Discourse Announces $20m Series A Investment

Chemical

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Discourse Announces $20m Series A Investment by Pace Capital and First Round Capital​


We’re pleased to announce that Discourse has taken $20 million in Series A investment from Pace Capital, joined by our seed investors, First Round Capital.

It’s been quite a journey since our seed foundation in 2012 and the launch of Civilized Discourse Construction Kit, Incorporated. In that time, the company has grown from 4 to 54 people, from $0 to over $10 million per year in revenue, and from 0 to 31,000 Discourse instances. You might say we’re a ten year overnight success.

We’re honored to cultivate the long-term relationship between Chris Paik at Pace, who has been gracefully following along with us since the earliest days, and the enduring warmth and empathy of Josh Kopelman at First Round. They understand that Civilized Discourse Construction Kit, Incorporated sits at the unique intersection of …

  • remaining uncompromisingly open source
  • totally 100% JavaScript to the bone, plus Ruby server side
  • completely committed to a remote-first view of work
  • gently but firmly encouraging people in a just-in-time manner to be their best online selves
  • being the easiest, most frictionless, simplest.. dare I say.. funnest.. way of getting things done with other people on the internet 🎉
There was a steady drumbeat of potential investors who kept approaching us as we grew, but it never felt like a solid fit, particularly with the uncertainty around the global pandemic. But with Chris and Josh, we felt they truly understood the long-term vision of what we set out to achieve at Discourse, and the unique path of a remote-first, open source company.

We’re thrilled to use these funds to advance Discourse on multiple fronts at once, to reach totally new audiences, and to keep improving and refining Discourse so it continues to be the best open source teamwork solution for groups of any size. We love working on Discourse, and these funds put fresh winds in our sails and spring in our stride.

This investment also means you can be confident that Discourse isn’t going anywhere. You can build on top of the Discourse platform and enjoy not only the well understood contract of 100% open source software, but also the support of a large, incredibly talented team galvanized by the idea of making online work just a little bit easier and just a little bit more fun every single day.

More here:

https://blog.discourse.org/2021/08/discourse-series-a
 

Pete

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"open source teamwork solution". That sounds awfully like 'not a community platform' to me, but Atwood has never been entirely consistent with what he calls his vision.

Whatever else I might say about Atwood and his team (especially when it comes to Atwood's personality), props to them for staying the course and making a viable business out of building and selling forum software in the last 9 years though - forums were already in decline by the time Discourse 1.0 landed and the fact that they're still out there is quite a feat.
 

Chemical

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Whatever else I might say about Atwood and his team (especially when it comes to Atwood's personality), props to them for staying the course and making a viable business out of building and selling forum software in the last 9 years though - forums were already in decline by the time Discourse 1.0 landed and the fact that they're still out there is quite a feat.
Agreed, I think they have done very well. Curious as to what they have planned for the $20m.
 

Pete

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The thing about Atwood, is that his wording betrays a lot more about his intent than I think he wants to imply. When he calls Discourse an 'open source teamwork solution', I infer there are several possibilities: 1) he's looking to expand it out in the chat space (a la Slack or Teams), 2) he's looking to expand it out to take on the groupware products (again, Teams, but also Exchange/Outlook), 3) he's looking to expand it to the hardcore groupware market (think Google Docs, Sheets), 4) into the CRM/helpdesk market (think Zendesk), or 5) into the project management space.

While this might sound fanciful, the reality is that if you have a solid platform that handles content the way Discourse does, it's really not a huge step to expand sideways - building out a helpdesk on top of a forum base is no challenge and sideways into CRM from there is not particularly hard either.

Expanding outwards to become a Teams like competitor (with the forum as a sort of knowledge base/archival storage) is also very viable; most of the core framework that is Discourse wouldn't be that hard to expand (especially if you're not too worried about performance because you're hosting it in the cloud yourself and charging people for it)

I think expanding to the full groupware market is a bit broad and unlikely, though if the plan is to tap into the Slack/Teams market, it's not _that_ far onward to building out calendars and online meetings, and with a $20m warchest you can absolutely invest in the people and tech for that.

Will watch this space.
 

LeadCrow

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Getting venture funding for a mix of opensource and expensive SaaS looks like a smarter plan than selling paid licences nowadays. Discourse has been making like 480K$/month from barely 4000 paying clients while everyone else is riding free.

As for future plans for monetization, I presume theyll focus more on introducing collaboration features to the paid SaaS edition and increase the number of paying clients to include education and organisations stuck mixing a large number of 3rdparty services. Consider just zoom, it took over the conferencing market - discourse couldve rolled its own solution and made a fortune from deployments with tiered access for participants (even those using non-paid installs of discourse).
 

Pete

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Eh, most of the big open source players have been doing something like this for a while - Ubuntu is free unless you want support, especially if you want extended support on an LTS build that runs past its LTS period (e.g. normally they get patches for 5 years but if you can't migrate a server right now, you can pay for extended support and patches)

It's also worth noting that SaaS as a business model is surprisingly lucrative in a way that selling the software isn't - see IPS and now XF.

But yes, I think any future for Discourse involves more collaboration tools and maybe gluing 3rd party services together. It's what enterprises want and what they will pay for.
 

LeadCrow

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Webmasters like integrations for the services they already use but there's no money in that for discourse, unless they get some revenue share from providers. SaaS suits forced affiliate code injection but making their own equivalent services should increase their margins and worth more substantially.
 

Pete

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Webmasters aren’t the target demographic for Discourse. The target demographic are the executives and department heads who don’t care, just want a place to sign for a service provided month after month, that will hook into the tools they already have/are looking to acquire.

Webmasters typically do not think in terms of budgets of 4-5 figures a month for a service, that’s more the domain of the large corporate customers who have different priorities to us lot on the ground.
 

Pete

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That isn't quite what I meant but for people not already in the Microsoft ecosystem, it might have some legs. Those already in the MS ecosystem will just use Teams for communication/group chat/calendar integration/calls.
 

rafalp

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Discourse guys know which notes to play to make the money. They crowdsource improvements and fixes to their product with OS license, support is done on their forums and their monthly plan is priced to gatekeep the average joes that would rack in support costs.
 
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