Tumblr was 2-3x bigger than reddit apparently at acquisition time (just looking at google trends). Now reddit is public at 27B market cap, and tumblr is virtually worthless. I don't think there's anything fundamental about tumblr that would have prevented it from being the one in the sun instead. They're not dissimilar, and they could've used those years to grow tumblr in whatever direction they liked if there was indeed something stalling it.

I know a fair bit about this deal. Some massive percentage of Tumblr's traffic was porn. And, shockingly, Yahoo management did NOT know this when they signed the check.