I think it is not clear from the article why Mullenweg (CEO) suddenly thinks they are capital constrained. Let's do some back-of-the-envelope numbers.
Their Enterprise VIP service (managed hosting basically) is useful, no doubt. And @ $5-10K a month, it is chump change for enterprises. But how many massive blog clients like New York Post, NYT, or CNN, would you need to make back $160 million. If you had 100 such clients, you would be grossing $10-20MM, and, probably netting $2-4MM profit. You would need a lot of clients to make back that $160MM but it does not matter.
Let us say you hire a sales team of 20 to do full time enterprise sales. That's $5MM investment per year. Let's say they bring in 50 new enterprise customer every year. That's $5MM/year recurring revenue. So the money spent on Enterprise sales is well invested.
But you can't spend $160MM on marketing/infrastructure for managed hosting.
Did they just take advantage of frothiness in the market? I wouldn't blame them; I mean if investors want to give them the money, then great.
Make no mistake. Wordpress is a useful platform. They could a lot to keep improving blogging for a long time. And there is lot of value in being the CMS host for enterprises. But $1.16 billion?
Can they IPO at this valuation? I think they can; money goes from small investors pockets to big investors pockets in the unending cycle.
I think that's what this is about; this will unfold over the next 2-3 years, as the new investors want their returns.