Reginal Thomas
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Did Yahoo! Overpay For Tumblr

I'm a sneakerhead, I love sneakers and I follow the ever growing culture surrounding them. My favorites are Air Jordans, one time there was a pair of Jordans set to release and I just had to have them. 


So I woke up early that Saturday morning to head to the sneaker store but by the time I got to the store there was a line for the kicks I wanted that went around the corner. I found this guy willing to sell me his spot on line for $100 dollars, he was 5th on line and I was desperate so I agreed to pay him the hundo. 


By the time I got into the store all the size 10's were sold out, imagine the ball of rage growing in my stomach after paying this guy $100 dollars for some bad news. Eventually I went to another store to get the sneakers. At the end of the day I got what I wanted but I definitely overpaid for the sneakers, because they were only $150 dollars and cost around $20 to make. 


Now I bring you attention to earlier this year in May, when Yahoo! (NASDAQ: YHOO) bought the blogging site Tumblr for $1.1 billion dollars. One big company buys a smaller company sounds like business as usual right? Until you realize that Tumblr only had 16.6 million dollars in cash at the time of the acquisition. 


Why does that matter?


It matters because Tumblr (as of now) doesn't feature mobile ads on their blogs and with Yahoo! CEO Marissa Mayer's famous quote, "We promise not to screw it up" and allowing the founder of Tumblr David Karp to continue running the website from his New York offices, all the while collecting $81 million dollars for staying with the company over the next four years, I'm not exactly sure how Yahoo! will make its money back. Essentially in my opinion it looks like they might have overpaid the same way I overpaid. 


I understand the allure of owning a company like Tumblr they draw millions of unique visitors a day, but if you plan on letting them run business then same way they've been running business and all they came up with was 16.6 million and you just paid 1.1 billion something is going to have to give, because those stockholders are going to want to see some profit from this.