Automattic has purchased Tumblr from Verizon, in a firesale move reported to be for less than $3 million. There is still value in the site, however, for Automattic.
Automattic — which owns WordPress.com — has acquired Tumblr and about 200 employees from Verizon, according to The Wall Street Journal and confirmed in Post Status Slack by Automattic CEO Matt Mullenweg.
Tumblr has had a rocky road since their sale to Yahoo! in 2013 for $1.1 billion. Yahoo! is now owned by Verizon — whose entire content and platform lineup is a mess. The WSJ reported in May that Verizon was shopping Tumblr.
The most recent controversy for Tumblr was a community revolt over the treatment of adult content. Matt says Tumblr's new adult content policy will stay in place under the new ownership. On Hacker News, he said, “Adult content is not our forte either, and it creates a huge number of potential issues with app stores, payment providers, trust and safety… it's a problem area best suited for companies fully dedicated to creating a great experience there. I personally have very liberal views on these things, but supporting adult content as a business is very different.”
Matt tells me the initial goals for Tumblr are:
Tumblr will remain a separate brand. There is a dedicated Tumblr community even after years of neglect and confusion. Still, Matt says Tumblr's user base is “several times larger than [WordPress.com's].”
The Tumblr backend will change its technology, but the front-end experience will stay similar to what it is today, as Automattic “[doesn't] want to change what's working.” Matt said Tumblr's interface is “working amazingly well, despite being fairly constrained in what they can launch [the] past few years.”
There are several potential wins here for Automattic. For one, they gain a committed community for pennies on the dollar compared to the $1.1 billion Yahoo! paid — a classic Yahoo! exit.
While the WSJ called the purchase amount “nominal” for Verizon, Matt says he considers the brand “super valuable, but right now not making as much as they could or should.”
Dan Primack of Axios is reporting a “source familiar” put the price “well south of $20 million.”
Primack later stated the upfront sale price was less than $3 million.
In Post Status Slack, Matt noted that “adding ~200 people and porting all of Tumblr to Automattic is non-trivial and by far the largest investment or acquisition Automattic has ever made.”
While unrelated to the upfront cost, the ongoing costs Automattic is taking on — and Verizon was surely quite keen to unload — is significant. The development and hosting effort will surely cost millions per year, not counting employee expenses. Automattic's largest previous acquisition — of WooCommerce — was about $30M in cash and stock. Thas is probably not far from the annual cost of the Tumblr employees Automattic is taking on now.
In recent years Automattic has put much more energy into effective monetization, and I have no doubt they can do significantly better than the sprawling Verizon organization Tumblr languished under.
Again on Hacker News, Matt noted, “We've been evolving Automattic to be more of a Berkshire Hathaway-inspired model and businesses with a lot of autonomy, and this [acquisition] continues that trend.” This is interesting, particularly as Berkshire is known to let portfolio companies operate quite independently, and of course, Berkshire CEO Warren Buffet is famous for being a savvy value investor. Tumblr is definitely a deep value play at this price.
With Tumblr's acquisition, Automattic has an opportunity to diversify its own brands — WordPress vs WordPress.com is always very confusing. (Legacy and tech media will surely screw it up talking about this acquisition.) Inevitably different cultures and web communities drift to different spaces online — think Instagram and Facebook, for instance.
Tumblr is a very browse-heavy platform. The potential for eCommerce on such a platform could be significant. Matt said in chat that he thinks “eCommerce on Tumblr is a great idea.” I can also see a world where Tumblr could be shaped into a primarily mobile product — a more direct (and more privacy-focused) implementation of what Instagram is, with a similar, minimal interface.
I would really love this, and Matt hints at some alignment on that front. In response to a comment speculating they'd wind Tumblr down, he said the plan was the opposite because “the web needs open and independent publishing and social media more than ever.” I know from my own conversations with Matt that he's thinking about this a lot now. The way he plugged “social media” in that statement makes me think it's at the top of mind
If Tumblr is open-sourced, a plugin ecosystem could work there as well. Matt says that “when [Tumblr] is on [WP's] backend that [idea] … can be explored.” So a plugin market for Tumblr is not off the table, but it doesn't sound like third-party extensibility is an immediate priority. I think the initial goals is to revive a large community and keep to the basics.
I have worked on WordPress my entire adult life — 16 years now — and so the democratization of publishing is near and dear to my heart. Tumblr and WordPress have always been very philosophically aligned there.
When the possibility to join forces became concrete, it felt like a once-in-a-generation opportunity to have two beloved platforms work alongside each other to build a better, more open, more inclusive – and, frankly, more fun web. I knew we had to do it.
Everyone loves to have a say on social media, but this move is well regarded so far in the tech space. It's nice when a company makes a save-attempt on something good that's been presumed “dead.”
The CEO of Tumblr, Jeff D'Onofrio, said the following on Twitter:
I’m very excited about Tumblr’s next chapter and looking forward to working with @photomatt and the entire team at Automattic. I’m most excited for what this means for the entire Tumblr community. There is much more to do to make your experience a better one, and I’m super confident that we are in great hands with this news. Tumblr and WordPress share common founding principles. The plane has landed on a friendly runway. Now it is time to freshen up the jets.
There will be more to come from Post Status about Tumblr joining the Automattic family of properties and also how it fits in the broader WordPress ecosystem. To my mind, porting a decaying but massive platform to an actively developed WordPress stack is a huge net positive for the web.
Additionally, the potential to further develop Tumblr, specifically in the social networking space, could be a beacon for a more user-centric web with clear offramps — it's just WordPress! — for folks to protect and own their own data.
I am optimistic.