by David Shabelman
[Posted on January 23, 2008 - 5:11 PM]
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DiggEmployees of Automattic Inc. are spending the week at an off-site company gathering at the C.O.D. Ranch and Retreat, 35 miles north of Tucson, Ariz. Picking up the tab won't be a problem with the blog technology company scoring $29.5 million in a second round of venture capital funding.
"We're a virtual company, and most of us work from home," said Automattic CEO Toni Schneider. "So we get together a couple of times a year to have some social time."
Polaris Ventures of Waltham, Mass., which invested as part of a $1.1 million funding for Automattic in 2006, led the Series B round. New York Times Co. joined investors True Ventures and Radar Partners, both of Palo Alto, Calif., in the latest round.
San Francisco-based Automattic operates the WordPress blog publishing platform. According to a blog post from company founder Matt Mullenweg, 1.8 million users joined WordPress in 2007, creating 25 million posts. Its top competitors include Six Apart Ltd. of San Francisco, which provides blogging services through its TypePad and Movable Type platforms (The Deal uses Movable Type for its blogs) and has raised $23.8 million in financing.
Schneider said The Times was already using Automattic's blogging software, so it was familiar with the company. He discussed an investment with the newspaper's senior vice president for digital operations, Martin Nisenholtz, and publisher, Arthur Sulzberger Jr., after running into them at a recent conference. The New York Times also is a limited partner with True Ventures, which focuses on early-stage digital media and other tech startups.
"They have plans going forward that intrigue us, and in order to improve what we're doing in that area, we'll be more successful if we work in a strategic partnership with guys as deep as the Wordpress guys are," Nisenholtz said.
Among those plans, Nisenholtz said, are ways for The Times to use blogs to supplement stories on the paper's Web site. For example, the publisher plans to use WordPress to aggregate relevant blog content from around the Internet to run along with its stories.
Schneider said the newspaper's participation in the venture funding "helped crystallize" the round. "It shows that strategic partners know how far WordPress has come and that it's powering blogs for the largest media companies in the world."
Schneider said Automattic would use part of the funds to cash out some early investors and early employees of the company, though he declined to provide further details. The company also will use the money to develop additional services for self-publishers and bloggers. In addition to its blogging platform, Automattic provides anti-spam technology for bloggers and owns a service that provides online "avatars"--human representations on the Internet. The company also runs bbPress, an open-source tool for indexing and categorizing blogs.
"We've felt like we've shown that our model worked for WordPress, and now we want to duplicate that across multiple projects and not just be a one-product company," Schneider said.
As Schneider acknowledged, Automattic has been approached about being acquired, but dismissed as false published reports that buyers would not meet the company's price tag. Those reports indicated Automattic was looking for as much as $300 million in an acquisition, while suitors were offering $150 million and $200 million.
"We've never gone out and tried to sell the company and said, 'If someone pays X we'll do it,' " he said. "We've been approached by people, and our typical response is that we're not for sale. We've never gone through a process of setting a price and shopping the company."
