With a price tag of $1.1 billion, Tumblr Inc. ranks as Yahoo Inc.’s (Nasdaq:YHOO) fourth biggest acquisition, behind the $5.7 billion purchase of Mark Cuban’s Broadcast.com in 1999, the $3.6 billion transaction for Web-hosting pioneer Geocities, also in 1999, and the $1.6 billion deal for Overture in 2003. But New York blogging service Tumblr (which, coincidentally shares a backer with Geocities in Union Square Ventures’ Fred Wilson) is far from the only purchase Marissa Mayer has made since she left Google Inc. (Nasdaq: GOOG) to become CEO of Yahoo in July 2012. The once-struggling Yahoo has picked up 10 other companies over the past 10 months, including four in May.
As Mayer has told analysts, Yahoo’s primary strategy is to buy startups that cost in the tens of millions or low hundred millions. Many are considered “talent acquisitions,” meaning the point of the purchase is to gain the founder. (In the case of Tumblr, Mayer is keeping founder David Karp, pictured, a talented 26-year-old entrepreneur so passionate about the Internet that, as a teenager, he dropped out of high school to develop websites and never looked back.) Many of the targets specialize in mobile services, reflecting the trend of increasingly popular tablets and smartphones. Most of the deals are so small that they lack known price tags.