Wall Street analysts and Yahoo shareholders are worried that Yahoo is going to screw up Tumblr, its $1.1 billion acquisition.
They are worried because Yahoo, and big Internet companies in general, have a history of paying a lot for startups and then killing their momentum. Yahoo’s victims are GeoCities and Flickr, among many others. AOL bought Bebo for $800 million+.
To assure shareholders she will not screw up Tumblr, Yahoo CEO Marissa Mayer said several times yesterday that Yahoo will let “Tumblr be Tumblr,” and allow it to run as a separate company.
She says Yahoo is following a precedent established in part by Google, which bought YouTube for $1.6 billion in 2006, and then left it alone.
But what does “letting Tumblr be Tumblr” mean in practice?
A veteran of Google’s YouTube acquisition, Hunter Walk, wrote blog post offering five lessons he learned living through that successful non-integration.
1. Protect Tumblr from “Helpful” Yahoos
YouTube saw a huge influx of meeting requests, collaboration ideas, inbound employee transfer offers, etc. We were the shiny new toy and everyone wanted to play. Much of it was self-interest – some good natured, some more political. But even the useful opportunities still had the risk of hugging us to death. Eric Schmidt, who was an amazing sponsor of YouTube, gave great advice – be very selective about who you bring into the team and just say he gave us permission to turn down the other offers of “help.”
We complemented this by proactively educating key Google groups about YouTube. I, along with others, visited key stakeholders at Google and their team meetings. Especially legal, policy and pr – we wanted them to understand the magic of YouTube. Beyond cat videos and copyright questions, help them to see education, community, homegrown stars – everything that made this 18 month old company worth the $1.6b price tag.
2. Avoid Locality Bias in Product Development
You’re part of Google, there’s corporate pressure (and perceived quick wins) to work with other Google products. Blogger, Orkut, OpenSocial, Google Video, Picasa. Remember those? We were growing so quickly that if YouTube integrated or heavily promoted them, they could probably hit their quarterly growth target just from our marketing efforts. But guess what, in many cases that wasn’t where our growth was coming from. It was coming from Facebook, Twitter, Buzzfeed, Tumblr and the curatorial blogosphere. So that’s where we focused. Be where our users are and grow on the back of those ecosystems. Were some of them Google competitors? Heck, some of them were YOUTUBE competitors but overall the goal was to sew ourselves into the fabric of the web. Boy did I take arrows in the back (I still remember Jeff Huber saving me from a few of them) but at the time, it was the right choice. YouTube’s partnership with Apple to be a default app on the original iPhone not only helped us make the jump to mobile but it ensured that every other carrier wanted YouTube on their phones too.
3. Stop Short Term Monetization That Won’t Scale
YouTube was just starting to earn revenue via a host of banner ads and one-off branded campaigns. Neither of these were going to be important longterm and many of the programs put money in our pocket, but passed through little benefit to content creators because they sold YouTube inventory. It took a good 18 months but under the right goals and leadership the cross functional team started sunsetting this stuff for more scalable monetization products which put money in content creators’ pockets.
4. Infrastructure (Tech, Process) on Tumblr Terms
The YouTube engineering and network team was superb – keeping the site live and minimising operational costs during hypergrowth. Google engineering leadership helped out by connecting them with teams they wanted to speak with, not by ordering them to migrate systems. The goal was to help YouTube architect even more scalable infrastructure without slowing down feature development. I think search index moved over first, then a set of progressive projects around thumbnail serving, streaming, etc. Treat it as a science fair where Tumblr gets to see all of the cool tech available to them. Pair senior engineers from each side to help build trust and overcome the Not Invented Here pride of status quo.
Business processes were similar. We quickly started using Google OKRs but across release schedules, job ladders, bonus formulas, etc had licence to experiment. Great cultures need to figure things out for themselves – it made no sense to immediately take everything Google was doing and force these best practices upon a company as young as YouTube. For example, there was a period where, working with Google HR, we changed our bonus multiplier to starve lower performers and give more of their bonus to higher performers. In addition to believing it was the right model, we also wanted to signal internally that YouTube wasn’t a place you could transfer to and then just coast.
5. Separate Identity, Separate Space
Although YouTube worldwide increasingly colocated staff in Google offices we maintained worldwide headquarters as a standalone building in San Bruno. Coming to an office every day that said YouTube in big letters and was filled w just other folks working on the same goal – incredibly motivating. We would have gotten lost on Google’s main campus. We needed separate space and identity. Not because we were better but because we were different. How could we have a community that believed in us if we didn’t feel like a tribe ourselves. We had a building, we had a heartbeat.
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