its audience is young, creative, likes to share and is mobile. Yahoo could use some of that.

Brian Morrissey, an editor of the marketing site Digiday, gets why Yahoo is throwing money at the problem. “But history is replete in the Internet with companies being acquired and then quickly losing that special something.”

And for that, you don’t have to look any further than Yahoo. During the last boom, it bought the website platform Geocities for more than $3 billion in stock. And more recently, it bought the popular photo-sharing site Flickr.

And it neglected them both, said Robert Hendershott, a professor at Santa Clara University.

“The real question is can you buy something that’s cool and avoid making it not cool?” said Hendershott.

Perhaps with this in mind, CEO Marissa Mayer said on a conference call, “I’d like to emphasize that while we’re acquiring Tumblr, we are making a sincere promise not to screw it up.”


Here’s Stacey Vanek Smith on the steps to making Tumblr a moneymaker.

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