HOW DAVID KARP FOUNDED AN $800M STARTUP "TUMBLR"
David Karp, the founder of the blogging platform
Tumblr,
was 17 when he decided to cut the apron strings and move to Tokyo. With
a smattering of Japanese and a sharp eye for computer code, the
impatient Manhattan teenager embarked on a period of self-discovery. "I
was holed up in the middle of this world where it was just me on the
internet," Karp recalls. Within weeks, he had fine-tuned his computer
skills and cooled on the idea of building robots. He wanted to be an
entrepreneur. But there was one small problem: his voice.
"I was so silly – I tried to be very formal and put on a deep voice
to clients over the phone so I didn't have to meet them and give away
how young I was," he says. "I lied about my age. I lied about the size
of my team. I lied about my experience. I was so terribly embarrassed
about it for so long. I should have just owned up."
Karp returned to the US with a fistful of contracts (drawn up by his
father) and a list of executives' ears to bend. Keeping up appearances,
he set up a consultancy company – dubbed Davidville – and managed to
convince Viacom and others to hire him.
Now 25, Karp is at the helm of one of the internet's fastest growing
startups. He founded Tumblr in 2007, aged 21, from the bedroom of his
mother's apartment in New York. Often described as Twitter meets YouTube
and WordPress, Tumblr lets its users curate pictures, videos and text
in one place online. The site gained 75,000 users in the first
fortnight, and now hosts more than 42m blogs, ranging from politics to
music and pictures of "
Accidental Chinese hipsters".
Wearing a red check shirt under a grey zip-up hoodie, the
shaggy-haired Karp has all the attributes of a web wunderkind. And now
his $800m-valued startup boasts investors including Virgin group
chairman Sir Richard Branson. But the early days of
Tumblr were not all plain sailing.
"I thought I could totally beat the system and have this cool product
that I would never need to raise money for, I would never need to sell
out, because [Tumblr] would bring all the attention to this
[consultancy] business where people would ask us to build them a
website," he says. And it worked – for a few months. Karp kept up his
consultancy gig until Tumblr began doubling its number of users every
few weeks. "Our clients eventually got more and more pissed off because I
wasn't returning their calls and at that point I was just totally
fucking it up. Clearly they could see Tumblr was my one and only and
they were getting shafted."
It
was time for Karp and Tumblr to grow up. Investors were circling, but
Karp's youthful defiance prevented the internet firm being shipped
across to the startup factory of Silicon Valley. Karp did sell 25% of
his one-year-old company as part of a $4.5m funding round from Union
Square Ventures and Spark Capital in late 2008. But he repeatedly turned
down offers to move the company to the "hyper-competitive" West Coast,
where he says entrepreneurs spend their time worrying whether Apple,
Google
or Facebook are going to steal their most talented engineers. New York
is a more supportive city for startups, Karp argues, even if it does not
have the obvious allure of Silicon Valley.
Tumblr is worth a fraction of Facebook's $100bn price tag, but Karp
is relaxed about its growth. Only last year, he says, he could see the
computer screen of every Tumblr employee in its New York office. Now the
company operates on two floors and is nearing 100 staff. "The real
threshold was last year," he says. "For a long time I did not want to be
[employing] more than a dozen people."
The key driver of Tumblr is its meritocratic network of bloggers. Big
names such as Lady Gaga and Barack Obama give the site some celebrity
lustre, but the creativity is found in its most dedicated users.
Photographers, designers and musicians can be followed, liked and
"reblogged" – and 85% of Tumblr users post more than 20 times a month on
average.
In conversation, Karp could evangelise on the force of creativity for
hours. At times he will suddenly pause, before retracing his steps and
continuing with animated zeal. Karp says he loves Twitter, is lukewarm
on Google+ ("I don't see any tools for creativity in there") and is not
the biggest fan of Facebook "as a product". And YouTube? "The only real
tools for expression these days are
YouTube,
which turns my stomach," he says. "They take your creative works – your
film that you poured hours and hours of energy into – and they put ads
on top of it. They make it as gross an experience to watch your film as
possible. I'm sure it will contribute to Google's bottom line; I'm not
sure it will inspire any creators.
"
No
doubt Google would disagree, arguing that a significant chunk of the 60
hours of video uploaded to the site each minute – an increase of 30% in
the last three months – contains or inspires some form of originality.
But Karp is unconvinced. YouTube, he says, "was the opportunity to
tell every aspiring filmmaker that if they worked really hard and really
went for quality they could create great stuff. The stuff YouTube is
incentivising is: build a huge subscriber base, put out a lot of videos,
do the math and get as big a cheque as possible."
Google recently did the math and found that YouTube pulls in about 4bn views a day – and has now
boosted promotion of its "Partner" programme in a bid to increase the quality of videos.
"YouTube offers the opportunity but they sacrifice the tools in such a
major way now," Karp continues. "YouTube is one of the most amazing
creative tools in the world and I think it's gotten a lot worse for
creators." No doubt the point is that Tumblr can close the gap.
Like many of the hottest internet firms, Tumblr has no proven
business model. The company's "lack of revenue" prevented some major
Silicon Valley venture capital firms from participating in its latest
$85m funding round in September last year,
according to the Wall Street Journal. John Maloney, the president of Tumblr, who is the business foil to Karp's user-led brain,
indicated in a recent interview that the company needs to attract "hundreds of millions" more subscribers on its route to profitability.
For his part, Karp describes technology journalism's obsession with
funding as "turpitudal" and insists his company is not in a financial
arms race with Facebook, Twitter or other internet sites.
Nor is Tumblr about to be acquired by a multinational media firm, he
says. In 2008, when Karp became $750,000 richer by virtue of selling a
25% stake in the firm, the fresh-faced founder laid his intentions bare.
"We would really rather not be gobbled up by a big media company," he
spat, in an interview with the New York Observer.
Unlike most other hot internet companies, Tumblr has not been plagued
by buyout rumours – but that does not mean there have been no offers.
Four years on, is Karp still adamant? "We were constantly tested along
the way," he admits. "Particularly in the first three years, there were a
lot of [mergers and acquisitions] people who would pull you aside and
you'd think 'Well, shit, I could be a pretty rich 23-year-old with very
little effort'". But he held firm. "We stuck it out. I won't say I
really knew why."
Sat in the half-lit bar of a hotel in London's West End, Karp becomes
introspective. "There are a lot of rich people in the world. There are
very few people who have the privilege of getting to invent things that
billions of people use," he says, adding: "The joke now is what's the
first tech company that we acquire. I hear AOL's going pretty cheap."