On Monday, Yahoo announced it was buying Tumblr, the blog network, for $1.1 billion. And then the tweets started, with people declaring that Tumblr founder David Karp was now a billionaire.
The conflation of Tumblr's purchase price with Karp's net worth assumed that Karp got nearly all of the Yahoo payday. And that's simply not how it works for venture-backed startups. Investors like Union Square Ventures and Andreessen Horowitz will share in the take, with Karp getting an estimated $275 million.
That's a lot of money, but it won't get him on Forbes' list of the world's billionaires.
You try explaining this to people on Twitter, though.
From high school drop out to billionaire: previously coy Karp cashes in on Tumblr smh.com.au/it-pro/busines…— Sandra Sully (@Sandra_Sully) May 20, 2013
Funny how people think that the founder of a venture backed company sold for $1.1b is somehow a billionaire— David Galbraith (@daveg) May 20, 2013
Sadly, even some respectable publications like Australia's Sydney Morning Herald made the error:
Other people asserted that Karp was a "high-school dropout." That's actually a debatable point. He left high school to continue his education through home schooling, and never received a formal diploma.
I hate how the media is referring to David Karp as a "high school dropout". Like, yeah he's a dropout but now he's a hot billionaire.— Trey Amandus Bennett (@trey_amandus) May 20, 2013
Vespa lover, yes. Billionaire, no.
And Business Insider's Henry Blodget tried to resolve the issue with punctuation:
- Who Hates The Yahoo-Tumblr Deal? Tumblrers, That's Who
- Buying Tumblr Will Leave Yahoo With The Same Old Identity Crisis
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