It’s a common criticism of popular Web services that don’t yet make a lot of money: Where’s the business model? That criticism has certainly been lobbed at Tumblr, the short-burst publishing platform all the kids are flocking to these days. Tumblr generates billions of pageviews across its networks and is growing at more than 250 million pageviews per week. “Making money off of Tumblr would be incredibly easy,” CEO David Karp tells Chris Dixon in the Founder Stories video above. A cheap AdSense ad on every member’s dashboard would make Tumblr “wildly profitable.”
So why doesn’t he do that? As he goes onto explain, he’d rather find ways to make money that also “enhance the experience for our users.” Tumblr does charge for things like being featured in its directory or $9 themes users can buy to spruce up their Tumblog. Karp notes that some theme designers are making tens of thousands of dollars month. Still, these seem more like ancillary revenue streams than what will end up being Tumbr’s main revenue source down the line. Fortunately for Karp, he has patient investors and just raised $30 million to keep scaling the service and figure out a more natural business model.
The challenges of scaling and keeping up with growth “has absolutely slowed down the product roadmap,” he admits. But his team is working hard to get back on track with both keeping the service up and rolling out new features.
Karp also talks about building a startup in New York City in the shadow of giant media conglomerates and how that gives him a different perspective than if Tumblr were based in Silicon Valley. (You can also watch Part I of the interview here, in which Karp talks about why traditional blogs aren’t for everyone).