One thing is clear, you need the technology that allows you to have a catalog of products, display it and collect the money from your customers to ship the goods to them finally. This was a massively complex operation when we didn’t have Stripe (to handle all the payments seamlessly) or Shopify that gives you all that as a platform.

What was one of the hottest and most boring solutions in early 2000? Magento (open source v2) was one of the open-source contenders. Built with PHP and MySQL, at its peak was running most of the e-commerce websites. Before Magento, people were using Joomla or Drupal (first release on 2001) as alternatives (staying in the PHP world).

According to Magento, there are currently around 250.000 merchants worldwide. Of the 10K web stores, Magento has a share of the 7%, still going strong.

You can now run Magento in the Adobe cloud, but it was traditionally deployed on-prem, and many hosting providers offered one-click solutions to set up your store. Thanks to the community, hundreds of integrations of all sorts make it an exciting bet when creating new e-commerce if you do not want to use a modern SaaS service such as Shopify.

Let’s go deeper into the history of this fantastic project, how it evolved and how the lack of innovation accelerated its predominance.

We can see in that chart how Magento was leading as one of the main e-commerce solutions, and Shopify rapidly grew and surpassed Magento in early 2018.

History of Magento

The beginning

This solution was created by Roy Rubin and Yoav Kutner when they started a project named Varien while attending college at UCLA. The first release of Magento wasn’t under the Magento Inc company, but the original Varien Inc. This initial release was on the 31st of March 2008, fourteen years ago. For context, the modern, most comprehensive SaaS solution was founded in 2006! But it wasn’t until 2009 that they created App Store, and this API allowed developers to develop applications for the Shopify stores.

The Magento approach was open sourcing their code under the OSL v3 license, which meant customers had to run their instances on-prem (no AWS at that time). The business model at that time for Magento was to offer Professional Services to help businesses create their stores and add the required features. This was quite a traditional business model at that time.

Magento, since the beginning, was thought to be extended; with some PHP knowledge, it was pretty trivial to create new features, and there was quite a big market of developers creating new plugins that people could use. Some of the typical modules involved payment providers, as each country and bank required its implementation.

Magento won the SourceForge Community Choice Awards several times in these first years. If you do not know it… SourceForge was the Github before Github. That was the website where you could find most of the open source projects, not using Git at that time but SVN.

Magento acquired by eBay

They were so successful at that time that eBay, one of the top tech companies, decided to invest in Magento, and they got 49% ownership of Magento at the beginning of 2011. Later in June 2011, eBay decided to buy the rest of Magento, the sole owner, joining the X.Commerce initiative. The total acquisition value was close to $180 million. A few months later, Yoav, one of the founders, decided to leave the company.

But Yoav hasn’t been detached from Magento, as in October 2012, he founded MageCore, a consultancy company offering support to their customers using Magento.

To get an idea, eBay's annual revenue was $11.6 billion. In 2021, the yearly income was around $10.4 billion, but we need to consider that today's eBay is way smaller than eBay in 2011! One person is key to understanding what happened next to eBay and Magento: Carl Icahn.

We move forward to 2014. Carl Icahn is an activist shareholder looking for companies where he can make a profit pushing the board to take some radical decisions. That year, Icahn forced eBay to complete a corporate spin-off from Paypal. This meant that eBay and Paypal would become two different companies.

This move had a collateral effect on Magento, as eBay decided to spin off the company and transfer it to a new owner, Permira Private Equity Fund. Permira bought the eBay Enterprise division for $925 million in 2015, a compound of different companies. The London-based fund decided to create a company called Magento Commerce, an independent company centered around Magento.

During this period, the company launched Magento 2, a massive refactor of the platform.

Transitioning to the cloud

That isn’t the end of Magento; there was another massive event for the company. In May 2018 was announced that Adobe was acquiring Magento for $1.68 billion. It seems to me that it was a great business deal for Permira.

For Adobe, it was a strategic bet for their cloud offering. Through Adobe Experience Cloud, you can pay a subscription so they will run Magento for you, and you can still find one-click installers in many cloud providers. For instance, DigitalOcean offers that.

A slow-declining ecosystem

We can see in early 2016 started their massive growth. What happened there? Shopify's 2016 Full Year financial results are an interesting read to understand its growth better. To summarize, with some of my hypotheses on why Magento declined so quickly:

• At that time was the boom of SaaS services, and at that time, companies started to have less interest in running their software if they could avoid it. Cloud was relatively cheap (now I would say is way too expensive), and it was very convenient for people without technical knowledge.

• Magento stagnated depending on their community to develop new features, but Magento has been interesting since version 2 and hasn’t been a massive upgrade.

• Agencies working with Magento found that they can have more significant margins setting up e-commerce websites with Shopify as they mostly need to focus on the UI, considerably reducing the development time.

Looking at Google Trends and comparing a search between Magento and Shopify, we can see that in some countries like east European countries and India.

Many agencies still offer their services to help new e-commerce companies to drive business through this boring platform.

But it’s clear that Shopify and similar ones are growing much faster; they're more modern, offer a better UI, and take the world. The COVID situation has been fantastic for Shopify as more people decide to buy online.

It’s surprising to see how a piece of software written so many years ago managed to be so successful, but in my opinion, they were late offering a cloud and managed solution as part of their core business. But good learning is that you do not need fancy features or technology but solve people's problems.

It’s great to see how some boring technology like PHP, with a pretty old project, still has a significant market share for e-commerce. I know some companies like Project A, Rocket Internet, and similar ones have their version of Magento (Alice and Bob) that still are creating successful businesses, at the expect of many developers happiness. But here we are going to talk about boring stuff, sorry.

It’s also essential how stagnation caused by the lack of innovation can quickly turn a very successful project into the Internet purgatory of almost forgotten projects.

If you want to keep reading boring stuff, please subscribe and tell your friend about this place.

Unfortunately, as today I am publishing this post, Shopify announced a layoff of the 10% of their employees, affecting mostly sales, recruiting, and marketing.

Boring Links

• Performance optimization and scaling strategy for your Magento2 Shop

• PHP: A fractal of bad design

• Scaling database with Django and HAProxy

• Basic guide to create your first Magento 2 module

• My thoughts on Adobe buying Magento for $1.68 billion

This newsletter was intended to share news about Engineering Management. Still, I feel that every single manager out there is already sharing great content, so I decided to pivot to a different sort of content: boring content, discussing engineering, business, and tech from a different perspective. This is not to bash any tech or companies but to put the focus where many are not looking at.

Today’s topic will be the current tech market situation. We transitioned from frantic valuations and growth to companies fighting for survival and desperately trying to get a new round to increase their runway, running to profitability.

Other companies are navigating this storm with a reduced urgency. I think these companies share some core concepts different from VC money.

• Many of them are bootstrapped without VC money. They do not owe money to anyone.

• Their goal isn’t to dominate the world through unceasing growth. Great idea, fantastic execution, willing to be the best with sustainable growth.

• They tend to be small, not having massive teams. More people, more expenses, more people doesn’t necessarily mean faster.

• They hire based on their revenue, re-investing sustainably.

• They have simple business models that generate revenue. They are not disrupting, and they play in a high-margin business.

• They are not hyped, people might not know them, and they do not have the attractiveness of the big tech probably, they do not pay the same.

Let’s go through some examples of boring companies.

Sustainable boring businesses

With these two examples, I want to share a couple of companies that are not trending in the tech scene but are creating an amazing businesses out of simple ideas with great execution.

Craigslist

It’s straightforward to describe Craigslist, and they’re a massive classified advertisements website primarily present in the US. Craig Newmark founded it in 1995. Probably that was the same year that they updated its UI.

The idea’s simple, you pay for posting an ad. It’s a no-brainer business model that works if you get tremendous traffic, as they do.

The profit margin is calculated at around 80%. In 2021 they generated $660 million, with a 17% growth compared with 2020, but still way below the record year in 2018 with $1.034 million.

It’s reported that Craigslist has just ~400 employees (based on Linkedin data). This makes a revenue per employee of $1.63 million. Compared with some big tech: Google ($1.6), Meta ($1.1), and Apple ($1.9).

Based on Linkedin data, I can see only 14 people in Tech. I’m sure the team is bigger, anyone with more info about it?

Let’s talk about Tech. It seems they’re running on-prem using the following tech: Apache as the webserver, MySQL, Perl as the primary programming language, and Sphinx for search. This is an extremely boring tech setup, but they’re running one of the websites with the highest amount of traffic on the Internet.

The job postings confirm they are running their infrastructure, as they’re looking for a Network Engineer, and it seems they are modernizing the frontend side by looking at the Javascript Developer role they have.

Working at this company seems safe, with great revenue, massive margins, and a small team. Boring but very successful.

Not everything is shiny, they have a tremendous issue with fraud and illegal content on their website.

SmallPDF

This company was founded in Switzerland by Manuel Stofer, Lino Teuteberg and Mathis Büchi Ginzbourg. Their core idea… to make PDF files smaller. Anyone that has worked creating reports or exports in PDF knows how painful and boring is to work with that!

This is a great example of a bootstrapped company, they never received money from VCs, but they managed to find a great idea, execute it and reinvest revenue for furthest sustainable growth.

They have a team of around 120 people (based on no Linkedin data) located in Zurich, Barcelona, and Belgrade.

Based on data from Reviewbolt, the estimated revenue (from 2020) was $10.55M. At that time, they were around 70 employees. Which brings an estimated revenue per employee of ~$150.000. Not as high as Craigslist, but in my opinion, enough for being a sustainable business.

They seem to be running in AWS public cloud and have more of a modern tech stack. In the job description, I can see some cool tech like WebAssembly. It seems to be working with React and Typescript on the frontend side.

They’re still actively hiring.

Unsustainable businesses

Some businesses that are suffering right now and that are looking for that sustainable growth is going to navigate an extremely difficult moment; for instance, recently, on the news, we could hear about companies losing their inflated valuation (affecting their employee’s potential future income) like:

• Klarna its valuation shifted from $45.6 billion to $6.7 billion.

  • Klarna hasn’t declared profits since 2018. With 2021 losing $730 million. With a revenue of $1.42 billion.

• Similar to Klarna, the world-known Stripe recently reduced its valuation by 28%.

  • For instance, Adyen, one of the biggest competitors, seems to be in better shape as they have a laser focus on big customers and a smaller portfolio of products and reduced team size. Quick comparison, Stripe ~7000 employees vs. ~2180 for Adyen.

  • In contrast, Stripe has a broad portfolio of products that might mark the difference in the long run.

• In China, the grocery delivery company called Missfresh is close to bankruptcy.

• Not to mention quick delivery companies that have closed recently.

These companies have some points in common.

• A complex business model based on extremely small margins.

• Without VC money, they cannot function, as they need to dominate the world to be profitable eventually.

• They can be extremely disruptive to society, like Uber.

Boring Links

• Stack Overflow runs nine on-prem servers to run all its sites. No K8s, no containers. Increasing RAM to the SQL database was more effective than adding another caching layer with Redis.

• Istio is moving back to the monolith. Well, not to an actual monolith as many of you have seen in the past, but starting to consolidate some microservices into bigger services to reduce complexity.

This is a rewrite from the previous Welcome message. Initially this newsletter was intended to offer content about engineering management and leadership. After not going through this welcome message I decided to pivot this inexistent newsletter to a new topic: Boring engineering content.

What boring means to me? Topics that are not that often written about, not to focus on FAANG experiences, or optimising for the highest total compensation, but sharing other stories that are possibly quite unknown.

I want to interview engineers and leaders working on boring companies, again, boring meaning they’re not trending topic in Twitter, there’s probably no messages in Blind or Glassdoor.

Join me in this weekly boring newsletter.

Thanks!