8 ms·

Automattic Raises $160 Million, Valued at $1.16 Billion

123 points by dkasper 12y ago

deleted 12y ago
[deleted]
hayksaakian 12y ago
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
- krogsgard 12y ago
  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.
- spada 12y ago
  Likely because if you have any interest in tech valuations you know what Automattic is.
  - jes5199 12y ago
    I don't know, Automattic seems much more obscure than a lot of the companies we usually talk about.
- poopsintub 12y ago
  The WordPress Foundation is a separate entity from Automattic at this point. They're just contributors.
  - rabino 12y ago
    "WordPress.com parent" is correct, though. "WordPress parent" wouldn't.
- deleted 12y ago
  [deleted]
- jmathai 12y ago
  Automattic, makers of Wordpress.com, ... is more accurate.
- iwasphone 12y ago
  The reason is cultural: on HN you are expected to know products by the name of their corporate entity.
- chexee 12y ago
  "The longer a thread about Automattic exists, the likelihood the WordPress v. WordPress.com argument will come up approaches 1." The curve grows steeper.
rokhayakebe 12y ago
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...)?
- TheBiv 12y ago
  Regarding the second question, the high head count most likely is in account management/support
- davidu 12y ago
  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.
  - trhway 12y ago
    >Companies that sell a product, especially an "enterprise" product need more people. The Disruption Opportunity (that has been out there for quite a time and is very resistant to disruption :)
- dkasper 12y ago
  > Where the funding goes for these web or mobile app companies? Marketing/advertising and employees.
- untog 12y ago
  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.
- lifeofanalysis 12y ago
  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.
leorocky 12y ago
Are they in that valuation trap Fred Wilson wrote about? High valuation, too much burn, tight IPO market?
- krogsgard 12y ago
  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/ http://ma.tt/2014/05/new-funding-for-automattic/
  - lifeofanalysis 12y ago
    Could be. But unlikely. See my detailed comment below.
antidaily 12y ago
The CMS arms race. I just saw a commercial for Wix.
Jgrubb 12y ago
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 12y ago
  Thanks!
wehadfun 12y ago
Is Facebook and Automattic the main companies keeping php around
- akgerber 12y ago
  Etsy makes extensive use of it and employs the originator of the language, Rasmus.
- joshdance 12y ago
  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.
- paulgb 12y ago
  Wikipedia and Yahoo are high-profile PHP users as well.
  - drgath 12y ago
    While I'd still consider FB a PHP-company, it's important to note that their use of it has evolved into a PHP derivative language ("Hack"). Also, Yahoo is years into a project to move everything away from PHP to JavaScript (Node.js) and Java. So, those companies abandoning stock PHP isn't much of an endorsement of the language & ecosystem.
- jackbravo 12y ago
  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 http://trends.builtwith.com/cms), all written in PHP.
- donniezazen 12y ago
  As someone who has recently learned programming and is unaware of history of programming languages, all this PHP hate leaves me whimsical.
- georgiecasey 12y ago
yawz 12y ago
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=1789&creativeASIN=1118660633&linkCode=xm2&tag=booksebooks-20* http://www.amazon.com/gp/product/1118660633?ie=UTF8&camp=178...
majani 12y ago
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.

123 points by dkasper 12y ago

deleted 12y ago

[deleted]

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

krogsgard 12y ago
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.
spada 12y ago
Likely because if you have any interest in tech valuations you know what Automattic is.
- jes5199 12y ago
  I don't know, Automattic seems much more obscure than a lot of the companies we usually talk about.
poopsintub 12y ago
The WordPress Foundation is a separate entity from Automattic at this point. They're just contributors.
- rabino 12y ago
  "WordPress.com parent" is correct, though. "WordPress parent" wouldn't.
deleted 12y ago
[deleted]
jmathai 12y ago
Automattic, makers of Wordpress.com, ... is more accurate.
iwasphone 12y ago
The reason is cultural: on HN you are expected to know products by the name of their corporate entity.
chexee 12y ago
"The longer a thread about Automattic exists, the likelihood the WordPress v. WordPress.com argument will come up approaches 1." The curve grows steeper.

rokhayakebe 12y ago

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...)?

TheBiv 12y ago
Regarding the second question, the high head count most likely is in account management/support
davidu 12y ago
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.
- trhway 12y ago
  >Companies that sell a product, especially an "enterprise" product need more people. The Disruption Opportunity (that has been out there for quite a time and is very resistant to disruption :)
dkasper 12y ago
> Where the funding goes for these web or mobile app companies? Marketing/advertising and employees.
untog 12y ago
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.
lifeofanalysis 12y ago
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.

leorocky 12y ago

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

krogsgard 12y ago
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/ http://ma.tt/2014/05/new-funding-for-automattic/
- lifeofanalysis 12y ago
  Could be. But unlikely. See my detailed comment below.

antidaily 12y ago

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

Jgrubb 12y ago

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 12y ago
Thanks!

wehadfun 12y ago

Is Facebook and Automattic the main companies keeping php around

akgerber 12y ago
Etsy makes extensive use of it and employs the originator of the language, Rasmus.
joshdance 12y ago
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.
paulgb 12y ago
Wikipedia and Yahoo are high-profile PHP users as well.
- drgath 12y ago
  While I'd still consider FB a PHP-company, it's important to note that their use of it has evolved into a PHP derivative language ("Hack"). Also, Yahoo is years into a project to move everything away from PHP to JavaScript (Node.js) and Java. So, those companies abandoning stock PHP isn't much of an endorsement of the language & ecosystem.
jackbravo 12y ago
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 http://trends.builtwith.com/cms), all written in PHP.
donniezazen 12y ago
As someone who has recently learned programming and is unaware of history of programming languages, all this PHP hate leaves me whimsical.
georgiecasey 12y ago

yawz 12y ago

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=1789&creativeASIN=1118660633&linkCode=xm2&tag=booksebooks-20* http://www.amazon.com/gp/product/1118660633?ie=UTF8&camp=178...

majani 12y ago

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.