VentureBeat

Automattic, the company that owns the popular Wordpress blogging software platform, has raised $29.5 million from existing investors and a new partner, the New York Times. Some companies had offered to buy it, founder Matt Mullenweg writes.

The San Francisco company started out as an open source code project at WordPress.org, which provided software that anyone could download and then host on their own server (what VentureBeat currently uses). More recently, it also began offering free blog hosting at Wordpress.com (which VentureBeat is planning to switch to), where it also sells a set of premium web services, such as Akismet, its spam-blocking software.

Om Malik has the scoop, including more details on the San Francisco company’s growth over the years.

Today, Wordpress hosts 2.2 million blogs today. Paying Wordpress customers include CNN, Fortune, Fox and the New York Times.

Automattic had a big year in 2007: 1.8 million new registered users joined Wordpress.com, 25 million posts were created, and it grew to reach over 100 million unique users worldwide. Meanwhile, the open source Wordpress.com code has been downloaded 5,880,790 since Automattic started, with 3,852,554 downloads in the past year alone, Mullenweg writes.

The New York Times partnership, besides the investment, includes a plan for the Times to expand its “existing blogging infrastructure” and “create new ways of connecting Wordpress bloggers with the New York Times and its readers,” Automattic chief executive Toni Schneider writes.

The company plans to continue improving its anti-spam service and build out its wiki and forum features.

Automattic also won two Crunchies on Friday — awards that a few other blogs and ourselves gave to startups: They included “most likely to succeed” as well as “Best startup CEO” for Schneider.

The financing was led by existing investors Polaris Venture Partners, True Ventures, and Radar Partners.

updated

Here’s the latest action:
1. Alibaba launches its own ad platform
2. SpiralFrog losing money rapidly
3. Viddler launches way to advertise at “tagged’ points within video
4. Amazon.com’s Kindle e-reader receives mixed reviews
5. Advertising technology startup Clickable raising $3 million more
6. Hope you can afford a helicopter — Flying cars don’t work
7. Automattic’s founders, getting ready for cash out?
8. Google buying switches for network?
9. SuccessFactors has SuccessfulIPO

Alibaba launches its own ad platform — The third-biggest ad platform may soon turn out to be Alimama, which was launched today by Alibaba.com. Alibaba, you may recall, is 39 percent owned by Yahoo, and recently went public at a high valuation. Its ad network will try to dig into the spaces that Google Adsense and Baidu Union haven’t yet reached; according to the company, it already has 150,000 small websites and 135,000 bloggers ready to use it. TI is splitting revenue 50-50.

SpiralFrog losing money rapidly — SpiralFrog is a startup begun by a small group of large music companies. Despite the “free” music downloads it offers, it’s bleeding cash, according to Read/WriteWeb, with Q3 revenue of $20,400 and losses of $3.4 million. There may be a cautionary tale therein for other music startups, or just an indictment of the site’s model, which involves barraging users with ads and surveys at every turn.

Viddler launches way to advertise at “tagged’ points within video — It lets you overlay ads at certain points within a video. For example, a guitar ad can be displayed when someone on the video is playing a guitar. The advertiser knows the video clip is related to a guitar because the producer “tags’ that video clip as being about guitars. More here

Amazon.com’s Kindle e-reader receives mixed reviews — The Financial Times has a good roundup of media reactions to the Kindle e-book, which we mentioned last week. Most comment on its less-than-pleasing appearance, but a few analysts are optimistic about its chances in the market.

Advertising technology startup Clickable raises $3 million more — Previous backers Union Square Ventures and Pequot Ventures have reportedly reinvested, after investing $3 million previously. [Update: The company says it hasn't finished raising the funding yet.]

Hope you can afford a helicopter — Because you’re not getting a flying car anytime soon. Moller, the maker of the M400 flying car, is out of money and has “substantial doubt” that it can go on. [via Jalopnik]

Automattic’s founders, getting ready for cash out? – Rumors are that Automattic, the parent company of the popular blog software Wordpress, is about to raise a round of capital from its backer, Polaris, that could cash out some of its executive team, i.e., give them substantial cash (as opposed to providing the company with the cash) in return for some of their personal shares. We’re told by a good source that the deal hasn’t gone through yet. Polaris confirms, saying: “We have stay a little mum on this for a few more weeks.” CEO Toni Schneider isn’t commenting.

Google buying switches for network? — We asked Google over the weekend about reports that they’re buying switches for some sort of telecom network. Turns the networking is for their own data centers. Check out the jobs on their site, which Google pointed us to, which suggest what it is doing: Lots of job openings for hardware and software engineers with networking backgrounds, for example here and here. Andrew Schmitt seems to have the details on Google’s plans.

Plaxo shows explosive growth after OpenSocial integration — Plaxo, once spurned because it was considered to spam you with update requests for its contact management service, is growing once again. “I’ve never seen a growth chart with such a sharply pronounced inflection point,” Plaxo marketing executive John McCrea tells CNET. “Within hours of the Google OpenSocial social network service unfolding, it was surge conditions here. Our service almost buckled.” See the full story here.

SuccessFactors has Successful IPO — Despite mounting losses, San Mateo, Calif. based SuccessFactors held its initial public offering. The online management tool provider’s market cap is now at about $650 million. The big venture capital winners are Greylock Partners, who owned almost a third of the firm, and TPG Ventures, with just under 20 percent. Cardinal Ventures, Canaan Partners, Emergence Capital Partners and Granite Global Ventures also held stakes.

Here’s the latest action:

1) VCs love on Obama
2) Frappr-Platial merge to take on Google
3) Is China is blocking US search engines? Or is it just U.S. jingoism?
4) Wordpress buys avatar company
5) Internet giants agree on copyright protection online — um, except Google
6) Data reveals iLike’s strong music momentum

VCs spend on Obama — Barack Obama is getting the most this year from the private equity crowd. He has raised $128,208 from 75 different VCs, according to PEHub. Running second is Mitt Romney with $94,500 from 51 contributors, while Hillary Clinton ($45,950), Chris Dodd ($22,700) and Rudy Giuliani ($21,100) round out the top five. Democrats got 60 percent more than Republicans.

Consolidation in social mapping companies — Google keeps improving their their social map features, letting you create your own maps and putting them in places like Google Earth, and then sharing with friends. Now Platial, a Portland company that does much the same thing, has acquired competitor Frappr. (Notably, Platial is backed by Ram Shriram, who sits on the Google board. Yes, that’s a major conflict. Update: We asked Shriram whether he is feeling conflicted, and he responded: “Not true at all…I believe Google is a partner but I am not conversant with details”.)  Platial says the combined companies will reach 15 million unique users monthly, which isn’t shabby at all. There’s power in fusion. Frappr never took outside funding. Platial raised $3.4 million from a host of players, including Kleiner Perkins, Keynote Ventures, Shriram, Georges Harik, Jack Dangermon, and Ron Conway.

Is China is blocking US search engines? — That seems to be the claim from a bunch a sources today, including reports that Yahoo, Microsoft and Google are all being redirected. However, some people are stepping back and wondering if there’s confusion on the matter, and some veiled anti-Chinese jingoism thrown in. We’ll track this in coming days. [Recommended update: Danny Sullivan's report, which suggests the Chinese blockade is an effort to avoid references to the Dalai Lama.]

Wordpress buys avatar company — Automattic, the company that operates the popular Wordpress blog software, has acquired Gravatar, a company that gives users a 80×80 pixel avatar image that follows you from blog to blog. It appears beside your name when you comment on Gravatar enabled sites. Avatars help identify your posts. What do you guys think? Should VentureBeat enable Gravatar?

Internet giants agree on copyright protection online (surprise: Google not included) — A group of Internet and media companies, including CBS, Dailymotion, Microsoft, NBC Universal, News Corp, Viacom and Walt Disney have agreed to guidelines to protect copyrights online, according to the Wall Street Journal. The principles include using technology to eliminate copyright-infringing content, and blocking infringing material before it is publicly accessible, according to the report. Google didn’t participate, however: Copyright questions, particularly surrounding the posting of video, have bedeviled Google since it bought YouTube. Google’s existing technology wouldn’t meet the agreed standard, because it doesn’t block content from being posted. Google’s technology merely takes it down “in a matter of a few minutes.” Google has been sued by Viacom for $1 billion.

Data reveals iLike’s strong music momentum — iLike has a 90 percent share of the music application installations on Facebook, according to iLike chief executive Avi Partovi at the Web 2.0 Summit in San Francisco today. (Not bad, considering there are 200 different music applications on Facebook). Of the top 10,000 bands featured on iLike, 43 percent of them have more registered fans on iLike than they do on MySpace.

[Matt Marshall and Mark Coker contributed to this report]

Here’s the latest (updated) action:

Six Apart’s headaches — The blogging software market is highly competitive, so small differences in quality can make a difference in user adoption. Six Apart, a Silicon Valley start-up that offers several blogging software platforms, including Movable Type, has released a product after acknowledging internally it could make developers mad. [Six Apart's Anil Dash has since responded in comments, saying the company took time to fix the bugs for the release. The references in an internal memo before the release that caused concern were the following: The need for "PR to stay ahead of the curve" with people who say "we rushed the release" and to developers who "will be very mad" for not having the resources to upgrade their plugins.] Moreover, chief architect Brad Fitzpatrick has left the company. We asked Six Apart for comment, but they did not respond. Frankly, the various bugs are one reason VentureBeat moved to embrace Wordpress, dropping Movable Type. Wordpress, owned by Automattic, also seemed swifter and more flexible. Separately, Wordpress’ hosted version (Wordpress.com) is more secure than Six Apart’s hosted versions. Wordpress has three different data centers, so you wouldn’t see it crash like Six Apart did when an SF data center melted down several days ago. Wordpress is run by a Swiss named Toni Schneider, who is obsessed with scaling the company without hitch or server meltdown. Lead developer Matt Mullenweg goes to bed thinking about scaling problems, Schneider adds. Related: I cited Toni in a piece I just did for Forbes about “when to hire an IT guy.”

Clicktale records what happens when a user hits your Web site — Today, Clicktale launched to show things like the number of mouse hovers over a link (in other words, showing how a link may be attractive, but not enough for people to click), how many mouse hovers eventually convert to mouse clicks and other interesting behavior measures. Techcrunch has a good review here. The Israeli start-up has competitors, including RobotReplay and TapeFailure.

Zhanzuo.com, a Facebook clone in China, has acquired Yoolin.com, a campus social networking site targeted at Chinese students abroad — Yoolin was founded in June 2006 by Chinese students from Stanford, UC Berkeley, Harvard and MIT, but according to Alexa data cited by this blog (which reported the acquisition), their traffic didn’t grow much.

Another news site, Newser.com — Journalist Michael Wolff has started a news Web site called newser.com that aggregates news articles for convenient reading. New York Times has the story. We don’t understand the company’s model. The cater-to-all destination site is a dead horse fairly beaten.

Non-profit music industry agent conflicted? — Wired reports that Sound Exchange, a nonprofit that administers copyright licensing and license-fee collection is funding a group called musicFirst, which is lobbying for the enforcement of extra broadcasting fees on terrestrial radio stations. According to Wired: “Whether or not SoundExchange’s lobbying efforts prove to be illegal, its presence as an advocate in this debate undercuts its role as neutral administrator of royalty fees set and approved by the Copyright Royalty Board.”

GoFish’s acquisition of Bolt, dead in water — Details here.

Microsoft testing ad supported Microsoft Works — Details at Ars Technica.

Advertisers in UK yank ads from Facebook when they realize the ads are posted next to the group page of a far-right-wing political party — Details here. Slowly but surely, advertisers are beginning to realize how dangerous it is to run campaigns in social networking sites. Tod M. Sacerdoti, founder of BrightRoll, which inserts advertising into videos for clients, told us recently he has all but abandoned serving social network sites, after seeing multiple examples of advertising networks exposing major advertising brands to lewd, quasi-porn video content.

Answers.com loses 28 percent of its viewers due to a change by Google’s algorithm — GigaOm points to the story.

IAC bags Google, chooses Microsoft - It will use Microsoft’s aQuantive’s ad network over Google’s Doubleclick.

Thomson Financial finally releases VC data — Like the data released last week by VentureOne, it shows venture capitalists are investing at the highest levels since 2001. VCs poured $7.1 billion in 977 deals in the second quarter of 2007 - the largest number deals since the third since Q3 2001. A Thomson spokeswoman said the week’s delay in the survey was caused by a server crash, and then a week’s worth of verification with its partners in the quarterly MoneyTree Survey: PricewaterhouseCoopers and the National Venture Capital Association. We asked whether a reported 61 layoffs at Thomson in recent months had anything to do with the snafu, since some of the VC reporting department has been replaced by outsourced labor in places like the Philippines. Or perhaps caused by distraction caused by Thomson’s pending merger with Reuters? A spokeswoman did not address the layoffs, but said the Reuters deal hasn’t closed yet, and so that played no role.

Vibrator maker Jimmy Jane might get real VC? — Individuals such as Tim Draper have backed Jimmy Jane, the sex-toy company, with about $1 million, but now the New York Times’ Matt Richtel says the company is about to get a real VC round. We contacted Jimmy Jane for comment, but no response thus far. Draper, for his part, suggested something is coming: “I don’t think I am allowed to answer that,” he said, when asked about a pending round. “We don’t make comments on financings until they are done.”

Yahoo advised to… go after social networking — An analyst report by Bear Stearns recommends that Yahoo more aggressively pursue social networking, saying it is a high growth opportunity, and noting that Facebook could be worth $6 billion or so. Yahoo had reportedly sought to buy Facebook last year for $1 billion.

Yahoo advised to… pursue open source — Tim O’Reilly says Yahoo is grasping open source as a competitive advantage and commends it, writing off the news Yahoo is now supporting something called Hadoop.

WiMax notebook computers coming by late next year — So says Intel, a leading provider of the technology, which will operate many times faster than WiFi technology used by most laptops. (Mercury News story)

Silicon Valley’s WiFi network project shifts from free, to paid — A Mercury News story shows the Silicon Valley Joint Venture Wireless Project looks shakier than ever.

KnowNow, a Sunnyvale company that has made early inroads selling RSS technology to companies, has agreed to help sell and support WordPress blogging software.

The deal is significant because KnowNow has quietly been selling nicely priced software systems — both hosted and server systems — to companies that help those companies track transactions, news and other events via the RSS protocol. KnowNow has lacked its own blogging software, and this gives San Francisco’s Automattic, the company which owns WordPress, one more way to infiltrate companies — at a time when cross-town rival Six Apart’s TypePad is among those with an early lead, and which recently got a boost from an alliance with Intel (more below).

RSS is the protocol, which can be used for sending electronic updates of just about anything, including things like sensitive banking transactions. It is also used to deliver blog posts to readers’ blog readers, whether it be BlogLines, Yahoo or some other company. KnowNow is in serious sales and marketing mode now that it has raised $13M in fresh capital from Kleiner Perkins and others. VentureBeat was surprised at that amount of capital, as RSS platforms should be relatively cheap to build. We talked with chief executive Todd Rulon-Miller, who comes across as confident but focused — he has been in the enterprise software game for years. He said that the systems being built for companies are managing many sensitive needs. Wells Fargo, for example, is among the companies that have bought at least one of KnowNow’s $75,000 sever licenses. He has ten large customers, and will be announcing more, he said.

We don’t know how well they are really doing, but with WordPress this becomes a serious combination — serious enough to match the Intel alliance (scroll down, and see here too), which pulls together Six Apart, Newsgator (for RSS reading), SimpleFeed (for RSS technology) and Socialtext (wikis).

We launched early yesterday morning, but an overwhelming spike in traffic, a subsequent server crash and no fallback combined to shut down the Web site for a whole day.
We’ve learned some lessons.

1) It is hard to launch a start-up. It is surreal to be on this side of the Internet meltdowns, something we covered smugly in our previous role of employed reporter. I recall how we at SiliconBeat wrote about blog search start-up Sphere on the morning of its launch a few months ago, and linked to them — only to discover they’d been stymied by some last-minute bugs. All this traffic hit their site, when they were down, and much of that traffic may not have returned. Tony Conrad, Sphere’s chief exec, at the time, had a very rough morning. Tony, now it’s your turn to chuckle. We feel your pain.

2) Got to think big. We were paying $30/month for our old SiliconBeat server. So when people suggested we upgrade to a special stand-alone server for VentureBeat, at $100/month, we thought it a prudent move — placing us at the top end of what we thought appropriate for our old traffic at SiliconBeat. But when high-profile bloggers pointed to our site from their blogs (such as Om, Arrington, Primack. Jessica Guynn, among others) yesterday morning, we crashed and never recovered. We didn’t figure out the whole story. But we’ve changed our minds since this morning, and decided to pay $400/month. Be cheap, but not too cheap. And because we’re boot-strapping, this isn’t always an easy call.

3) If something can go wrong, it will. Murphy’s Law. Toni Schneider at WordPress warned us about this a couple of months ago. He even stood by, ready to host us on WordPress servers for free. Still, Murphy’s law kicked in. We had nailed everything else. Thor had crafted the site, I’d proofed it. But we didn’t take the servers seriously enough. We launched, it felt great to be in the air — “until the wing fell off,” as Thor, my developer put it.

4) Have friends. A dead server makes one panic, and we want to thank the folks for their support, in particular Nik Cubrilovic, over at TechCrunch, for lending sound advice. Read this post he shared with us about the overload earlier this year at Techcrunch.

5) The fight goes on. No point whimpering, or pointing fingers about blame. The next day is coming, and you got to try flying again. We remember Tony Conrad’s smile on his face a week after his botched launch, when everything was going dandy for him again.

Trapeze Networks, the Pleasanton start-up that provides equipment to build WiFi local area networks, has raised $30 million in a fourth round of funding, apparently with the help of Juniper Networks.

This is signficant because Trapeze early last year looked like it had “fallen off the trapeze,” as Battery investor Tom Crotty put it to us.

At the time, Crotty was savoring the acquisition of Airespace, which was sold last year to Cisco for $450 million. A competitor to Trapeze, Airespace returned an early profit for Battery, and enabled Cisco to keep the lead in the so-called WLAN (Wireless Local Area Network) sector. The networks are sold to help companies to help them connect all their equipment, from phones to computers. Another company Silicon Valley competitor, Aruba, seemed to be getting more traction, and some say it is now considering going public. VentureWire (sub required) wrote a story about the Juniper investment in Trapeze this morning.

According to that report, Redpoint Ventures, Oak Investment, Motorola and Nortel Networks all participated. Founded in 2002, the company has raised a total of $97.5 million.

The sector has been revived lately with all the action surrounding WiFi, specifically the ability to route phone calls through such networks, including the use of VoIP — and thus saving companies money. Trapeze has been helped by this trend, and has worked with new networking players like DiVitas.

37signals, the jazzy Web 2.0 company, takes funding from Amazon founder Jeff Bezos — See the company’s announcement here about why. We last mentioned the company here. The company boasts: Since we launched Basecamp we’ve been contacted by nearly 30 different VC firms. We’ve never been interested in the typical traditional VC deal. With a few exceptions, all the VCs could offer us was cash and connections. We’re fine on both of those fronts. We don’t need their money to run the business and our little black book is full. We’re looking for something else…We found a perfect match in Jeff. Jeff is our kinda guy.

Why is Jeff so exceptional? We’ll take a stab at the answer. Amazon, an online site fighting in the tight-margined retail world, was losing lots of money during the Internet bubble, and still was losing money after it burst. Bezos managed to attract billions of dollars of debt to sustain his effort, even through those worst of times, when investors were pulling the plug on just about every other company in the red. Somehow, Bezos pulled it off. He is exceptional indeed.
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