"I lied about my age. I lied about the size of my team. I lied about my experience. I was so terribly embarrassed about it for so long. I should have just owned up."
When he moved back to New York, Karp set up his own software consultancy company, Davidville.
But he soon became fascinated by a new short-form of blogging called a "tumblelog".
Karp told the New York Observer that he "kept waiting" for one of the established blog platform players to set up a platform for tumblelogging and, when that didn't happen, he did it himself.
Karp founded Tumblr in 2007 at age 21 from the bedroom of his mother's apartment in New York.
Sometimes described as Twitter meets YouTube and WordPress, Tumblr lets its users curate pictures, videos and text in one place online. The site gained 75,000 users in the first fortnight.
Tumblr now says it has more than 108 million blogs, 50 billion postings in 12 languages and 175 employees.
The website ranking site Alexa lists Tumblr as number 32 in terms of global popularity, and this year Karp made the Forbes 30 Under 30 list in the media category.
But despite his success, Karp prefers not to live an opulent life.
He currently lives with his girlfriend Rachel Eakley, a chef and psychology graduate student, in a sparse apartment in Brooklyn.
"I don't have any books. I don't have many clothes," Karp told Forbes. "I'm always so surprised when people fill their homes up with stuff."
The deal, if confirmed, would be the largest for Yahoo since Marissa Mayer took over as chief executive last year and could help the struggling internet pioneer regain traction with younger internet users.
Neither Yahoo nor Tumblr has commented on the report.
But Mayer has scheduled a news conference in New York on Monday at which the company said it will unveil "something special".
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