Yahoo is attempting to procure Tumblr for $1.1 billion, and its board will meet on Sunday night to discuss the deal, according to Peter Kafka and Kara Swisher of AllThingsD — who at this point may have a direct line into Yahoo CEO Marissa Mayer’s occipital lobe (Update: the deal has been approved by Yahoo’s board, says Kara Swisher). With over 100 million visitors per month, according to comScore, and 108 million blogs, according to Tumblr’s homepage, Tumblr could be a great acquisition for just about any major company. But what kind of company is Yahoo trying to become?
Since the beginning of 2013, Yahoo has acquired eight companies of public knowledge; news clipping startup Snip.it, two mobile recommendation startups, Alike and Jybe — which include five former Yahoo employees — Summly, a news-reading app founded by 17-year-old Nick D’Aloisio, social productivity app Astrid, social polling app GoPollGo, frequent flyer search startup MileWise, and location-based gaming company Loki Studios. Seven of the eight acquisitions (the only holdout is Astrid) have been shut down and moved into Yahoo’s mobile operations.
It’s clear that Mayer is trying to make Yahoo a more mobile organization, but it doesn’t seem as if Yahoo has a clear fix on the direction in which it wants to go. These acquisitions seem to be a very eclectic mix. If it were Google, you would say they are beefing up Android, and upgrading Google Now, but Yahoo doesn’t have a mobile operating system. Outside of Summly, none of the features of these startups correspond with anything Yahoo is currently doing that maintains a modicum of success. It appears that, like a bull in a china shop, all that Yahoo can see is mobile. Moving toward mobile is a good strategy for the directive-challenged company, but Yahoo’s biggest issue going forward isn’t mobile. It’s the same issue that has begun to plague Facebook — the loss of its ‘cool’ factor. When no one under the age of 25 would be caught dead using an email address ending in ‘yahoo.com’, going mobile will not fix your problems, it will only bring them further into the light.
Facebook has begun to lose its ‘cool’ factor as well, experiencing the early stages of what Yahoo went through after Google unleashed Gmail from its beta tag and onto the market in 2007. After speaking to numerous people over the past few months about their use of Facebook, there is one common train of thought throughout the conversations I’ve had with each individual — they believe Facebook is a necessary evil, for lack of a better term. They tolerate Facebook because it connects them with their friends and family, but the enjoyment they experienced when they first signed up for the service years ago is all but gone. There is no excitement about Facebook — it has become a utility — which is probably why the HTC First has reportedly fallen flat. No one wants a utility-skinned utility device.
We’ve also learned from multiple articles over the past months that teenagers don’t like Facebook, occasionally for the precise reason it has become a necessity for those in their twenties and thirties — it connects them with their families. Facebook, keenly aware of this issue, decided to purchase Instagram, for three reasons; it eliminated its biggest competition for uploading photos, the acquisition kept it out of the hands of Twitter, Facebook’s other major competitor, and it could help stem the loss of Facebook’s ‘cool’ factor. Two out of the three worked perfectly.
Now, it seems as if Yahoo is following Facebook’s formula, trying to solve two issues in one fell swoop. In Yahoo’s eyes, Tumblr is decidedly more mobile than any current products that it can offer, and the ‘cool’ factor of Tumblr could work magic on Yahoo’s deplorable reputation with the youth.
The problem with Yahoo following Facebook’s formula is Yahoo doesn’t contain the key ingredient — indispensability. No one needs to use Yahoo. There is no worldwide network connecting families and friends in Yahoo. There is no place in Yahoo that contains enough information about everyone in your perceivable social circle to allow you to do a background check on a potential date within minutes of meeting them. There is nothing at Yahoo that would keep the loss of their ‘cool’ factor through a public fiasco at a drip, instead of flowing like an open faucet. Acquiring Tumblr won’t fix Yahoo’s issues, it would just shift their problems from the desktop to mobile.
Facebook has time to fix any perceivable shortcomings. Its users have incentive to stay, not to leave. That allows for some leeway to try new ideas, acquire more innovative companies, and introduce new products and features that could instantly turn its fortunes around. Yahoo does not posses that luxury. If it goes through, the acquisition of Tumblr may be its last chance to grasp the interest of the upcoming generation.
Yahoo has lost out on search to Google and Microsoft. Email is dominated by Gmail. Flickr experienced a two-week resurgence after Instagram’s terms of service debacle, but Facebook’s newest toy has come back stronger than ever. Yahoo News does have the preeminent NBA reporter in Adrian Wojnarowski, but that won’t help the bottom line.
While Tumblr may seem like a smart play to Yahoo and its board, it won’t save them. Yahoo’s users are aging, and Tumblr’s users can be fickle. Without complete autonomy for Tumblr, and even possibly with it, this could end up resembling the News Corp/Myspace situation. Tumblr’s entire existence hinges on its ‘cool’ factor. There isn’t an instant messaging service or a ‘like’ button in the familiar sense on Tumblr; people reblog what they like, and post what they find interesting, not to climb a pseudo-social scale, but actually for themselves. Tumblr isn’t so much about following and liking your friends’ every post, as it is about following the people who post the most interesting items to you. If people no longer use the service in a genuine way, and the curators decide to pack it in and leave, Tumblr is done.
Yahoo can’t acquire its way out of its issues. The only company that has succeeded that way is Apple, and they got a CEO in their deal.