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EcommerceBytes-NewsFlash, Number 2477 - February 11, 2011 - ISSN 1539-5065    1 of 4

eBay's 49 Percent Investment in Magento Revealed at Analyst Day

By Ina Steiner
EcommerceBytes.com
February 11, 2011




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eBay's PayPal subsidiary invested in Magento one year ago for $22.5 million. The disclosure that eBay owned 49% of Magento came during eBay Analyst Day on Thursday, and caught many by surprise. Magento allows merchants to open ecommerce-enabled websites and offers both free open-source software and a paid enterprise version.

Magento cofounder and CEO Roy Rubin confirmed the news and said eBay and PayPal share Magento's vision and support the open platform. "They love what we're doing, and they like that we're independent."

Magento had announced the investment in a March 2010 blog post without revealing the identity of the investor, but Rubin said it was known within the Magento community.

Rubin founded ecommerce consultancy Varien Software in 2001, and in 2007, the company launched the Magento open-source shopping cart out of frustration with other offerings on the market.

This week, Magento announced a new fee-based hosted solution for small and medium sized businesses during its inaugural Imagine eCommerce conference in Los Angeles. Magento Go will launch in a few weeks, with pricing starting at $15/month. A "$1 Million Dollar eCommerce Stimulus Fund" will enable merchants to get a free online store for one year.

But it is the Magento Go open platform for developers that has Rubin excited, and that will launch in a few months.

eBay has seen the benefits of opening its PayPal platform to developers, and Magento's open platform approach likely attracted PayPal to the company.

Rubin made it clear that Magento continues to operate independently - despite the investment by eBay, Magento's forthcoming Magento Go solution does not provide integration with eBay. Magento does offer integration with PayPal, which it had offered even before last year's investment - but PayPal is not the only payments partner with which it works.

Rubin said eBay knows that Magento has to be independent, and "not mired down by a desire to be deeply integrated with them."

Rubin said eBay's investment will remain at 49%, and said he's not going anywhere. "This is a 10-year story for me," he said. "It's an incredible opportunity to be at the core of ecommerce, and we will continue to push forward, especially after this conference." The Imagine eCommerce conference was sold out - 650 people attended, and another 200 were on the waiting list - and some people crashed the conference, he said, so desperate were they to attend.

Last year was a good year for Magento. In addition to the investment from PayPal:

  • Magento grew from 100 employees to 240 employees;
  • It nearly tripled revenues in 2010;
  • Magento adds 100 enterprises/month - Rubin said that's more new clients/month than its competitors add in a year.

"We are fortunate to have a partner that supports our strong belief in open source, community and innovation," Rubin said.

eBay spokesperson Johnna Hoff also confirmed its 49% investment, and said, "We currently integrate PayPal into Magento's open source shopping solutions to online retailers, making it even easier for businesses to get up and running with ecommerce and online payments.

Link to AuctionBytes full coverage of eBay Analyst Day

Link to AuctionBytes Blog post about eBay's investment in Magento.

Update: eBay has announced its intention to acquire 100% of Magento - see this June 6th news story.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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