In Zend (And PHP) We Invest

Only the very brave can pick winners amongst the current crop of Web 2.0 start-ups, social networks and other sundry services. And whatever the outcome might be, it is safe to say that the popularity of open source database MySQL and programming language PHP will only increase.

That should explain why Zend Technologies, a Cupertino-based start-up closely tied to the PHP language and community, managed to raise $20 million in Series D funding. Greylock Partners, one of the more aggressive investors in Web 2.0, led the round. Existing investors Azure Capital Partners, Index Ventures, Intel Capital, Platinum Venture Capital, SAP Ventures and Walden Israel Venture Capital also participated in this round. The company has so far raised $36.7 million. [Many of Zend’s investors have also invested in MySQL AB, the company behind the open source MySQL database.]

Zend offers a PHP-related development environment and sells products such as the Zend Platform, and the Zend Studio, used by developers to write web applications.The new money will be spent to build a sales force and beef up the support and services arm of the company. Zend is following the trajectory adopted by other open source companies, which started out life as projects, and were embraced by the enthusiasts, but then transitioned to support-and-services model in order to tackle the more lucrative enterprise market.

In 1997, Zeev Suraski and Andi Gutmans, two Israeli developers and students at the Technion – Israel Institute of Technology iwrote the parser behind Rasmus Lerdorf‘s PHP-FI, which was later released as PHP3.

A year later they rewrote the parser completely and called it the Zend Engine. In 1999 they started Zend, and since then the company’s growth has closely tracked the growing popularity of PHP.

PHP is now the bedrock for household names such as Yahoo and Facebook, and has seriously challenged Java as a development environment. Nearly 20 million domains use PHP, according to data collected by Netcraft. The TIOBE Programming Community Index shows that it is the fifth most popular development environment.

“The real challenge is to grow the business fast enough, and the new funding is going to help us with that,” says Andi Gutmans, cofounder and vice president of technology. He pointed out that PHP was becoming extremely popular in the enterprise. “As our enterprise business grows, we need to build a high level services and support organization.” Zend wants to expand aggressively in overseas markets in Europe and Asia. France, for instance is actively promoting open source solutions for its government projects, and so are other European nations.

Zend’s offerings include Zend Platform, Zend Studio and several other PHP related products. The focus on services and support is a sensible move for the company, since its core offerings are being challenged by some other open source PHP tools such as Eclipse (free) and cheaper offerings such as Text Mate.

“From the very beginning, PHP has been a language of web development, and we have never tried to be anything different,” he says. “That is the sole reason why PHP is growing in popularity.” Gutmans says that PHP was initially a two-tier architecture, but now a third tier is emerging in the shape of AJAX and web services on the client side. The company will enhance its architecture to work more closely with these new technologies, for instance, building closer links with Dojo and the Zend Framework. “We have to in order to help build modern web applications.”

[If you are looking for a good overview of the state of PHP, Niall has links to a talk Rasmus Lerdorf gave at OSCON earlier this year. (Slide show is here.) Lerdorf talks about PHP5 and how it is the key ingredient of modern web apps.]


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