Automattic announced another round of funding today, a $300 million Series D investment from Salesforce Ventures, giving the company a $3 billion valuation post-funding. The last time Automattic raised money was $160 million in a Series C round in 2014. Since that time the company has grown to more than 950 employees and made strategic acquisitions, including WooCommerce in 2015 and Tumblr (closing in 2019).
CEO Matt Mulleneweg said the funds will enable the company to speed up and scale its product development, as well as continue the company’s continual contributions to WordPress:
For Automattic, the funding will allow us to accelerate our roadmap (perhaps by double) and scale up our existing products—including WordPress.com, WordPress VIP, WooCommerce, Jetpack, and (in a few days when it closes) Tumblr. It will also allow us to increase investing our time and energy into the future of the open source WordPress and Gutenberg.
In 2016, Mullenweg identified both Jetpack and WooCommerce as “multi-billion dollar opportunities” that could each be larger than WordPress.com in the future. Jetpack has grown from 1+ million users in 2016 to more than 5 million today. The plugin’s product team has aggressively expanded its commercial plans and features and is one of the first to experiment with offering previews and commercial upgrade nudges for blocks in WordPress’ editor.
WooCommerce has also grown to more than 5 million active installs (from 1+ million in 2015 at the time of acquisition). The e-commerce platform has a more challenging market with formidable competitors like Shopify, which recently overtook eBay as the second largest shopping site after Amazon. Shopify reported $362 million in revenue during its last quarter with $153 million coming from subscriptions to the Shopify platform.
I asked Mullenweg about how the funding might help Automattic make WooCommerce more user-friendly and competitive. Despite going up against the seemingly indomitable e-commerce powerhouses, Mullenweg sees WooCommerce’s platform an opportunity for growing independent stores on the web.
“WooCommerce already represents the best way to marry content and commerce, and has a huge advantage being so tightly integrated from a user perspective with WordPress itself,” Mullenweg said. “However it also inherits some of the barriers WordPress has to adoption, particularly from new users. I think that Gutenberg will help a ton, as it’s better than any of the builders the eCommerce players have, and when that gets combined with the flexibility, control, and scalability you get from WP + WooCommerce it’s going to be huge. There’s a ton of work left to do, though, and we’re trying to grow that team as quickly as possible to keep up with the opportunity.”
Mullenweg declined to share any information about Jetpack and WooCommerce’s revenue today but confirmed that they have not yet eclipsed WordPress.com.
“What I can say is that WP.com is still our biggest business, and WooCommerce was our fastest growing last year,” he said.
Automattic’s most recent round of funding will help the company better monetize these products that have grown in tandem with WordPress’ market share, which W3Techs puts at 34.5% of the top 10 million websites. Independent stores sitting on top of this large chunk of the web represent a significant market that Automattic is currently dominating in the WordPress space.
The Tumblr acquisition also affords another opportunity to introduce e-commerce solutions to more of Automattic’s customers. Mullenweg previously said the Tumblr app receives 20X more daily signups than the WordPress mobile app. The social network/blogging hybrid also has a significantly younger user base, based on a 2018 study that found 43 percent of internet users between the ages of 18 to 24 years old used Tumblr. It’s an untapped market for e-commerce, as Tumblr users who want to sell currently have to use a service like Shopify or Ecwid and generate a Tumblr-compatible widget.
Mullenweg said the acquisition hasn’t closed yet but Automattic may explore e-commerce on Tumblr in 2020.
“Once it closes there will be a few months of normal integration work and getting the teams working together, making sure we have harmonized policies on support, content moderation, anti-spam, ads, and all of those lower-level things,” he said. “Beyond that I’ve seen what you’re seeing — a lot of Tumblr users want access to more customization and e-Commerce. There are no specific plans yet but I imagine that’s something the team will consider for next year’s roadmap.”