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The Inside Story Of How Yahoo! Screwed Up Tumblr

Wayne Duggan

When Yahoo! Inc. (NASDAQ: YHOO) acquired Tumblr back in 2013, Tumblr was one of the hottest companies on the Internet. However, as Mashable’s Seth Fiegerman reported, Yahoo’s subsequent mismanagement of Tumblr has prevented the multimedia blogging site from coming close to its full potential.

It all started when Yahoo CEO Marissa Meyer originally pledged to maintain Tumblr’s autonomy.

That independence didn’t last long.

A Promise Goes Sour

As early 2014, the Yahoo and Tumblr sales teams began coordinating on Yahoo’s new “digital magazines.”

Then, in October 2014, Mayer shocked the team by publicly announcing that Tumblr would hit $100 million in revenue by 2015.

“WTF is that based on?” one Tumblr employee remembers wondering.

“That was Marissa just picking a number,” a former Yahoo executive now admits.

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Mayer then brought in Amazon.com, Inc. (NASDAQ: AMZN) ad executive Lisa Utzschneider, who had earned a reputation for ruffling feathers.

“She spoke down to everyone,” one Tumblr team member recollected. Utzschneider essentially steamrolled Tumblr sales executive Lee Brown, who was a team favorite. Brown left the company for BuzzFeed in February.

“It was this political coup and people were like what the f— just happened?” a former Yahoo executive recalled.

“It led to everyone being disenchanted and a year of politics.”

To make the management transition worse, the new Yahoo executive sales team simply didn’t have the expertise of the previous team when it came to pitching Tumblr to marketers.

Two months after Brown left, a mass exodus of the Tumblr sales team began.

Earlier this year, Yahoo reversed its plans to integrate the two sales teams and announced a $240 million Tumblr write-down.

Now, with speculation that Verizon Communications Inc. (NYSE: VZ) will be officially stepping in to acquire Yahoo’s core business within weeks, the Tumblr team is facing yet another uncertain future.

Disclosure: The author holds no position in the stocks mentioned.

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