Automattic Raises $160 Million, Valued at $1.16 Billion

[Jgrubb]

I don't know if you still come slumming around HN anymore, but congrats, photomatt. I'm a Drupal developer and I always think it's funny when I hear the Drupal war cry about how much more flexible or capable or whatever Drupal is than Wordpress. Seems to me that you had a much clearer idea of what you wanted your product to do from the get go, and I admire that a lot. Way to go.

[photomatt]

Thanks!

[yawz]

Well done! Congratulations.

Funny enough, I'm nearing the end of Scott Berkun's "The Year Without Pants: WordPress.com and the Future of Work"[1]. It is a great read. Highly recommended for a behind-the-scene view of WordPress and their company culture.

[1] http://www.amazon.com/gp/product/1118660633?ie=UTF8&camp=178...

[hayksaakian]

Not sure why the HN title, as of 10:15 PT doesn't include the full title "WordPress.com parent Automattic..."

Adds a lot of context

[spada]

Likely because if you have any interest in tech valuations you know what Automattic is.

[chexee]

"The longer a thread about Automattic exists, the likelihood the WordPress v. WordPress.com argument will come up approaches 1."

The curve grows steeper.

[iwasphone]

The reason is cultural: on HN you are expected to know products by the name of their corporate entity.

[poopsintub]

The WordPress Foundation is a separate entity from Automattic at this point. They're just contributors.

[krogsgard]

The original post title didn't include the .com, so said "WordPress parent company" which is inaccurate. It was probably submitted to be technically accurate. Now that the post title has been adjusted to include .com, it would make more sense to use that here.

[jmathai]

Automattic, makers of Wordpress.com, ... is more accurate.

[rokhayakebe]

Two questions.

Where the funding goes for these web or mobile app companies?

Why so many tech companies have a high employee count when others (seemingly larger) do away with little people (Instagram, Craigslist, Whatsapp...)?

[davidu]

Companies that sell a product, especially an "enterprise" product need more people.

Instagram is engineering driven. Growth there is engineering driven.

Companies like Box have sales people, account managers, sales engineers, code engineers, marketing folks, finance and planning people doing modeling and running the books, etc. Growth is technology driven but people enabled.

[lifeofanalysis]

I want to help clarify this valuation.

I think it is not clear from the article why Mullenweg (CEO) suddenly thinks they are capital constrained. Let's do some back-of-the-envelope numbers.

Their Enterprise VIP service (managed hosting basically) is useful, no doubt. And @ $5-10K a month, it is chump change for enterprises. But how many massive blog clients like New York Post, NYT, or CNN, would you need to make back $160 million. If you had 100 such clients, you would be grossing $10-20MM, and, probably netting $2-4MM profit. You would need a lot of clients to make back that $160MM but it does not matter.

Let us say you hire a sales team of 20 to do full time enterprise sales. That's $5MM investment per year. Let's say they bring in 50 new enterprise customer every year. That's $5MM/year recurring revenue. So the money spent on Enterprise sales is well invested.

But you can't spend $160MM on marketing/infrastructure for managed hosting.

Did they just take advantage of frothiness in the market? I wouldn't blame them; I mean if investors want to give them the money, then great.

Make no mistake. Wordpress is a useful platform. They could a lot to keep improving blogging for a long time. And there is lot of value in being the CMS host for enterprises. But $1.16 billion?

Can they IPO at this valuation? I think they can; money goes from small investors pockets to big investors pockets in the unending cycle.

I think that's what this is about; this will unfold over the next 2-3 years, as the new investors want their returns.

[untog]

All three examples you gave are consumer products that are either free or near-free. The level of support people expect from Instagram is very different to the support they expect from the company they pay to host their corporate web site.

[dkasper]

> Where the funding goes for these web or mobile app companies?

Marketing/advertising and employees.

[TheBiv]

Regarding the second question, the high head count most likely is in account management/support

[wehadfun]

Is Facebook and Automattic the main companies keeping php around

[jackbravo]

Wordpress, Joomla and Drupal. Those 3 CMSs run more than 50% of all the CMS powered websites on the entire Internet (http://trends.builtwith.com/cms), all written in PHP.

[paulgb]

Wikipedia and Yahoo are high-profile PHP users as well.

[akgerber]

Etsy makes extensive use of it and employs the originator of the language, Rasmus.

[joshdance]

Inertia. Lots of tuts about php. Relatively easy to get something to show up. Runs just about anywhere. But FB and Automattic definitely push it forward.

[donniezazen]

As someone who has recently learned programming and is unaware of history of programming languages, all this PHP hate leaves me whimsical.

[georgiecasey]

magento, the leading self-hosted e-commerce software.

[leorocky]

Are they in that valuation trap Fred Wilson wrote about? High valuation, too much burn, tight IPO market?

[krogsgard]

They've been running with positive cash-flow even without the investments. Few employees and relatively low costs. Matt notes in his personal post that they are capital constrained for faster growth but not for operations, so it's not about running out of money but having more money now for current opportunities. http://ma.tt/2014/05/new-funding-for-automattic/

[antidaily]

The CMS arms race. I just saw a commercial for Wix.

[majani]

FOSS companies by design have no sustainable competitive advantages, and therefore shouldn't command high valuations. This Bubbly valuation is only being driven by comparisons with the equally silly Tumblr sale.