I think that's actually the point of the piece: David is so focused on product that he doesn't want to deal with things like operations or revenue that the deal makes sense. Yahoo will take care of those things, and David can focus on the only thing he cares about, product.

This seems disingenuous to me. A key part of creating a great "product" is that it continues to support itself. Having a great product without having some sort of a revenue stream isn't being hyper-focused - it's being negligent.

Congrats to David on everything, but it seems very odd to try & separate "product" from the revenue that it should generate if it's going to be a business.

Not so much to me. There are legions of artists creating non-software works/products/pieces/whatever that have to worry about non-existent revenue stream (or don't worry about it at all). Greatness in their craft is not really linked to the money at all. Some people may link the two with software, but there's really no innate reason to do so (see many OSS projects). Exterior costs such as servers, software, hardware etc create the impression of a link, but innately, I don't think there is one.

Let me rephrase your sentence that makes more sense to me: A key part of creating a great "business" is that it continues to support itself.

Call it "features and experience", then, not "product".

"features and experience" are still contingent, in a very large way, on how the business runs.

e.g. ad-driven vs freemium vs subscription, quantity and types of advertising, etc.

Focusing on making the best product/"features and experience" without paying (enough) attention to how it's supposed to make money to sustain itself and fit into the world at large, is exactly how NeXT wound up with fantastic computers and software that no-one bought.

That's what he has Yahoo's executives for, right? In a big company you need not one, but many voices/advocates of different disciplines. His role is important, because else they end up with a steaming pile of marketing gags with no awesome product to make up for them. I would also not call Ad-Driven/Freemium/Subscription mode "features and experience". Yes, this can make or break the user experience - well if it would, then David would stop them.

You can't argue it both ways. He either still has power over what the suits come up with for revenue, and thus hasn't actually abdicated any responsibilities at all (just given some biz dev guys a little more autonomy) or he has given up those responsibilities and the day the suits press forward with an experience-damaging move he doesn't like, he will discover he doesn't actually have full control over his product's features/experience.

e.g. if they say "tumblr's going freemium" the follow-on questions of "how do we differentiate the experience of free vs paid and how do we communicate the value of the upgrade?" are experience questions that need to be answered and designed in a holistic and considered manner. [1]

[1] And that's why I say those modes are absolutely part of 'features and experience'. Flickr just switched between two fairly-similar freemium models and we power-geeks had a hundreds of comments debate over whether the experience/value jived with the offering and/or was communicated cleanly.

That's just from the business perspective. From the consumer perspective revenue does not matter at all.

The art of business is to make the greatest product you can without revenue _detracting_ from it.

The Steve Jobs mindset here is that if you just disregard the revenue all together and just focus on building the most absolute great product you can imagine people will use it and love it.

Making a revenue of that is not 'product' it is business, and it seems perfectly reasonable to hire a businessman for that (and not let him influence you too much, and try not to get fired for that like Steve did..).

> The Steve Jobs mindset here is that if you just disregard the revenue all together and just focus on building the most absolute great product you can imagine people will use it and love it.

That's not what Steve Jobs did at all. He first and foremost saw Apple as a business opportunity - who pushed Woz to actually make revenue.

Apple had a revenue model built in from the start.

Their revenue was selling the product at more than its cost price. He pushed Woz to build a great product. I think it was Woz himself who was obsessed with also making it cheap to manufacture.

I am not saying that Steve Jobs did not intend to have profit, I'm saying that reasoning about revenue was not a limiting part of the product establishment.

If it was, how do you explain the launch of the iPod?

You're confusing two ideas.

With Apple, the revenue model is always clear - even with the iPod - Steve Jobs just knew he could create something that people would buy. He didn't launch the iPod and then worry about how he was going to make money off of it - it was always very clear to him - he was going to sell a ton of them.

Tumblr still hasn't figured out a revenue model. They still have to fit that into their product. Being able to do so & do it successfully is integral to their product - otherwise it's just a cool tool that they're letting millions of people use for free.

That was never the issue with Apple.

I am not sure if David had any power to decide about the deal with Yahoo.

If he took money from Venture Capital he might have very, very little impact on bussiness side of Tumblr.

I believe they were running out of money and needed to do more work to bring revenues appropriately up. Yahoo allows them to not need to focus on revenues, as they already have a large and established an ad sales team.

In contrast, another VC round surely would have forced them to focus on revenues, perhaps even at the expense of user experience and product quality.

Not to mention, could they get a favorable VC round given their poor revenues?

Probably not based on their numbers. VCs wanted an exited. They are on the board. People don't consider how little control the founders of this company had post-rounds. It was the VC's play.

Seems like a free lunch though - isn't Yahoo buying them presumably because they foresee a way to monetize Tumblr, possibly in contradiction to David's desired direction of the product?

I believe David is ok with advertising. He just doesn't want it to be the main focus of his effort. The fact that Tumblr has huge growth and Yahoo has one of the largest Ad Sales teams in the world, means that this merger will in-my-opinion be v.successful.

My bet/hope is that with more resources from Yahoo, David will pick and influence more parts of Yahoo than just Tumblr.

My guess is a twenty something riding a billion dollar wave into yahoo hq isn't going to make friends quickly. Influencing yahoo as one person might prove difficult. All the best though.

Maybe this could explain : http://jesuschristsiliconvalley.tumblr.com/post/50931471868/...

Would you want to work your whole life on one product? Maybe he felt it was good enough.

I think he was waiting for a billion dollar. That's why he didn't really cared about money at first, but building a billion dollar company.

I guess everyone gets bored of their passion after a while.

Why lock himself in to a 4 year deal, then?