By Verne Kopytoff
FORTUNE -- Flickr, the online photo sharing service, seemed to be heading for the big-time when Yahoo acquired it eight years ago. The site already had a lot going for it: legions of devoted users, a team of respected founders, and a headstart on the social media phenomenon. But Yahoo screwed up its potential bonanza. Executives starved Flickr of resources and tangled it in bureaucracy while other photo sharing services like Facebook and Instagram gained traction.
Marissa Mayer, Yahoo's (YHOO) chief executive, is now trying to avoid those pitfalls with Yahoo's latest acquisition, Tumblr, the fast-growing online blogging service. The planned $1.1 billion deal, announced Monday, is intended to reignite Yahoo's stagnant business by making its services more appealing to young people. Mayer's plan is to give Tumblr the independence that Flickr lacked. It's a strategy, she pointed out, that paid off handsomely for other companies and their big acquisitions.
"When we look at super-scale acquisitions like eBay-PayPal (EBAY), Google-YouTube (GOOG), a meme arises," Mayer said at a press conference Monday after being asked about how she'll avoid the past mistakes with Flickr. "Those companies have so much momentum, and they often do better when operated independently. Learning from that history is why we made a commitment to operate Tumblr independently."
The ghost of Flickr -- along with a number of other failed acquisitions over the years like GeoCities, Broadcast.com, and Delicious -- haunts Yahoo to this day. Until recently, startup founders thought twice about selling their companies to Yahoo for fear that their hard work would be left to whither on the vine or killed off. Mayer, who became Yahoo's chief executive last year, long after Flickr's struggles started, has gone to great lengths to repair the company's image. Over the past few months, she's acquired several startups, most notably, Summly, which automatically summarizes news articles for people using mobile devices.
Tumblr is Mayer's biggest bet so far. It will remain in its own New York office, apart from Yahoo's other New York staff, to preserve its culture of innovation. David Karp, the 26-year-old high school dropout who founded the service, will remain in charge and report directly to Mayer.
How much autonomy he'll have is unclear. Spending unlimited amounts of money is unlikely. Big companies have limited budgets and a lot of priorities. On its own, Tumblr is believed to have little revenue, although that is supposed to change in 2014, according to Yahoo.
In acquiring Flickr, Yahoo executives also promised the service's founders that they would have some autonomy. To a certain extent, Yahoo kept its word by letting Flickr remain an independent site and keeping Yahoo branding on it to a minimum. However, Stewart Butterfield, who co-founded Flickr with his then wife, Caterina Fake, and continued to lead the service until leaving in 2008, complained that Yahoo executives pinched pennies when Flickr needed upgrades. Inaction slowed Flickr's international expansion, Butterfield said, and stalled a project that would have given more visibility to photos of breaking news events.
After Butterfield's departure, Flickr continued to stagnate. A late push into mobile, for example, left the market wide open to a number of new rivals like Instagram. Flickr didn't release an iPhone app until 2009 -- two years after the first iPhone -- while its first Android app premiered in 2011.
Mayer made a point to say that Yahoo has installed an entirely new management team in recent years. The implication is that executives will be much more attentive when Tumblr needs resources. "It all comes down to people," Mayer said. "We have an all-new executive management team."
Tumblr gives Yahoo a springboard into social media, an area in which it has failed to make much progress. Instead, Yahoo has had to watch as others like Facebook (FB) reap the rewards. Flickr, with its once-tight community of photo enthusiasts who commented on each other's images, could have been a launching pad for a social network. But Yahoo executives, who discussed the idea publicly, never carried through with it as they instead focused on keeping up with Google in search.
Flickr lives on, of course. In fact, Mayer's press conference Monday focused on upgrades to Flickr including 1 terabyte of free storage, high-resolution images, and a new page design. Whether it's too little too late remains to be seen. Mayer effused optimism, saying: "Flickr was awesome once, and it languished. We're going to make it awesome again."
The reaction to Yahoo's acquisition of Tumblr is way out of proportion to its importance. It could be a relatively small mistake or a marginal gain.
FORTUNE -- It is only recently that Tumblr started asking itself, "So, how should we make money from this thing?" As of today, that's a question that Yahoo and its still-new CEO, Marissa Mayer, will have to address. And yet it's not necessarily the most MOREDan Mitchell, contributor - May 20, 2013 2:34 PM ET
It's time for the Web 1.0 icon to put down its credit card and get back to work.
By Cyrus Sanati
FORTUNE -- Yahoo's $1.1 billion acquisition of Tumblr looks like an expensive and misguided attempt by chief executive Marissa Mayer to somehow make the Web 1.0 company "cool" again. Instead of innovating her way out of the mediocre corner of the Internet in which Yahoo currently resides, the former Google MOREMay 20, 2013 12:15 PM ET
New survey results from job marketplace Elance.
By Kurt Wagner, reporter
FORTUNE -- A new survey by online job marketplace Elance found that men and women share similar opinions when it comes to women working in the tech industry. The results, which consisted of answers from close to 7,000 freelancers mainly in the U.S., found that both males and females agree on the top deterrents keeping women out of the tech industry, MOREApr 30, 2013 10:22 AM ET
Yahoo CEO Marissa Mayer speaks about ending the work-from-home policy, saying it was "wrongly perceived as industry narrative."
By Christopher Tkaczyk, senior editor
FORTUNE -- In the closing keynote at the Great Place to Work conference at the Hyatt Regency Century City in Los Angeles Thursday, Yahoo CEO Marissa Mayer defended her decision to kill the company's popular work-from-home policy.
Until now, she had refused to comment on the switch, previously saying MOREApr 19, 2013 11:26 AM ET
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Teacher knows if you've done the e-reading [THE NEW YORK TIMES]
They know when students are skipping pages, failing to highlight significant passages, not bothering to take notes — or simply not opening the book at all.
"It's Big Brother, sort of, but with a good intent," said Tracy Hurley, the dean of the school of business.
Microsoft MOREJP Mangalindan, Writer - Apr 10, 2013 3:00 AM ET
The site Yahoo may be buying is no dog. Users love Dailymotion. What about advertisers? It's complicated.
FORTUNE -- Even if you've heard of Yahoo's video portal, Screen, you probably rarely, if ever, have knowingly used it. That is one major reason Yahoo is reportedly in talks to purchase Dailymotion, the European video platform.
Eventually, Dailymotion could end up being a major profit center for Yahoo (YHOO). But in the short-term, Yahoo MOREDan Mitchell, contributor - Mar 28, 2013 1:08 PM ET
Networking giant Cisco wants to double its revenues from software, as its so-called collaboration business continues to change.
FORTUNE -- Cisco Systems' "transformation" into a more software- and services-centric company is far from complete. Over the next five years, the San Jose-based networking equipment giant plans to double the amount of revenues that come from software from $6 billion to $12 billion. To that end, it's announced a string of software-related MOREMichal Lev-Ram, writer - Mar 28, 2013 7:06 AM ET
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HTC's marketing chief takes bolder approach [THE WALL STREET JOURNAL]
"We have a lot of innovations but we haven't been loud enough," said Mr. Ho, a Singaporean who is HTC's third marketing chief in less than two years. The new approach, he says, will be bolder.
Customers were treated to a sneak peek of the new strategy when HTC fielded teams to demo the One outside the MOREJP Mangalindan, Writer - Mar 26, 2013 3:00 AM ET
Yahoo CEO Marissa Mayer is sticking to her message that services are No. 1, and she's confident that the company can capitalize on the shift to mobile.
FORTUNE -- It's hard to blame Marissa Mayer for speaking in platitudes and vagaries, though she's now seven months into her reign as Yahoo's CEO. With apparently successful revamps of both email and the Flickr photo service already under her belt, she's now focused on strategies MOREDan Mitchell, contributor - Feb 13, 2013 8:48 AM ET
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