Tumblr
From Invertopedia, the encyclopedia of how things fail
Tumblr was the blogging network Yahoo bought for $1.1 billion in 2013[1][2]. Yahoo wrote down more than $700 million of that in 2016[2][3]. After child abuse images were found on the site and Apple pulled its app, Tumblr banned adult content on December 17, 2018, and its traffic fell almost 30 percent within two months[4][5]. In August 2019 Verizon sold it to Automattic, the company behind WordPress, for a reported $3 million[1][6][7].
Contents
The bet
Yahoo, under then-CEO Marissa Mayer[7], bought Tumblr as its largest acquisition ever[2]. The bet was that a huge, young, loyal audience could be turned into an advertising business. Tumblr had about 550 million users, around 80 percent of them on mobile[3], and a revenue goal of $100 million for 2015[3].
What happened
| May 2013 | Yahoo buys Tumblr for $1.1 billion, its largest acquisition ever.[1][2] |
|---|---|
| 2015 | Tumblr misses its $100 million revenue goal.[3] |
| Feb 2016 | Yahoo discloses a first impairment charge of $230 million on Tumblr.[1][3] |
| Jul 2016 | Yahoo writes down another $482 million. Together the two charges come to more than $700 million, about two-thirds of the price.[2][3] |
| 2017 | Verizon buys most of Yahoo's assets, and Tumblr with them.[1] |
| Nov 2018 | Child abuse images are found on Tumblr and Apple pulls the app from the App Store.[4][5] |
| Dec 17, 2018 | Tumblr's ban on adult content takes effect.[4][5] |
| Feb 2019 | SimilarWeb counts about 370 million visits, down from 521 million in December.[4][5] |
| Aug 12, 2019 | Verizon announces the sale of Tumblr to Automattic. No price is disclosed; reports put it at about $3 million.[1][6][7] |
| Aug 2024 | Automattic says it will move Tumblr's back end onto WordPress.[7] |
The kill shot
Tumblr never found a business that fit its users, and when it finally changed the product, it banned what a big part of them came for.
Yahoo paid for an audience, not a business. Tumblr had to sell ads against Facebook and Google, which had better data, and against Twitter and Snapchat, which were stronger on mobile, where most of its users were[3]. It missed its 2015 revenue goal[3], and within three years of the deal Yahoo had written off about two-thirds of the price[2].
The ban came after Apple pulled the app[4][5]. A Tumblr spokesperson reportedly called it "a strategic decision for the business that better positions it for long-term growth among more types of users"[4]. Visits fell from 521 million in December 2018 to about 370 million in February 2019[4][5]. Users left, and the new ones it hoped for did not show up in the numbers.
Red flags ignored
- Price for users, not revenue. Yahoo paid $1.1 billion for a site that could not reach $100 million in revenue.[1][3]
- Written down within three years. Two charges in 2016 took out more than $700 million of the price.[2][3]
- Policy set by the app store. The ban came right after Apple pulled the app, though Tumblr said it had been considering one for a while.[4]
- Owner churn. The Automattic sale gave Tumblr its third owner in six years.[1]
- Chasing users it didn't have. The stated aim of the ban was growth "among more types of users," at the cost of the ones already there.[4]
The cost
$1.1 billion paid in 2013[1][2]. Write-downs of $230 million and $482 million in 2016[2][3]. A reported sale price of about $3 million in 2019[6][7], with Automattic taking on about 200 Tumblr staff[1]. Years later, Automattic's CEO Matt Mullenweg said Tumblr was losing about $30 million a year[7].
The inversion
Know who your users are before you decide who they should be. If you buy an audience, find the business that fits the people already there, and never cut away what they came for in the hope of attracting someone else.
What survived
Tumblr itself. It still runs under Automattic and hosts about half a billion blogs[7]. Automattic kept the adult content ban when it bought the site[1][6]. In late 2023 Mullenweg moved most of Tumblr's staff to other Automattic teams, and in August 2024 Automattic said it would move Tumblr's back end to WordPress without turning Tumblr into WordPress[7]. In July 2025 Mullenweg said that migration was on hold indefinitely, and that Tumblr was still not profitable[8].
References
- ^ “Verizon Sells Tumblr to WordPress' Parent Company”. TheWrap (Sean Burch), August 12, 2019. Sale to Automattic announced August 12, 2019; $1.1 billion Yahoo purchase in 2013; $230 million write-down; Verizon's Yahoo purchase; third owner in six years; about 200 staff; ban kept.
- ^ “Tumblr's slow evolution forces Yahoo to write down value by two-thirds”. Digital Trends (Saqib Shah), July 19, 2016. May 2013 purchase for $1.1 billion, Yahoo's largest acquisition; $482 million charge; earlier $230 million; over $700 million combined, about two-thirds of the price.
- ^ “Yahoo CEO’s 700-Million Dollar Fail: Tumblr”. Vulcan Post (Chen Yiji), July 20, 2016. February 2016 first impairment of $230 million; $482 million in Q2 2016; missed $100 million 2015 revenue goal; 550 million users, 80% mobile; ad competition.
- ^ “Porn Ban Hits Tumblr Where It Hurts”. Statista (Martin Armstrong), March 15, 2019. Ban from December 17; child abuse images found in November 2018 and app pulled; SimilarWeb visits 521 million in December, 370 million in February; spokesperson quote.
- ^ “Predictably, Tumblr's Engagement Figures Tank After Porn Ban”. IFLScience (Rosie McCall), March 18, 2019. Ban took effect December 17, 2018; Apple removed the iOS app; SimilarWeb visits fell from 521 million to 369.5 million, almost 30%.
- ^ “Verizon Offloads Tumblr to WordPress Owner Automattic”. Digit (Ross Kelly), August 13, 2019. Price unconfirmed, reports of under $3 million; Automattic has no plans to reverse the ban.
- ^ “Tumblr to move its half a billion blogs to WordPress”. TechCrunch (Sarah Perez), August 28, 2024. The 2019 "$3 million fire sale"; Marissa Mayer as Yahoo CEO; about $30 million a year in losses; late 2023 staff moves; August 2024 back-end migration; half a billion blogs.
- ^ “Automattic puts Tumblr migration to WordPress on hold”. TechCrunch, July 1, 2025. Mullenweg on The Verge's Decoder: the WordPress migration on hold indefinitely; Tumblr not profitable.