Yahoo Might Buy Tumblr, New York's Cutest Startup

We hear Yahoo is in talks to buy Tumblr, a blogging startup run by 22-year-old David Karp for "low-to-mid eight figures" — which would translate to a small fortune for the New York entrepreneur.

Yahoo Might Buy Tumblr, New York's Cutest Startup

And a quick one, too, without the troubles of figuring out how to make money off of Internet hipsters' self-indulgent ramblings. Karp has toyed with charging users for extra features, but it's not clear that adding fees would draw much revenue. Nevertheless, Tumblr was able to raise $4.5 million in December, an investment which reportedly valued the company at $15 million.

An incredible amount for such a young startup with such fuzzy hopes of making money. But it's a bargain compared to Twitter, a startup similarly unburdened by the depressing reality of actual revenues. Which is why Yahoo might, just might, be willing to part with as much as $50 million for it. (In a sad recognition of how late Yahoo is to the whole Twitter phenomenon, its PR department set up a Twitter account today.)

We hear the talks are serious, led by Tapan Bhat, a fast-rising executive in charge of Yahoo's homepage and other key properties — but as with any acquisition talks, they could fall apart. Fred Wilson, a partner at Tumblr investor Union Square Ventures and a Yahoo spokeswoman did not respond to inquiries about the talks. In a text message, Karp, confirming his reputation for adorably juvenile sarcasm, wrote, "You got it backwards."

What could kill the deal: Already, Yahoos are grumbling at the idea of spending tens of millions of dollars on a revenue-free startup. The company's spending spree on Web 2.0 startups like Del.icio.us and Flickr has yielded few visible financial results. Some grumble that has more to do with Yahoo's mismanagement of the acquisitions, but the point is the same: Why should Yahoo spend more on startups, having failed to profit from the ones it already bought?

And there's also new CEO Carol Bartz, who is waging a pointless jihad on leakers. She may be angry enough that word of the talks has escaped Sunnyvale that she may kill the deal for that reason alone.

Update: Awww, Karp is adorably denying the rumor of Yahoo's interest in his company! Then again, he also claimed Tumblr was buying Yahoo, so who knows what to make of anything that comes out of his so-cute-you-could-pinch-'em cheeks? His lead programmer, Marco Arment, is also perkily insinuating that he would quit if Yahoo bought the company:

I hope they let me work on some of the many exciting projects at Yahoo! Who needs a high rank at a small company in New York? I want to move to California and get stuck in traffic every day on the way to my midlevel engineering job where I sit in a cubicle all day and can't make any product decisions while working on something nobody will ever see to manage regional ad clickthrough stats tracking.