Why Yahoo Spent $1 Billion On Porn
Sometimes companies will buy other companies for lots of money. But instead of a scenario such as Google buying YouTube where your value sky-rockets, some companies will go, “Oh fuck.”
If you want to check out the genius buyouts,
https://josephbasu.medium.com/top-3-best-company-buyouts-of-all-time-6991238c8db3
check out this post on ‘The Top 3 Best Buyouts of All Time’.
However if you want to look at a major fail, you’ve come to the right place.
Yahoo Buys Tumblr
I tried to think of many ways on how I could explain how dumb of a purchase this was in many many aspects. Yahoo bought Tumblr for $1.1 Billion and when Tumblr was sold off, it was sold for approximately $3 Million. That and the fact that when they sold it, Tumblr was only really popular for furry porn.
Now I can understand the logic behind Yahoo’s decision, after all back in those days Tumblr was popular with the millennials and this idea would hopefully keep Yahoo alive.
However what Yahoo didn’t take into account when they wanted a piece of that was that they were also getting a piece of all the furry porn being posted on Tumblr. So to solve this, the CEO of Yahoo implemented a revenue goal. In fact, at the beginning Yahoo said they were gonna be ‘hands-off’ since they believed that Tumblr knew what it was doing and they were gonna let it do its thing.
Then a year passed. And Tumblr didn’t generate much profit. Now since they did spend a Billi on them Yahoo decided to take matters into their own hands and implemented a revenue goal. $100 Million by the end of the year. It was an ultimatum. Not only was that an absurd figure, it was completely pulled from thin air, there was no math no logic into it, just an egregiously large number.
Now the Ad Sales Team is freaking out, they’re like, “How the hell are we going to sell that many ads?!” Now they start desperately calling people to advertise for them but they realise something, most big companies that want to spend on ads, don’t want their product, company and reputation to be placed next to the porn that was within and associated with Tumblr’s image.
In a state of panic Tumblr banned all of the porn on their domain in order to hit their goal of $100 Million. Now what did that do? It drove the last few people that were on their website, off their website. With this and the fact that up and rising competitors such as Snapchat and Instagram were eating into Tumblr’s market share, Tumblr died and if you’re wondering, they did not hit their goal of $100 Million.
Yahoo then offloaded Tumblr for $3 Million.
To summarise this entire acquisition, Yahoo burnt $1.1 Billion to buy furry porn.
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Joseph Basu
