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 3 of 4)
rushing things, though, describing the two as very careful about husbanding resources and not over-hiring from the start. Hirshland says they also resisted rushing into areas like enabling video or photos. “They were really focused about being smart about how they architected the infrastructure so that the thing really could scale when it was time to.”
And scale it soon did. Mullenweg says on his blog that the keys to WordPress really taking off were making it easy for people to set up their own free blogs on WordPress.com and working with Web hosting providers to make it possible to download the WordPress software with a single click. When that happened, he writes, “the popularity grew beyond what I could have ever imagined.”
Now we’re heading into the summer of 2007, and the company found itself at a crossroads. Says Hirshland, “During this period, WordPress really hit that point in the curve where growth was very noticeably accelerated.” Major media firms noticed as well, and “all of a sudden took a whole bunch of strategic interest in the company,” he adds. “So Matt had some decisions to make. They were hard decisions.”
One suitor was particularly serious—a major company wanting to acquire Automattic. (The name of the firm has not been released, but I can’t help but guess that with CNET being an early investor, it would be logical for it to take an interest: the NYT is also a possibility, but somehow I get the feeling it was waiting for another way in, hence the small investment). After a lot of discussion, Mullenweg decided to sell.
Hirshland, the supposedly conservative East Coast VC, calls the decision frustrating. “I said to Matt I felt very strongly he shouldn’t take the offer, and we should invest and build,” he recalls. Mullenweg resisted, arguing that it would be good to be part of a larger business and not worry about funding and other resources. So he accepted the offer, and the two sides began negotiating the details, a process that lasted until early last fall.
But as the negotiations continued, the doubts apparently grew in Mullenweg’s mind. Says Hirshland, “I think Matt did some really hard soul searching, thinking of the value of what was being built.” He remembers a poignant meeting last fall where Mullenweg told the group that he had come around to the idea that the right thing to do was to stay independent and go for it.
“Needless to say, I was very happy,” Hirshland says. With the decision to remain independent, it was definitely time to raise more money to scale the company to bigger things—and he and Polaris were happy to oblige. “It took about five minutes to decide that this was something that we wanted to do,” he says. “From our perspective there’s nothing more attractive than getting to back entrepreneurs and companies that you already know very well.” Arriving at terms was relatively easy, too, since a lot of the details had already been set during the aborted buyout offer.
The $29.5 million Series B round closed in late January, with Polaris putting up $20 million of the total. Previous investors Black (through True Ventures) and Radar Partners also joined the round—as did The New York Times, which had previously expressed interest in deepening its ongoing strategic relationship with Automattic if an opportunity presented itself.
So, what next? Hirshland calls the growth of Automattic and WordPress “mind boggling.” WordPress has two main forms: WordPress.org, which is where you download the software and install it yourself on a host site, and WordPress.com, a service that offers you a free WordPress blog. Here are some more stats from Mullenweg’s blog, written in late January: 5,880,790 total downloads of WordPress.org, including 3,852,554 in the last year alone. In 2007, “On WordPresss.com 1.8 million new users joined, they created 25 million posts, we served 3.2 billion dynamic page views, and grew to reach over 100 million unique users worldwide.”
That, obviously, provides a base for building the business into something really big—which is the reason behind the company’s huge new funding round. (Hirshland says it’s a myth that Web 2.0 companies don’t require that much capital: in the beginning and if they never meant to be real companies, maybe, he says. But not if it’s going to be a platform.)
The New York Times partnership will be a big part of those plans. “There’s a whole bunch of ways in which …Next Page »
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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
7/6/08 8:57 am
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