Automattic pumps $4.6M into New Vector to help grow Matrix, an open, decentralized comms ecosystem

Automattic, the open source force behind WordPress .com, WooCommerce, Longreads, Simplenote and Tumblr, has made a $4.6M strategic investment into New Vector — the creators of an open, decentralized communications standard called Matrix. They also develop a Slack rival (Riot) which runs on Matrix.

The investment by Automattic, which is at a higher valuation than the last tranche New Vector took in, extends an $8.5M Series A last year, from enterprise tech specialists Notion Capital and Dawn Capital plus European seed fund Firstminute Capital — and brings the total raised to date to $18.1M. (Which includes an earlier $5M in strategic investment from an Ethereum-based secure chat and crypto wallet app, Status).

New Vector’s decentralized tech powers instant messaging for a number of government users, including France — which forked Riot to launch a messaging app last year (Tchap) — and Germany, which just announced its armed forces will be adopting Matrix as the backbone for all internal comms; as well as for the likes of KDR, Mozilla, RedHat and Wikimedia, to name a few.

Getting Automattic on board is clearly a major strategic boost for Matrix — one that’s allowing New Vector to dream big.

“It’s very much a step forwards,” New Vector CEO and CTO and Matrix co-founder, Matthew Hodgson, tells TechCrunch. “We’re hopefully going to get the support from Automattic for really expanding the ecosystem, bringing Matrix functionality into WordPress — and all the various WordPress plugins that Automattic does. And likewise open up Matrix to all of those users too.”

A blog post announcing the strategic investment dangles the intriguing possibility of a decentralized Tumblr — or all WordPress sites automatically getting their own Matrix chatroom.

“This is huge news, not least because WordPress literally runs over 36% of the websites on today’s web – and the potential of bringing Matrix to all those users is incredible,” New Vector writes in the blog post. “Imagine if every WP site automatically came with its own Matrix room or community?  Imagine if all content in WP automatically was published into Matrix as well as the Web?… Imagine there was an excellent Matrix client available as a WordPress plugin for embedding realtime chat into your site?”

Those possibilities remain intriguing ideas for now. But as well as ploughing funding into New vector Automattic is opening up a job for a Matrix.org/WordPress integrations engineer — so the Matrix team has another tangible reason to be excited about future integrations.

“One of the best and the biggest open source guys really believes in what we’re doing and is interested in trying to open up the worlds of WordPress into the decentralized world of Matrix,” adds Hodgson. “In some ways it’s reassuring that a relatively established company like Automattic is keeping its eye on the horizon and putting their chips on the decentralized future. Whereas they could be ‘doing a Facebook’ and just sitting around and keeping everything centralized and as locked down as possible.”

“It’s a bit of a validation,” says Matrix co-founder and New Vector head of ops and products, Amandine le Pape. “The same way getting funding from VCs was validation of the fact it’s a viable business. Here it’s a validation it’s actually a mainstream open source project which can really grow.”

New Vector co-founders, Matthew Hodgson and Amandine le Pape

While the strategic investment offer from Automattic was obviously just a great opportunity to be seized by New vector, given ideological alignment and integration potential, it also comes at helpful time, per le Pape, given they’ve been growing their SaaS business.

“The business model that we’re looking at with New Vector to go and drive — both to fund Matrix and also to keep the lights on and grow the projects and the company — is very, very similar to what Automattic have successfully done with WordPress.com,” adds Hodgson. “So being able to compare notes directly with their board and our board to go and say to them how do you make this work between the WordPress.org and the WordPress.com split should be a really useful tool for us.”

While Matrix users can choose to host their own servers there’s obviously a high degree of complexity (and potential expense) involved in doing so. Hence New Vector’s business model is to offer a paid Matrix hosting service, called Modular, where it takes care of the complexity of hosting for a fee. (Marketing copy on the Modular website urges potential customers to: “Sign up and deploy your own secure chat service in seconds!”)

“Some of our highest profile customers like Mozilla could go and run it themselves, obviously. Mozilla know tech. But in practice it’s a lot easier and a lot cheaper overall for them to just go and get us to run it,” adds Hodgson. “The nice thing is that they have complete self sovereignty over their data. It’s their DNS. We give them access to the database. They could move off at any time… switch hosting provider or run it themselves. [Users] typically start off with us as a way to get up and running.”

Talking of moving, Hodgson says he expects Automattic to move over from Slack to Riot following this investment.

“I am very excited about what New Vector is doing with Matrix — creating a robust, secure, open protocol that can bring all flavors of instant messaging and collaboration together, in the way that the web or email has its foundation layer,” added Automattic founder, Matt Mullenweg, in a supporting statement. “I share New Vector’s passion for open source and the power of open standards. I’m excited to see how Automattic and New Vector can collaborate on our shared vision in the future.” 

Mullenweg was already a supporter of Matrix, chipping into its seed via Patreon back in 2017. At the time the team was transitioning from being incubated and wholly financed by Amdocs, a telco supplier where New Vectors’ co-founders used to work (running its unified comms division), to spinning out and casting around for new sources of funding to continue development of their decentralized standard.

Some three years on — now with another multi-million dollar tranche of funding in the bank — Hodgson says New Vector is able to contemplate the prospect of profitability ahead, with ~16.8 million users and 45,000 deployments at this point (up from 11M and 40k back in October).

“I think there’s also a high chance — touch wood — that this injection gives us a path straight through to profitability if needed,” he tells us. “Given the macroeconomic uncertainty thanks to the [COVID-19] pandemic, the opportunity to say we have this amount of cash in the bank, assuming our customers follow roughly the trajectory that we’d seen so far… this would be a way to get out the other side without having to depend on any further funding.

“If things are on track we probably would do additional funding next year in order to double down on the success. But right now this at least gives us a pretty chunky safety net.”

The coronavirus crisis has been accelerating interest in Matrix “significantly”, per Hodgson, as entities that might have been contemplating a switch to decentralized comms down the line feel far greater imperative to take control of their data — now that so many users are logging on from home.

“As lockdowns began we saw sign ups increase by a factor of about 10,” he says. “It’s tapered off a little bit but it was a real scaling drama overnight. We had to launch an entirely new set of videoconferencing deployments on Jitsi’s offering, as well as scaling up the hardware for the service which we run by several times over.

“We’re also seeing retention go up, which was nice. We assumed there would be a huge spike of users desperately trying to find a home and then they wouldn’t necessarily stick around. In practice they’ve stuck around more than the existing user base which is reassuring.”

In some cases, New Vector has seen customers radically shrink planned deployment timescales — from months to a matter of days.

“We literally had one [educational] outfit in German reach out and say that tender in September — we want you to go live on Monday,” says Hodgson, noting that in this instance the customer skipped the entire tendering process because of they felt they needed a secure system school kids could use. (And privacy concerns ruling out use of centralized options such as Zoom or Microsoft Teams.)

“The biggest impact from a New Vector perspective at least has been that a lot of our slower moving, bigger opportunities — particularly in the public sector with governments — have suddenly sped up massively,” he adds. “Because it was previously a nice to have premium thing — ‘wouldn’t it be good if we had our own encrypted messenger and if everybody wasn’t using Telegram or WhatsApp to run our country’ — and then suddenly, with the entire population of whichever country it might be suddenly having to work remotely it’s become an existential requirement to have high quality communication, and having that encrypted and self sovereign is a massive deal.”

In terms of competing with Slack (et al), the biggest consideration is usability and UX, according to Hodgson.

So, over the last year, New Vector has hired a dedicated in-house design team to focus on smoothing any overly geeky edges — though most of this work is yet to be pushed out to users.

“We’ve actually pivoted the entire development of Riot to be design led,” he says. “It’s no longer a whole bunch of developers, like myself, going and hacking away on it — instead the product owner and the product direction’s being laid by the design team. And it is an unrecognizable difference — in terms of focus and usability.

“Over the coming year we are expecting Riot to basically be rebuilt at least cosmetically to get rid of the complexity and the geekiness and the IRC hangovers which we have today in favor of something that can genuinely punch its weight against Slack and Discord.”

In another major recent development New Vector switched on end-to-end encryption across the piece in Riot, making it the default for all new non-public conversations (DMs and private chats).

“It’s the equivalent of email suddenly mandating PGP and managing not to break everything,” says Hodgson of that feat.

A key challenge was to “get parity” with users of the non-encrypted version of Matrix before it could be enabled everywhere — with associated problems to tackle, such as search.

“Typically we were doing search on the server and if the messages are encrypted the server obviously can’t index them — so we had to shift all of our search capabilities to run client side. We went and wrote a whole bunch of REST that allows you to basically embed a search engine into Riot on the client, including on the desktop version, so that people can actually reach their encrypted message history there and share it between devices,” he explains.

Another focus for the e2e was the verification process — which is also now built in by default.

“When you now log into Riot it forces you to scan a QR code on an existing login if you’ve already logged in somewhere. A bit like you do on WhatsApp web but rather than just using it to authenticate you it also goes and proves that you are a legitimate person on that account,” he says. “So everyone else then knows to trust that login completely — so that if there is an attack of some kind, if you admin tries to add a malicious device into your account to spy on you or if there’s a man-in-the-middle attack, or something like that, everybody can see that the untrusted device hasn’t been verified by you.

“It’s basically building out a simple web of trust of your devices and immediate contacts so that you have complete protection against ghost devices or other nastier attempts to go and compromise the account. The combination of using QR codes and also using emoji comparison rather than having to read out numbers to one another is I think almost unique now, in terms of creating really, really super robust end-to-end encryption.”

The e2e encryption Matrix uses is based on algorithms popularized by the Signal protocol. It was audited by NCC Group in 2016 but plans for the new funding include a full stack audit — once they’ve ironed out any teething issues with the new default e2e.

“[We want to] at least pick a path, a particular set of clients and servers — because we can’t do the whole thing, obviously, because Matrix has got 60-70 different apps on it now, or different clients. And there are at least four viable server implementations but we will pick the long term supported official path and at least find a set which we can then audit and recommend to governments,” says Hodgson of the audit plans.

They’re also working with Jitsi on a project to make the latter’s WebRTC-compatible videoconferencing platform e2e encrypted too — another key piece as Jitsi’s tech is what New Vector offers for video calling via Matrix.

“We partner with Jitsi for the videoconferencing side of things and we’re working with them on their e2e encrypted videoconferencing… They [recently] got the world’s first WebRTC -based e2e encrypted conferencing going. And they plan to use Matrix as the way to exchange the keys for that — using also all of the verification process [New Vector has developed for Riot]. Because end-to-end encryption’s great, obviously in terms of securing the data — but if you don’t know who you’re talking to, in terms of verifying their identity, it’s a complete waste of time,” adds Hodgson.

So when Jitsi’s e2e encryption launches New Vector will be able to include e2e encrypted videoconferencing as part of its decentralized bundle too.

How much growth is New Vector expecting for Matrix over the next 12 months? “We’ve tripled almost all of the sizing metrics for the network in the last year, and I think we tripled the year before that so I’m hoping that we can continue on that trajectory,” he says on that.

Another “fun thing” New Vector has been working on, since the end of last year, is a peer-to-peer version of Matrix — having developed a “sufficiently lightweight server implementation” that allows Matrix users to run ‘riot’ in a decentralized p2p space via a web browser (or via the app on a mobile device).

“We turned on the peer-to-peer network about a month ago now and they’re at the point right now of making it persistent — previously if all of the clients on the network went away then the entire network disappeared, whereas now it has the ability to persist even if people start restarting their browsers and apps. And it’s very much a mad science project but as far as I know nobody else is remotely in that ballpark,” he says.

“The nice thing is it looks and feels identical to Matrix today. You can use all of the clients, all of the bridges that people have already written… It just happens to be that the Riot is connecting to a server wedged into itself rather than talking to one sitting on the server… So it’s a total paradigm shift.”

“We weren’t sure it was going to work at all but in practice it’s working better than we could have hoped,” he adds. “Over the next year or so we’re going to expect to see more and more emphasis on peer-to-peer — possibly even by default. So that if you install Riot you don’t have to pick a server and go through this fairly clunky thing of figuring out what service provider to trust and do you want to buy one from us as New Vector or do you want to a Swiss ISP. Instead you can start off bobbing around the ocean in a pure peer-to-peer land, and then if you want to persist your data somewhere then you go and find a server to pin yourself to a home on the Internet. But it would be a completely different way of thinking about things.”

Those interested in dipping a toe in p2p decentralized IM can check out this flavor of Riot in a web browser via p2p.riot.im

Salesforce Ventures invested $300M in Automattic while Salesforce was building a CMS

In September, Salesforce Ventures, the venture of arm of Salesforce, announced a hefty $300 million investment in Automattic, the company behind WordPress, the ubiquitous content management system (CMS). At the same time, the company was putting the finishing touches on Salesforce CMS, an in-house project it released last week.

The question is, why did it choose to do both?

One reason could be that WordPress isn’t just well-liked; it’s also the world’s most popular content management system, running 34 percent of the world’s 10 billion websites — including this one — according to the company. With Automattic valued at $3 billion, that gives Salesforce Ventures a 10 percent stake.

Given the substantial investment, you wouldn’t have been irrational to at least consider the idea that Salesforce may have had its eye on this company as an acquisition target. In fact, at the time of the funding, Automattic CEO Matt Mullenweg told TechCrunch’s Romain Dillet that there could be some partnerships and integrations with Salesforce in the future.

Now we have a Salesforce CMS, and a potential partnership with one of the world’s largest web content management (WCM) tools, and it’s possible that the two aren’t necessarily mutually exclusive.

As sales of smart speakers grow, Soundcheck wants to help make the web more ‘speakable’

Slowly but surely, smart speakers are taking over. As Amazon builds Alexa into everything from tiny clocks to microwaves and Google wraps Assistant into just about anything it can, it feels like it’ll be no time before the rooms that don’t have some sort of voice-powered device are the exception.

But most people and businesses probably have no idea how to get their content prepped and ready to play friendly with these speakers. That’s the driving force behind Soundcheck, a company opening its doors this morning.

Soundcheck helps to take your content and package it in a format these smart speakers and voice assistant devices more readily understand.

Soundcheck’s primary focus initially is on WordPress -powered sites — not a small target, considering that estimates suggest WordPress powers over 30% of the internet. They’ve built a plugin that lets you take information on your WordPress site and, in a tap or two, wrap up the most important pieces in Google’s “speakable” data format — effectively acting as a highlighter, saying, “Hey voice speakers and the search algorithms that power them! This bit of information is meant for you, and answers that question about Topic X.”

soundcheck screen

Getting data into this format usually means writing custom markup for each page in question, which is something that not everyone (like, say, a small business owner using WordPress mostly for the whole simplified WYSIWYG aspect) is prepped to do. Soundcheck boils down the process to a button press, handles the data validation and provides a preview of how that content might sound when read aloud by a voice assistant.

Soundcheck will be free for users who just want the basic plugin, with support for their 50 latest WordPress posts. If you need support for more posts, or you want to do fancier things like custom API integrations and tying into dedicated Amazon Alexa/Google Assistant apps, they’ll charge somewhere between $20-$79 a month. The company tells me it’s also building out an analytics tool to help publishers better understand where and when its data is being accessed by voice. They also say that support for other content platforms beyond WordPress is on the roadmap.

Soundcheck was founded by Daniel Tyreus and Narendra Rocherolle — the latter of whom also co-founded Webshots, the ultra early photo sharing site that sold to [email protected] for $82.5 million in 1999. The duo originally set out to build Peck, a service founded in 2016 that aimed to figure out the best way to pull in information on a subject and pack it down into its most concise form. They found that one of the toughest parts of that equation was getting data packaged up and ready for smart speakers like Alexa and Google Home — so they pivoted to focus on that.

The team has raised $1.5 million to date, backed by True Ventures, Resolute Ventures, Twitter co-founder Biz Stone and Flickr co-founder Caterina Fake — along with Automattic, the very team behind WordPress.

How Automattic wants to build the operating system of the web

Automattic, the company behind WordPress.com, WooCommerce, Longreads, Simplenote and soon Tumblr, is now worth $3 billion. But its founder and CEO Matt Mullenweg has a bigger goal. He wants to make the web better, more open and diverse.

With the rise of social networks and closed platforms, Automattic’s mission statement has never sounded so important. Automattic doesn’t want to be the hot new startup. It wants to build a strong foundation to empower content creators for decades to come.

In an interview this week, Matt Mullenweg discussed why he raised $300 million from Salesforce Ventures, what he thinks of the current state of the web and how Automattic has a shot at building the open-source operating system of the web. The interview was edited for clarity and brevity.

(Photo Credit: Christopher Michel / Flickr under a CC BY 2.0 license)


Romain Dillet: Tell me more about how much money you’ve raised, who you’ve raised from.

Tumblr’s next step forward with Automattic CEO Matt Mullenweg

After months of rumors, Verizon finally sold off Tumblr for a reported $3 million — a fraction of what Yahoo paid for the once might blogging service back in 2013.

The media conglomerate (which also owns TechCrunch) was clearly never quite sure what to do with the property after gobbling it up as part of its 2016 Yahoo acquisition. All parties has since come to the conclusion that Tumblr simply wasn’t a good fit under either the Verizon or Yahoo umbrella, amounting to a $1.1 billion mistake.

For Tumblr, however, the story may still have a happy ending. By all accounts, its new home at Automattic is far better fit. The service joins a portfolio that includes popular blogging service WordPress.com, spam filtering service Akismet and long-form storytelling platform, Longreads.

In an interview, this week, Automattic founder and CEO Matt Mullenweg discussed Tumblr’s history and the impact of the poorly received adult content restrictions. He also shed some light on where Tumblr goes from here, including a potential increased focused on multimedia such as podcasting.

Brian Heater: I’m curious how [your meetings with Tumblr staff] went. What’s the feeling on the team right now? What are the concerns? How are people feeling about the transition?

Week in Review: Snapchat beats a dead horse

Hey. This is Week-in-Review, where I give a heavy amount of analysis and/or rambling thoughts on one story while scouring the rest of the hundreds of stories that emerged on TechCrunch this week to surface my favorites for your reading pleasure.

Last week, I talked about how Netflix might have some rough times ahead as Disney barrels towards it.


3d video spectacles 3

The big story

There is plenty to be said about the potential of smart glasses. I write about them at length for TechCrunch and I’ve talked to a lot of founders doing cool stuff. That being said, I don’t have any idea what Snap is doing with the introduction of a third-generation of its Spectacles video sunglasses.

The first-gen were a marketing smash hit, their sales proved to be a major failure for the company which bet big and seemingly walked away with a landfill’s worth of the glasses.

Snap’s latest version of Spectacles were announced in Vogue this week, they are much more expensive at $380 and their main feature is that they have two cameras which capture images in light depth which can lead to these cute little 3D boomerangs. One one hand, it’s nice to see the company showing perseverance with a tough market, on the other it’s kind of funny to see them push the same rock up the hill again.

Snap is having an awesome 2019 after a laughably bad 2018, the stock has recovered from record lows and is trading in its IPO price wheelhouse. It seems like they’re ripe for something new and exciting, not beautiful yet iterative.

The $150 Spectacles 2 are still for sale, though they seem quite a bit dated-looking at this point. Spectacles 3 seem to be geared entirely towards women, and I’m sure they made that call after seeing the active users of previous generations, but given the write-down they took on the first-generation, something tells me that Snap’s continued experimentation here is borne out of some stubbornness form Spiegel and the higher-ups who want the Snap brand to live in a high fashion world and want to be at the forefront of an AR industry that seems to have already moved onto different things.

Send me feedback
on Twitter @lucasmtny or email
[email protected]

On to the rest of the week’s news.

tumblr phone sold

Trends of the week

Here are a few big news items from big companies, with green links to all the sweet, sweet added context:

  • WordPress buys Tumblr for chump change
    Tumblr, a game-changing blogging network that shifted online habits and exited for $1.1 billion just changed hands after Verizon (which owns TechCrunch) unloaded the property for a reported $3 million. Read more about this nightmarish deal here.
  • Trump gives American hardware a holiday season pass on tariffs 
    The ongoing trade war with China generally seems to be rough news for American companies deeply intertwined with the manufacturing centers there, but Trump is giving U.S. companies a Christmas reprieve from the tariffs, allowing certain types of hardware to be exempt from the recent rate increases through December. Read more here.
  • Facebook loses one last acquisition co-founder
    This week, the final remnant of Facebook’s major acquisitions left the company. Oculus co-founder Nate Mitchell announced he was leaving. Now, Instagram, WhatsApp and Oculus are all helmed by Facebook leadership and not a single co-founder from the three companies remains onboard. Read more here.

GAFA Gaffes

How did the top tech companies screw up this week? This clearly needs its own section, in order of badness:

  1. Facebook’s turn in audio transcription debacle:
    [Facebook transcribed users’ audio messages without permission]
  2. Google’s hate speech detection algorithms get critiqued:
    [Racial bias observed in hate speech detection algorithm from Google]
  3. Amazon has a little email mishap:
    [Amazon customers say they received emails for other people’s orders]

Adam Neumann (WeWork) at TechCrunch Disrupt NY 2017

Extra Crunch

Our premium subscription service had another week of interesting deep dives. My colleague Danny Crichton wrote about the “tech” conundrum that is WeWork and the questions that are still unanswered after the company filed documents this week to go public.

WeWork’s S-1 misses these three key points

…How is margin changing at its older locations? How is margin changing as it opens up in places like India, with very different costs and revenues? How do those margins change over time as a property matures? WeWork spills serious amounts of ink saying that these numbers do get better … without seemingly being willing to actually offer up the numbers themselves…

Here are some of our other top reads this week for premium subscribers. This week, we published a major deep dive into the world’s next music unicorn and we dug deep into marketplace startups.

Sign up for more newsletters in your inbox (including this one) here.

What will Tumblr become under the ownership of tech’s only Goldilocks founder?

This week, Automattic revealed it has signed all the paperwork to acquire Tumblr from Verizon, including its full staff of 200. Tumblr has undergone quite a journey since its headline-grabbing acquisition by Marissa Mayer’s Yahoo in 2013 for $1.1 billion, but after six years of neglect, its latest move is its first real start since it stopped being an independent company. Now, it’s in the hands of Matt Mullenweg, the only founder of a major tech company who has repeatedly demonstrated a talent for measured responses, moderation and a willingness to forego reckless explosive growth in favor of getting things ‘just right.’

There’s never been a better acquisition for all parties involved, or at least one in which every party should walk away feeling they got exactly what they needed out of the deal. Yes, that’s in spite of the reported $3 million-ish asking price.

Verizon Media acquired Tumblr through a deal made to buy Yahoo, under a previous media unit strategy and leadership team. Verizon Media has no stake in the company, and so headlines talking about the bath it apparently took relative to the original $1.1 billion acquisition price are either willfully ignorant or just plain dumb.

Six years after another company made that bad deal for a company it clearly didn’t have the right business focus to correctly operate, Verizon made a good one to recoup some money.

Aligned leadership and complementary offerings drive a win-win

Daily Crunch: Verizon is selling Tumblr

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. Verizon is selling Tumblr to WordPress.com parent, Automattic

It’s been six years since Yahoo acquired the popular blogging platform for more than $1 billion. Since then, Yahoo was acquired in turn by Verizon, and now Verizon is selling Tumblr for what’s been variously reported as a “nominal” price and “well below $20 million.”

While it may be simplistic to peg the service’s declining value to any single decision, last year’s move to ban pornography has certainly proved disastrous. At least on the surface, Automattic and WordPress seem like they might be a better fit.

2. Snap introduces Spectacles 3, with two HD cameras and 3D effects on Snapchat

Snap isn’t giving up on its Spectacles hardware yet.

3. Postmates to drop IPO filing next month

Despite previous reports indicating the on-demand delivery company is seeking an M&A exit, sources close to the matter say Postmates is on track to complete an initial public offering this year.

disrupt sf

4. Announcing the Disrupt SF 2019 agenda

We’ve got a little something for everyone: Space chats with Lockheed Martin’s Marillyn Hewson and Blue Origin’s Bob Smith, a word from Snap CEO Evan Spiegel, a fireside chat with two of 2019’s big VC winners, Ann Miura-Ko and Theresia Gouw, as well as a rare chance to sit down with GV’s David Krane.

5. MasterClass founder launches Outlier, offering online courses for college credit

The classes cost $400 each and feature content specifically shot for online consumption (rather than your standard classroom lectures), with dynamically generated problem sets. And they come with credit from the University of Pittsburgh.

6. Singularity 6 raises $16.5M from Andreessen Horowitz to create a ‘virtual society’

The startup’s ex-Riot Games co-founders claim they’re less focused on building a button-mashing competitive shooter and more on creating a “virtual society,” where users can develop relationships with in-game characters powered by “complex AI.”

7. How lawyers help bring your acquisition deal to fruition

Attorneys can act as project managers, working with company executives and boards of directors, guiding them through the lengthy transaction process — and of course, advising them on the legal side of the equation. (Extra Crunch membership required.)

Verizon is selling Tumblr to WordPress parent, Automattic

Six years after Yahoo purchased Tumblr for north of $1 billion, its parent corporation is selling the once dominant blogging platform. WordPress owner Automattic Inc. has agreed to take the service off of Verizon’s hands. Terms of the deal are undisclosed, but the number is “nominal,” compared to its original asking price, per an article in The Wall Street Journal.

Once the hottest game in town, the intervening half-decade has been tough on Tumblr, as sites like Facebook, Instagram, Reddit and the like have since left the platform in the dust. More recently, a decision to barn porn from the platform has had a marked negative impact on the service’s traffic.

The news certainly isn’t surprising. In May, it was reported that Verizon was looking for a new owner for the site it inherited through its acquisition of Yahoo. Tumblr was Yahoo’s largest acquisition at the time, as then-CEO Marissa Mayer “promise[d] not to screw it up” in a statement made at the time.

Tumblr proved not to be a great fit for Yahoo — and even less so Verizon, which rolled the platform into its short-lived Oath business and later the Verizon Media Group (also TechCrunch’s umbrella company). On the face of it, at least, Automattic seems a much better match. The company runs WordPress, one of the internet’s most popular publishing tools. As part of the deal, the company will take on 200 Tumblr staffers.

Developing…

WordPress management site WP Engine acquires Flywheel as it moves to a $1B valuation and IPO

WordPress now accounts for 34 percent of all websites globally, and today one of the key companies that helps handle the creation and management of some of those WP-hosted sites is getting a little bigger through some consolidation in the wider ecosystem. WP Engine, which works with businesses to build and manage their WordPress-hosted sites, has aquired Flywheel, a smaller competitor.

Financial terms of the deal are not being disclosed, WP Engine’s CEO and chairperson Heather Brunner said in an interview, but she confirmed to TechCrunch that it involved her company raising a small round (amount also undisclosed) from its existing investors to help finance the deal. WP Engine’s investors include Silver Lake (which last year put a whopping $250 million into the company) along with WordPress developer Automattic, Silverton, GuidePost Growth Equity (formerly known as North Bridge) and Eric Ries (of “Lean Startup” fame).

Brunner also declined to talk valuation of WP Engine, although she noted that current annual recurring revenue is at $132 million, and that Flywheel’s is $18 million, and with a current growth rate of 50%, together the two are on track to make $200 million in ARR by 2020 and likely pass the $1 billion mark for valuation, en route to a public listing.

“It is our aspiration to build a public-ready company, and this acquisition is part of making that happen,” she said. (Ironically, that could mean that WordPress’s partner, and sometimes competitor, could go public before it does.)

The deal is a sign of some consolidation in the ecosystem that has built up around WordPress. WP Engine is a veritable powerhouse in that ecosystem, having been an early mover in the space — WordPress backed it back in 2011 — and now working on building and managing sites for some 120,000 brands and agencies in 150 countries (likely totalling multiples of that in terms of actual sites).

WP Engine, as Brunner describes it, focuses largely on mid-market and larger businesses, while Flywheel — founded and currently based out of Omaha — has focused on smaller businesses. That makes the two natural complements to each other, but Brunner notes that there will be more gained from the union.

“The team there is very product focused,” she noted. “They’ve built a suite that we feel has been focused around small agencies, but they are also the types of tools that larger agencies will benefit from.” She is referring to the product Local by Flywheel, a local development application used by more than 150,000 developers.

Flywheel, founded in 2012, had only raised around $6 million in funding, including a $4 million round several years ago. The economies of scale of throwing in its lot with WP Engine will give it a much wider exposure and access to new customers.

“We founded Flywheel with the belief that in order to help creatives do their best work, we needed to create an internal culture that encourages our employees to do the same,” said Dusty Davidson, CEO and co-founder of Flywheel, in a statement. “That philosophy has led us to build an incredible company and some of the most well-loved products in WordPress, supported by an impressive group of talented people and the most remarkable open source community in the world.”

WP Engine has made a few other acquisitions prior to this, of other partners in the WordPress ecosystem, marking it out as a consolidator in the field. Brunner noted that while some of the company’s growth efforts might lead it to further acquisitions, it is also pursuing a second track of working with third party partners and acting as the intermediary platform for companies to bring in other services in aid of running their sites. Partners in the WP Engine ecosystem — alongside WordPress itself, of course — include Amazon Web Services, Cloudflare, Google, HubSpot and New Relic, she noted.