Website wars: Squarespace gets new round, Automattic on the hunt

Interesting set of news from a couple of the key website platform players today.

First, Squarespace announced a $40 million round, the first it’s taken since 2010.  The big push for the company the last few years has been moving to Squarespace 6 and then launching commerce, both of which have put significant wind at the company’s back from a growth perspective based on my conversations with them.

And now we hear that Automattic, the company behind WordPress, is out looking for $100 to $150 million in new funding. It’s unclear what they’re looking to use such a monster round for, but I have to wonder if the company is looking to invest more resources in WordPress development to help modernize what is, at this point, a bit of an aging platform.

The challenge for Automattic, and WordPress by extension, is that which is also it’s greatest strength: the fact that the core WordPress platform is open-source. While the company does well monetizing through both the small-site-centric wordpress.com and catering to big blogs and media with WordPress VIP, the company doesn’t capture the majority of hosting revenue for WordPress sites. This is because, unlike Squarespace, many if not most of the bigger WordPress implementations use the open-source version of WordPress on a third party hosting provider.

I also have no doubt that some of the same media customers who do use WordPress are casting a lustful eye over at what the Vox network is doing with its more modern CMS platform that seems to be attracting new talent like Ezra Klein (and was a big part of why Joshua Topolsky and team went over there to start The Verge. (On a sidenote, I’m sure if Automattic did a wargaming exercise, one of the scarier possibilities is that of Vox looking to sell Chorus as a product, or an acquiring company buying Vox with the intention of doing so themselves)

One additional path to monetization could be through the launch of native commerce capabilities at WordPress.com and through WordPress VIP.  Today those small business and media companies who monetize with integrated site commerce do so through premium hosting players like WooCommerce or through custom-built solutions, but I think that’s money being left on the table for Automattic if they ever decided to launch their own commerce offering.

Both companies have made significant progress in adjusting to mobile, HTML5 and the move towards responsive design, but I imagine all of these trends will continue to need continuous investment. Either way, the news today points to the fact that there is significant value seen in the underlying website platform businesses as economic activity continues to move online and everyone from small independents to big-business continue to launch websites to chase business.

Disclosure: Automattic is backed by True Ventures, a venture capital firm that is an investor in the parent company of Gigaom.

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