Tag: vc

Difference Between WordPress and Facebook

Fred Wilson puts the difference at $14.8B – if we take “the publicly available information about the most recent financings of the two companies ($15bn for Facebook and $200mm for Automattic)” to provide good measures of the respective company’s values. But Fred isn’t any more impressed with that measurement that I am.

I think that some aspects of Fred’s post could use clarification. I’ll continue the job of clarification started in a comment by Jeff Jarvis. I’ll also plug some of my own writing about WordPress.

After quoting the funny money numbers, Fred moves on to a chart of unique visitors to Facebook and to “WordPress.” Jeff’s clarification is that the WordPress line in that chart almost certainly refers to the site WordPress.com, and that many WordPress blogs are hosted elsewhere. Jeff also remarks that WordPress is a platform, not a social network.

We need to be clear about three different but related entities.

Comparing unique visitors at Facebook.com and at WordPress.com is comparing an apple with an orange. Automattic has other oranges in its bag, and hence has other revenue streams. If we want to compare the $ values of Facebook and Automattic, we should look at all the oranges in Automattic’s bag, and not just at WordPress.com.

Having noted the clarification in Jeff’s comment, I’d like to follow up on another statement from the same comment: “WordPress is not a network. WordPress is a platform.” That’s mostly true, but it ignores a couple of important points.

First, WordPress has several of the ingredients of a social network. Consider, for example, Diso: “an umbrella project for a group of open source implementations of… social networking concepts… first target is WordPress, bootstrapping on existing work and building out from there.” I’ve added emphasis to show that Chris Messina and his buddies consider WordPress a good starting point for an open, standards-based social network.

Second, WordPress.com has several network-like features. Once signed on to WordPress.com, you can leave comments on other blogs hosted there (including this one) without having to provide further identity. There are WordPress.com-wide tag and category pages; as an example, here’s the page for the tag automattic.

One of the things that makes Automattic interesting is that it’s in the business of making money from free software. If you share my interest in this aspect of Automattic, you might want to check out my series of posts on it. It starts with this introduction. The most successful post in the series (indeed, on this blog) is the one on making money from WordPress.com.

I don’t attempt to put a $ value on Automattic. I am convinced that its $ value does not lag that of Facebook by many billions of dollars. I think that Fred Wilson shares my conviction. I wonder if he attempted to get his VC firm, Union Square Ventures, a piece of the Automattic action. Earlier this year, Automattic got a $29.5M round of funding.

Automattic Cash: $29.5M

Matt reports that Automattic has raised $29.5M, and indicates that the money isn’t just for WordPress.

Automattic is now positioned to execute on our vision of a better web not just in blogging, but expanding our investment in anti-spam, identity, wikis, forums, and more — small, open source pieces, loosely joined with the same approach and philosophy that has brought us this far.

News about this funding started to come out a couple of months ago. It’s not clear to me how much of the money will go to the founders.

Other coverage includes:

  • The NY Times, which is one of the investors in this new round.
  • CEO Toni: “we are also entering a partnership with the Times to expand their existing WordPress blogging infrastructure and to create new ways of connecting WordPress bloggers with the New York Times and its readers.”
  • Om Malik, in what I think is his longest post since his recent “little medical episode.”

A Network That Has No Site

Fred Wilson, VC in NYC, reports that Union Square Ventures has invested in Zynga. I hadn’t heard of Zynga, but Fred’s post caught my attention because it was essentially saying: I invested in a network that has no site.

Which of course owes much to the line “I gave my love a chicken that has no bone”. Which of course is from the song “I Gave My Love a Cherry” and, more to the point, is said by Homer Simpson in Marge vs. the Monorail. You may remember that he follows it with “Mmm…chicken.”

You may also remember that the late great Phil Hartman did the voice of the huckster who sold the people of Springfield on the monorail. The song with which he did so is reason enough to track down the classic episode. If you do track it down, I’d be interested in your comparison between the monorail, as on The Simpsons, and social networks, as on the web.

Acquia: Drupalmattic?

Acquia is a startup that will provide complements to Drupal. Drupal, in turn, is a content management platform supporting a variety of web sites from personal blogs on up. Drupal is free/open source software, released under the GPL.

One of the questions in the Acquia FAQ is: “Are there other open source companies that Acquia is modeled after?” Part of the answer provided is that: “Just like Red Hat, Acquia’s business model is based on an existing open source project with a broad base of existing GPL’d open source code.”

Acquia strikes me as rather similar to Automattic. Drupal, like WordPress, is a GPL’d platform on which blogs and other “social web” sites can be built. The lead developer of Drupal, Dries Buytaert, will be the CTO of Acquia; Matt Mullenweg is in effect CTO is Automattic. Each firm has an experienced CEO who sold his previous firm.

Of course, there are also many differences between Acquia and Automattic. Acquia has started with rather more venture capital: $7 million, as opposed to the million or so with which Automattic got under way.

If the name Acquia makes you think of a series of map-in-front fantasy novels (The Annals of Acquia?), then check out Mark Hopkins’ post at Mashable. “Only a few days ago did Dries Buytaert,” he starts, and goes on to remark that Drupal “has grown to no small respectability.”

Web 2.0, Kleiner Perkins, and Wal-Mart

One of the web-related stories of the month so far is the apparent loss of interest in Web 2.0 on the part of Kleiner Perkins and other VC firms. Silicon Valley Watcher quotes a KP partner as saying: We have absolutely no interest in funding Web 2.0 companies.

Another story of the month is the success of the Everex Green PC at Wal-Mart (it’s still sold out at walmart.com as I write this). Glyn Moody emphasized two things about the gPC. Each is, not surprisingly, related to the fact that the gOS operating system is Linux-based.

One, of course is the price, which would be impossible with Microsoft Windows. The second is the way the manufacturer is trying to create a machine whose software is based around Web apps. One important aspect of this approach is that it decouples user software from the underlying operating system. So the fact that this machine is running GNU/Linux is almost at the level of what BIOS it uses.

To rephrase the second point: the web as platform is basic to the gPC. It’s also basic to Web 2.0. In fact, it is the first of the principles that Tim O’Reilly used to answer the question: What Is Web 2.0?

So it seems as though KP is leaving Web 2.0 just as Web 2.0 is arriving at Wal-Mart – and leaving just as quickly in the hands of customers. This is where I pull the alternate endings trick. Which of the following punchlines do you prefer?

  • KP’s timing is lousy: the market for Web 2.0 applications is getting bigger, thanks to the world’s largest retailer.
  • KP’s timing is good: it’s no accident that Silicon Valley is a long way from Bentonville, Arkansas.
  • Perhaps KP is just fed up with the term Web 2.0.
  • A big lumbering venturesaurus like KP isn’t right for Web 2.0 startups anyway. Such startups are better served by a firm like Y Combinator.

Automattic Cash

Michael Arrington has heard that Automattic has been offered a new round of financing. Most of it will go to the founders. Most of how much? Up to $50M. Michael doesn’t identify sources for this story, just as he didn’t for the earlier story that Automattic rejected a $200M buyout.

Actually, I’m less curious about sources than I am about founders. Who are the founders of Automattic? Matt, of course. I was fairly sure that Toni was not a founder, since Automattic already existed when he joined. A look through Toni’s archives shows that I was right, and that Andy, Donncha and Ryan were the other founders.

Meet the new financers, same as the old financers… the (up to) $50M comes from the same people who provided the first round of funding for Automattic. So the lead investor is Polaris, in the person of Mike Hirshland. He blogs as VC Mike at WordPress.com where, in April last year, he explained why Polaris invested in Automattic in the first place.

If the Arringtonian conjecture is correct – and I’d be surprised if it’s completely off the mark – congratulations to all concerned.