There’s a lot of talk around the recent acquisition of Tumblr via Yahoo! and the varying perspectives are as varied as you might imagine, from those that have foretold the death of the tumblogging service to those that say this is the best thing that could happen to David Karp and his team.
Regardless of where you sit I just want to salute David (and the investors) and applaud the work done – lots of time, resources ($125M in funding), and blood/sweat/tears went into building Tumblr and they’ve received a reward that was worth every penny (and then some).
And to sell the company was a good decision on behalf of those that had invested those resources into David and the team, including the users and community that has so passionately embraced the service. Functionally and aesthetically WordPress could learn a thing or two from the way that they do “publishing” – it’s something almost too slick and too simple.
There have been some responses, naturally, from the WordPress community and one in particular that has caused a little bit of a stir via Ghost, who tweeted this the other day:
Things Ghost Will Never Do: Sell You to Yahoo! for $1.1 Billion
— Ghost (@TryGhost) May 20, 2013
John O’Nolan shared passionately that Ghost will never sell to Yahoo! for $1.1B and in some ways he’s right, given the context of differences between Ghost (not-for-profit) and Tumblr which is clearly a for profit company:
These companies exist to make money, so they’re always selling something. If you’re using a web service for free, you’re the thing that’s being sold. You’re either being sold to advertisers (ala Facebook/Twitter) or you’re about to be sold to someone else, who in turn will probably sell you to advertisers (Instagram => Facebook / Tumblr => Yahoo!).
In a non-profit company no one person or group of people can “own” the organization – no shares are traded and no equity, not even to the board. If a non-profit “sells” or sells assets the proceeds must benefit the organization itself. I know this because I’ve worked in the non-profit sector for quite some time and my experience within that space is signfiicant.
So, what happens if you’re “done” with the organization? You just have to walk away from it and leave it to someone else. If you close it for good then all assets must be distributed to other nonprofits that are fulfilling a similar mission. In Ghost’s example, as a strictly hypothetical example, if they were to shutter completely then the assets might move to The WordPress Foundation or some other non-profit that’s building similar applications with a similar mission.
But, that doesn’t mean that John O’Nolan and his team of passionate do-gooders do not have a “price” – it just means that it’s not in a straight equity buyout a’la Tumblr.
You see, even John O’Nolan has a “price” – I’m sure of it. All of the entrepreneurs that I’ve worked with and for do. Those that do not are lying to themselves or deluded. Everyone has a price – sometimes the numbers just need to be high enough for it to count.
In a non-profit sense the “price” could be a few things the first typically being another opportunity. John is a smart guy and he’s got some world-class talent on the team. It would be foolish to believe that this project is their “last” and “final” swan song in technology and entrepreneurship as they will most likely engage in other activities, build new products, and do greater things.
When they have had their fill and built it to the best of their ability their “price” will be starting something new.
The other “price” that many non-profit leaders pay to leave or exit can be strictly financial. That is, the salary that is given is not enough because of the lack of revenue or giving/donations/fund-raising that may be too little or too weak to create sustainment. Most non-profits fold because of this. If you’ve known anyone who’s tried or attempted to start a not-for-profit then you know this all-too-well. Non-profits are like any other business and startup venture – it’s tough as nails to make it work.
So what John says is, in fact, true but it’s not the 100% full story:
Ghost is a non-profit. We’ll make money from our premium hosted service, but we’ll use 100% of the money to make Ghost better and pay people to work on it. We won’t distribute any profits to shareholders, because there won’t be any shareholders. A non-profit has trustees who don’t own shares, they just oversee the company. We literally won’t have anything for Yahoo! to buy.
Ghost may not have anything to sell to a literal Yahoo! but they do have human resources that can be poached for time and talent. That’s why I’ve started new ventures and why I’ve raised venture capital myself – I have a price and I can’t afford to not try the next adventure.
So if I am to be explicit, everyone has a price although not every organization does. Ah, the power of words, right?
In the end, I’m excited about John’s decision to make it a not-for-profit as it really does mean the longevity of the app – I hope it runs smoothly and they build an exciting and reputable organization that will exists for years to come. But I don’t expect to see John at the helm of the project for eternity just as I don’t see David Karp being at Tumblr/Yahoo! forever either.
Personally I doubt he’ll stay his contracted 4 year term but I’ve been wrong before.