Home Technology Tumblr loses $30 million every year, says CEO

Tumblr loses $30 million every year, says CEO

by Ana Lopez
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If we’ve learned anything from the past year of Twitter cloning, CEO squabbles, shitposting, and bad, money-hungry policies, it’s this: Making a social media company profitable is hard!

After rolling out some unpopular features, Tumblr is now trying to “publicly build” and be more transparent about the company behind the fandom-driven platform. In a live-streamed Q&A, CEO Matt Mullenweg and COO Zandy Ring answered questions from Tumblr users about the company’s direction. The executives weren’t completely unfiltered (Matt, please answer my question about how much money the blue checks made – I want to know!), but they did offer some interesting insights into what it’s like to run Tumblr now.

According to Mullenweg, Tumblr spends about $30 million more than it makes each year. This isn’t too surprising given Tumblr’s history as a company. Founded in 2007, the blog site was acquired by Yahoo (businessroundups.org’s parent company) in 2013 for $1 billion. But in 2019, WordPress parent Automattic bought Tumblr for just $3 million. While it has a loyal base of power users, so does Tumblr struggled to grow its daily active users since its infamous porn ban.

Medium-sized social platforms have an opportunity to grow amid the “exodus” of Twitter, and Tumblr is no exception. When you log in to your Tumblr account, you will see a link that says “Are you from Twitter?” Sign up.” And amid the backlash over Twitter’s paid verification product, Tumblr increased its iOS revenue by 125% by offering two blue checks for $8. These blue checks do nothing. They’re just funny.

Still, Ring says Tumblr hasn’t had such a dramatic surge in user numbers.

“People have the impression that we’re experiencing tremendous growth right now, but that’s really not the case,” she said. During this Q&A, which was promoted to the top of users’ dashboards, only about 300 people tuned in at a time.

In November, Mullenweg told The Atlantic Ocean that Tumblr’s iOS downloads were up 62% the week Elon Musk completed his Twitter takeover. According to data businessroundups.org reviewed on data.ai, Tumblr got 880,000 new installs on iOS and Android in November, up from 450,000 and 500,000 in September and October, respectively. But in the following months, download numbers returned to standard levels (about 400,000 to 500,000 downloads per month).

This question-and-answer session took place a day after Tumblr announced its “core product strategyon his staff blog, which caught users off guard as it resembles notes from an investor slide deck more than a blog post.

“The underlying problem is that Tumblr isn’t easy to use,” the post reads. It outlines several changes, such as making the difference between reblogs and replies less confusing for new users, or collapsing reblog threads. In the post, the company wrote that it would improve “algorithmic ranking capabilities across all feeds,” which some users misinterpreted as Tumblr saying it would force an algorithmic feed on its users, causing a stir on the site.

“Chronological feed will always be an option,” Mullenweg clarifies.

Tumblr’s fundamental tension is that it doesn’t have enough users to be profitable, but the users it does have are fiercely protective of the site’s culture — and they don’t follow standard consumer behavior patterns (they’ll pay to send crabs to their friends, but they don’t pay to subscribe to creators). So Tumblr’s emphasis on making logins easier and improving discoverability may feel like a harbinger of unwanted changes to the site’s most dedicated users.

During the Q+A, Mullenweg and Ring emphasized that they would not make any permanent changes without user feedback. But either way, making an extra $30 million a year is a serious challenge. Tumblr will probably have to do more than sell useless (yet hilarious) digital goods if it wants to stay afloat.

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