Karp has said Tumblr could be “wildly profitable” overnight by simply incorporating conventional online ads into the platform, but he believes that would spoil the community and the creativity that have taken shape there. His proposed solution entails advertisers’ being just as creative and expressive as Tumblr users. For now, that means that a spot on the Tumblr dashboard generally used to highlight the company’s picks for the coolest stuff happening in its network will include occasional content from paid sponsors. The first participants included Adidas, Calvin Klein and the movie “Beasts of the Southern Wild,” generating more than $150,000 in revenue within a month.

The experiments Karp is doing seem far more interesting than the ways that Twitter plans to monetize.

Twitter's business model is starting to resemble Feedburner, whereas Tumblr is creative and might actually pioneer something new and fundamentally interesting around better discovery.

I liked the following excerpts:

• In the beginning, most traffic came to Tumblr from without; but now more than 70 percent of the traffic on Tumblr occurs in the dashboard zone, where users read, react to and repurpose one another’s posts.
• Karp notes, you can comment on someone else’s post, by reblogging it and adding your reaction. But that reaction appears on your Tumblr, not the one you’re commenting on. “So if you’re going to be a jerk, you’re looking like a jerk in your own space, and my space is still pristine,” Karp explains. This makes for a thoughtful network and encourages expression and, ultimately, creativity. “That’s how you can design to make a community more positive.”
• Karp breaks its users into three groups. The first is, he concedes, the smallest, but it’s the one he emphasizes the most: the “creators,” who post their own photographs, original writing and so on. Then there are the “curators,” who cull, heart and reblog the best of this material for the benefit of the biggest group, the “consumers.”

My thoughts regarding those notes:

1. 70% of Tumblr's usage is the dashboard. That's pure sit-back-and-read-the-newest-stuff-from-blogs-I'm following. Many people have infinite scroll turned on.

2. Comments don't appear on the creator's page. This is more like Twitter and less like Facebook and Pinterest.

3. I wonder if creators-curators-consumers fall into a 1% - 9% - 90% breakdown?

While talking with someone from Wikia lately, my understanding of the actual breakdown was closer to 0.1% - 0.9% - 99% ...

It's also crucial to note that Tumblr loves everyone:

In reality, a lot of what is curated and consumed on Tumblr originated elsewhere, but at least some of it was made on the platform. This, Karp argues, makes Tumblr distinct from, say, Pinterest, the lately hot service that is associated with gathering and highlighting material from around the Web. (Not that Karp sees Pinterest as competition. He says that a lot of what’s on Pinterest comes from Tumblr and helps drive his traffic.) More to the point, Karp asserts that Tumblr was built for creative people to create things, and for those more interested in sharing or discovering. It’s a system built for positive reinforcement: “Everybody loves everybody,” he concludes, “through the chain.”

I also found the following quite interesting:

Tumblr does not display “follower” counts, for example, or other numerical markers of popularity that are viewed as crucial social-media features, because Karp finds them “really gross.” The culture of public friend-and-follow reciprocity that theoretically expands a social networking service can, in his view, “really poison a whole community.”

Since you can't see who's following a Tumblr blog, discovery is MUCH harder.

You have to promote your Tumblr on your Facebook or Twitter if you want more followers.

I do like how, much like Evernote, the founder built the service for himself.

I also like how fearless David Karp is when it comes to Monetization:

The trick is making page views equal money. “Pretty much every large tech company today,” Karp said, is essentially “metrics driven.” Google, Twitter, Facebook: they’re obsessed with “optimizing” services, design, functionality and aesthetics through constant testing and tweaking. That ability to optimize and (not incidentally) monetize user experiences by reacting to microlevel data is the essence of Web-business magic, as it is generally understood.

Karp chose not to operate that way. Rather than monetizing clicks, he wants advertisers to view Tumblr as a place to promote particularly creative campaigns to an audience whose attention is worth paying for. It’s an approach that may or may not guide Tumblr into the black. But Karp isn’t worried. His nice-young-man aspect makes it easy to miss the brashness of what he is saying: he isn’t interested in competing, but not because he doesn’t like competition. He just feels that he sees something everyone else has missed.

Fearless.

He does not know what he does not know, and that makes him fearless.

Also, he loves simplicity and removing things from the product:

“He’ll tell us, ‘Hey, got a new version coming up — and I took four features out!’”

Lots of experiments going on at Tumblr, and they get removed if they're not essential.