I entered the glamorous(ly perceived) world of social media about a year ago when I started working for a small New York startup. The startup was so small, in fact, that it didn’t have an office and rented space from a company that provided desks, chairs and WiFi to hopeful tech entrepreneurs who lived on caffeine, laptops and dreams of venture capital.
After a few days of working for the startup, Trista, who managed the space we were using, asked for my e-mail address so that I could be included in the chain of office updates (no sleeping under desks at night, free Red Bulls in the fridge, VENTURE CAPITAL FIRMS VISITING NEXT WEEK). The conversation requesting my e-mail address went something like this:
I was shocked. Throw my resume in the trash? Because of a Yahoo! e-mail address!? It sounded pretty dramatic, but the truth was that Yahoo! had passed its prime and was viewed as somewhat of a joke by the New York tech community and beyond. But only a month after my conversation with Trista, Yahoo! made an interesting move and appointed Marissa Mayer its new Chief Executive Officer.
Only 37, Mayer had quite the impressive resume. She came to Yahoo! having worked with Google as the company’s first female engineer. Mayer was also named one of Fortune’s Most Powerful Women in Business five times since 2008 when she made history as the youngest woman to ever make the list. And yet despite her accomplishments, everyone was cognizant that Mayer was young, a sentiment that was evident in the media that questioned her ability to not only run a business, but revive one.
This past weekend, not a year after joining Yahoo!, Mayer made headlines when the Yahoo! board approved a US$1.1 billion purchase of popular blogging site, Tumblr. The website whose tagline is “Follow the blogs you’ve been hearing about. Share the things that you love,” has over 100 million users interacting on over 100 million blogs each month. Yet Tumblr only generated US$13 million in revenue last year and has many apprehensive as to why Yahoo! is spending so much to acquire the site.
To revive Yahoo! something different needs to be done and that is exactly why a young CEO who actively invests her own money in startups such as Square, the mobile payment processor, was put in charge. Mayer recognizes that though Tumblr does not readily generate revenue, its huge base is made largely of a younger demographic when compared to other social networks. It is the exact demographic (18-24 year olds) that defines the cool factor Yahoo! lacks.
This has huge marketing potential, which must be approached with caution. In its press release Yahoo! mentions “”Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business. David Karp will remain CEO. The product, service and brand will continue to be defined and developed separately.” At least for now, the plan is to not upset current users by keeping the core components of Tumblr in the hands of its original leaders. And Tumblr may benefit from Yahoo! as well, now having a massive search structure at its disposal.
At the very least, Mayer has already started to bring Yahoo! up-to-date by participating in the trend of massive networks acquiring growing platforms—it was only a year ago that Facebook bought Instagram for US$1 billion. Time will tell if these purchases are worth it in the long run, but for now I’m keeping my Yahoo! e-mail account, even if it’s no longer on my resume.