Web 2.0, blogging, VC
Automattic Connection: How an East Coast VC Got Behind WordPress, the West Coast’s Hottest Blog Platform
Robert Buderi 2/26/08
(Page 4 of 4)
the two companies can end up working together,” says Hirshland. For one thing, expect “a fair amount of collaboration” on technology—things like features and functionality—as the Times uses the WordPress platform for a range of different publishing offerings. But he says there are also interesting cross-fertilization opportunities—with content from WordPress blogs going to the Times and vice-versa.
Automattic has also started looking into advertising models. Hirshland relates a story about advertising that highlights the transformation in Mullenweg from an idealistic open-source blogging pioneer—always hesitant to embrace commercial activities that might undermine the “feeder system” of developer support—to more of a businessperson. Very shortly after the decision to remain independent, Hirshland says, there was a memorable board meeting when the young entrepreneur related that Automattic had a “really cool” advertising opportunity. That caused a double-take from the group. “Time out…Matt just used the word ‘cool’ in connection with advertising,” is the way Hirshland sums up the stunned reaction. But the experiment has already begun, he says, mostly in niche areas in what he calls “select WordPress.com pages.” Look for that to get bigger soon, I’m guessing.
The company will also be expanding its operations outside of blogging. CEO Schneider has blogged about the general plans here. Akismet, the company’s anti-comment-spam software, has been wildly successful, Hirshland says. “But it has almost no resources behind it other than Matt in his spare time.” So look for that to change. And bbPress, the firm’s forum and bulletin board software, represents another potential growth area. Hirshland describes it as looking like WordPress did three years ago. “We think there’s lots and lots and lots of opportunity for that” to follow a WordPresss-like growth path, he says.
Automattic will also likely go on something of a buying spree, as it looks to make a number of tuck-in acquisitions to complement its operations. Last fall, the firm bought Gravatar, a maker of “globally recognized avatars,” which are images that appear next to people’s names whenever they comment on any website set up to recognize gravatars. And there will be “lots more” of this type of acquisition, Hirshland says. “Small startups that usually haven’t been funded” is the way he describes them, where the founders realize “that being a part of something like Automattic is actually a very attractive thing.”
Schneider blogged that Automattic has been profitable, and Hirshland confirms it, saying that the company takes in a small amount of revenue by serving Google AdSense ads on select pages, as well as by charging modest service fees for big VIP customers, I’m guessing like GigaOm. “Small effort on very large volume can support a very small burn rate,” Hirshland notes.
Still, sums up Hirshland, “the effort and resources dedicated to building revenue streams to date has been fairly minimal. I expect that to grow at a steady, but not dramatic rate.” In short, he says, there won’t be any drastic changes in course, which is (of course) the course that has gotten Automattic and WordPress so far in the first place.
Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926, or follow him on Twitter at http://twitter.com/bbuderi.
2/26/08 4:01 am
Just wanted to say that this was an interesting piece to read. A nice overview of how Matt and company got from point A to point B. I also learned some things I didn’t know such as the select WordPress.com pages advertising campaign.
If Automattic can make more acquisitions that were as good as a much for the company as Gravatars was, the sky becomes the limit for Automattic.
2/26/08 6:38 am
This is a fabulous article, and an interesting story to boot, with some great sidebars on east vs west, etc… I think it’s going to make a fascinating Harvard B-School Case. Of course, funding isn’t everything, as a couple of well endowed local companies recently realized — one tanked and the other sold out leaving the investors “under water”. I didn’t notice stories in the Xconomy updates, but no need to rub salt on the wounds. Let’s hope Automattic executes well, and maybe they will also open an office in Kendall Square alongside Microsoft, Google, Yahoo!, et al:)
2/26/08 9:49 am
“As the deal was being put together, Tony Conrad introduced Matt and Mike to Toni Schneider”
Not that it matters hugely, but for accuracy’s sake I was introduced to Matt by Om Malik in summer 2004, about a year before Automattic raised it’s first money.
2/26/08 10:46 am
Toni
Thanks for the clarification. I have corrected this.
3/4/08 3:34 pm
Great story, great article. I am constantly amazed by Matt’s levelheaded approach to fleshing out Automattic and his interesting view on commonly problematic issues, such as advertising. I look forward to seeing what Automattic has up their sleeves in the future.
3/6/08 4:47 am
Very enjoyable read. I have no doubt that there are great things in store from WP and Automattic. He has so many great qualities, refreshing to know Web Entrepeneurs like Matt exist.
3/6/08 4:50 am
Thanks for the article, it was a good read indeed
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8/2/09 12:06 pm
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