Matt Mullenweg sells a stake in Automattic

by Mathew on April 12, 2006 · 3 comments

As you may know if you’ve been reading my blog at all over the past little while, I find it fascinating to look at the various business models being pursued by Web 2.0 startups, and the debate over which route is better — such as the question of whether blog networks need VC money, which a recent post by Jeremy Wright raised, or whether startups should build themselves specifically to be bought by Yahoo or Google or Microsoft, and try to duplicate what del.icio.us did.

For the latest perspective on all this, we can look to Matt Mullenweg of Automattic.com, the creator of WordPress.com — the blog software this blog uses, and many others — as well as the blog-spam tool Akismet and lots of other cool stuff. On his blog, Matt writes about selling a minority stake in the company to what he describes as “to a few select partners who I think are going to bring a lot of value to the business far beyond mere dollars.” Matt, who is an extremely nice guy — even if he does look like he’s about 15 years old (he’s 22) — puts it this way:

“This isn’t going to change how the business is run, or the people involved with it, but it will allow us to take better advantage of the opportunities before us and also for us to keep our promise to every one of you to maintain a fast, stable, and innovative platform in the long term.”

Matt says the company “isn’t going to get fancy SoMA offices, throw huge parties at SxSW, or “get big fast.” Instead, it’s going to spend the money on sharing “everything we can back to the community, like all of the code behind WP.com in WordPress MU, the spellchecking feature we sponsored, free Akismet for 99.9% of users, and a few other goodies we still have up our sleeve.” A smart post and a smart move by a smart guy. Well done, Matt — and good luck.

Update:

VCMike, one of the guys at Polaris who acquired the stake in Matt’s company, has a description of why on his blog, and Automattic’s CEO talks about it here.

Note:

I don’t want it to seem like every post I write is somehow about our conference (www.meshconference.com) but it just so happens that Matt will be on a panel at mesh on May 16th. Mark Evans ran into him at iSummit and asked him if he would, and he very kindly said yes. Maybe we can talk a bit about his decision and how it came about.

  • http://sethf.com/ Seth Finkelstein

    OK, the VC’s are for the business contacts and the connections. I can understand that. It’s not just about cash.

  • http://www.iworkindustries.com James

    Although…

    If you’re a middle class programmer, and folks keep telling you how great a job you’ve done with your development, and you could lay in some savings for giving up a small portion of the company you’d built (and you were 22!), taking a little cash sounds like a great idea.

    I don’t think it’s right to speculate on the ranking of each factor – cash, contacts, experience, connections – that a deal brings forth, but, though it’s not cool to acknowledge, never underestimate the motivation of cash.

  • Mathew

    Thanks for the comment, James. An excellent point.

    Mathew

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