In 2015 Envato invested $1.5 million dollars into Pressed — the white-label WordPress hosting service — for a one third stake in the company. Now they've fully purchased ownership in the business, and the majority of the Pressed team is now working for Envato on their new Envato Hosted offering.
Envato began a partnership with Pressed in December, 2015, to offer a white labeled hosting option to theme buyers, reducing the steps for folks new to creating a website. They expanded that program with a more integrated hosting option in the theme buying process a year later, which included revenue share for authors in the program.
It's important to understand who Envato is targeting. Envato, and the majority of the other largest companies in the WordPress space, are fighting for a customer's first website creation experience.
Millions of people go through the process of finding out how to create a website, where they end up at Envato's ThemeForest, GoDaddy, WordPress.com, WordPress.org, SquareSpace, BlueHost, etc. Historically, each of these services, and others like them, have had often complimentary roles in a customer's first website creation experience. Increasingly, they are attempting to gobble up new customers fully into their own ecosystems.
This is the thought process behind much of the product development we are seeing in the WordPress and hosting space. It is more profitable to attract a customer once and keep selling them additional services, rather than to attract several new customers to a single service and send them elsewhere for complimentary services.
The software and products that companies provide are not as expensive to create (per customer) as the customer acquisition process. And any time you can add average revenue per user (ARPU) for a reasonable cost, it's a good thing.
As I've discussed before, these are the battle lines being drawn. Increasingly partnerships will be with downstream partners rather than partners that can be a threat to keeping the customer on the service.
While traditional hosting companies have fought this battle longer, Envato has wised up to the fact that they have a huge opportunity.
Envato is often the customer's entry point, and then the customer figures out through education, support, and otherwise that they need hosting and other services to go along with the new templates they've purchased. Instead of letting the customer go off and do that alone, Envato is stepping in to capture that experience themselves.
The experiment has gone well enough, because Envato is now doubling down on the hosted product and integrating their many services along with it. Envato CEO Collis Ta'eed tells me, “It's still in very early rollout, available on a handful of themes, and with over a thousand customers on the program and growing.”
Collis also confirms their desire for customers to have better onboarding experiences when creating a website:
For the next phase of our project, we saw opportunities in owning Pressed and integrating the team with our own. Now that we've made the acquisition, we're going to double the focus on offering Envato Hosted and Pressed as platforms for theme authors to earn recurring revenue, and for customers to get a faster, easier and happier start to WordPress from Envato.
For $19 per month, or $16 paid annually, customers get a theme, a quick setup experience, discounted Envato services, and more. Indeed, it's a compelling offering.
For existing Pressed white-label customers, things may change in the longer term, but for now, it seems it's business as usual. James Giroux from Envato tells me, “We’re continuing the white label business that Pressed has been providing to theme shops like Organic Themes and others, as well as the many web designers who had joined the service to build their agencies.” Not all Pressed customers have been contacted about the acquisition, and there hasn't yet been a public announcement.
I think this is a smart move by Envato. Collis noted how this acquisition was outside their norm for new product development: “We’re generally a company that builds things from the ground up, but where deals like the one with Pressed help us deliver value to customers and authors faster, then that’s pretty exciting for us!” Indeed, for building a hosting company, they could've easily spent as much or more money to get a product that's less well developed than Pressed.
Pressed CEO Ben Welch-Bolen did not move to Envato with the acquisition, and CMO Paul Carter left the company to work on other projects before the deal. The majority of the team is now working at Envato. The purchase price for the remaining two thirds of the company is unknown.
I was really excited about Pressed, and I still am. I think it is a very nice product and solution that has obvious advantages for Envato.