Ever since Yahoo announced that they were buying tumblr for 1.1 billion dollars, I’ve been thinking about value. There are a lot of complicated equations that Yahoo’s CEO, Marissa Mayer, pored over to determine that this was a viable transaction. Is tumblr worth that much money? Traditional techniques for valuation involve adding up a year’s profits and multiplying them by some amount. Another technique would be to add up the value of the company’s assets.
tumblr doesn’t really have a profit, not yet anyway. And for traditional asset valuations, the truth is that it barely has any actual saleable assets. But tumblr has a giant list of entranced, targeted users. This purchase shows what all internet marketers know: people = profits. (If you are an internet marketer, this should be your mantra.)
And, a surprising amount of those users have a fair amount of money. So while right now when I use tumblr I see ads for cartoons and movies, I imagine a large shift within a year or so to targeted ads for home automation devices, robotics, computing, etc–and not just cheap stuff, either.
My own tumblr, Seth Turin and the Automata, is heavily focused on my own little hobby–futurism, automation, and really cool tech stuff that’s coming out which will reshape our world. (Check it out.) I use tumblr because it’s a great way to find out offbeat news and to spread that information to you. It’s a window into a whole world, and the window is quick and fun to look through.
A few ads in the way won’t bother me at all.
But the real question is: Will those ads make back a billion dollars?
In your own internet marketing ventures, that’s the real question you need to ask yourself about you spend time/money on. Is what I’m doing right now contributing to my success monetarily? Yahoo expects to make 100m-ish in the next year from tumblr, and sure, over the next 3-5 years, they may make back that billion. But most internet marketers don’t have 5 years to wait to make back their time and money investment.
What you are doing today, what you are doing as soon as you finish reading this, is what determines your success. What your company is truly worth is the value you put into it today. Forecasts and predictions are great, but you can only put off value for so long.
I’m not saying it’s all about money – tumblr probably didn’t have any profit for a while. But they did grab onto 75,000 users in their first few weeks. That initial success at developing a userbase is what drives profits down the road. If what you’re doing today isn’t gaining you profit or new users, you need to rethink your strategy.
I’ve got lots of friends who’ve tried to create a startup and who gave up early on because they had nothing to show for their ideas and work except some cool website or software. What they needed was to start getting profit, or users, early.
So whatever you do today, make sure it’s offering real value to your users. That will get you more users and push you toward profit, which is the only way to have real success, the kind of success that an investor could put a value on.
Anyone can do it. To be successful in the future, you just have to put your energy into present.
(If you’re interested in following me on tumblr, click any of the images below–)
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– Seth
