The other night I read a line in one of the awesome posts at the Matt Report. (By the way, if you’ve never watched Matt’s interviews, you’re really missing out.)
The line was this:
I’ve said it before and I’ll say it again: We’re in an interesting phase of the WordPress growth spurt. It’s only a matter of time until we see some larger WordPress companies really break away from the pack and follow the traditional path of a Silicon Valley startup.
And that got me thinking. As someone who spent a decade in five Silicon Valley startups and now has spent three years coaching, consulting, and befriending WordPress companies—what’s the difference?
As I thought about it, I found there were some wonderful distinctions, as well as some that could be improved. So here are the 5 ways they’re different.
1. Bootstrapping is a way of life in the WordPress ecosystem.
Silicon Valley companies revolve, often, around venture capital. With the growth of incubators and accelerators, we’ve also seen the introduction of super angels and other ways to seed these companies, but more often than not, the prize for these companies (regardless of whether it should be considered a prize) is the raising of a round of financing.
The consequences of that dynamic can be pretty apparent. After all, you’re celebrating the gathering of resources rather than the accomplishment of any real tasks that contribute to your mission.
So in this way, the WordPress world wins. Most of the companies in our space work hard at tweaking and adjusting their business until they find the right balance of support (and the costs that go with it) and sales (and the revenue that comes from it).
As they do all this, they deliver products and services that actually help people. And those that stay alive end up being, in my personal opinion, better for it.
2. Total and absolute failure happen less in the WordPress ecosystem.
There’s another ancillary benefit to bootstrapping that keeps failure at bay. It’s the fact that most of the WordPress companies I know don’t end up relying on some storehouse of funds to let them do what they want. Because of that, they don’t get careless with money.
I can’t tell you the number of startups I know that raised a small initial round and then used it up with rapid growth—all the while looking for other investors instead of figuring out how to get to cash-flow positive.
The net result was that when these companies didn’t raise a second round (which is just as hard as raising a first round), they didn’t know how to run their business on their own revenues. And so they shut the doors. Total and absolute failure.
You see that happen a lot less in the WordPress world—because without an initial round of financing, operational discipline sets in pretty early. You can’t hire until you can afford to hire.
3. There are less requests for NDAs in the WordPress world.
I can’t tell you the number of times I was asked to sign an NDA in the last twenty years—from Silicon Valley startups. But I can tell you the number of times I’ve been asked to sign one by a WordPress company, because I can remember each one. Less than the fingers on one of my hands.
In the words of The Shawshank Redemption, you either “get busy living or get busy dying.”
No one has time for the next most amazing idea ever. Winning is a game of execution, not just waking up with a revolutionary idea (that, by the way, someone had 5 years ago).
4. There is a lot less business modeling rigor in the WordPress world.
Of course, there are some ways that I really like what happens in Silicon Valley. Some days where I miss it.
Because honestly, in much the same way that I can’t remember how many times I was asked to sign an NDA in that world, I can’t count the number of times I’ve seen glazed looks when I ask WordPress companies about their business model.
A business model doesn’t have to be hard. You have the ways you make money and the ways you spend it. The goal is to make more than you spend—regularly and consistently.
But when I talk with WordPress folks it sometimes sounds like hope and luck are key elements to their strategies—as in, “we’re going to try this and see how it works.”
That’s not a business model.
5. There is a lot less rigor in metrics in the WordPress world.
I love having conversations with Dre Armeda of Sucuri, or with Thomas Griffin (of Soliloquy and Envira fame). Or talking to Jason Cohen, one of the WP Engine co-founders. They spend lots of time thinking about the entire lifecycle model of a customer.
These guys are asking about the lifetime value of their customers (LTV). They’re looking at customer acquisition (and the associated costs). They look at indicators of attrition and how to monitor retention. They spend hours digging into at-risk customers—and create metrics for finding and dealing with them, all the time monitoring conversion metrics.
But those are just three guys. And that’s a small minority of the WordPress ecosystem.
Don’t get me wrong, I know others are doing it. But one of the dynamics of dealing with VCs in Silicon Valley is that those questions get brought up so often, you can’t imagine building or running a company without them.
And that’s not yet the de facto reality in our WordPress world.
These differences are great & challenging.
All that said, there’s much to love about the world we’re creating over here. WordPress continues to grow and become a viable place to build your business. I hope the distinctions are helpful in keeping what’s important important. But I also hope it challenges us to drive a bit more rigor into some aspects of what we do every day.
What differences do you notice?
Chris Lema is the VP of Software Engineering at Emphasys Software, where he manages high performers and oversees product development and innovation. He’s also a blogger, ebook author and runs a WordPress meetup in North County San Diego. His coaching focuses on helping WordPress businesses, or businesses wanting to leverage WordPress.