Sunday, March 27, 2011

Founder David Karp Describes Tumblr or Second Life?

In February, CEO Chris Dixon talked to Tumblr Founder David Karp as part of the Techcrunch Founders Stories. Six minutes and thirty-six seconds is all it takes to see the interesting overlaps between the Tumblr and Second Life business challenges. 

Creative Tension
In the face of seemingly outrageous valuations, the question of sustainable profitability is at the forefront of VC discussions. Are we on another bubble? I don't know, but I do know that there is a unique tension between providing a service that appears primarily focused on the craft of creative expression and not some easily recognizable business service such as advertising.

Does a focus on self-expression limit the commercial options for a platform like Tumblr? What is the nature of tension between monetization and creative expression? Is a penchant for creativity key?

David claims that Tumblr could be wildly profitable simply by placing one cheap ad-sense ads in the dashboard view. The Tumblr dashboard is like the Second Life viewer; it's your window into the world and it's where most people spend their time. 

But Tumblr is avoiding a blatant ads model - David claims the real challenge is:
Can we get to wild profitability with features that actually enhance the community?
Well, can you? One option is to find ways for Tumblr to enable users to become part of the ecosystem - such as the paid directory service and the Tumblr theme marketplace. Another is to actually pay attention to community needs and serve them.

Pay for Promotion and Visibility
As I posted in my last post about creativity, I believe creative expression craves connection and in the world where everyone is a creator and a consumer, it's easy to get lost and hard to be found.

To help solve this for both parties, Tumblr launched a paid directory service, where anyone could pay a fee ranging from $9 to $49 to be listed in a particular category once you met a set of legitimacy criteria - # of followers, time as a registered user, etc. 

It sounds like a good idea at first, and you might start to think - hey, there's an idea for the Second Life Destinations Guide - but what happens to the "featured content" in the directory when everyone pays that nominal fee? Well, Tumblr has more jingle in their pockets, but everyone else is back to square one.

Perhaps that's why the sign yourself up for the directory service is temporarily unavailable while Tumblr takes another stab at this idea.

Quit Your Day Job
image cc Businessweek
Today individual theme designers can sell premium Tumblr themes through a marketplace called the Theme Garden. The Theme Garden is a mix of free and premium themes, organized in browsable sections of Featured, Premium, Recent and Popular. Most of the Premium themes are designed by Tumble community members.

As David describes it, Tumblr users "have a shot at" buying beautifully designed, highly customizable themes to adorn and personalize their own tumblr, and most of the theme fees goes to the individual designers - creating a bi-winning equation. 

There are already designers who are earning "tens of thousands" a month, according to David - enough to "quit their day job to focus on building stuff for Tumblr community full - time." Sound familiar?

On the balance of Scale and Communication
When a web service starts heading up the ramp of scale, how do you balance time between future product features and just keeping the ship afloat?

Scale verus features and fixes is a familiar tradeoff. Tumblr is showing signs of global scale and growth - the infamous hockey stick - and as of March crossed the 15 million total blogs mark and is serving over a billion impressions per week.

But with growth comes infrastructure stress, and it's no secret that Tumblr has had its share of downtime, forcing the team to shift the focus from growing features and users to making the service more robust and reliable. 
Scaling has absolutely slowed down our product roadmap ... - David Karp
An extended Tumblr outage in December of 2010 put the collective Tumblr community and tech pundit onlookers into a frenzy - and in the heat of the moment, Tumblr didn't exactly help quiet the storm. In fact, they were largely silent sans a couple of status updates on twitter.

The incident played out on major tech blogs, and while Tumblr users got a poke in the eye for being so silly in their hysteria, Tumblr didn't whine about user complaints, but rather acknowledged the issue, recognized their failures, apologized, hopefully learned from communication failures and eventually adopted their own version of the twitter fail whale - the Tumbeasts

Remember when Second Life used to have its own grid beasts? 

Communities: Love Them or Hate Them - Celebrate or Ignore Them?
.. that's a community effort that we've been really bad at.  We've been incredibly lucky to have all these creative communities show up on Tumblr, but we've down really little to go back into those communities and figure out what we're doing right, or what we're doing wrong, or what we could do better.  -- David Karp
Yes, that's right he said "communities" without even the hint of a heavy sigh and moreover, David sees the care and feeding as a key part of the business of Tumblr. 

Recently, Tumblr even had the audacity to hire Richard Tong to help them figure out how to serve and even celebrate the fashionista community by actually doing things *with* them - like taking 20 Tumblr bloggers to New York Fashion Week

What was that Second Life Resident group called - the ones that got to go the the Linden Lab offices and share their experiences first hand? What happened to that initiative? If someone remembers, let me know and I'll update the post.

UPDATE: Thanks Tateru Nino for the tip. The program was called Second Life Views but details on the demise are still outstanding.

The Commentary: When Perception Becomes Reality
The last thing that struck me as an interesting parallel lies within the comments of the Techcrunch post, which reminded me again of how it's sometimes a liability to be a Second Life Resident or advocate. 

Broad-sweeping statements like the following almost sound like they were written about Second Life.
IMO, one reason that Tumblr chooses not to run ads or pursue other revenue streams at this time is that the vast majority of their user-"created" content is copyright infringement. 
Not to mention all of the porn or nudity that gets posted. Advertisers will balk at that. 
I really enjoy the curation of quality porn...oops. I mean NSFW imagery and vids. My fav feature is how you can follow the NSFW curators and the urls don't even show up in your history file. My wife is none the wiser. That alone is genius.
Now, if they could just keep the site live for a whole day... now that'd be something.
Probably should make sure that the site doesn't crash 5x per month before they start charging.
It will be interesting to see if Tumblr is able to stick to their plan of finding a way to make money that also enhances the experience for the users - seems like despite the rocky places, they are on the way.


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