Photo: Ian Broyles via Flickr
Last year was transformative for five-year-old Tumblr. Tumblr closed the year with 14 billion pageviews in December, up from 3 billion the year before.
In September, Tumblr raised $85 million at an $800 million valuation, but since then Tumblr has been relatively quiet.
We met with its founder and CEO, David Karp to find out what he’s been doing. He told us what made Tumblr’s growth explode last year, what it was like to raise so much money, and he told us what to expect from Tumblr in 2012.
Karp says the sudden burst of traffic last year caught the company off guard. He’s not entirely sure what sparked the 6-fold growth. “All of a sudden we started to get a lot of international traffic,” says Karp.
South America traffic has especially thrown Tumblr for a loop; it hits at the same peak hours as US traffic. “10 per cent of Tumblr’s traffic comes from Brazil alone,” says Karp. The U.S. now only makes up about 50% of Tumblr’s total visitors.
The growth spurt hasn’t slowed (see chart below). This past Tuesday Tumblr broke its traffic record again when it received 600 million pageviews in one day. Karp’s team has stayed quiet while it figures out how to handle the surge. Some of the back end needed to be reconfigured which is partly why Karp sought the September financing.
Karp had no trouble raising the latest round. He was eager to keep his original investors involved but he also wanted new California investors who could add expertise. Karp flew out to California for two weeks; some of the investors followed him to New York to spend time with the company.
“It was really cool, we met with a lot of people. Some of the investors were hearing Tumblr’s story for the first time,” says Karp. Karp recalls physically shaking after a meeting with Marc Andreessen. “He was very impressive — and intense.” While Andreessen was on his short list of potential investors, Karp ultimately chose Insight Venture Partners and Greylock Partners.
With a fresh infusion of $85 million, Tumblr has a lot to prove in 2012. For one, it needs to prove it can turn a profit.
Karp has a few ideas. Currently two dozen designers have been creating and selling Tumblr templates on its marketplace. Karp says the company is seeing “really meaningful revenue” even though the marketplace isn’t publicly open to developers yet. “It’s not even an up-to-date product,” says Karp. “Our designers are always complaining about how old the marketplace tools are. But some of them are making so much money as Tumblr designers that they’ve been able to quit their jobs. Some of them are making hundreds of thousands of dollars.”
While Karp wouldn’t call it a freemium model, he said he’d like to create a platform where users can pay for enhanced features, like templates, and maybe even open an app-like store so users can make, share and profit from their own Tumblr innovations. Karp is very opposed to tacky banner ads. But he’s very interested in profitable creative solutions.
Karp is also toying with ways to create non-intrusive ads that actually benefit users. “We ran a sponsorship with Cartoon Network for a new show they were launching,” says Karp. “We selected a few of our bloggers with big followings for the network to promote. Cartoon Network designed a really cool sponsored template for the blogs, and the bloggers loved it. It made their blogs stand out and sent them more traffic. Sponsorships that can actually help our users, like fashion companies working with fashion bloggers, are interesting.”
While there’s no ad sales team in place at Tumblr, Karp says he wouldn’t be opposed to helping some of his bloggers find advertisers for their content so they can turn a profit. “It would be the most amazing thing to create a product that comes full circle, where people can create blogs, get readership, make a little money, and use it to create something else,” says Karp.
“If people just wanted to use Tumblr to make money though, I’d be disappointed. I wouldn’t encourage them to put ads all over their pages, so there will never be a checkbox to include ads on a Tumblr blog.”
Karp is all for promoting his bloggers. He proudly shared that 30 of Tumblr’s blogs have turned into book deals. There’s now an editorial team forming that will help promote stories people write and share on Tumblr too.
We’ve heard Tumblr has hired an outside guy to work on an AdSense-like product. While Karp did not confirm the news, he did mention the possibility of a contextually-targeted ad product in the near future. “It clearly works when you’re interested in finding out about something and then an ad for it appears,” says Karp.
As for the future of Tumblr, Karp is still figuring that out too. “Right now, an IPO never comes up in our board meetings. But we do talk about exits, and there are all kinds of interesting things you can do now.” He referred to the sort of exit Larry Page and Sergey Brin had when Google went public. They maintained their founder titles but were still able to innovate.
“As long as I’m able to create, I’ll be happy at Tumblr,” says Karp.