Yahoo has announced the acquisition of Tumblr for a staggering price of $1.1 billion. It is microblogging platform and social networking website. It has become the fourth most expensive acquisition Yahoo has made in the last 16 years. It can be labeled as the most expensive acquisition if we take into account the amount of cash involved in the deal which was officially announced on May 21. Tumblr was founded by David Karp who never finished high school or enrolled in college. He was involved with several technology startups before he founded Tumblr at the age of 20 six years ago. He is expected to make $250 million from the deal and joins the select circle of entrepreneurs who have struck it rich before turning 30.
The Blogging Platform Grew in Value in Just 6 Years
David has made Tumblr what it is in a relatively short time because of his programming skills and website design acumen. He had worked for a startup in Tokyo also for few months. On his return to US he became the chief technology officer for UrbanBaby, an Internet message board for parents. He received several hundred thousand dollars when it was taken over by CNET Networks in 2006. It became the seed money for starting his own company, called Davidville. One of Davidville’s projects was a simple blogging service called Tumblr. One of the first investors in the company was Spark Capital who saw him as a rare entrepreneur. It is remarkable that the blogging platform grew in value to cross the billion dollar mark in just six years.
Yahoo Has Completed 50 Acquisitions in 16 Years
Only three other acquisitions made by Yahoo have cost more than Tumblr in terms of valuation. Yahoo had acquired GeoCities and Broadcast.com in 1999. The later is still considered the most expensive as it was valued at $8.1 billion at the time. However it was acquired mostly through Yahoo stocks. GeoCities was valued at $6.4 billion and was acquired in a similar fashion. Overture was taken over by Yahoo in October 2003 in a cash and stock deal. Tumblr is the only other acquisition made by Yahoo which is valued over a billion dollar. Yahoo has completed 50 acquisitions in the last sixteen years but the value of all the other deals are under $1 billion.