You can do the math on Tumblr's pageviews, throw in some expected CPM, weighted average cost of capital, and try to justify the billion dollars that Yahoo! 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 not the asset Yahoo! bought. It will be run on it's own and probably not touched too much.
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 ten years from now focused on display ads on webpages. At least, I hope not anyway. I hope by then someone will have figured out something more interesting. The next ten years of the internet will be won by great product minds.
Great product minds don't work by committee. Like the great 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 20's would have ignored Fred Wilson when he said they should include comments in their blogging platform early on?
Answer: One... David Karp.
In December of 2007, I wrote the following e-mail to Fred Wilson, Brad Burnham, and Bjian Sabet:
"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 wasnt 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, he can. I didn't realize how prescient that note would be as I think about Tumblr's nearly certain acquisition by Yahoo! 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, Anthony Casalena at Squarespace, Scott Belsky at Behance and Jason at Fab.
It's why Google tried to throw $100mm at Dave Morin at the beginning of Path--to lead all social efforts on the web. They knew that to transform the web properties at Google into a coherent vision for the future, you needed centralized decision making that led to a great product visionary. It wasn't about having Path at all. It was about a product leader.
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.