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It is the -- of tech today is Yahoo! making a billion dollar mistake buying out social networks start up Tumblr.
Of course Yahoo! hopes it can turn -- hundred million plus users and -- ad viewing revenue revenue generating machine but think about this a company that had thirteen million dollars in revenue last year how can be worked over a billion bucks let's bring in a couple experts tech blogger Dan Lyons.
And the Wall Street Journal's Spencer on today.
Dan -- old friend let's start with you you know what.
My experience with you Dan you often hate most everything that dumped tech companies are trying to do and get this deal you think actually has an upside -- -- Well first of all.
I think a billion dollars in Silicon Valley and it what it used to be you know these guys are playing with play money right and so it seems like a lot of money.
But maybe not.
I also think that Tumblr has a chance to become.
The number three platform that matter you have FaceBook up Twitter and there is really no clear number three Yahoo! has a chance to.
To own that number three spot and with even cooler about -- is at its young and it's cool at a time when.
You know people are leaving -- looking young people -- looking to alternate the social networks like snapshot and mr.
Tumblr is the one with the young cool kids want to be so I think it's actually a Smart deal.
Yeah that's an interesting take their expense -- though is Yahoo! operating from a position of strength here or is it operating out of desperation and weakness.
What -- it quite so -- they desperation but I definitely they're playing catch up you big time.
You know Yahoo! missed two major technology revolution they've -- social media revolution.
FaceBook and Twitter -- then and then they blew the mobile revolution which is you know.
-- most of the growth of Silicon Valley companies now so this acquisition is aimed at trying to solve those two holes in their strategy.
You know published a big source -- stands -- and actually have very strong growth in mobile so there is.
The potential for this to to work out over time but there's a lot of risks and and bumps in the road -- -- to go through.
You'd get -- you said -- how to play money because.
-- because they just brought a whole pile of money from selling staking out a Bob -- Yahoo! did but it trial is cash felt like when Yahoo! used you know bubble inflated share of our broadcast dot com for a few billion dollars in the shares plunge in price.
It turned out to be a cheaper deal.
But one way to actually make that real billion dollars earned money is to bring an ad revenue -- Dan if you look at the Tumblr site.
I think a lot of advertising will be terrified to have their brands -- some of the stuff that's going on there right there's some kind of warned things and naked things and self cutting things.
I think that's less of a risk then has been people have made it to be.
In the sense that your advertising into someone's dashboard and and you really advertising to the members not against all that content so it.
You're if you're advertise you don't have to -- this stuff is necessarily gonna end up next to some of that.
You know if -- content.
But it in terms of the value.
If you're right a billion dollars is a lot of money what I love about this and what the what I love Marissa Mayer is that what she's really saying.
Dennis is that like.
You know the document take this for a half billion dollar company that used to be a seven billion dollar company and -- can't turn it around with with little kind of tweaks in a little acquisitions that.
Then and -- you need transformational deals I just love the fact that she went -- made this big deal what she's saying Yahoo! have to just be reinvented utterly.
-- created from inside and let's go buy something that's great and promising and let's make a bet that you know.
-- 25 sales people couldn't really make money off that site but Yahoo!'s 2500 salespeople could probably.
Make money off this big pile of users so I think it's very risky and it's very daring but I kind of love Marissa Mayer for doing it.
-- -- -- Well I didn't agree with them -- they do need to take bigger risks but some people would say that this is maybe not the best risk they can take they might be better off investing.
In some core advertising technology that has actually.
Yet electoral opportunity doesn't drive more viewers to the Yahoo! cyclone could -- separate site would not -- know -- brand.
But no links between Madonna will say they're gonna like put the Yahoo! Search technology out there into the -- and they're gonna try to integrate -- contact.
But there's no the barrier to entry on a social number and it's very low.
And and I think that's 100 -- -- that the users do flee like seven geocities -- it -- several that -- -- Iraq they ran away the other risk is that.
If they tried to monetize it too aggressively.
I'm playing my way carefully back it's fairly people who took a very tricky balance.
And real big balancing -- you're lucky and -- us from both -- you to Marissa -- from making a big deal thanks for being with us airline and Spencer on day.
Take care dumb and bank -- to see it.
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