July 24, 2024

Tumblr Faces Financial Troubles as Parent Company Automattic Absorbs Staff

After facing long-term financial struggles, blogging platform Tumblr is set to operate with a skeleton crew as parent company Automattic reassigns the majority of its staff to other products. The leaked memo revealed that only essential workers, primarily in departments such as trust and safety, will remain at Tumblr. Meanwhile, the rest of the platform’s 139 employees will be absorbed by Automattic, which currently employs around 1,900 people. In response to the memo, Tumblr CEO Matt Mullenweg addressed the situation on his own Tumblr blog, where he engaged with questions from users.

The financial challenges being faced by Tumblr are not unexpected. Following Elon Musk’s acquisition, the blogging platform experienced a brief period of increased popularity as disgruntled Twitter users sought an alternative platform. However, Mullenweg disclosed in July that Tumblr is currently losing approximately $30 million per year.

While Tumblr encounters similar obstacles faced by other social platforms, it uniquely caters to a fiercely protective fan base that typically resists attempts at monetization. Users on the platform are often willing to spend money on features such as sending crabs to friends or purchasing joke blue checks to mock Twitter. However, when Tumblr attempted to launch a subscription feature, it encountered significant difficulties and issues during the product launch.

Founded in 2007, Tumblr was later acquired by Yahoo, the parent company of TechCrunch, for an impressive $1 billion in 2013. However, the platform’s financial situation continued to decline, leading to its acquisition by WordPress.com parent company Automattic in 2019 for a significantly reduced price of $3 million. Despite having a dedicated community of power users and being highly regarded in fandom spaces, Tumblr has struggled to increase its daily active user count, particularly after implementing the infamous ban on adult content.

In conclusion, financial troubles have pushed Tumblr to operate with a minimal workforce, with most employees being reassigned to other products within parent company Automattic. The platform’s ongoing struggle to generate revenue has added to its long-term financial challenges. While Tumblr continues to have a strong following among its dedicated user base, it has faced difficulties in expanding its daily active users, particularly since the implementation of the adult content ban.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it