Adobe bought Magento for $1.68 billion from Permira, a British global investment firm, in May 2018. Before Permira, Magento was owned by eBay, who acquired the company from the platform’s original owners, Roy Rubin and Yoav Kutner of Varien Inc.
Today, Magento is considered a behemoth in the ecommerce industry and has come a long way from its humble beginnings in 2008. While running a web development business back in 2003, Rubin came across osCommerce, a popular open-source ecommerce platform used by companies to run their online stores. After digging into the product, he soon realized that although it had a large following, there weren’t many service providers for the platform on the market. Those that were available weren’t too sophisticated.
Identifying this gap in the market, he started advertising on Google AdWords to attract osCommerce clients to offer web development services through his company Varien Inc. They received an astounding response to their ad, overwhelming them with more business than they could handle. After working with the platform for a few years, they had earned a name in the industry and had clients calling them up, asking for advanced features and functionality every day.
The only problem was the high cost of developing custom functionality. Recognizing this, Rubin and Kutner decided to start a side project with a few of their developers to see what they could come up with as a suitable alternative to osCommerce that would address its shortcomings. They soon realized that it could be a revolutionary project and turned it into their primary focus. On the 31st of August 2007, Varien released the first beta version of Magento, followed by the open-source Magento Community Edition in June 2008.
Growth and acquisition
Soon after its launch, Magento became an instant hit, surpassing its main competitor osCommerce within its first year on the market. As it grew, Varien continued adding more functionality into the software and built a global community around it. During this time, eBay Inc. took notice of Magento and purchased a 49% share of the platform in 2010. Less than a year after that, eBay decided to fully acquire Magento to integrate it into X.commerce, their integrated open-source platform.
Under eBay’s ownership, Magento continued to soar and developed a strong foothold in the ecommerce industry. It was also under their ownership that a majority of Magento 2 development was conducted to fix the backward compatibility issues of the original software. In 2015, eBay sold eBay Enterprise, the part of the company where Magento resided, to a group of European private equity firms for $925 million. The buyers soon split eBay Enterprise into four parts, and Permira Funds took ownership of Magento.
Magento continued to thrive under Permira’s ownership and even launched the Magento Enterprise Cloud edition on the 12th of April, 2016. In the same year, Adobe partnered up with Magento to expand the Adobe Experience Cloud by leveraging Magento’s advanced B2B and promotional functionality. The acquisition of Magento by Adobe enabled B2C and B2B merchants to access unified shopping experiences, greater personalization, and unparalleled agility under a common architecture.
In early 2017, Permira announced that Hillhouse Capital, an Asia-focused private equity fund, would make a $250 million investment to further Magento’s growth and expansion. As Magento continued to grow, its position in the enterprise market continued to solidify. It became an attractive investment opportunity for Adobe, whose main competitor, Salesforce, had recently acquired Demandware. Seeing Magento as an opportunity to solidify their existing Adobe Experience Cloud and to venture into the enterprise-level ecommerce industry, Adobe fully acquired the company in 2018 from Permira.
Many feared that the acquisition of Magento by Adobe would mean an end to the open-source version. Putting those doubts to rest, Matt Asay, Head of Developer Ecosystem at Adobe, put out a tweet assuring the community that Magento would continue to remain open source. Magento has since continued to grow and innovate under Adobe’s leadership, benefiting from their existing technology and partnerships.
Launch of Adobe Commerce Cloud
In 2019, Adobe introduced the Adobe Commerce Cloud, built on Magento Commerce, that integrates with their Analytics Cloud, Marketing Cloud, and Advertising Cloud. They also launched the Magento PWA studio project, which allows developers to create PWA versions of Magento stores using a set of developer tools. Moreover, they launched the Magento Page Builder for stores running Magento Commerce to make it easier to create and edit content with a drag and drop style editor.
Adobe’s acquisition of Magento has helped transform Magento from a standalone ecommerce platform to a fully integrated ecommerce solution incorporating online commerce with advanced business intelligence functionality.