May 28 (Bloomberg) -- “Steve Jobs and Willy Wonka to me were just like these brilliant people who had these magical factories where every six months they’d come out with this huge show,” David Karp told me a few years ago. “I thought that was like the coolest thing ever. That’s what I wanted to do.”
And now, it seems, he just might have done it.
Karp, of course, is the 26-year-old autodidact who founded Tumblr, the social-networking blog site that Yahoo! Inc. just scooped up for $1.1 billion. Karp stands to make $250 million from Yahoo Chief Executive Officer Marissa Mayer’s effort to make her search site relevant again.
Karp isn’t your typical Internet entrepreneur. He grew up in New York, on the Upper West Side of Manhattan, and attended the Calhoun School, where his mother was a science teacher. His father, an award-winning composer, wrote the musical themes for “Dateline NBC” and TV broadcasts of New York Yankees games. His maternal grandfather, Ken Ackerman, was a radio broadcaster, known as the “Voice of San Francisco.”
At Calhoun, Karp drove teachers nuts by trying to hack into the school’s computer system. After leaving, he spent a year at the Bronx High School of Science, where he studied Japanese. But he fell in with the wrong crowd and dropped out -- besting technology giants like Jobs, Bill Gates, Larry Ellison and Mark Zuckerberg, who all timidly waited until after entering college to abandon their formal education.
By then, Karp had read a book about HTML software and had helped small businesses along Amsterdam and Columbus avenues build websites. As a 14-year-old, he worked at Tekserve, the huge, hipster-laden Apple-repair specialist on West 23rd Street.
Soon enough, Karp was introduced to Fred Seibert, a former jazz-music record executive who became one of the creative founders of MTV, Nickelodeon and Comedy Central. At the time, Seibert was holed up at Frederator Studios, on a huge floor at 1440 Broadway, in the middle of Times Square, with a bunch of young programmers and walls lined with skateboards. “I was so nervous and not sure what to say,” Karp said about meeting Seibert. But he remembered being very impressed by Seibert, dressed all in white, hanging out in this cool office space with a bunch of tech geeks, trying to change the world.
He learned so much from Seibert and those around him that Karp’s parents allowed him to keep working for Frederator while he was home-schooled. He took Japanese classes at the Asia Society and learned math and English from a tutor. Eventually, he started working for UrbanBaby, the “somewhat raunchy forum for progressive New York moms,” he said. He worked remotely from home, logging into the UrbanBaby servers and cashing his paychecks. He was nervous that the company’s founder, John Maloney, would fire him if he found out he was only 16.
A couple of years later, after his first love broke his heart, Karp fled on a whim to Japan. He gave his parents two weeks’ notice. He gave none to Seibert, for whom he was still doing consulting projects, or Maloney. But, through the wonders of technology -- a Vonage account and remote access -- he kept doing his work from Tokyo for his bosses in New York. They had no idea he had left, until one day Seibert asked Karp to come by the office to fix something. Karp said that would be hard, because he was on the other side of the world.
“I see this young guy who has absorbed everything that’s going on in the world in real time and has figured out a way to live his life differently than anyone else I knew,” Seibert told me. “He’s the chief engineer at this company, UrbanBaby, which at the time was smoking, doing unbelievably. He’s fixing my problems from 6,000 miles away. He’s working on New York time in Tokyo. He was really a different grade of person.”
After CNET Networks Inc. bought UrbanBaby in May 2006 and Karp had returned to New York, he took his modest payout and started Davidville, a Web-consulting business, at a single desk in Frederator’s new Park Avenue South offices. He then hired his first employee, Marco Arment, who had just come from an interview with Bloomberg LP. In April 2005, a simple new microblogging phenomenon emerged. Known as “tumbleblogs,” they contained their authors’ random musings, links to other sites and photography.
When not working for clients, Karp fiddled around with creating tools to make it easier for the tumblebloggers to do their thing. He wrote the vast majority of the front-end code for what became Tumblr. He put up his first post on the new site -- “Nobody shoots anyone in the face unless you’re a hit man or a video gamer,” a quotation from Jack Thompson, an anti-video-game activist -- on June 5, 2006. On Nov. 1, 2007, Tumblr closed its first round of venture-capital financing, and later hired UrbanBaby’s Maloney as president. The rest is history.
But it hasn’t all been charmed. He and Arment had a professional disagreement in 2010. (Arment then founded InstaPaper, and wrote, on Tumblr, that although he won’t make “yacht and helicopter money” from his Tumblr stock options, he will now have a “strong safety net” to do what he wants.) There was the Great Tumblr Blackout of 2010, when the computer system crashed and Karp was forced to turn to quasi-rival Twitter to communicate with his highly devoted -- but now highly peeved -- users. Last month, Karp abruptly closed down Storyboard, its in-house content business, and dismissed the staff. Other top executives have left Tumblr as well during the past year or so, including Maloney.
There is no doubt that Karp, with his dorky good-looks and adorable girlfriend, Rachel Eakley, cuts quite the stylish figure zooming on his late-model Vespa between his home in trendy Brooklyn and his office in fashionable east Chelsea. He has recently appeared on the cover of Forbes and the front page of the New York Times.
It’s a fairy tale, for sure. But the happy ending is in considerable doubt. Karp and Mayer, who is likely quite anxious to figure out how to justify spending $1.1 billion for a company with modest revenue and little or no profit, will be desperate to find ways to make money from Tumblr’s 300 million addicted users. Despite Mayer’s promise in the Yahoo’s news release “not to screw it up,” the facts are that Yahoo has a lousy record with its acquisitions. Then there are the facts that most mergers and acquisitions fail, and most founders get fed up with the new corporate rules and move on.
Maybe David Karp will be different. But it was his iconoclasm and a single-minded devotion to Tumblr that got him this far. We’ll soon see whether he can handle corporate life for the next four years, the term of his new contract, and having a real boss. It’s a far bigger leap of faith, in many ways, than dropping out of high school at 14.
(William D. Cohan, the author of “Money and Power: How Goldman Sachs Came to Rule the World,” is a Bloomberg View columnist. He was formerly an investment banker at Lazard Freres, Merrill Lynch and JPMorgan Chase. The opinions expressed are his own.)
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