Does Tumblr Lose Its Cool If It's Acquired?

In the news business, when you start seeing enough reports about something, it usually means that at least part of those reports are true. That's why the media and tech worlds are in such a tizzy today, with multiple reports surfacing that Yahoo is close to acquiring Tumblr for as much as $1 billion.

Now even more reports are starting to suggest that Google, Facebook and even Microsoft are all also showing interest in the microblogging service.

It makes sense that acquisition talks are circling around Tumblr. The company has taken more than $125 million in venture funding since 2007 and investors want to see a return on that investment. Meanwhile, Tumblr continues to try to find itself a business model — including native mobile advertising — without alienating its users.

So for me the question isn't if Tumblr is close to being acquired — clearly talks at some level are taking place. It isn't even a question about whether Tumblr is worth $1 billion — I think the service is easily worth that much, just on the strength of its product and its core user base.

No, for me the question for me is whether or not an acquisition will hurt Tumblr's image as the place where millennials (to use a word that I really wish we could retire) invest much of their time and energy online.

The Cool Factor

You know how there are some people that just ooze coolness? No matter what they do, what they wear or how they act, they are just cool. You can usually identify that person before she even opens her mouth.

Web sites and services are like that too. From virtually the day in launched in February 2007, Tumblr has had the cool factor. When I signed up for Tumblr in 2007 (though my blog only goes back to 2008 and I only started actively using it in 2009), it was because every cool early adopter and on-the-cutting-edge person I knew online was talking about Tumblr.

From its interface to its company culture to the people that populate its world, Tumblr is just cool.

That's why Tumblr users stay on the site longer than Facebook users spend on Facebook. That's why movie studios, fashion brands and even the White House all want to be on the platform.

It's also why the potential of an acquisition has the Tumblr community worried. Especially if that company is Yahoo.

The Yahoo Problem

Before Marissa Mayer, Yahoo was the place great startups went to die. Flickr, Delicious, Upcoming, Fire Eagle — even GeoCities (if we want to go way back) — foundered or were shut down under Yahoo.

Mayer is hoping to change that — acquiring 10 startups since joining the company as CEO in July 2012. Most of Mayer's acquisitions thus far have been based around talent or technology, which means it will take more time to see the impact those acquisitions have on new or existing Yahoo products. Yahoo has also invested in its existing products — from email, to Flickr to the new Yahoo Weather app for iOS — hoping to prove to users that it can change and be a place where useful apps and services still exist.

But beyond being a place that great startups go to die, Yahoo has also had to fight a reputation of being uncool. Like AOL, the company has hundreds of millions of visitors and email users — but it's not cool. Cool people don't use Yahoo for email — they use Gmail. Cool people don't watch video on Yahoo — they do YouTube, Hulu or some of those Megavideo clones we're not supposed to publicize. Cool people don't read the news on Yahoo — they visit Mashable, Buzzfeed and Twitter.

(And to be clear, I'm generalizing here. Just because you still use your @yahoo.com email address I'm not saying you're uncool - just your email service.)

That's the challenge with making an acquisition of a company like Tumblr that has not only a very loyal (and very vocal user base), but a company culture that is very much associated with its greater brand.

Buying Tumblr won't make Yahoo cool overnight and if done incorrectly, it could actually harm the image, credibility and "cool" factor Tumblr currently has in spades.

Be Like Instagram, Not Like LiveJournal

If Yahoo — or any company — acquires Tumblr — it has to do so with a full understanding of the company culture and the relationship between the service and the users.

More than any other major web service, Tumblr has a symbiotic relationship with its users. The users are the content. Liking and reblogging content is currency in Tumblr. It's what makes the ecosystem work. That relationship is actually unique and crucial to understanding how any acquisition of the company could move forward.

Any disruption to that relationship has to be done carefully and with a full understanding that if things change too much, users will go elsewhere.

Let's not forget that one of the main reasons Tumblr was able to grow as fast as it did was because the Tumblr for older millennials (like myself), LiveJournal, was ruined by its fist acquirer, Six Apart.

Six Apart was a cool company and at the time, the acquisition seemed like it made a lot of sense. Within a year, however, it was clear that the new owners didn't understand or respect the culture that had developed with users. The one-to-one relationship users used to feel with the employees, administrators and volunteers evaporated.

When Six Apart then sold LiveJournal to a Russian company in 2007, it was just one more blow to the user base. LiveJournal still exists but the community and communities around it have largely disappeared and migrated to other platforms and services — including Tumblr.

Fortunately, not all acquisitions with that have a vocal and unique company and user culture go badly. Last year, Facebook acquired Instagram. At the time, many users (including myself) were worried that the service would be "ruined" by Facebook.

A year later, my fears were unrealized as the service has remained largely untouched and for many of us, better than ever.

Facebook did this by letting the team largely remain independent. Instagram's Facebook integration is certainly more robust and there was that whole Twitter spat — but by and large, the team runs as its own entity. Another key point is that the team — by and large — hasn't left Instagram in the wake of the acquisition. Most of the team members I know are still working on the Instagram team and have no plans to leave. That's important too.

While Tumblr arguably needs more structure within the organization — that doesn't necessarily mean that product, design and editorial teams now need to start reporting to different outside groups or start routing their strategy in a different way. David Karp should still be the person making the big decisions about Tumblr — not Marissa Mayer, Steve Ballmer, Larry Page or Mark Zuckerberg.

A successful Tumblr acquisition — at least from the user perspective — would be one that leaves Tumblr as its own entity and then partners in areas (such as ad delivery, ad inventory and even backend infrastructure) that make sense. That was Amazon's strategy with Zappos and to date, it seems to have gone extremely well.

A Tumblr acquisition doesn't have to ruin its cool — but it does have to take place the right way. This isn't a normal company, it's a company users have a strong relationship with and its a company where image and personality are paramount. Keeping that in check is crucial to any future business deals.

Would you be less likely to use or visit Tumblr if Yahoo bought it? Let us know in the comments.

Image via Getty, Brian Ach