Earlier this month, an excerpt from Nick Bilton’s forthcoming book about Twitter included a curious throwaway line that those of us in the tech world paid close attention to:
At Tumblr, the venture capitalists grew so impatient with its founder, David Karp, as he struggled to make the company profitable, they were discussing his removal before the site’s sale to Yahoo.
The statement wasn’t attributed to a source and offered no elaboration. But it wasn’t much of a surprise, either.
Since Tumblr’s $1.1 billion sale to Yahoo, reports painted a picture that Tumblr was teetering on the edge of disaster, and that the sale was Tumblr’s only chance at survival. The five-year-old company, which had raised $125 million in venture funding, had just $16.6 million left in the bank and had only earned $13 million in revenue in 2012. It wouldn’t be surprising if the company was considering a change in leadership, since product-obsessed Karp was not interested in the business side of the company.
Today, on stage at Business Insider’s Startup conference, early Tumblr investor Bijan Sabet of Spark Capital denied that report. “David’s job was never in danger,” he said. “We never talked about getting a new CEO.”
The company was having ongoing discussions with potential COOs. In fact, Tumblr is still in search of its Sheryl Sandberg — an experienced operator to come in and run the company alongside its product-focused founder and CEO the way Sandberg does alongside Mark Zuckerberg at Facebook.
“Financing was never a problem, Sabet said. “We just decided to sell the company.”
About that. If David Karp simply needed a Sheryl Sandberg, then why did the company sell before it found one?
Sabet says he doesn’t think Karp would have sold if YouTube’s sale to Google and Instagram’s sale to Facebook hadn’t happened. Those deals set the precedent that it’s possible to keep large consumer-facing acquisitions independent. It was easier to believe Marissa Mayer when she said Tumblr could stay independent in a deal, since she was at Google when the company bought YouTube.
“If those two deals wouldn’t have happened, it would have been harder to believe,” he said.
Either way it worked out well for Sabet — Spark Capital reportedly earned almost $200 million on its $13 million investment in Tumblr.
[Image via Zimbio]
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