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  • 1. Investment HighlightsFebruary 2012
  • 2. What Is Tumblr?a microblogging platform andsocial networking websitethat allows users to post text,images, videos, links, quotesand audio to their tumblelog,a short-form blog.Tumblelog is to blogging astext messaging is to email.As of January 5, 2012,Tumblr had over 39.5 millionblogs and more than 15billion total posts.
  • 3. Tumblr’s Place in the SocialMedia Ecosystem...
  • 4. Valuation
  • 5. Valuing “Mature” Social MediaCompanies We triangulate value for “mature” companies based on three metrics: forward revenues, discounted earnings and cash flows. Facebook only reached relative maturity over the past year and still claims a high revenue multiple of roughly 15x-20x, valuing it at over $90B. Some non-financial metrics include: Monthly Active Users (MAUs), MAU growth, Unique Monthly Visitors (UMVs), UMV growth.
  • 6. How We Value Young Companies How fast is the company building the treasure trove of customer data?: Measured by UMV and monthly user/blog growth. How unique is the value proposition? Track record of the management team and its main investors. Revenue multiples are not good early indicators, while company is building up a user-base. Facebook had only $150M in revenues in 2007 yet commanded a valuation of over $15B. Twitter had $100M-$110M in revenues for 2011 yet it’s being valued between $8B-$10B.
  • 7. Tumblr’s valuation As of Fall 2011, Tumblr had a valuation of $800M. Valuation seems reasonable versus peers at the same stage. Tumblr reportedly has “scant” revenues. If Tumblr is unable to execute on a revenue model in 2012, it should take a hit to valuation. Major investors include: Union Square, Spark, Greylock, Sequoia. Management team: David Karp-Founder John Maloney-President (Founded UrbanBaby)
  • 8. Unique Monthly Visitors • Tumblr has seen over 100% growth YoY 45,000,000" 40,000,000" 35,000,000" 30,000,000" 25,000,000" Tumblr" 20,000,000" Wordpress" 15,000,000" TwiGer" 10,000,000" 5,000,000" 0" " 10 1" " 11 ,1 c, 1" De 1" n ,1 b, 1" Ja r,1 ar " Fe ,1 11 1" M Ap ay " n, l,1 11 " 11 M Ju 1" Ju g, " p, t,1 11 Au " 11 Se v, Oc c, No DeSource: Compete.com
  • 9. Unique Monthly Visitors (% Growth) 20.00% 15.00% 10.00% 5.00% Tumblr Wordpress 0.00% TwiFer 1 1 1 1 1 1 11 11 11 11 11 11 10 !1 !1 r!1 !1 !1 t!1 b! n! g! p! v! c! c! ar ay n l Ju Oc Ap De No De Au Ja Fe Ju Se M M !5.00% !10.00% !15.00%Source: Compete.com
  • 10. SWOT Analysis
  • 11. Strengths Microblogging seeing increasing popularity vs the number of blogs has seen a steady decline in individual blogs over the past two years. Revenue model beginning to take shape: Themes for purchase Pay to highlight posts Advertising masked as “promoted” posts coming soon Tumblr has avoided putting up banner ads, which has become the kiss of death amongst hipsters.
  • 12. Strengths Very easy to create an online persona than on other networks like Twitter. Content published on Tumblr has greater potential to go viral than most other social networks due to its “reblog” and lack of comments features. Widely adopted by pop culture.
  • 13. Weaknesses Lack of robust business model. Revenues haven’t kept up with the site’s user growth. Tumblr’s lack of revenue generation has become a barrier to investment. Adult Content and SPAM are problematic, scaring away potential advertising. Tumblr claims 3% of traffic is NSFW (we think it’s much higher). Tumblr’s openness has encouraged scammers.
  • 14. Opportunities Continue to embrace the App revolution. Partner with music, chat services like Spotify and Skype. Monetize partnerships with core demographic. NY Fashion Week partnership was a big success. Address adult content issue before the site gets too big and take the hit to subscribers now.
  • 15. ThreatsSomeone builds a better mousetrap.Solid revenue generation never realized.Investors tire of lack of exit strategy.Tumblr is not successful in hiring solid management/operations team.Do not raise enough money to scale the company tomaintain a robust platform.
  • 16. SummaryTumblr has captured the niche microbloggingdemographic.UMVs have increased over 100% between 2010 &2011.Tumblr needs to address its advertising impediments.$800M valuation seems reasonable for now. Ability to execute on revenue model will be key driver in 2012