Yahoo and Tumblr CEOs Talk Acquisition, Adult Content and Advertising

May 21, 2013 — -- Yahoo CEO Marissa Mayer says she's not worried about the adult content on her new acquisition Tumblr and she'll make sure that people who don't want to see it won't. Meanwhile, 26-year-old Tumblr CEO and co-founder David Karp will stay on and he's growing more comfortable with the notion of advertising on his mostly ad-free site, though not being referred to as a "hipster CEO."

Mayer and Karp made the comments during their first broadcast interview since the $1.1 billion acquisition with "Good Morning America's" George Stephanopoulos and then with ABCNews.com. Yahoo has a content-sharing partnership with ABC News.

In announcing the deal on her very own Tumblr account, Mayer vowed "not to screw it up." She promised to let the network of 50 billion blog posts function independently.

Before we talk about the deal, one of the things we have seen with natural disasters, like the one in Okla., is the power of social media. What can you tell us about what Yahoo and Tumblr are doing now?
Mayer: We do have people covering the story and we also have people who are uploading their photos and are sharing their experience of what it is like to be there.

Yahoo has famously in the past paid a lot of money for new sites. And it hasn't worked out. What's your plan to avoid that failure this time?
Mayer: One of the things that is so special about Tumblr is this community of users. This community of creators. We want them to make sure that they recognize that Tumblr is going to be independent. It's going to have the product roadmap and vision it has always had. It needs to stay true to that user promise and we are setting up Tumblr to do exactly that.

Tumblr has also said it doesn't won't turn "purple." But you've also said that the whole idea of advertising turns your stomach. How are you going to make money without losing your street cred?
Karp: More specifically we have always said the state of advertising on the web has always been uninspiring to us. The truth is there is a lot of great advertising out there in the world that makes Vogue a better magazine. The thesis for our business was that that was the type of advertising that we could inspire and enable on Tumblr. And Yahoo as the original digital media company is the perfect partner to help us do that.

And you are the original hipster CEO?
Karp: I don't know about hipster, I don't know if I appreciate that one.

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Well, you have had a lot of success since dropping out of high school. But one of the other challenges you are going to be facing is that a fair amount of content on Tumblr is adult content. Is it something you are comfortable with?
Mayer: It's actually a mistaken assumption. It actually turns out that Tumblr relative to many of its peer sites has a low amount of adult content. The idea is that we do want the community to have tools. Tumblr has originated the phrase "Not Suitable for Work," (NSFW) so we want people to be able to tag so people who are looking for that type of thing can find it and those who don't don't and don't find it by accident.

How do you do that?
Karp: Community flagging, machine learning. The end goal is that you draw a circle around that content and you give users a switch to turn it on and off. So if you don't want to bump into it you don't.

Mayer: There's a lot that can happen there. One of the things we think is really exciting is that the thriving Tumblr community is generating a lot of beautiful and compelling content and can we pull that content into the news streams that are on the homepage today or Yahoo News.

$1.1 Billion is a lot of money to pay for a company and you've been acquiring other companies. Is this an exception? Are there more big purchases to come?
Mayer: We had only been doing small acquisitions. We have done about ten, but they had all been small – 5 or 10 person companies. You only do an acquisition like this if it really makes sense. The fit between Yahoo and Tumblr is better than almost any acquisition I have seen in terms of the way their offering fits with our offering. It's completely complementary and that's rare to find. That's why we did this now. It's obviously an exception. To put it in context for Yahoo, we haven't done an acquisition this large since 2003. But no, you don't do acquisitions like this all the time.

There was chatter that this deal was a move to help Yahoo elevate its perception as cool and to appeal to another demographic. Is there truth to that?
Mayer: No, we are just doing what is right overall for our business. Tumblr obviously has a younger demographic and I think that's great, but with Yahoo we want to have really broad appeal. You don't do a transaction like this for perception, you do it because they have great technology and great community and content and it fits really well with ours.