GO
Loading...

Tumblr Will Operate Independently: Yahoo CEO Marissa Mayer

Tuesday, 21 May 2013 | 11:29 AM ET
Yahoo, Tumblr CEOs Speak Out on Deal
Tuesday, 21 May 2013 | 10:14 AM ET
This is part of enhancing our growth story, said Marissa Mayer, CEO of Yahoo! on why her company acquired blogger website Tumblr for $1.1 billion. And, David Karp, CEO of Tumblr, explains how this "mission" provides an opportunity to serve "an incredibly creative community."

Yahoo CEO Marissa Mayer told CNBC on Tuesday that the $1.1 billion deal for Tumblr is "part of enhancing our growth story" and the effects will start to be felt in 2014. "There is a lot of new energy in the core of Yahoo," she said. "I think that's really exciting."

"We really wanted to be able to move faster as a company. I think you can see that we've achieved a lot more velocity and I think that's what's being felt right now," she said on CNBC's "Squawk on the Street."

To value the deal, Mayer said that the traditional valuation analysis was done and "all of those methodologies supported this valuation."

"Tumblr has a really good thing going. I'm cognizant of the fact that we don't want to mess that up," Mayer added.

She said Tumblr, founded by 26-year-old high school dropout David Karp, will operate independently.

(Related: Cramer: Yahoo's Tumblr Acquisition 'Works')

Marissa Mayer and David Karp appear on CNBC's "Squawk on the Street" at the Nasdaq.
Sally Shin | CNBC
Marissa Mayer and David Karp appear on CNBC's "Squawk on the Street" at the Nasdaq.

"It's not going to change. There are certainly going to be some things behind the scenes—maybe be it search or discovery or pulling some of Tumblr's content into Yahoo's core properties—but in terms of the way that Tumblr works it's still going to be aligned with David's vision and road map," Mayer said.

"Especially when you have a hypergrowth company, you want them to operate independently so they can run as fast as they can. That's really how you deliver value from the acquisition to the core company," she added.

Mayer said that she is looking at the acquisition as a partnership and said the most exciting opportunities are in idea exchange and collaboration between the companies. "There is so much that we can do together that it just makes sense to merge."

The acquisition is an attempt to make Yahoo more relevant to a younger audience through the social web. But Mayer dismissed the idea that Yahoo bought it to "buy some cool."

She said the blogging site, which has 300 million unique monthly users and 109 blogs, will be allowed to develop based on Karp's vision.

"We bought a growth opportunity. We've been very clear that our goal is to grow, to grow with the market and eventually to grow faster than the market. Tumblr is hypergrowth. The massiveness of that user base is amazing, so growing our audience by 50 percent to more than 1 billion users per month that is huge," she said.

Karp said creating Tumblr was a "mission" to serve the online creative community. "This is an incredible opportunity to serve that mission for a long time. This is a long-term thing for me," he said.

"I have no idea what Marissa's expectations are, but this is still my baby and where I'm giving all of my heart and attention," he added.

(Read More: Yahoo Board Agrees to Buy Tumblr for $1.1 Billion)

Mayer said that she's "not sure" if another acquisition is on the immediate horizon, "I don't like to say never, but I think it takes a moment to integrate this well."

On the competition, Mayer said that she tried Google Glass and called it an "interesting product" and said that she supports wearable technology in general. "I like the notion of taking your context and getting information in real time. Glass takes us one step closer to getting that context."

Comparisons have been made between Tumblr and Google's 2006 acquisition of YouTube. At the time, YouTube had virtually no revenue but is now one of the company's most valuable brands.

(Related: Yahoo to Buy Tumblr, Vows 'Not to Screw It Up')

Like YouTube, Tumblr offers users a platform to create original content and share with others. However, Tumblr content is primarily text, animations and images, which generally draw lower premiums from advertisers compared to video. Tumblr allows sharing of videos, but to a lesser extent than video-focused YouTube.

Similar comparisons have also been made to Yahoo's 1999 acquisition of GeoCities, which was shuttered in 2009. Yahoo insiders dismissed the comparison to GeoCities and said that management believes Tumblr is one of the rare transformative sites on the Internet, according to The New York Times.

(Read More: But Wait. Didn't Yahoo Try a Deal Like This Before?)

In the first trading session since the announcement, Yahoo shares closed up 0.23 percent on Monday. It continued trading higher on Tuesday.

Disclosure: CNBC has a content-sharing partnership with Yahoo's finance site.

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul

Disclaimer

  Price   Change %Change
YHOO
---
GOOGL
---

Featured

Contact Technology

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More
  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.