Toni Schneider: CEO Role Model

On August 27th 2009, Toni Schneider the CEO of Automattic (makers of WordPress.com) gave a very interesting and entertaining talk about his life as CEO, his past in the States and about the super-exciting life as a part-time venture capitalist with True Ventures.

First he talked about his past in California. Growing up in Switzerland and being very interested in technology and computers, he did not have much of a choice for studying computer science. But as he phrased it, he luckily met an American one day who told him about this great college in Santa Barbara. And that is where Toni went. He studied in Santa Barbara and Stanford computer sciences. At Stanford he joined a startup that created three dimensional sound. They later sold it. After a few other startups and acquisitions he became part of Yahoo. At Yahoo he was vice president of the Yahoo Developer Network (YDN). I did not know that and I was very surprised to see a Swiss guy having the lead at the YDN.

After the time at Yahoo, a friend of Toni created a Venture Fund and wanted him as a partner. At the same time, Toni proposed to Matt Mullenweg to set up a company for wordpress.com. It is important to note, that Automattic is not the company behind the software. They see themselves primarily as a service provider (wordpress.com, Askimet, PollDaddy) with an infrastructure of 1200 server you can use to host your sever. The business model is upgrades for your blog, Google AdSense (but only for Internet Explorer users, not a joke!) or Askimet licensing.
One of their clients, CNN, hosts around 50 blogs with several million unique viewers a day. They pay USD 30’000 a month for using the Automattic infrastructure.
Toni also talked about Automattic as a “virtual company”. They did not have any office until a little while back. Of the 55 employees only half are located in the US and have a working contract with Automattic. The others are consultants, that are payed on an hourly-based consultant contract. They never have any meetings (= saving lots and lots of time). The only time they meet each other eye-by-eye is at their 6-monthly event somewhere on the planet. The other time they collaborate over IRC or the P2 theme for WordPress. They never use e-mail, because it is not very easily searchable, most e-mails remain unread or get lost and so on.

One important lesson he gave the audience was the frequency of decision making. If you have to make a decision, see how fast it can be undone. Let’s say you release a new feature. If nobody likes it, you can easily remove it again. But if you take VC money, you are stuck with the investors for a couple of years.
Making decisions that can be reverted is important. As well as “release early and release often“.

Also something very interesting is the fact, that each employee has full access to all live systems and source code repositories. If there is something you do not like, you can easily change it. And it takes 30 seconds to change all 1200 servers. After that, you have another 30 seconds to remove or fix the thing you just broke ;-). How many people do you need to administrate 1200 servers? One hell of a good system engineer. Yes, only one guy is in charge of 1200 servers. And those servers are regular, USD 100/month root boxes. They only have to run Apache, MySQL, Linux and are all set up the same. I am really eager to hear more about the technology behind WordPress.com. Anybody wants to organize the first Swiss WordCamp?
Wordpress.com/Automattic is profitable. They have an income of 1 million a month and expenses of USD 800’000. The reason why they took the first million in funding was to have at least something in the bank, as a reserve. Then they “had to take” 30 million because the investors really, really wanted to invest. Something you don’t see or hear very often. And this is of course very good for the company. Now they can dictate the rules of the investment. The idea behind taking the money was to give it to the employees, changing stock for money. At first the team was very happy with that. But in the end, almost no stocks returned. Seems the employees believe in Automattic and have higher goals ;-).

Last Toni talked about his great life as a venture capitalist. Everybody wishes to be a VC. It is a easy job, no work stress, you met many new and bright people. And he confirmed all of it. He works 20% as a partner at True Ventures. A relatively new fund that seeds in early stages small sums between 0.5-2 million dollars. For that, they take 23-24% of the shares. Compare to other and bigger VC firms that invest 5-50 million and take 30-40%. The first batch was around 150 million big. Of that money 40 millions are invested in around 40-50 startups. The rest is banked for later investments or bigger rounds.
In a second batch True Ventures has now 198 million dollars to invest. Not bad if you know that other funds are dying or not investing. But True Ventures was investing all the time, even in this bad time. The investments Toni did are more personal, for people he personally know from Stanford or somehow through his day job at Automattic.

The evening finished with an apero at the Technopark foyer where many people had the chance to exchange a few words with the CEO of the Year 2007 and talking about ideas for the WordPress Dashboard or asking about sweet life in California.

Here are now some photos of the event. The last photo shows some Swiss WordPress bloggers (including myself). Enjoy.