Category Archives: Automattic

New Funding for Automattic

I’ll start with the big stuff: Automattic is raising $160M, all primary, and it’s the first investment into the company since 2008. This is obviously a lot of money, especially considering everything we’ve done so far has been built on only about $12M of outside capital over the past 8 years. It was also only a year ago I said “Automattic is healthy, generating cash, and already growing as fast as it can so there’s no need for the company to raise money directly — we’re not capital constrained.”

I was wrong, but I didn’t realize it until I took on the CEO role in January. Things were and are going well, but there was an opportunity cost to how we were managing the company toward break-even, and we realized we could invest more into WordPress and our products to grow faster. Also our cash position wasn’t going to be terribly strong especially after a number of infrastructure and product investments this and last year. So part of my 100-day plan as CEO was to figure out what new funding could look like and we found a great set of partners who believe in our vision for how the web should be and how we can scale into the opportunity ahead of us, though it ended up taking 110 days until the first close. (Our other main areas of focus have been improving mobile, a new version of WP.com, and Jetpack.)

This Series C round was led by Deven Parekh of Insight Venture Partners, and included new investors Chris Sacca, Endurance, and a special vehicle True Ventures created to step up their investment, alongside our existing secondary investors from last year, Tiger and Iconiq. (There is a second close soon so this list might change a bit.) There was interest significantly above what we raised, but we focused in on finding the best partners and scaled it back to be the right amount of capital at the right valuation. Deven and Insight share our long term vision and are focused on building an enduring business, one that will thrive for decades to come.

WordPress is in a market as competitive as it has ever been, especially on the proprietary and closed side. I believe WordPress will win, first and foremost, because of its community — the hundreds of core developers and large commercial companies, the tens of thousands of plugin and theme developers, and the millions of people who build beautiful things with WordPress every day. Automattic is here to support that community and invest the full strength of our resources to making WordPress a better product every day, bringing us closer to our shared mission of democratizing publishing. But a majority of the web isn’t on an open platform yet, and we have a lot of work ahead of us. Back to it!

You can read more about the news by Kara and Liz on Recode: WordPress.com Parent Automattic Has Raised $160 Million, Now Valued at $1.16 Billion Post-Money, on Techmeme, and on the Wall Street Journal.

Toni Schneider & Automattic CEO

Eight years and one day ago I blogged about Toni Schneider joining Automattic as CEO, as I said then:

I first met Toni shortly after I moved to San Francisco and I’ve wanted him to be a part of Automattic pretty much since the idea first entered my mind. We’ve spent many long meals over the past year discussing the Automattic idea before it even had a name. I’ve been on cloud nine since (somehow) I convinced him to leave the incredibly cushy corporate job and rough it out in startup world again. I’m very very excited about some of the things coming down the line.

Fast-forward roughly two thousand, nine hundred, and twenty-two days and I’m still on cloud nine and love working together with Toni. We have been through some incredible ups and downs in people, valuation, been on both sides of the table for acquisitions, and seen dozens of competitors come, go, and come again as the hyperactive tech news cycle loops back around.

Today we’re announcing publicly that Toni and I are switching jobs — he’s going to focus on some of Automattic’s new products, and I’m going to take on the role of CEO. Internally this isn’t a big change as our roles have always been quite fluid, and I’ve had some recent practice filling in for him for a few months last year when he was on sabbatical. I’ve learned a tremendous amount from Toni over the years and I’m looking forward to putting that into practice.

Besides, it’s obvious that no one in their twenties should run a company. They think they know everything, a fact I can now say with complete confidence now that I’m 30 and two days old.

See also: Toni Scheider’s post, Om Malik, Tony Conrad.

On the new Simplenote

Last week we relaunched Simplenote, an app Automattic acquired along with Simperium earlier this year. The coverage so far has been really overwhelming with great articles:

But, even after my foray into Simplenote alternatives and doing research and trying out other note-taking apps, I’ve stuck with Simplenote as my iOS note-taking app of choice. […] However, I could consolidate them all into just one app if I had to. And that app would be Simplenote. The reason I’d choose Simplenote is because it’s a quick, easy-to-use app with great search and it has fast, reliable sync.

Shawn Blanc: The New Simplenote Apps

Go check it out. For me it was easy – even though I dropped Simplenote, I had kept NVAlt syncing with it in anticipation of an update as good as this one. I launched it, logged in and a few moments later I was back up and running. Best of all, Simplenote is back on my first home screen.

Charlie Sorrel: Like Rocky, Simplenote Is Back In Front After Years Of Neglect

Simplenote has always kept the focus on content — your content. With a bare minimum chrome in its apps, Simplenote has stayed away from flashy gradients, big UI elements and detailed icons and instead, has offered a minimal, mostly white user interface to its users. I liked everything about Simplenote, so paying for its Premium subscription and supporting the service was a no brainer for me.

Preshit Deorukhkar: Simplenote — The Perfect Notes App Suite

Also the Simplenote for Mac app rising in the app store listing. I am excited about all of this above and beyond what any rational measure would support.

Probably the most comprehensive was by Ellis Hamburger in the Verge, Simplenote reborn: the first great notes app is back. I’d recommend reading the entire thing. Ellis asked me a number of questions via email and I’d like to share the entirety with you here:

What is so compelling about Simplenote, and why exactly was it worth “reviving?”

From the day I first used Simplenote it felt like a breath of fresh air in a crowded sea of cluttered apps. I use and rely on the service every day. We do many things at Automattic, but our core passion is creating great products. When we see something we feel isn’t our best work it bugs us until we’re able to loop back and iterate on it — it’s a blessing and a curse. This latest iteration of Simplenote on Android, OS X, and iOS is something we’re all very excited about sharing with the world.

How big a role did Simplenote play in Automattic acquiring Simperium?

It depends on how you look at it: I probably would have never heard of Simperium if it wasn’t for Simplenote, and the app really demonstrates the power of the Simperium API and the tastefulness of the people who created it. But the bigger interest was in what we could build alongside Fred and Mike on top of Simperium across all our products.

Where do Simplenote and Simperium fit with Automattic? Will any of each service’s features make their way into your other products, like WordPress, or do you intend to operate them separately?

Simplenote and WordPress share one key characteristic: they’re about writing. They both aspire to become invisible and be a canvas for your creativity. WordPress has succeeded above its competitors year after year because we’re ruthlessly focused on the experience of the author, and I saw the same spirit in Simplenote. It fits in Automattic like a glove.

One of the keys of Simplenote is, well, its simplicity. I think as we integrate it more with the broader Automattic ecosystem it’ll look more like Simplenote inside of WordPress rather than vice versa. It’s all backed by an easy-to-integrate API so if people want something more complex someone will build a client for that.

Simperium is at the core of several new things we’re either building or hope to build in the near future. We’re investing quite a bit to make the service robust and flexible for our needs as a top-ten internet site, and that development will benefit everyone who uses the service much the same way our investment in anti-spam benefits the internet at large through Akismet. You will start to see the Simperium engine make its way into almost everything we do.

Will Simplenote someday be a fruitful business? If so, how?

The beauty of Simplenote being under Automattic’s wing is that we are already blessed with incredibly fruitful businesses in WordPress.com, Akismet, and VaultPress. The biggest thing I didn’t like about the old app was the ads, and as you’ve noticed those are gone in this new version. Our main goal is to pour our heart into something and make it great, then it with the world. I find Simplenote indispensable, delightful, and use it every day, and I hope you will too.

That’s that, I hope that you check out Simplenote and give it a try. It’s now available for Android, iOS 7, and Mac.

More Tiger Secondary

It’s only been a few months since May when Tiger Global led a round purchasing about $50M of Automattic stock from existing shareholders, but they are back and have led a $75M purchase of Automattic stock, this time entirely from our early investor Polaris. (There were a few individuals in the first round, and ICONIQ joined investing in this round.)

Read also: Evelyn Rusli in the Wall Street Journal “Tiger Global Ups Investment in Creator of WordPress.com”.

Until now Polaris had been Automattic’s largest investor, and second largest shareholder. Mike Hirshland wrote the biggest checks in our 2006 and 2008 rounds (the only primary capital Automattic has raised) and served on our board until 2011 when he left the firm and we were lucky to be joined by Dave Barrett. Over the years I’ve had the pleasure of spending time and getting great feedback from a number of people associated with the firm including Ryan Spoon, Bob Metcalfe, Steve Arnold, and Alan Spoon. Although they’ll no longer be on the board Polaris will continue to be a major shareholder, retaining about a third of their stake. Now that Automattic has been locked in as a win for their portfolio I hope they’ll continue to be involved for many years to come.

I’m glad to be even more fully aligned with Tiger. I think it says a lot to their excitement in the company that just a few months after joining the family and learning more about the company they significantly increased their stake, and at a significant bump in valuation. Their deep resources, market experience, and long-term outlook make them an ideal partner for the next phase of Automattic and the continued growth of the WordPress ecosystem. What we’re building will take time and it won’t be easy, but things worth doing seldom are.

This news comes in a fun week generally: Scott Berkun’s book about Automattic is out today and getting rave reviews, WordPress.com just passed Yahoo in the US Quantcast rankings (and that doesn’t include custom mapped domains), we’re relaunching Simplenote for iOS 7 and Mac after the Android update last week, WordPress is on the cusp of cracking 20% of websites, we just announced a partnership with Eventbrite, and this Wednesday I’ll be on stage at GigaOM’s Structure Europe conference.

Hopefully I’ll see some of you there, and if you’d like to join in on the mission of democratizing publishing Automattic is hiring.

Business Insider has a fun article on Automattic’s Awesome Remote Work Culture. Includes some quotes from me about how we work, including “Rather than being anti-office, we’re more location agnostic” and the top five meetup locations so far (Lisbon, Portugal; Kauai; San Francisco; Amsterdam; Tybee Island, Georgia).

Automattic After-Market, Lee Fixel, and Tiger

One of the most striking shifts in entrepreneurship when I started Automattic seven years ago was the rise of the Founder Friendly VCs. The standard operating procedure at the time for VC-backed companies consisted of bringing in “adult supervision,” founders often taking largely-ceremonial roles like “chief architect” after the business had scaled to a certain point, aggressive financial terms around liquidation preferences, and a control structure that more often than not left founders with a minority say in the future of the company, especially if it went through rough patches. Folks like True Ventures (who Automattic has always been intertwined with) appeared as iconoclasts because they came out saying that founders were the best ones to grow a company long-term and structuring their entire practice and way of investing around that idea. It seems non-controversial now, but it was like Dylan going electric. Still in spite of their philosophical innovations, many of these funds were structured in similar ways to the ones of old, with 7-10 year fund lifetimes, for example.

Fast-forward to 2013 and there’s an even more founder-friendly class of investors rising, at least for companies that have made it past a certain exit velocity of growth and revenue. Most visibly pioneered by Yuri Milner and Facebook in 2009 there’s a breed of later-stage investors from largely financial backgrounds that come in with the ability to write checks larger than the entire size of most VC funds and a desire to align with founders so strong that they embrace things that even VCs from the founder-friendly cohort would balk at: forgoing board seats, assigning voting proxies to founders, taking very long term approaches to growth, and investing in (and seeking out!) companies outside of the California/New York bubble, from South Africa to Russia to Brazil. The most interesting thing to me about this new generation is how behind the scenes they are: forget about a blog or Twitter, most of these guys don’t even have websites for their firms. These are some of the smartest and most successful people you’ll ever meet and you’ll never hear about them… they like it that way. Asymmetric information is their core competitive advantage.

Anyway, wanted to get in front of the news that will inevitably come out in the next week or two: there has been a large secondary transaction in Automattic stock, about $50M worth. “Secondary” means that it’s existing stockholders, like the earliest investors or employees, selling stock to another investor versus money going into the company (“primary”). It was led by Lee Fixel at Tiger Global, one of the behind-the-scenes quiet geniuses that has previously invested in SurveyMonkey, Facebook, LinkedIn, Palantir, Square, Warby Parker… Automattic is healthy, generating cash, and already growing as fast as it can so there’s no need for the company to raise money directly — we’re not capital constrained. The minority of stockholders that elected to participate are holding on to the vast majority of their shares. We’re building an independent company that’s going to be a growing part of the fabric of the web for many years to come, so allowing early investors to lock in some returns releases any short-term pressure there might be on the company for a liquidity event and allows us to focus fully on the long road ahead.

As sometimes happens in with regulated financial things, I can’t answer every question about this, but will leave comments open. I hope to see some of you on Monday the 27th when I’ll be celebrating the 10th anniversary of WordPress alongside community members in over 500 cities. Also check out Toni’s post about all of the above. If you’re interested in living anywhere and working hard alongside people passionate about the same, Automattic is always hiring.