The biggest news in WordPress in 2015 broke this week. Automattic (the company behind WordPress.com and a bunch of other WordPress products) has acquired WooThemes, the company behind WooCommerce – the world’s most popular ecommerce platform (in the top million websites, according to BuiltWith). You can read more about the acquisition on TechCrunch, or the WooThemes and Matt Mullenweg‘s blogs. This post is to let you know that this has happened, and to share our thoughts on it all.

What does it mean for WooCommerce users?

Many of our customers use WooCommerce so right out of the gates I want to talk about what this might mean if you’re a WooCommerce user. Well, my take is that it can only be a good thing. WooThemes are a proven team. They’re all now joining Automattic, another proven and hugely talented team. That should equate to more people to build, test and support WooCommerce, and a wider support network to help the team think strategically about how to drive it forwards from here.

What does it mean for WordPress?

In some ways it’s a bit of a shame that such a strong WordPress business has been acquired by another, bigger WordPress business. That can only serve to reduce the diversity and balance in the WordPress ecosystem. Other than Envato, I can’t actually think of any other major WordPress businesses. It gives Automattic a bigger influence over WordPress and creates a bigger gap between Automattic and any other WP business. That’s the bad stuff.

Overall though, I’m optimistic it’s going to mean good things for WordPress. Matt wants WordPress to power 50% of the world’s websites, a rough doubling from where we are now. The Woo acquisition seems like a pragmatic hack to shorten that journey. On the flip side, if you’re in the ecommerce platform market, this is probably bad news; WooCommerce has taken huge chunks out of Magento’s market share – and probably contributed to a shutdown of their hosted solution. If WooCommerce gets better, and gets an instant route to market to 12.5% of the world’s websites, that can only mean bad times for Magento and other ecom platforms.

What does it mean for WooThemes?

About $30million, reportedly, plus the chance to be part of an awesome company.

What does it mean for Automattic?

For Automattic, WooCommerce makes sense not only from a product point of view. WooCommerce doesn’t run on WordPress.com, so in one fell swoop, Automattic have bought some great software, a great team and also commercial relationships with a ton of WordPress customers – many of whom won’t be paying Automattic for any other services (although most will have WordPress.com accounts). And that’s not just the end users of WordPress sites, but perhaps as importantly, it’s the WordPress.org developer community. I can’t think of an acquisition that Automattic could have made that would have given them so many instant commercial relationships with developers and customers in the WordPress.org ecosystem (except I guess Envato).

But there must have been a lot of thinking behind this too:

  • WooCommerce isn’t light on hosting resources. Will Automattic make WooCommerce available to WordPress.com users? That seems inevitable, even if it takes a while. So there’s going to be some engineering happening behind the scenes to keep WooCommerce as fast and stable as possible.
  • What if they hadn’t bought WooThemes? This is was a great opportunity, but there was also a risk in not making a play. If WordPress.com want to expand their reach, it’s been clear for a while that the lack of an integrated ecommerce proposition has hurt. Ecommerce is a binary requirement before when considering WordPress.com vs WordPress.org – if you want to do ecommerce, don’t consider WordPress.com. That must hurt Automattic in terms of market share, but there’s another level at which ecommerce is hurting them; enterprise
  • WordPress.com VIP is a premium product, built to handle insane traffic volumes and stay standing. It’s a great product, but the niche it can serve optimally is basically high-volume content sites. If you want to sell memberships, products or anything else in an integrated way, it’s not a good fit. With the emergence of WP Engine as a dominant force in driving WordPress into enterprise, supporting ecommerce (and in fact hosting WooThemes’ own website), suddenly there’s an alternative, viable, enterprise-class hosting option for WordPress that’s a lot more flexible.
  • So moving WooCommerce onto WordPress.com infrastructure feels like both a good client win/retention strategy for Automattic, but also a potential new commercial offering. Currently, you get either bog-standard WordPress.com (which is free but you might use a few optional add-ons for about £20/mo), a much-neglected and frankly weird Enterprise offering at £400/mo or the top-end £5K/mo WordPress.com VIP for global publishing brands. That’s a pretty wide spread of price points: £20, £400 or £5000/mo. And right now, you can’t run proper ecommerce on any of them. Could a WooCommerce-powered WordPress.com site be a new add-on, or help differentiate a new price point of say £50 or £100/mo? Let’s see.
  • It also means that Automattic erode a bit of the advantage that WP Engine currently offer over Automattic’s Enterprise or VIP offerings. That’s not going to hurt WP Engine too much, and nor would Automattic want to hurt them too much as they’re an investor in WP Engine, but nevertheless it’s a play that will muddy the currently clear ecommerce/no ecommerce decision.

What does it mean for us, Pragmatic?

We surf the crest of the WordPress wave; the better WordPress does, the bigger our market. So I’m glad this acquisition has happened. Let’s grow that WordPress pie.

On a strategic level, this event emphasises the value of building a great WordPress product and/or service business. WordPress is a resilient and active ecosystem in a commercial sense as much as a software one. Whilst we’re not thinking about an exit, it’s reassuring to know that there’s a continuing track record of active commercial M&A’s within the WordPress ecosystem.

If you’re into WordPress, you should follow Post Status blog where Brian Krogsgard writes informed and insightful posts about the state of WordPress on a regular basis. Here’s his take on the Woo event: https://poststatus.com/automattic-acquired-woocommerce-woothemes/