Saw this headline roll by and had to remember to breathe. Until that moment I thought of Tumblr as a tiny company operating upstairs in a random midtown office. David Karp, its founder, is brilliant, and the site is growing at an incredible rate, and now the company is valued at $135 million. Oh to be young, talented and rich in NY in 2010.
Instant comments say its more bubble bidding, but it might not be. I hope Tumblr opts for a WordPress-style business model known as "freemium," where they give away the basic site, and charge for the extras. That will keep their interests nicely aligned with their users'. I think long-term, companies like Twitter and Facebook will have big problems as they have to narrow the margins for their participants, always competing with more members of their community, forcing them to either disappear or look for greener pastures. I don't see any clear line of places they can't go. But if Tumblr charges for sites, then its users are customers, and that's something that we're all comfortable with because we're either customers or have customers in the rest of our commercial lives. The user-as-hamster model is growing more uncomfortable all the time.
Anyway, it might not be obvious at first that this is not great news for the publishing business, as it's currently configured. Flush with cash, companies like Tumblr, Foursquare and others are mining tech talent in NYC, and bidding up the already-high prices for engineers. If you're a newspaper or magazine publisher in NYC, and you've been employing technical people, watch out -- you're competing with employers with newly deep pockets. And don't forget Google is (rumored to be) buying a huge office building in Chelsea, near the meatpacking district. It's going to be filled with technical people too.