The Lesson of Tumblr: Product Uber Alles

The best coverage I’ve read about Yahoo’s massive acquisition of Tumblr comes from Tumblr co-founder Marco Arment (who went on to create Instapaper):

Intense focus requires neglecting almost everything else. David’s focus on pushing the product forward meant that he didn’t want to think about boring stuff: support, scaling, paperwork, and money. Every time we’d get close to needing more funding, I’d try to convince David to hold out a bit longer or try to become profitable, and he’d convince me that everyone was better off if we’d focus on the product instead. And every time, he was right.”

Many of the entrepreneurs I work with are probably tired of my constant emphasis on product and its flipside, traction.  It’s probably pretty boring to hear the same questions over and over: “How much are customers using the product?  What evidence do we have that we’ve got traction in the market?”  But just because it’s boring, doesn’t mean it’s unimportant.

For startups, product is all-important.  This doesn’t mean that the actual blocking and tackling are meaningless–the #1 job of a CEO is to avoid running out of money.  But the best way to get money is to demonstrate traction.  And the best way to get traction is to build an awesome product.

Tumblr is the uber-example of this principle.  By all accounts, Tumblr founder/CEO David Karp didn’t give a damn about monetization.  He avoided advertising of all kinds because it would worsen the user experience.  Yet Yahoo! paid $1.1 billion for his company.  Why?  Because his product was a) beloved, and b) widely used.  Tumblr claims to have 300 million users.  You can get away without figuring out your long-term business model if you have 300 million users!

Build a startup that produces a great product.  The ultimate goal is to build a great business, but it’s almost impossible to build a great business around a mediocre product.

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