Twitter was founded in March 2006. Tumblr was created in February 2007. Twitter has 230 million monthly active users, 53 million of them in the U.S. Tumblr is thought to be within an order of magnitude of that — between 30 million and 50 million actives, plus more than 300 million unique visitors. The two even share some DNA: Tumblr founder David Karp says Twitter borrowed the concept of the retweet from an action on his platform, the reblog.
Yet Twitter went public Thursday, raising $1.8 billion and achieving a market valuation of $31 billion by the end of the day, while Tumblr sold itself to Yahoo Yahoo for $1.1 billion in May amid reports that it was running short of money.
As the saying goes: Results may vary. But why?
"I think every company's different, every founder's different," says Bijan Sabet, whose venture firm, Spark Capital, was an early investor in both social startups. "They're two different situations. It's a funny day when we look at $1.1 billion as small."
Granted. But all else being equal, every founder would agree that $31 billion is cooler than $1.1 billion. And when I profiled David Karp for FORBES last year, he made it clear that an eventual IPO was at least on his mind, if not his preferred scenario. In a market where less-established startups like Snapchat and Pinterest are fetching valuations of several times Tumblr's sales price, it's worth asking why two outwardly similar companies that long appeared to be on similar trajectories ended up with such different outcomes.
I posed that question to a handful of smart people: Sabet of Spark Capital; venture capitalist David Pakman, a partner at Venrock Associates; Nihal Mehta, general partner at ENIAC Ventures and executive chairman of LocalResponse LocalResponse; Chris Tolles, co-founder and CEO of Topix; and Gartner analyst Brian Blau. Here's what they see as the key differentiators:
Leadership. This might be the big one, since everything a company does and is flows from its leadership. Tumblr spent the last year of its life as an independent company ostensibly on the hunt for its its own "Sheryl Sandberg" — a strong business executive who could complement Karp the way Sandberg does Mark Zuckerberg at Facebook. That it never found that person probably speaks to a lack of desire or interest on Karp's part.
Twitter certainly had its own leadership issues, but the appointment of Dick Costolo as CEO in 2010 put a period on them. " In order to build a company that is of value to brands, you actually have to want to do it from the top down," says Pakman. "You can't do it reluctantly. In Dick, you've got a guy who's really excited to build an unbelievably interesting advertising medium."
Karp's lack of interest in the mechanics of revenue was a big factor in winding up at Yahoo, Sabet agrees. "David's true love is product and thinking about the user," he says. "Now he gets to do that full time."
Brand. It may not have the market penetration of Facebook, but every wired American knows Twitter's little blue bird symbol. Do you know Tumblr's logo? Probably not. "It hasn't been able to break out to the mass market the way Twitter says," says Mehta. "You can't imagine your parents ever having a Tumblr account. That's a big difference."
It's one that stems from who sets the tone on the network. Twitter undertook a concerted campaign to get actors, comedians, athletes and politicians using its service, notes Gartner's Blau. "Tumblr did the same thing, but the people that self-selected Tumblr was the artist and designer crowd," he says. "Those are not influencers. In fact, those are people who really want to be off by themselves."
Content. In several ways, the nature of content that thrived on Tumblr made it a difficult business proposition. Some unknown proportion is pornography; estimates range as high as 30%. (One study found that 11.4% of the 200,000 most-visited domains were adult content.) A good deal more of it is copyrighted material, republished without consent. "I think Twitter is an important thought platform for the world, whereas Tumblr just isn't — it's a reblog site for 'memes,'" says Tolles.
Don't underestimate the importance of format, either. In the 140-character tweet, Twitter invented the equivalent of a new quantum particle — something that seemed like it should have existed all along. "They found a communications mechanism that really resonates with people," says Blau.
Mobility. Twitter was born as an SMS application. The migration of the internet from desktops to smartphones was never anything but a good thing for its growth. Meanwhile, "Tumblr was very desktop and had to port to mobile," notes Mehta. That posed various challenges. It's hard to blog from a phone, and the big, gorgeous images that populate so many Tumblrs don't look like much on a 3-inch screen.
Data: While Tumblr had a lot of users, on a per-user basis they weren't nearly as valuable to marketers as the people on Twitter or Facebook, says Pakman. The nature of follow/friend relationships on those sites generates the kind of data advertisers crave — about interests, affinities, personal relationships. "In the case of Tumblr, it's not really clear what the data tells you," he says. "It's not clear why people follow other people. It seems to be because you like their creative expression. I'm not sure that's very valuable data."
Geography. Karp has always said Tumblr's New York City location was a crucial element of its success. Tolles disagrees. "It's hard to make a platform work outside Silicon Valley. I just think there's a set of resources that NYC doesn't have that gets brought to bear — executive talent, technical talent and a desire to work together with other people in the industry."
——-
Update: I added a second, lower estimate of the amount of pornographic content on Tumblr to give a better idea of the possible magnitude of the issue.
Also on Forbes:
Yahoo's Top 10 Biggest Acquisitions
No comments:
Post a Comment