Tumblr: David Karp's $800 Million Art Project

David Karp is in the midst of a rite of passage that seems universal for the young tycoons of the Internet’s social era: He’s buying himself a proper swank pad. And like Mark Zuckerberg‘s luxe but dowdy $6 million manse in Palo Alto and Sean Parker‘s Greenwich Village carriage house-cum-party palace, Karp’s choice says a lot about him–and Tumblr, the blogging platform he founded nearly six years ago. The 1,700-square-foot, $1.6 million loft, which he’s currently remodeling, is quite modest for a 26-year-old whose net worth, on paper, exceeds $200 million. That’s in part because it’s located in the world’s hipster capital, Williamsburg, Brooklyn, where irony trumps showiness–he’s quite possibly the richest person in the neighborhood. But the most telling feature is on the inside, which contains … virtually nothing. A spartan bedroom with a half-empty closet. 

A living room area with nothing but a sofa and a TV. (One concession to opulence: a restaurant-grade kitchen for his girlfriend, Rachel Eakley, a trained chef.) “I don’t have any books. I don’t have many clothes,” Karp shrugs. “I’m always so surprised when people fill their homes up with stuff.”

“He owns, like, three items,” confirms Marco Arment, Karp’s first and, for a long time, only employee at Tumblr. “He’s always looking for ways he can get rid of something.” Even Karp’s person is spare in the extreme: His one suit, though trimly cut, flaps around his 6-foot-1 frame when he fidgets, which he does a lot. Maybe it’s all the calories he burns this way that keeps him skinny, like a teenager who has yet to fill out his bones. “I’ve always been 40 pounds underweight,” he says.

For Tumblr’s CEO, minimalism isn’t just an esthetic choice. It’s the key to freedom. When he travels he avoids making plans more than a few days in advance, even on his trips to Japan, and packs only the sveltest of carry-ons. “It’s my Jason Bourne or James Bond fantasy, wanting to be perfectly mobile,” he says. One of Tumblr’s directors, Roelof Botha of the Silicon Valley venture firm Sequoia Capital, recalls showing up at a board meeting in New York toting only “the tiniest of duffel bags” for his trip. “David took one look at me and said, ‘You really brought all that stuff?’ ”

Karp’s intolerance for the inessential imbues Tumblr. Where others looked at the twin revolutions of blogging and social networking and saw new tools for communication, Karp saw possibilities for making them radically easier and more intuitive. Tumblr lowered the bar to creating a beautiful, dynamic website and raised the payoff in the form of positive social reinforcement.

If Facebook is where you check in with your real-life friends and Twitter is how you keep up with current events, the Tumblr experience can be boiled down to people expressing themselves publicly. Like those other two networks, Tumblr is organized in the form of streams of posts. But it’s far more sensory and emotive, a swirl of photographs, songs, inside jokes, animated cartoons and virtual warm fuzzies. On the main Tumblr feed compiled by its editors, a photojournalist’s visual diary of Afghanistan might be followed by a cartoonist’s impressionistic drawings of Darth Vader, which give way to a gallery of hamsters that look like President Obama.

Users make sense of the chaos with the aid of a dashboard, the interface for finding and following other users and keeping track of the feedback their posts receive. Hearts are good; “reblogs” are better, suggesting another user liked your post enough to share it with his or her followers. The tools for creating these multimedia posts are simple: seven buttons that let you add text, photos, hyperlinks, video, music, dialogues or quotes with a click.

The result: classic hockey-stick growth that’s getting steeper by the month. In November it shouldered its way into the top ten online destinations, edging out Microsoft’s Bing and drawing nearly 170 million visitors to its galaxy of user-created pages, according to the measurement firm Quantcast. Tumblr’s tens of millions of registered users create 120,000 new blogs every day, for a total of 86 million and counting, which drive some 18 billion page views per month. Its latest funding round, in September 2011, valued Tumblr at $800 million, making Karp’s 25%-plus stake worth more than $200 million. Then its traffic doubled.

An impressive start. But this is Tumblr’s make-or-break year, where it needs to prove three things: That it can continue the growth. That it can actually make money. And that David Karp, the creative genius and quintessential minimalist, is the right guy to lead Tumblr to glory. “The road is littered with dead companies that made the wrong move at the wrong time, the MySpaces of the world,” says Gartner analyst Brian Blau. “They’ve got to be really careful.”

Karp has momentum. When Hurricane Sandy flooded massive data centers in New York, knocking the Huffington Post, Gawker and BuzzFeed offline, all three gravitated to Tumblr as their temporary publishing platform. Hollywood has taken note, with no fewer than three new TV series in development spawned by Tumblr sensations that went viral. And this: When Oxford Dictionaries U.S.A. designated “GIF” its word of the year for 2012, it credited Tumblr with pushing the term, a technical name for a type of compressed image file, into the mainstream. “The growth we’ve seen in the last year just totally overshadows everything that came before it,” says Karp. “To be honest, it’s a place I never thought we’d be.”

And, in some ways, never hoped to be. Tumblr is growing up and, as anyone with a baby or a mortgage can tell you, that means expensive complications. “I really like David, but he’s got a brutal year ahead,” says Gawker Media owner Nick Denton. “The pressure on Internet media companies to deliver revenues is going way, way up.” Karp, who once showed disdain for advertising, finally allowed ads on Tumblr last May. The company finished 2012 with $13 million in revenue; the hope in this “leap” year is that it’ll get to $100 million.

If it can hit that sales figure, profits should follow — the key benchmark even for social media firms, which, until Facebook’s troubled public offering, could get away with being the shiny new social platform. “I don’t think there’s anybody that’s pushing for short-term maximization,” says Botha. “But to the extent we can get to profitability soon, it’s a good thing because you don’t have this existential crisis every day.”

And how soon is that? Money isn’t that pressing an issue–yet. Karp says Tumblr has banked “most of” the $125 million it has raised. But Tumblr spent an estimated $25 million on its operation last year and will likely have to shell out up to $40 million this year. In 2013 David Karp has a race on his hands: Can he break into the black before needing to hold his hand out again for investors?

Forbes.com