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.
One of the cornerstones of Automattic’s web-scale infrastructure is a project out of Russia we started using in 2008 called Nginx. Don’t let the sparse website fool you, Nginx (pronounced engine-ex) has been taking high-end websites by storm, and is used on 24% of the top thousand websites (a good chunk of them WordPress). I was very proud of our team helping sponsor and debug SPDY support in the latest release. Hopefully this accelerates the adoption of technology like SPDY that improves the user experience of the web.
As I write this, I’m on my way to Seaside, Florida to see 60+ Automatticians at our yearly meetup. More than sixty… that number astounds me! Automattic has grown so far beyond what I originally imagined and every day I’m amazed by my colleagues and the things they create. Today we’re growing in another way: Automattic has transferred the WordPress trademark to the WordPress Foundation, the non-profit dedicated to promoting and ensuring access to WordPress and related open source projects in perpetuity. This means that the most central piece of WordPress’s identity, its name, is now fully independent from any company.
This is a really big deal.
I want to recognize and applaud the courage and foresight of Automattic’s board, investors, and legal counsel who made this possible: Mike Hirshland, Phil Black, Tony Conrad, Toni Schneider, Gunderson Dettmer. I’d also like to thank Matt Bartus of Dorsey & Whitney for their counsel on the Foundation side. The WordPress brand has grown immeasurably in the past 5 years and it’s not often you see a for-profit company donate one of their most valuable core assets and give up control. However, I know in my heart that this is the right thing for the entire WordPress community, and they followed me on that. It wasn’t easy, but things worth doing seldom are.
When Automattic registered the WordPress trademark back in 2006, we were a small startup of a few people: a business founded largely to enable us to work on WordPress full-time instead of hacking around our day jobs. A lot has changed since then — somehow along the way we ended up with an audience of a quarter billion people — but a lot has stayed the same. We’re still a group of people in love with WordPress and free/open source software and we’re lucky to have figured out a way to contribute to the world and flourish as a business while doing it.
Automattic might not always be under my influence, so from the beginning I envisioned a structure where for-profit, non-profit, and not-just-for-profit could coexist and balance each other out. It’s important for me to know that WordPress will be protected and that the brand will continue to be a beacon of open source freedom regardless of whether any company is as benevolent as Automattic has been thus far. It’s important to me to know that we’ve done the right thing. Hopefully, it’s important to you, too, and you’ll continue your support of WordPress, the WordPress Foundation, and Automattic’s products and services. We couldn’t do it without you!
If you haven’t heard of P2 yet, check out this quick video:
Almost everyone at Automattic is a blogger, but for the first couple of years of the company we didn’t blog much internally. Everything happened over IRC, Skype, and email. (In that order.) Eventually we started a blog that worked like a traditional blog did with long posts and comments, but everyone forgot to visit it until I wrote a quick script on cron job that would email everybody summaries of new posts and comments.
There was a disconnect we couldn’t reconcile: even though our internal blogs didn’t work out most of the company was active on Twitter every day. (WordPress users are some of the most passionate adopters of micro-blogging.)
We found a solution in Prologue which added a posting box to the home page and gave it a Twitter-like feel. Now Automattic had a pulse, a place where the incredible amount of activity was chronicled and captured. It was low-friction and hassle-free, we all started using it more.
But there was still a problem, Prologue was great for status updates but terribly awkward for conversation. P2 solves all this by moving the conversation inline on the homepage. Conversations can be fully threaded using 2.7’s new comment features. Finally the blog started to get so busy we made it real time so you can just leave the page open and new stuff will come in. (It’s hard to describe, so watch the video above.) Seemingly simple changes have increased engagement many-fold: our main P2 now has over 4,700 posts in it with 1,100 of those in the past 60 days.
It completely transformed how Automattic works internally and I think is one of the most valuable things we’ve adopted in the past year. I’m on the road a lot, and sometimes my only connection is checking the mobile-optimized P2 on my iPhone.
I’m excited about P2 partly because blogs provide an incredibly robust infrastructure on which to build more advanced apps and this is a good example of that. I’d love to see more themes that transform what WordPress can do top-to-bottom.
Some exciting news today: Yahoo! is transferring blo.gs to Automattic for safekeeping and further development. I’ve been a long-time fan of the service, and it even inspired the early WordPress feature which reordered your blogroll based on update times.
We’re looking forward to beefing up the service and giving it a refresh, while continuing its reputation for reliability. It makes me nostalgic to hear the name “blo.gs” again, I even still have the t-shirt they made for a Feedmesh meetup years ago. (For a big blast from the past, check out the discussion around feedmesh and real-time, distributed updates. Everything old is new again.) Major kudos to Yahoo! for giving us the chance to do so — I think most companies would have just shuttered it.
We’ve also aggregated and organized all that awesome WordCamp footage from around the web, on WordCampTV. There you’ll find videos and slideshows of presentations made by Automattic employees and other WordPress gurus, plus interviews I’ve done with the media and fellow bloggers.