Following Yahoo’s $1.1bn acquisition of Tumblr Pandodaily published an article asking why Tumblr and Foursquare, New York’s top consumer web startups, haven’t had the same success as Twitter and Facebook. First the numbers, as measured by 2012 revenues Foursquare and Tumblr are a long way behind:
Pando points out that one would expect Tumblr and Foursquare’s proximity to New York’s strong advertising industry to give them an advantage over their Valley competitors when it comes to building an advertising business, but then comes to the conclusion that the reason they fell behind is more likely to do with access to cash and talent. Valley based companies are more easily able to raise money and have a larger pool of people with scaling experience to recruit from.
That argument makes sense, and I’m sure explains part of the discrepancy in performance, but for me the bigger reason is that the use cases for Twitter and Facebook are important parts of our every day lives whereas Tumblr and Foursquare are more nice-to-haves. Keeping up with news and staying in touch with friends are more important for more people than self expression and checking in/restaurant discovery. More important use cases means more people coming back more often and greater tolerance for ads, and hence much bigger opportunity.