Magento's Open House Mystery

The other night I attended an open house celebration at Magento's new digs in Culver City. It's only a two-hour drive from San Diego, and I have been wanting to go up for a visit for quite some time. Everyone there was given a name badge, a menu, and a stack of "Magento bucks," to spend on food and drinks.

Their new office in West L.A. is a very hip, industrial-style open space with what looks like a dark, starry sky overhead. It's a great place for a party with a DJ playing from the 2nd floor loft while people mingle below.

In place of what would normally be the lobby, there's an open space where people can gather in small groups or, I imagine, could even be used for company-wide meetings. The bar was serving beer and mixed drinks like "Magento Martinis" and Mojitos and there were a few pillars scattered about which were just the right size to hold your drink as you talk to someone, or gaze into their eyes, as the case may be. But I imagine that these pillars could also be used as demo stations. In fact, there's a planning wall in the back with stuff pinned all over it that looks like a work-in-progress for the upcoming IMAGINE eCommerce Worldwide Conference. Then beyond that are are some individual work spaces with low, white walls cut at irregular angles that make you feel as if you're walking through an ice cavern. (You might think of them as "ice cubicles.") Then along the side are some more traditional, but open offices.

But before we go any further, here's a little background for those not familiar with Magento. The original company, Varien, was founded by Roy Rubin in 2001 as a web design firm. They eventually moved into software development, and by 2008 had released Magento -- an open source Ecommerce development platform, running in the LAMP (Linux/Apache/MySQL/PHP) environment. By March 2010, exactly two years after the launch of Magento, the company -- which had up until this time been completely self-funded -- received a $22.5 million equity investment from a mystery partner. Writing in Practical eCommerce, Armando Roggio notes that the SEC filing actually lists two unnamed investors.

According to their website...

[Editor's Note: Now, hold on here just a minute! Let's not go using those old numbers from the website because they're all wrong. Here's the real deal, straight from an inside source:]

Magento is the fastest growing eCommerce platform with over 200 solution providers and 70,000 stores running Magento around the world. In one month, Magento sells more enterprise-class customers (including major retailers, brands, etailers and innovators) than their enterprise-class competitors do in a full year. Their ecosystem includes over 3,000 extensions and apps for Magento, which continues to increase at the rate of over 100 per month.

However, the identity of the mystery investor(s) remains a guarded secret. For all its success, Magento is still a relatively small company, with 180...

[Editor's Note: No, not again, now... stop, stop STOP!  I don't know where you're getting all these old numbers. Here, use  these.]

For all its success, Magento is still a relatively small company, with 205 employees, which is an increase of 90 since last January.

It's the kind of place where you can wander around and poke your head into an open office -- as I did, Magento Martini in hand -- to find Bob Schwartz, president of the newly formed Magento, Inc., looking for a YouTube video. Just then, a small group stopped by to introduce themselves. When one in the group mentioned she was looking for a job, Bob said, "Magento's hiring! Let me take you over and introduce you."

So I continued down the hall past the "ice cubicles," and was headed out toward the catering trucks when I ran into Roy Rubin. I took the opportunity to tell him that his company has a "real dot.com vibe."  He knew exactly what I meant and smiled.

[Editor's Note: Now wait just a minute... everyone knows that no self-respecting dot.com is ever self-funded and profitable. So why do you say they have a "real dot.com vibe?" What is that supposed to mean?]

Out in the parking lot over on the left, they were serving fancy grilled cheese sandwiches with soup and salad. Then there was an Indian cuisine truck in the center, and a Sushi truck over on the right in the back. I did a quick survey, as you would when sizing up a home page, and got in the Sushi line because I wanted something that would be easy to eat while standing up.  Just as I found my way to the end of the line, a woman turned to me and asked, "Is this the end of the line?" To which I answered, "It is now!" As it turns out, she works in advertising but was having a hard time understanding what Magento is all about. "What exactly is it?" she asked.  I explained that Magento is a robust, open source, e-commerce development platform, to which she replied, "I don't even know what 'open source' means. This is a whole new language for me." So I explained:

It really is a matter of licensing philosophy and that, unlike most commercial software developers who keep their code proprietary, those in the "open source" movement make their code available for developers to modify -- frequently at no charge -- which in Magento's case, has led to a groundswell of creativity on the part of software developers all over the world. The result is a huge "ecosystem" of custom applications, plug-in extensions, and a community of loyal followers.

Her next question was, "If they're giving it away, how does the company make any money?" Part of the answer, at least is:

They offer several versions of the platform, including the Enterprise Edition (starting at $12,990 per year) and the Professional Edition (starting at $2,995 per year). Then there's the Community Edition which is free, but comes without support. That's the version most everybody I know uses, but it's by no means a complete solution. You still have to manage the hosting, or find a company to host it for you, install the software and database, and then customize it to suit your needs. And anything beyond that, you're on your own. So the Community Edition of Magento is not for everybody.

It's sort of like they're all on this big cruise ship but those using the Community Edition are following along in lifeboats, pretty much fending for themselves. So whenever the big ship Magento changes course or releases an update that rocks your boat, they lean over the rail and throw you a rope, saying, "We're heading over that way and you can follow along... we'll see you over there..." But you're not entirely on your own, because, as is typical of the open source community, there's usually someone else who has experienced a similar problem and is happy to lend a hand. So as you can imagine, there's a measure comradery among many Magento users because they're all in the same boat.

By this time, the sushi line hadn't moved an inch, so I decided to try my luck with a grilled cheese sandwich. There were a couple of guys in line from the building next door, who lamented, "Our offices don't look anything like this. You should see where we work!"

Because we set our clocks back a couple of weeks ago, it was getting dark. So after finishing my sandwich and salad, I started to head back inside. That's when I ran into Bob Schwartz again, but this time he was on the steps talking to some guys from Japan. When I had a chance, I asked him who is organizing the IMAGINE eCommerce Worldwide Conference.

"We are!" he exclaimed, and went on to explain:

This will be the first conference ever hosted by Magento. In the past, there have been Magento conferences -- in Germany and Spain and other places around the world -- but they have always been organized by other companies who invited us to speak. This will be the first, ever, Magento-hosted conference. We're starting here in LA in February, and will then take it on to other places.

[Editor's Note: Now don't forget to include this quote from Bob: "We love what we do, 'enabling the Ecommerce ecosystem.'"]

I'll be there for sure. So I said my good-byes and went back inside. But I was still wondering about the mystery investor(s),  as were many others in the crowd. I heard some hushed speculation that it might be PayPal, while others think it's probably eBay.  But wait -- didn't eBay acquire PayPal back in 2002 for 1.5 billion? I almost forgot about that.

Maybe there's a clue around here somewhere. So I went back inside and noticed someone standing by the IMAGINE Conference Wall talking to Roy. Isn't that Sasha Strauss, Chief Strategist for Innovative Protocol?  And isn't that the same branding company that eBay uses? Even though they're friends and sometimes appear on speaker panels together, I can't help but wonder...

I'm sure we'll find out soon enough, because they can't keep it a secret forever.

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