Web Content Management

Some thoughts on Salesforce and Automattic

Well, the most exciting news in WCM in a while has dropped today, with the announcement that Salesforce Ventures is investing $300 million in Automattic (aka WordPress) for a valuation of $3 billion dollars. For comparison, any other WCM vendor has been valued at far less than this in the past. Most recently, the big movers were Sitecore at $1.14 billion in 2016, and Episerver at $1.16 billion in 2018.

However, this is the first move by a big platform player in quite some time. Adobe acquired Day at $240m in 2010, and ditto Oracle with FatWire in 2011 (undisclosed price). So it’s been nearly a decade since a 500-lb gorilla has done a cannonball into our little pool, and as such, this is bound to cause some waves.

What does this mean for Salesforce?

We know that WCM has been a gap in their portfolio for quite some time, and Salesforce Ventures has dipped a toe in the pool by putting some money into a number of players in martech, including Bloomreach and Contentful. However, they have not made a play for any vendor to integrate strongly into their core CRM stack, and it would seem clearer that with the launch of their Salesforce CMS beta, they intend to build this functionality internally.

Interestingly enough, I don’t actually see this investment as related to a CMS play at all. I don’t see WordPress replacing their internal CMS ambitions; it’s not architected as something that would slot in easily and does not fit the publishing model and use cases that Salesforce needs to enable better customer experiences.

This is actually a much larger play against Facebook (and to a lesser extent, Google and Amazon).

All those vendors have an element of “moat” or lock-in and have grabbed a far larger chunk of the “small publisher” domain. If you think about small businesses, many only have a Google maps entry or a Facebook page they update, as opposed to running a standalone site. Facebook is particularly aggressive with this “walled garden” – making it a royal pain to even view these pages without an account. Google is being a little smarter and more nimble by pushing PWA and AMP standards to “keep the web open” (such that they can continue to index and make money off it). Amazon in turn is dominating the eCommerce space, especially for 3rd party sellers now, and AWS is completely eating the cloud space (where Salesforce seems themselves as a player).

I think Benioff is seeing this trend as a bad thing, and has some “humanitarian/altrusitic” reasons for looking at something like WordPress/Tumblr as a way to keep self-publishing alive – but also a way to poke a bit of a stick at what are now existential competitors.

What does this mean for Automattic?

Long story short – this is not a CMS play, this is a media and platform play.

I think this is very interesting for the company. I will be curious to see what they do with what is now around $300,000 cash in hand per employee. The Tumblr acquisition is related to this (and the trend above) and was a smart buy for this pivot. I don’t see them moving further into Enterprise CMS, but rather trying to compete or enable on a media level – so against the likes of Medium, Vox, Spotify, podcasting type plays – and social networking at large (which are actually, really, media companies in their own way). Automattic already has a large stable of media properties on their platform and I see this as a way to continue to improve that collaboration (building on NewsPack) and possibly compete more with ARC Publishing (owned by the Washington Post, which is in turn owned personally by Jeff Bezos, the CEO of Amazon – which is another existential threat to Salesforce).

Matt Mullenweg’s interview with TechCrunch seems to support this view.

“The problem we’re tying to solve is likely multigenerational. It can take the rest of our lives and we need to pass it on to the generation that comes after to continue to work on it. Hopefully for the rest of humanity because I can’t imagine a time when humanity cannot benefit from an open, free, connected web,”

Matt Mullenweg

What does this mean for Enterprise WCM vendors?

Aside from exacerbating the existential angst they already have from the “black hole” gravity well and ticking clock of VC money (which I wrote about already), this will start to accelerate some of that consolidation trend we are seeing – merely out of fear of being the last player in a game of musical chairs being conducted. At the end of the day though, I don’t see this investment actually affecting product roadmaps – merely vendors perception of where they sit in it and what “winning” looks like. If I talk about CMP “waiting for something to happen” and the trends there, WCM is in very much the same boat in the larger DXP space. Expect consolidation to continue, and the middle will hollow-out to larger platform vendors and smaller vendors who can run well standalone (i.e. as per Shafqat Islam the CEO of NewsCred: “outlasting everyone is a winning strategy”).

Post-script: Tom Wentworth (VP Product Marketing, Acquia) made the valid point that “It’s just an investment, no more than that. Salesforce Ventures is not Salesforce. They’ve even invested in competitors before like HubSpot. ” But I see this investment as being far larger – their previous investment rounds in other WCM companies were far smaller, and spread among a group of investors:

This single investment represents about 20% of the entire $1.5B portfolio (give or take – I am using the 2018 $1.2B number + this $300 million) and is the single largest investment by Salesforce Ventures by about 3x (as per their latest 10-Q, the largest is $105m) and dwarfs each and every one of their individual funds. So all that to say, I think this one is a bit too large and unique to be entirely “business as usual”. $30 million (or a fraction thereof – only 10% of their investments are over $10m) says “hey, your tech is cool”, $300 million says “we are aligned on a deep and strategic level”.

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