How Tumblr Saved Itself ~$20 Million With One Simple Move

One reason profitability is even within the realm of possibility is that the company finally made a hard, but smart choice toward the end of last year.

It moved off of third-party servers and built its own data center, which came online in October.

Tumblr CEO David Karp won't get specific about how much the company saved doing this, but a couple sources close to the company that we've talked to say that Tumblr's burn rate moved from $4 million to $5 million per month down to ~$2 million.

That's annual cost savings of more than $20 million per year.

Correction: An earlier version of this story said that Tumblr moved off Amazon Web Services. It did not. It moved hosting/serving/processing off of an ISP based in Dallas to its own data center in Newark. Amazon is still used for Tumblr's static image storage.