🎧🍌 How WordPress Powers 43% of the Internet | Matt Mullenweg, CEO of Automattic
Lessons starting one of the first SaaS companies, building a community around your product, how AI is changing coding, lessons on optimism from Walt Disney
This latest podcast episode is a trip in the wayback machine.
Matt is one of the co-founders of WordPress, which today powers over 43% of all websites on the internet. He then started Automattic in 2005, which was valued at ~$2.8B in Q2 of 2025.
Our conversation gets into how WordPress first started in the mid 2000’s, the early days of Automattic, and the initial decisions and philosophies that set them up for success 20 years later.
We also talk open source software, why Matt’s such a big proponent of it, how Automattic built its business model as one of the first SaaS companies (that now owns companies like Tumblr and WooCommerce), and how AI is changing engineering.
Matt also shares advice for building a community around your product, his thoughts on “Conscious Capitalism”, what he learned running one of the first distributed teams (and why 90% of VC’s wouldn’t invest in Automattic), lessons on optimism from Walt Disney, and his favorite classical thinkers that inspire him today.
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Timestamps to jump in:
3:48 WordPress: Powering 43% of the internet
8:30 Outcompeting Reid Hoffman’s startup in the early days
14:03 Why open source wins over the long-term
16:21 Business models in open source
21:12 Starting Automattic in 2005, one of the first SaaS companies
28:45 Spending most of Automattic’s Seed round on servers
33:36 How to use Community + Word of Mouth for early growth
38:38 Matt’s current standoff with WP Engine
43:30 How to give back in open source
53:55 Best practices from 20 years of running a remote company
59:59 Lessons on optimism from Walt Disney
1:12:33 How AI is changing coding
1:16:09 Automattic’s internal employee secondary market
1:23:51 How open source increases longevity
1:26:08 Matt’s favorite classical thinkers
Referenced:
Bay Lights in SF
DAFFY donor advised funds
Quote from Rudy Francisco
Maintenance by Stuart Brand
We are as Gods by Stuart Brand
Marginal Revolution by Tyler Cohen
Find Matt on X / Twitter and LinkedIn
👉 Stream on YouTube, Spotify, and Apple
Transcript
Find transcripts of all prior episodes here.
Turner Novak:
Matt, welcome to the show.
Matt Mullenweg:
It's a pleasure to be here.
Turner Novak:
It's a pleasure to have you. So I think probably the average listener has maybe heard of WordPress but probably doesn't realize exactly how big and kind of the scale of all that. Can you just really quick explain what WordPress is, explain what Automattic is and then we can get into it?
Matt Mullenweg:
Sure. So the most important thing is WordPress is open source. So when you use WordPress, you have freedom and you're increasing the amount of freedom in the world. It started as just blogging software, so just journaling, that sort of thing, then expanded to run entire websites and then became an application platform. So people build all sorts of stuff on it. It's over 60,000 plugins and themes. I think the average WordPress install has like 30 plugins installed.
Turner Novak:
Oh, wow.
Matt Mullenweg:
So every WordPress is totally unique. There's no two that are alike, so you can really make it your own. And we have this fun action and hook system, so plugins can literally change everything about it. So I think that's the advantage. You can kind of get the best of SaaS and running it yourself, so you get the best of both worlds.
Turner Novak:
And you guys, I think the stat that I saw was WordPress powers like 43% of all websites on the internet, something like that.
Matt Mullenweg:
Yeah. So we are the largest CMS by a factor, almost an overall magnitude about 10x or 9x, the number two.
Turner Novak:
And is that Shopify is like 4-ish percent?
Matt Mullenweg:
Yeah, Shopify has really grown super well. They went from one to four in the past five years, percent. They're very good at e-commerce obviously. We have a plugin for WordPress called WooCommerce, which is an open source Shopify, which I think is about on 8% of all websites in the world.
Turner Novak:
Oh, wow.
Matt Mullenweg:
Basically our plan is its community driven. So my company Automattic contributes quite a bit, but there's thousands of other companies and volunteers and individuals that also contribute to WordPress. And the ecosystem of sensibility allows a lot of people to do things that are, I would never imagine or even encourage sometimes with WordPress. People build crazy stuff on top of it.
Turner Novak:
Unnecessary, you probably should have made something else or you should have used a different tool?
Matt Mullenweg:
Sometimes. But the thing that's been blowing my mind the most recently is this new thing we have called Playgrounds, or there's a commercial version on WordPress.com called Studio. Because in the beginning you would have to have a web host to play with WordPress. You set up a database server, everything. But now using this technology called Wasm, like web assembly language, essentially, we actually spin up PHP and a SQLite database and everything. So you can now run WordPress in your browser, a full install in about a few seconds it takes to boot up and it just runs locally. So it's instant.
Turner Novak:
Okay. So you can be a grandma or someone who's not super technical and familiar with how this stuff works and just click a button and you're hosted and live with the WordPress site?
Matt Mullenweg:
Well, what's cool is that, well, it's a local version, so it's just for you. And so you still would have to pay to get a host or to publish it to the world. But for students or experimentation or learning to code or developer environment or anything like that, it's really, really cool to have this local version that you can just do anything with. And it's pretty much impossible to break because every single action essentially keeps a journal snapshot of everything you do. So if you ever want to roll back, you can just rewind your WordPress instance to a state when it wasn't broken, if you somehow break it. If you're changing the code or something like that.
We're already seeing it being adopted in a ton of schools, particularly internationally. WordPress is strong in English, but I just got back from work at Asia, which changes cities every year. But this year it was in Manila, the Philippines, and it's really amazing across India, Philippines, Indonesia, Japan, just the adoption. Actually, I think the number two country in the world for contributions to WordPress is Japan.
Turner Novak:
Really? I guess it may be slightly surprising, but not that surprising. It's a big country.
Matt Mullenweg:
It's big country, a credible education system, a real dedication to crafts. And we have the jazz and everything that probably maybe appeals culturally. And then this idea of open source that you build things to be good because they're good, and it can be a public good as well. You don't just build it for commercial reasons. You build it to try to make humanity better.
Turner Novak:
And I think the whole open source area I want to explore. I also want to understand just how did it all get started back, I think you were 19 when you started, if I'm remembering right? But take us back to the early days. How did it all get going?
Matt Mullenweg:
Rewind early days. So blogging was kind of popular, but dozens of CMSs.
Turner Novak:
So what year was this? 20-
Matt Mullenweg:
Maybe 2001, 2002 kind of timeframe. So Google had Blogger, Yahoo had something called 360, and Microsoft had MSN Spaces. Everyone had sort of a blogging system. But for ones you'd run yourself, the big ones were something called Moveable Type, which was from a startup called Six Apart funded by Reid Hoffman, if you remember him from LinkedIn and everything like that.
Turner Novak:
This was probably before he started LinkedIn, right? I think he started LinkedIn in 2003?
Matt Mullenweg:
I'm not sure. Kind of around the same time. He was a big deal though. He had already done PayPal and stuff.
Turner Novak:
PayPal and stuff, yeah.
Matt Mullenweg:
Now the difference, Moveable Type, you could download the code and run it on your server, but it wasn't actually an open source license.
Turner Novak:
So what's the big deal with that?
Matt Mullenweg:
Well, they could change it. So I was attracted more to open source things. Built on the GPL, patchy license, things like Linux. And so I started using software called b2/cafelog was the name of this software out of Corsica, France. Single developer. It still refers to in the WordPress source code. Because what happened was this software had been abandoned essentially. And I had been a volunteer for it on the forums and helping people out and contributing code and everything. And so myself and a gentleman named Mike Little, actually in the UK where I'm today, we had never met, but we were both kind of volunteers to the b2 project. So we teamed up to create a fork. So in open source, anyone in the world can take existing software, take all the code and start a new project. The only rules, you need new name, essentially.
Turner Novak:
Oh, that's the only rule. Okay.
Matt Mullenweg:
Well, just with trademarks and stuff like that. User confusion. So we forked the software. I think there were six or five different forks. I forget how many. So we were one of many people who forked the software. But a friend in Houston at a blogger meetup came up with the name WordPress, Christine Tremoulet, and then, yeah, I registered WordPress.org and we were off to the races. Now Moveable Type, let's rewind back to Moveable Type. So we have tens of users. They have many, many tens of thousands, and all the Silicon Valley funding and all this sort of stuff. But they introduced a new version going from version two to version three, and it was kind of a rocky upgrade, sometimes happens in software. And they also changed their pricing model. So people who used to pay 50 bucks would have to pay 400 bucks.
Turner Novak:
Oh, wow.
Matt Mullenweg:
So this caused a mass exodus of people looking for an alternative. And luckily for WordPress, I don't remember if it was right before or right after, but we launched our Moveable Type importer. So we had a way to bring all of your posts and categories, and which also meant that we had finally gotten feature parity with Moveable Type, because you have to have a-
Turner Novak:
Competitive platform.
Matt Mullenweg:
Totally. So a lot of people started adopting WordPress, upgrading to WordPress instead of upgrading to the new version of Moveable Type. And we had very different technological choices. They were built on Perl and sort of would generate static files. And we made the bet on Moore's Law, PHP that everything would be dynamic and we'd kind of render at runtime, which was very controversial at the time because servers were a lot slower. But kind of this idea that, well, they double in speed every 18 months. And that dynamic is kind of faster and easier and better. When you use Moveable Type, the more posts and pages you had, the bigger your site got, the slower it would get, right? Because it had to rebuild each one when you made a new post. Yeah, we bet on dynamic. That ended up being a really good bet.
Turner Novak:
So was speed and then I guess simplicity, it sounds like?
Matt Mullenweg:
Yeah. Well, the software was simple and kind of bad in the beginning.
Turner Novak:
You think WordPress original software was bad?
Matt Mullenweg:
Oh, sure. Yeah. I mean, I was a 19-year-old kid. I didn't know a lot about design or performance or engineering or anything. I was learning as we went along. But as it grew, it started to attract more contributors. I also learned a lot just from doing it, and it just got better and better in each release. And we've had a very, since kind of the relatively early days, a very consistent release schedule where we release three times a year. And we are also obsessive about back risk compatibility. So actually a theme written in 2005 for WordPress still runs 19 years, 20 years later. So I learned that from studying operating systems and platforms, and that was something Microsoft was always really good at, was this backwards compatibility. Apple's actually pretty good at too. Like the Rosetta system that runs x86 code, even though they're on the M-series chips, ARM chips.
So yeah, we were just obsessed with that, and that ended up working out pretty well. So this release schedule, this relentless kind of iteration, we just got a little bit better several times a year, kind of like the Wikipedia. Wikipedia started off way worse than Encyclopedia Britannica and everything. But after lots of iterations and lots of contributions that have open source kind of wins in the longterm. That's why I've dedicated my life to open source, both because I creates better software, better outcomes, and it's better for humanity because you have a bill of rights attached to the software, that you can use it for any purpose. You can modify it, you can redistribute it, you can fork it like we did. That freedom's really, really important. And we don't get that from proprietary services or software.
Turner Novak:
Can you maybe explain that a little bit more for somebody who... If somebody's listening to this and it's the first time they've ever heard people talk about open source and they're maybe be still a little bit lost, can you just maybe talk a little bit more about just, I guess the principles of open source?
Matt Mullenweg:
It's about freedom, autonomy, and liberty. So let's talk about some counter samples. Well, I mentioned Moveable Type, they came out with a new version, and to upgrade, you'd have to pay way more. Who's ever had that? Raise your hand if some service you're using has raised the price in the past year. All of them, right?
Turner Novak:
I mean, internet providers do that all the time, to even get on the internet, right? Comcast will give you this entry-level deal of 30 bucks a month, and then suddenly you're paying 100.
Matt Mullenweg:
Yeah. Even for functionality though. So a big focus of WordPress is we started a 10-year project actually in 2016 to create this new Gutenberg editor, basically like a richer editor that would allow you to design web pages, kind of like Lego blocks for building websites. We obviously think this is a really big deal. It's a default experience on WordPress. We're very excited about it, but there's a percentage of people who don't like it at all. So still to this day, there's millions of sites running the classic editor.
So Imagine software came up with an upgrade that you didn't like. With WordPress, you can install a plugin to make it work the old way, and with other software, you're just kind of stuck with it. Any proprietary app, if you're using and they change something, if you don't like it, you're kind of stuck with it. It's not like you can say, oh, give me the two weeks ago version of Twitter or Linear. And these are great apps. Salesforce, these are obviously very successful, but ultimately you're, what we sometimes refer to as a digital sharecropper. So you get some benefits, but you ultimately are not in control or own what you're using. So you're at the mercy of the King or whoever is actually controlling the software.
Turner Novak:
I think the thing that's so interesting from open source, from my perspective, you'd think, okay, you're giving the software away for free. How do you make money typically from open source software? Obviously WordPress, you've raised money from investors. So that just tells me, okay, there's a business model of some kind. So what does a business model usually look like in open source when you're giving things away for free?
Matt Mullenweg:
So WordPress has never raised money from investors, but I started a company called Automattic that did, and that's one of literally tens of thousands or hundreds of thousands of companies in the WordPress ecosystem. So one of the freedoms that open source gives you is the freedom to charge for it. And people, they say, well, if you could get it for free, why would anyone pay? But if you start to think about it, there's millions of things that you could get for free that we choose to pay for. You could build your own house or repair your own car if you wanted to, but we generally trade time for money, or people like to support the creators of what they do. So let's say your favorite band, I don't know, what's your favorite band right now? Someone you really like?
Turner Novak:
Avicii.
Matt Mullenweg:
Avicii? Cool. So you could pirate Avicii's music if you wanted to, or you can not go to the concert and stand outside the venue and maybe hear it or something like that, but you want to support him or now you want to support his family and his estate and things like that. So it just feels good to support the creators because then they create more of what you like and you encourage more of that in the world. In fact, with someone like Avicii, with his legacy, you might encourage other artists that are inspired by his style or his story or his musical influences. So you vote with your wallet essentially. And that's one of the most powerful things about capitalism, is your ability to vote with your wallet.
And people thought this wouldn't work. By the way, some of the biggest controversies in WordPress' history was our enforcement of this. Because we said, Hey, in the WordPress.org directory, we're not going to have any code or allow you to link to any code that's not 100% GPL. There's some ways you can kind of get around the GPL. It's kind of tricky, but you can make the PHP GPL, but you can make the JavaScript proprietary or something.
Turner Novak:
Interesting. And what is GPL?
Matt Mullenweg:
Oh, GPL stands for the GNU Public License. It's an open source license that's used for Linux, it's used for WordPress. It's one of the more popular ones.
Turner Novak:
So if you create open source software, you make a GPL like a license for that specific piece of free code that people can use?
Matt Mullenweg:
It's based on copyright and licensing. So every piece of software has some license, and there is the sort of continuum from fully proprietary. So those really long things you agree to when you install a new computer or install software, terms of service?
Turner Novak:
Yeah, that no one needs. Yeah.
Matt Mullenweg:
No one reads. Yeah. Actually on WordPress.com, we have one of these, and I put in some Easter eggs for people who actually read it. So there's some hidden surprises.
Turner Novak:
Have you gotten people they've called out that it's in there?
Matt Mullenweg:
Totally. Yeah. So if you're listening to this, you might find the Easter egg, unless my ORs removed it at some point. Sometimes fun stuff you do gets removed over time, but I think it's still in there. Where were we? Oh, so you choose the license and most of the licenses are saying what you can't do with the software, or taking away your rights or indemnifying the creator or things like that. So what the GPL does is basically saying, hey, you can use this for any purpose. Now if it doesn't work, by the way, you can't sue me or anything. There's other licenses, like public domain or the Creative Commons licenses are very interesting as ways to license creative works. So there's a big spectrum of licenses you can put out there or put your work under, your creative work, that makes it more accessible to the world. And of course, in the US, we have this concept of copyright inspiring after a certain number of years. So I feel like we're actually entering where the very earliest Mickey Mouse, like the Steamboat Willie stuff, is about to go into the public domain.
Turner Novak:
I've seen those. Yeah.
Matt Mullenweg:
And of course, classical works like Aesop's Fables or things that are hundreds of years old, Shakespeare's plays are in the public domain. So as you look at the incredible stuff that's built on top of that intellectual property, it's really exciting. And this is not to say that proprietary licensing is wrong. I don't think there's anything wrong with it. It's just, I think there should be an option for folks who want to, to have the choice to put their creative work under something that's more permissive and allows others to remix and build on top of it.
Turner Novak:
So I think it's an important then delineation with some of the stuff that you've kind of created and built. So WordPress is the open source project. Anyone can use that code to build a product with. And then you created a company called Automattic, which I think we're going to get into some of the different stuff Automattic does, which uses WordPress. So then how does Automattic intersect with WordPress?
Matt Mullenweg:
So we sell goods and services on top of WordPress as one of our businesses, and then we also just make other cool open web stuff. We have a great podcasting app called Pocket Cast.
Turner Novak:
I've definitely come across it before. Yeah.
Matt Mullenweg:
If you love podcasting or listening to podcasts, Pocket Cast is probably one of the best power user ones out there. It gives you a lot of control over how you listen to things and folders and cues and all sorts of cool stuff there.
Turner Novak:
So then with Automattic, what was the thinking around you were working on WordPress, how did you create this different entity, Automattic? How did that kind of evolve and how did that go? You were younger, right? Were you 19, 20, 21? At what point did you make this separate entity and kind start building a company?
Matt Mullenweg:
So the first release of WordPress was when I was 19. It started to take off. I was attending the University of Houston, studying political science, and it started to take off. I visited San Francisco and over the summer, just took a week, slept on a friend's couch, but I went to all the tech companies, Google, et cetera. So I got job offers from my Yahoo, Google. But the most interesting one was a company called CNET, actually.
Turner Novak:
Oh, yep. I remember CNET. It's the news media, right? They did reviews and stuff.
Matt Mullenweg:
So they had download.com and news.com, it was one of the first big internet media companies. I would say actually the first large scale internet media company, which also meant they created some of the first CMSs in the world, content management systems, because they're the first to have enough content to need management. So there's some early CMS software called Vignette that was really big, that was actually spun out of CNET. So the reason I went to CNET versus some of these other companies, that obviously have gone on to be successful like Google, was they allowed me to work on open source and keep the copyrights by open source code. So having studied a lot of jazz musicians and music history, I learned when the artist didn't own their masters, sometimes they could be taken advantage of. And so it was very important of me to retain the copyright and be able to work on open source.
So as a media company versus a technology company, like when you join a tech company, you sign over all your IP rights for code you create as an engineer, which is important because they need to be able to license the software and sort of say that this thing we're selling you, we actually have rights to. But yeah, CNET was allowing me to sort of carve off my open source stuff from the proprietary stuff I was creating from them. And so yeah, I dropped out of school, moved to San Francisco, and I was there about a year. Of course, as soon as I got to San Francisco, VCs started circling and WordPress was starting to take off. CNET was using it, as a bunch of other people. And so I had this idea that, well, basically could I get paid for working on WordPress? A lot of us were just doing as volunteers, right? What would be a business model or a way we could figure out how to make a little bit of money so that we could work on full-time versus kind of nights and weekends. That was really the original idea.
Turner Novak:
Okay.
Matt Mullenweg:
I'm glad to say I've been doing it now for 20 years, but more than full-time. So it sounds very obvious now because this is how the internet works, but at the time, it was new, which is the software as a service. So to use WordPress in 2003, you would download a zip file, unzip it to your computer, it open all these files, PHP files, JavaScript files. You'd FTP that to a server someplace that you'd set up, like a Linux server or Windows server or something like that. You sort of configure a database. You'd do all these. You basically have to be junior system admin to set it all up. And there were some companies that you could pay for maybe a virtual web hosting account, but they didn't have what was called a one-click install. That was actually an innovation that we helped introduce to the industry was this idea of a very fast and easy install, even though the software is being configured.
So I thought, well, what if we could make it just one-click easy, like signing up for a Yahoo Mail account or something like that to set up a WordPress?
Turner Novak:
I think I did do that. At some point back in high school, I used, it probably wasn't the full uploading through FTP, I used cPanel for the website I had in high school. So I think there was a plug-in or something with my hosting where you could click a button to set up the WordPress. You still had to do a bunch with it, but you didn't have to actually literally upload it with FTP. It was halfway in between the manual upload in the one-click creation.
Matt Mullenweg:
Totally. So cPanel, it was popular control panel software at the time, and that one-click installer that they did, a lot of people used it. I'm so excited to hear that you used that in high school, although it make me feel a little old.
Turner Novak:
Yeah, I mean, I'm trying to think of what did I use it for? I've done it for family members, people uploading websites too. I'm trying to remember what else I used in it. That was probably the one big plugin. There's maybe an analytics one that I use. I just had a website with friends in high school where we'd learn to code, we'd find a script and we'd upload it and play around with it and learn PHP, learn CSS through stuff like that.
Matt Mullenweg:
Totally.
Turner Novak:
Or one of the big things was I'd take game requests from friends and I would rip them from eBaums World, Albino Blacksheep, upload it on our website that wasn't blocked at school, so that people could play-
Matt Mullenweg:
So they could download it.
Turner Novak:
... their favorite games at school. That was definitely a blast from the past. So you got this thing up and running. What were you charging for it? It was basically a software as a service. You pay us 10 bucks a month and you get your WordPress is up and live. Did you do all the hosting for people too?
Matt Mullenweg:
Yeah. Well, we created two products. Actually my first product was a plugin for WordPress called Akismet, now we call it machine learning or AI, but basically an anti-spam system. So spam comments were a thing then, they're still annoying now, and Akismet was a service to block them. And then we created WordPress.com, which of course sort of point and click Fisher Price WordPress, very easy to get started.
Turner Novak:
Fisher Price WordPress. Okay.
Matt Mullenweg:
The very first version I think was free. We had an invite system, so you had to get an invite.
Turner Novak:
Oh, really?
Matt Mullenweg:
I don't know if we did at the very beginning, but we were ad supported, so we put ads on the website, but people started selling the invites because they really wanted in. So that's when we had sort of our first indicator that we might be onto something. And then we introduced upgrades, like customization or turning off the ads. If you didn't want your site to have ads on it, you can pay an upgrade. That's evolved over the years where now it's a full sort of Amazon AWS-like hosting service.
So Wordpress.com can now use from a command line. You can spin up instances, it auto-scales across multiple data centers. It's evolved quite a bit. Actually, the multiple data centers is a fun story because we're so broke, when we raised a little bit of money, I ended up spending most of it just buying servers, like physical servers from Dell.
Turner Novak:
That was pretty common back in the mid-2000s, right? It was just you'd raise a million bucks and 750K went on buying some servers.
Matt Mullenweg:
You literally just described what we did. And so went down to San Diego, plugged them in manually, screwed them in, configured it, everything. But we ended up outgrowing them pretty quickly. So I was like, well, what do I do now? I can't buy anymore. And there were just starting to be some of these services that would let you rent a server for like 99 bucks a month on a credit card. Sort of a proto-AWS, like before virtualization and everything like that. And a lot of them were based in Texas. Because Texas had these big data centers because of Enron build out actually, there's some fun history there.
Turner Novak:
Oh, really? Okay.
Matt Mullenweg:
So we started just getting on credit cards, like additional servers at ServerBeach in San Antonio or EV1 Servers in Houston. These are all gone now. But they would also give you a lot of bandwidth with every server, which was really useful because bandwidth was very scarce. But because we essentially had to become multi-data centered from the very beginning, because I had the servers we had bought in San Diego that we were stuck with. They were kind of the main ones. And I was spinning up these little ones, these different hosting providers all over the world to handle the demand and scale.
And it turned out to be very robust and anti-fragile multi-center failover code. I love for both replication and sort of failover, because kind of similar to Google at the time, we get just a bunch of really cheap servers and assume they were going to fail versus spending a ton of money on a really expensive thing that was never supposed to fail. And of course it did anyway, like NetApp or these big file servers or things like that. So we stumbled in because of necessity and lack of money, this highly distributed fault tolerance system.
Turner Novak:
How soon before or soon after this, did you have AWS? And did you have 10 different providers you were kind of working with and balancing? And I'm interested in just that era of the internet, as somebody running a business. I was a big user of the internet this time, but what was it like then? Did you have 10 different providers?
Matt Mullenweg:
I think we were mostly in two, some of these Texas, like $99 a month type things where you get a whole server. It looks like Amazon S3, which was the first AWS service, it launched in 2006. So it was about a year after we did, or a little over a year, and it was just storage, it was just file storage. So their EC2 would come later, which was their sort of server platform. We actually still to this day don't run on any of the hyper clouds.
Turner Novak:
Oh, interesting. You have your own at this point or?
Matt Mullenweg:
Yeah, so we have about presence in 23 or 25 data centers all over the world. Sort of some primary ones in the US and Europe, that are sort of the big data centers. But if a meteor hits one of them, if a meteor hits Dallas, the others will step up to fill. WordPress.com's uptime is pretty unmatched, which was a big deal at the time. They used to be things like the dig effect, where if you were featured on dig, which is coming back now, or one of these websites or I Oprah mentions you maybe to make a more mainstream example, the sites would always go down. So we started to build in cashing and fault tolerance to make it so that we could scale for those big burst of traffics, which ended up being sort of our next business, which was what we called VIP hosting.
So this was for originally some bloggers. So TechCrunch started on WordPress.com. There was a blogger called Robert Scoble had a really popular tech blog at the time, and they started getting a lot of traffic, more traffic than the big like CNET publications that they were starting to replace. And the blogs were out competing like the sort of traditional media. But then it turned out that that platform was really useful for other folks too, like the NFL who gets a ton of traffic, very spiky traffic on certain days of the week, or certain parts of the year like the Super Bowl. So that enterprise platform is still one of our big businesses today. So WordPress, VIP, fast-forward now runs Whitehouse.gov, a lot of major websites, a lot of major media like Time.com. And so as you can imagine, security is really important with that. There's a lot of governments and people in the world who would love to hack Whitehouse.gov.
Turner Novak:
Yeah, for sure.
Matt Mullenweg:
Knock on wood, that's never happened with our systems. I hope it's very resistant to that. And of course for scale, like traffic, everything like that.
Turner Novak:
So then how did you get all these people to start using it? You kind of alluded to it, and we talked about essentially almost half the internet is run on WordPress at this point. What were some of the big things that you did in the early days? So it sounds like maybe the first one was you kind of intercepted that moment of the, I forget the name? Reid Hoffman.
Matt Mullenweg:
Movable Type. Yeah.
Turner Novak:
Movable Type. So Movable Type you kind of intercepted their upgrade. Were there any other big things that you did that really unlocked a whole new level of growth over time?
Matt Mullenweg:
I have to be honest here, and it speaks to one of our biggest weaknesses even today, which is we're really bad at marketing. So most of our competitors have Super Bowl ads and really slick commercials. Like Squarespace sponsors every podcast in the world and everything like that. And we've been really word of mouth and community-based. So word of mouth. We try to teach people. We have something to believe in. So I like to say, don't just build a product, build a movement. So the fact that we're open source, we have this philosophy, a way we want the web to work. And then I guess the final thing is events.
So we started doing these things called WordCamps, which were these super low cost events that anyone could spin up, almost like a TEDx or something. And they started to be hosted all over the world at universities and cities and meetups. Meetup.com, we're still active with today. So hundreds of cities around the world, WordPress users, they get together once a month and talk about it. So I kind of like community building grounds up is very much always been at least what we're most successful at. I'd love to get better at some more traditional marketing. I think we could probably be even bigger, but it's just never been something we've cracked.
Turner Novak:
What do you think you did right on the community side? I think that's kind of something that I hear a lot of people talk about nowadays is build a community around your product. Maybe the same things you did wouldn't necessarily work today, or maybe they would, but if somebody were like, oh, how do I build a community around my product? How would you talk somebody through thinking through the things that usually work best?
Matt Mullenweg:
That's a good question. Number one I would say is lead by example. So when you're building a community, you got to show up and you got to exemplify the behavior that you want the community to do. So what were we doing? I used to, for these WordCamps when they started, if you organized one and got 100 people to sign up, I would fly anywhere in the world.
Turner Novak:
Really? Okay.
Matt Mullenweg:
And so I ended up in some very strange places.
Turner Novak:
What's the craziest place?
Matt Mullenweg:
I had no writer or anything. I'd just be like, "Hey, if you could find me a place to sleep with some air conditioning, I'm good. I'll get the plane ticket and just host me and I'll speak at your events or your university or whatever." So I would just kind of go everywhere. And it's funny now even 10, 15 years later, how many folks who are now sometimes have built huge businesses in the WordPress, be tens of millions of dollars per year. Tell me a story when I meet them about being on some small island in the Philippines 12 years ago, and I went to their little town and spoke about open source and spoke about WordPress. I think you need something to believe in that's bigger than just sort of self-interest. So giving people a shared mission and purpose and being consistent with it over the years and decades, I think people really respect that. And being based on open source, that's kind of built into the foundation, our constitution, if you will, that sort of ensures that.
The other thing I'd say is, yeah, this is community norms. So from the very beginning, being global and everything, we wanted to be a space where everyone felt comfortable. And particularly I think for me being a kid with no college degree, no one knew... Originally, early contributions I would've made were actually on the pseudonym. I was worried no one would take me seriously if they knew who I really was. So a lot of my early activity on the internet was pseudonymous.
So we've always tried to be someplace that anyone feels comfortable and including we still have some anonymous contributors today. And this is now a little more standard, but in the 2000s it was perhaps a bit more progressive, just like whoever you are, whatever you are, however you want to show up, however you want to dress, you're one of us. We're combined with a shared mission, this thing we believe in, and we don't want geographic borders or language borders or anything. And so our early tagline was we wanted to democratize publishing. And to us what that meant is making it radically accessible to anyone regardless of economic ability, what language they spoke, anything. So another thing was translation of WordPress, that internationalization of the software, which was totally community driven, was really big for growth then and still to this day.
Turner Novak:
So you mentioned something, you said people building companies on top of and around WordPress. So I know there's one that, it's kind of been a little bit more in the news cycle lately. You've been a little bit more vocal about some of the things going on. Can you just kind of explain the backstory and what's going on with WP Engine?
Matt Mullenweg:
Sure. Yeah. So there's a company called WP Engine. A lot of people think is officially WordPress, but it's not. They just have a sort of similar name and they offer WordPress hosting just like many other companies, they've done a really good job, I think, appealing to developers and agencies. And I think they've also, a lot of people believe that some of their naming and branding, how they presented themselves, is some portion of their customers thought they were official WordPress. So the B for drama that people have probably heard is we started talking some about the trademark use. WP Engine a few years ago was bought by a private equity firm called Silver Lake, which is a really large $100 billion plus private equity firm.
Turner Novak:
I was going to say they're one of the biggest asset management, like private market asset management firms.
Matt Mullenweg:
Talk about who you don't want to pick a fight with. People whose bank account is numbered in the Bs.
Turner Novak:
Yeah, multiple Bs.
Matt Mullenweg:
Multiple Bs. But we've always, in the history of WordPress, even when it was very unpopular, sort of tried to stand up for our beliefs and what we believe is right. So long story short, there's become a legal battle with WP Engine over their trademark use, and we end up blocking them from some WordPress community events because we said, "You're not a member in good standing anymore." And they've started a huge smear campaign against me and Automattic, and they're suing us. Both sides are now spending millions of dollars in legal fees sometimes per month. So it's been a huge distraction to WordPress community in some ways. But I think it also illustrates that what, Dries, who's the founder of Drupal, another great open source project, calls the maker versus taker problem.
So one beautiful thing about open source is that, again, you can use it for whatever, and there's no requirement to give anything back or contribute to it or pay anything or something like that. But going back to, we talked about artists earlier. You said you love Avicii. Imagine if everyone who loved Avicii never bought his music or never went to any of his concerts, he couldn't have continued doing it. So there's some balance there. Now, some small percentage will always be a pirate or a taker, but you sort of rely on the better angels of people's nature to think long term and say, okay, maybe that makes sense in the short-term. But the long term, if I do that, and if everyone does that, guess what? It's not going to work.
Actually, it goes to one of my favorite philosophers, John Rawls, this kind of idea of like, okay, I want to build up rules in a system that even if I spawned a new entity and I couldn't predict who I was going to be, that I would want those rules to apply to me, not just my current instantiation or my current life. So yeah, luckily in the WordPress's history, although there's been a ton of commercial success, companies have participated really well in the community. And so the exception has been very, very rare. But every five to seven years, something will flare up, whereas someone goes outside of the community norms and there's usually a bit of drama for six to 18 months, and then it all comes down, and then five years in the future and no one talks about it. But we're in the midst of one of those sort of six to 18 month periods right now. It's been about actually, I think five months.
Turner Novak:
Oh, so you think you might have another year to go just if you take historical?
Matt Mullenweg:
I hope it's another month to go, to be honest, because honestly, it's in everyone's incentives for this not to happen. So sometimes you can take short term, and I think one criticism of capitalism or private equity often is sometimes they optimize for a short term. But the balance of forces I think is very much that in the long term, by working together, by contributing back, by creating this healthy commons that we all benefit from, everyone to do a lot, a lot better in the future. So a WP Engine that fully participates in the WordPress community and everything like that, I think is a wildly successful company 10 years from now. And I'd love to get to that point.
Turner Novak:
I'm curious then, how should somebody in open source think about, if I'm a founder in open source and there's people that are maybe overstepping some of the boundaries of the common principles of open source, are there ways I should maybe think about how to approach the situation? If I'm in a similar boat as Matt, whether I'm Automattic scale or whether I'm just early on, early days scale, any advice for approaching some of these situations?
Matt Mullenweg:
We talked about how to build community before. I think a good thing to start with is leading by example. So there's a WordPress foundation, a nonprofit foundation, and one thing we've always done is our excess money, we grant out to other like-minded foundations at the end of each year. And for my company Automattic, we do periodic audits and any engineer can suggest, hey, we're using this library or this thing that's really important for software. And so it's like, okay. We go to the website and see, do they have a way to donate? And so we're, I think, one of the largest sponsors of the PHP foundation. I support a lot of stuff on the GitHub patrons and other things like that. So just like how do you pay it forward? And a little goes a long way. So you'd be surprised how many folks don't think about that.
Even at to the very early days of WordPress, one of the things that sort of started our first business model was I got this $500 donation when it was still just kind of me. It wasn't like an official business or anything like that. And it was someone who took the money they would've paid to upgrade Moveable Type and decide to donate it to the developer's of WordPress. And so that again, kind of shocked me, and it was like, whoa, maybe this could actually be something, if we create a way for people to do that easier, perhaps that could be a model. And I do think that for open source companies, it's good to have something commercial that people can buy, whether that's support or provide some value that fits in people's minds in addition to just pure donations. So it's kind of like how Patreons often will have little gifts, or even NPR will send you a little tote bag when you donate.
Turner Novak:
Oh, really? I didn't know that.
Matt Mullenweg:
Yeah, just have something. It could be a T-shirt, it could be whatever. It doesn't even have to be something attached to the software, but something to sort of thank people for their support. And yeah, we're always looking for ways to do that.
Now at scale, it can become big. So actually in WordPress, we have this program called Five for the Future, which is something we introduced more formally a few years ago, which basically said, hey, think of a way to support the commons. So whatever 5% means to you. So maybe if you're a full-time freelancer building WordPress sites for people, you look for two hours a week, two hours every 40-hour work week, that you contribute back, volunteer. For Automattic, that scaled to being basically 100 full-time people. When we were like 2000 folks, 5% is 100 full-time. So over the years we've contributed countless at this point, tens or maybe over a $100 million worth of investment into the volunteer part of WordPress, the part that's available to everyone, not just us.
Turner Novak:
Yeah. You're not bringing this up, this is me bringing this up, but you had a blog post on your website where you specifically, I think you laid out public charitable contributions that you made over time. I was like, wow, it's a lot of money that it looks like you're donating every single year, but that's kind of a pretty bold move to just put that out publicly, especially when you probably didn't need to necessarily, but it seems like it's pretty important to you.
Matt Mullenweg:
This was in kind of a height of the battle, and I was getting attacked a lot personally, and I've always just tried to have a personal philanthropy program, and part of the point I was trying to make, I don't know if I would do this again, but I was like, I think I'm donating personally more to nonprofits than this WP Engine company, which makes $400 million per year, is donating to anything. And they list one of their company values as being like, we give back. And so I was like, well, I don't know, I'm almost an individual, individual that's unwell, but I'm donating double-digit percentage of my income every year to nonprofits, like 501(3)(C), check it with the IRS sort of things. And that's on top of everything that we've talked about. All these contributions, by the way, when you volunteer for WordPress, it's not tax-deductible. It's not like an official 501(3)(C). So that's on top of all that other stuff that we've talked about so far.
But it's been fun. The Bay Lights in San Francisco is a project I've been proud to be a supporter of. The Innocence Project, which does DNAs iterations of people who've been wrongfully convicted for crimes. Almost decades later, DNA will say like, hey, this person who's been on death row didn't actually commit this crime. So this is just fun stuff. These days I'm also really excited about supporting Science, Nat Friedman's project, which was the Vesuvius project, which is decoding these ancient scrolls using like MRI. They basically scanned them and machine learned to decode the text of these charred scrolls that were buried in a volcano. So just stuff like that. I like looking for things that are a little obscure or maybe not mainstream causes and almost like a venture capital philanthropy model where I'm like, what's the weird thing that probably isn't going to work, probably going to fail, but no one else is doing, and maybe that'll turn into something big.
Turner Novak:
Or the thing he's doing with the plastic list I think is super interesting.
Matt Mullenweg:
That's not me, that's Nat Friedman. That's incredible.
Turner Novak:
Yeah, I mean, that's another one of those projects where it's like, I don't know how you make money from that. You start a new plastic chemical company that's better, it's not bad for you or something? I'm not sure how you commercialize that, but that's kind of why you need somebody just kind of have this, I'm just doing this. I'm putting all this information out there. Oh, by the way, all these different products are not that healthy for you. I'm not doing anything with them, I'm just putting it out there. And you just make it kind of public for people.
It's like, we kind of need people to be doing stuff like that. And that's one of the things when I first saw it, I was like, wow, that's super cool. It's been a problem that me and my wife have been thinking a lot about. We've used glass containers in our house for years trying to avoid plastic wherever you can, and it's like, this is genius. Just study, do the research on measuring the levels and all this stuff and just put it out there. People can see it and then let them do something with it.
Matt Mullenweg:
And this was probably influenced by the idea of tithing a church or something like that that was supposed to pretty young, but don't wait until you're old to start giving back. And it's incredible this cohort, we've mentioned that frequent, a few times. I find him a big inspiration, and it's probably not a coincidence that he was CEO of GitHub at one point, right? The largest open source hosting place. But you also look at folks like Patrick Collison with the Arc Institute or Guillermo Rauch from, I might've mispronounced that, but from Vercel, actually alumni of Automattic, we bought one of his previous startups.
Turner Novak:
Oh, interesting.
Matt Mullenweg:
These folks aren't waiting till their old and retired to give back. They're doing it as they go. And I think that's nice because you can also contribute your time and maybe your expertise to these different causes.
Turner Novak:
Yeah, it's kind of one of the things that I feel like I wish the world was a little bit different where let's say for example, there's this giving back, like the 99% pledge, I think that Warren Buffett is really big on. So you say on paper, Warren Buffett, one of the wealthiest people in the world, he says he's going to donate 99% of his wealth, and I don't know what that number is as of today, but it's probably $100 billion, but he's not doing anything with it today. He could be doing something.
And then I think the thing that is the most kind of in my mind, I'm like, "You could be doing so much." Is he owns a large percentage of some companies where you might say some of your business practices are probably not good for the world. And let's say we fast-forward whatever period of time, you pass away, you donate the wealth and you try to fix all these issues, but it's like you can influence those companies today. You can change so many things positively in the world. You don't even have to donate your money. You can still keep it all if you want.
Matt Mullenweg:
I would say yes and. Well, one, the giving pledge and other things, a common misperception, entrepreneurs know this. The idea of net worth for a lot of these folks who we say are the richest people in the world, it's not truly liquid. It's not like Elon Musk has $200 billion in a bank account he could spend on anything. No, it's stock in his company. And if he tried to sell it all by the way, that would crash.
Turner Novak:
If he truly liquidated everything, it's probably like 30% of what it actually is or something like that.
Matt Mullenweg:
If that, because what would the signal be to Tesla shareholders that Elon's selling all his stock, that would probably freak everyone out. It could go down 95% or something. So there is that sort of, I think, misperception of income versus net worth. But I think you really nailed it that I think in addition to finding causes to support and sort of this idea for Five for the Future. If you can build it in now, take 5% of your post-tax income or pre-tax income and just kind of put it in a DAF. Adam Nash has this great new thing called Daffy that makes it very easy to make a donor-advised fund. Set that up. You can donate appreciated stock, you can donate cash. There's all these sorts of things, and then that encourages you to start, even if it's small, even if it's just like a 100 bucks a month or something. You'd be surprised how much that can mean, especially to some smaller local organizations.
And if people are wondering where to start, I would encourage people to look local first. So find things in your neighborhoods, schools, arts programs. At Houston, I support a lot of music programs. I got so much from the public education and music programs growing up there. So buying instruments. A couple thousand dollars worth of instruments can sort of transform an elementary school, and you'd be surprised like a little can really go a long way.
But you also talked about how do you build your company. I love this idea of conscious capitalism. It's kind of a word I use for it, but just kind of building a company in a way that you'd want your children or grandchildren to work there. How are you giving back to the world? For us, the big thing that we really took a risk on there and has now become a lot more mainstream is remote redistributed work. So looking at the balance of things is I wanted to create economic opportunity and an opportunity to work for Automattic for people all over the world, and I wanted them to be able to have a lot more control over their schedule or their lives when they did it. So that sort of led us... By the way, a lot of our open source works in a distributed fashion, so like okay.
Turner Novak:
Yeah, fair. You're probably inspired in a way. Yeah.
Matt Mullenweg:
2005, 90% of investors I spoke to wouldn't invest in us because we didn't have a headquarters and everyone in an office. Rightly so, a very, very smart investor, one of the probably top five in the world said to me like, "Hey, Microsoft, Oracle, Yahoo, Google, name every super successful tech company, all of them have had headquarters and especially in the early days. We're all physically co-located with each other. Why do it differently? We know this works."
Turner Novak:
So you literally don't have a headquarters or do you now at this point?
Matt Mullenweg:
Well, we have a mailing address and an office, we'll do events and a meetups and board meetings, but it's minimis. I think average daily attendance is probably dozen per month out of the thousands of people we have. So yeah, I mean, you need an address, but you can also get a PO box or something. We've always tried to build it where the center of gravity was not in a physical location because I want people to be able to participate equally. There's another thing that happens. Google now has offices all over the world, but talk to executives in London or Zurich or one of their offices that isn't Mountain View and they're far away from the sun.
The opportunities to advance or influence the future of the company is probably less than if they were in Mountain View, so they typically end up going to wherever the sun is, the CEO is. Wherever the center of gravity is, a big part of the year just to stay relevant, and I want to create an environment where people could be influential no matter where they were in the world or what time zone they get worked in. It turns out you do this for reasons that I talked about, gives you access to the best talent and other things, but you also end up allowing people to contribute who might not otherwise work at a normal company. A lot of parents, particularly moms who are often have a larger portion of the caregiving for both young or elder ones, can design their schedule where they can still rock a job and contribute just as much as anyone else, but maybe at some different hours than 9:00 to 5:00 office hours.
Turner Novak:
I think moms are probably the most slept on and underappreciated. Teachers also I say are very underappreciated, but I feel like moms. Parents in general, but moms. You just think about the skill that it takes. Let's say you have two kids, three kids, you're raising these things that don't even know how to speak or communicate with you and you're bringing them up and making them a member of society. That is so difficult. And you're basically a boss for employees that don't want to listen to you and you get them to do what you want, and then it's like, that is extremely difficult. And then you just go work with some people in an office and build a product or whatever, need a slightly different skill set so much easier also at the same time.
Matt Mullenweg:
Yeah, definitely. I think probably the most challenging, and I'm told the most rewarding job in the world is being a parent. But yeah, talk about project management, motivation, dealing with wild scenarios and things going wrong and handling it with a calm and aplomb. Yeah.
Turner Novak:
It's fun though. I mean, we have two kids. I love it. I love having kids, but it's not easy. I think if you think having kids is easy, that's not what you're signing up for. I think you have to learn how to not be selfish also. For me, just as all of a sudden you have these two kids where you've got to do certain things that you might not want to do, you might personally not be that interested in, but you kind of learn to get joy from just spending time with your kids, watching them grow up, teaching them things.
We had a kind of fun moment the past couple of weeks. We started playing Minecraft together, and they're like four and eight, so like can kind of start to get it. And I had played Minecraft back in college when it first came out, and so it was kind of cool to go back and play this with them and I felt like I was actually pretty good at it because I knew how to play it. And it's just kind of fun exploring, building stuff.
And I think the other crazy moment is the first time I texted my oldest daughter, when she was texting me back, it was just kind of this surreal-
Matt Mullenweg:
Oh, cool.
Turner Novak:
... it was like a ChatGPT moment, where you talk to ChatGPT, it says something back. And when my daughter was texting me, we're going back and forth, I was like, "This is kind of wild." We created this thing and this person that we made is now she's coherent. When they talk to you, it's definitely one of those moments, but for some reason it hit me really hard. I think it's just growing up on the internet as a kid, texting and back and forth was a big channel or a big communication channel. So I don't know, that one just blew my mind.
Matt Mullenweg:
We now have contributors to WordPress that are younger than WordPress itself.
Turner Novak:
Really? Okay.
Matt Mullenweg:
And I was just in Ireland and actually the very first employee of Automattic is based and born in Ireland. So I was in the area, I was able to have a nice lunch with him and his wife. And I remember his daughter was born while he was working. It's like the first baby that anyone had at the company and now she's 18, she's like an adult and going out into the world and all these sorts of things. It's kind of wild. Very rewarding.
Turner Novak:
One question I wanted to ask because you kind of hit on this, when you talk about fundraising, you said 90% of investors were just, this is a non-negotiable with the remote work. Open source probably-
Matt Mullenweg:
And open source. By the way, we were weird in so many ways and I was a kid and all these sorts of things, and, and, and. Lots of reasons not to invest.
Turner Novak:
So what was that like then back in it sounds like early 2000s or mid-2000s, what was that process like just trying to raise money? How did you figure all that out? How did you land it? Just take us inside those couple instances.
Matt Mullenweg:
I call it a great filter and I talk about the folks who said no, I'd also just like to give huge kudos to the folks who said yes and took a chance on this. And Phil Black from True Ventures, some of these folks now that have gone on to some really amazing careers, sort of looked at not just the pattern matching for things that have been successful before, but perhaps there was a new model that was being created. And I would say the advice I'd give is that because you said you had an audience of entrepreneurs, I think it's fine and actually important to have these principles in ways you want to build things. However, if you fail as a business, you'll become a story for why businesses shouldn't do that in the future. So it's actually really important to be commercially successful as well.
I would say doubly so if you're doing something a little unusual, because otherwise you could set back things a generation. And so I always go back to this Walt Disney quote. "We don't make movies to make money. We make money to make more movies." If I want to keep working on open source and I want to want more companies to be distributed and everything like that, we need to build a successful business and people can point to us as a positive example, not a negative example. And there was a lot of worry in the early days that oh, maybe this is going to be a lifestyle business or a Craigslist where it gets ton of usage and a ton of value, or Wikipedia, like a nonprofit, maybe it works for that, but not like a successful commercial thing. So it's actually been really motivating sometimes because I would say in our employee base, a lot of people are far more motivated by some of these open source ideals than necessarily building a business.
So we always go back to say, "Hey, let's be as successful as possible as a business because then one, we'll put more money into open source both ourselves and supporting other companies. But two, we're going to inspire a lot more companies to build this way and a lot more investors to feel safe investing in a company that has these ideals and things like that." It's kind of counterintuitive. So some capitalists think come like a raging hippie and some raging hippies think I'm like an unredeemable capitalist. So I think that's probably a good middle ground, and the middle ground I think is the right way. Where you can build something that contributes a lot back to society by how you operate as a business that you put so eloquently earlier, and experiment with some new ideals or some beliefs, principles that you hold true. And that I think is what fuels you through the downsides, through the tough times, and also attracts a level of talent to you that you wouldn't be able to get otherwise.
Turner Novak:
Interesting. Yeah, I like thinking about it that way. I think one thought it reminded me of, are you familiar with Palantir? They do this thing called the Forward Deployed Engineers. It's basically you have a technical person that goes and sits with the customer and just makes sure that the product is implemented. It's kind of a sales role, it's kind of a product role, it's kind of troubleshooting customer support, engineering. It's really, you're doing a lot, but the concept is a forward deployed engineer. That's kind of how they describe it.
And there's definitely a time, just speaking about Palantir as what should the company be valued at. There's probably a period of time in Silicon Valley where a lot of people was like, "That's a fake company. That's not real. It should be a zero." I think maybe that's changed today. But a lot of people thought this forward deployed engineer concept was just dumb because Palantir is worth nothing. It's a zero. So that thing that they're doing doesn't work. Versus I think if you look at it today, if you just pull up the stock price, you're like, okay, I guess it is a good business model. I guess it does work. So okay, what do they do? It's this forward deployed engineer thing.
So now it's kind of leaned in the opposite direction where people think like, "If you just have forward deployed engineers, you'll be $100 billion company like Palantir." So it's probably something a little bit in the middle. I think the general concept is pretty interesting. It probably works with Palantir because they sign these massive contracts with the government and you're just making sure that the customer's sticks and they keep paying and they probably have certain entities that are paying them $50 million, whatever. They have these massive contracts.
So you can justify paying a couple hundred grand salary of on site, part of your customer acquisition or implementation costs. That's one of the most interesting examples I think. When you just think about the proving that something actually works and proving that a certain model is actually a way to doing it by being successful. And then just other people say like, oh, this must work. You almost give the other people the ability to do something hard because you've proven that it works and they get a little bit of slack. Try something that might be hard or might not quite be the smartest way to do it or something, or you make it so that is the way to do it. You make that is the best practice or the standard.
Matt Mullenweg:
One of my favorite sort of newsletters Twitter accounts, it's called the Pessimist Archive.
Turner Novak:
Oh yeah, I think I've seen some stuff from that account.
Matt Mullenweg:
It's fun. They go way back, like 100 years sometimes.
Turner Novak:
Yep. It's all like newspaper headlines.
Matt Mullenweg:
Yeah, look at cover articles predicting the death of Apple or saying how Google was never going to work because they didn't have enough advertisements, or YouTube was going to fail. If I had a nickel for every time people said WordPress was dead or blogging was dead, it's kind of easier to be a pessimist in the world. And also sometimes pessimists are right, but it doesn't mean that they're right the next time. And so many examples of people who are right once and they predict doom the rest of their career and miss it. What's the joke that the economists have correctly predicted 20 of the last five recessions or something?
Turner Novak:
Something like that, yeah.
Matt Mullenweg:
Or there's a joke there.
Turner Novak:
There's that one guy, Robert Kawasaki, he wrote one of those books. Are you familiar with him?
Matt Mullenweg:
No.
Turner Novak:
He's just this guy that every month he has this new tweet that he puts out saying it's like the stock market's going to collapse and it's the end of the western world.
Matt Mullenweg:
He'll be right eventually.
Turner Novak:
Yeah, he will be right eventually. And he was right in 2007, but he does it every month basically for a decade. And it's like, yeah, I guess a broken clock is right once a decade.
Matt Mullenweg:
There was this fun hack people used to do in the early days of Twitter where they would create a prediction account that wasn't very popular and I forget, I'll just give an example, I'll make it up, predict the winner of the Super Bowl and the exact score. But what they did is they published a thousand tweets with all possible permutations and they deleted all the ones that weren't correct and then they pointed to the one that was correct afterwards. And look, "It's timestamped, it's old." Et cetera.
Turner Novak:
Yeah, I'm a genius.
Matt Mullenweg:
Since you have audience of entrepreneurs, it takes far more bravery and courage to be optimistic. And I just encourage folks to keep that flame alive of the optimism and the principles and the things that sort of inspire you to build because you really need that. And I would say one of the hardest things in creative work, whether you're an artist, whether you're an engineer, whether you're a product person, is keeping that childlike flame alive because so much of society is sort of almost designed to extinguish it. So whatever it is that you have to do to kind of keep that flame alive, in the face of however much criticism or people believing no or whatever it is, is really, really important.
Turner Novak:
Do you have any advice for doing that or anything that worked best for you?
Matt Mullenweg:
Ooh, for me, there were some personal practices. So meditation's been really big in my life. It took me a long time, probably until I was almost 30, but just exercise is so good for your mood and your brain. That's actually a thing that got me started exercising was I read this book by John Medina called 'Brain Rules' and I was like, "Oh great. I use my brain all the time. This is my meal ticket. So how can I make my brain better?" And rule number one was exercise. I was like, "Oh darn it." I don't like that at all. But it turns out even just going for walks, and if you look at so many great thinkers over the years, sometimes it just go for walks can be really, really powerful. And actually it gets you 80% of the calorie burn of jogging or something. It's kind of annoying how much walking is effective.
Turner Novak:
It's just so effective, but it's annoying knowing that man, I'm not walking enough and I just need to do it more.
Matt Mullenweg:
Do walking meetings, listening to podcasts, walking calls. There's so many ways you can add in walking. A treadmill desk, to your daily things. Have some colleagues who've had incredible body transformations just by getting a treadmill desk and you don't have to walk fast, walk a mile and a mile per hour or something. That little bit of movement is really helpful. There's that saying that sitting is the new smoking and how tough it is, how much time we spend sitting every day. So that kind of idea of putting your oxygen mask on first I think is really important. And that sort of including self-love I think is then once you get better at that and practice more of that, then you can expand that circle to be more of a support to others, to be more loving to others. I forget the name of the poet, but it was something like, I'll paraphrase, "Love yourself so fiercely that others see how to do it."
Turner Novak:
Huh? I've never heard that before.
Matt Mullenweg:
We'll find that actual attribution there. It's always been one that's spoken to me. And then earlier you talked about forward deployed engineers, and I would say to me something that's always sort of re-lit the flame is going to WordCamps and meeting members of the WordPress community. And so many people will come up to me and talk about how they learned the code from installing WordPress on a cPanel server or they built a business. It was an amazing story of a teacher in northern India and he told me, "Our family couldn't even afford a full meal per day. We were often hungry." But at his school he had an internet connection and he said, "Every day I tried to learn something." And he'd stay like 30 minutes, 45 minutes extra. And he learned to code and started building WordPress sites and all of a sudden, just a little bit there, even a couple hundred dollars was a huge deal to him and his family.
Turner Novak:
That's a lot in India. Yeah.
Matt Mullenweg:
Now he works for one of the top agencies there. He has a totally different life. He's transformed not just his life but the life of his family and been able to send money back and everything like that. That kind of story. You couldn't make it up. If I were to hire a PR firm, I'd say, "Please find me the best." But this person just came up to me at the most recent WordCamp Asia, and it was a time I was probably a little tired, I was jet-lagged. I was like, okay, but I'll have this conversation. And it gave me so much inspiration.
And so I try to remind myself of those stories when I'm feeling down or anything. And I do want to say that all the things I said, sometimes you still feel terrible. So if you're feeling terrible, don't worry. Every entrepreneur you admire has had those sort of dark nights of the soul or things where you feel like everything's going the wrong way, but if you get up to fight another day, that's sometimes all it takes. And so much of, I think our success has just been persistence and so many of our competitors are the things I think just kind of gave up along the way.
Turner Novak:
I know this is a slightly different topic, but I really wanted to talk about this. So I've heard you mention that you are still one of the primary developers of WordPress. You're still coding, you're very hands-on with it. We got to talk a little bit about AI. How are you seeing that change coding? How do you think that's going to change the internet, open source? Pretty open-ended, but I'm just curious your thoughts on it.
Matt Mullenweg:
Yeah, so I'll clarify, I'm still the lead developer of WordPress, but I do a lot more directing of code. Now, I do love the code, so I code a lot for personal projects and sort of different things. And AI has completely transformed that for me at least, especially as someone who I'm often trying to find hours in the early morning or late night to hack on something transformative. Things that used to I think would've taken me eight hours or days when I was in my fully locked in 20-something year old coding eight hours a week.
Turner Novak:
Like you could walk in for a weekend and just commit the 20 hours.
Matt Mullenweg:
I can now do that stuff in 30 minutes and that's with the version that was six months ago. And I haven't even tried out the Claude code stuff yet. So I've been really encouraging every couple of years, and it's happened kind of twice in WordPress's history where I've gone to the community and said, "Hey, there's this new technology, I need you to learn it deeply." And people would kind of make fun of that because I said learn deeply. And so the first time that happened was with JavaScript, because at the time 95% of WordPress' code was PHP and I was like, "Hey, there's this new model, we need to become more of an application, not just reloading the page type of thing." It was sort of around the same time we were starting Gutenberg. And so I went to the community and said, "Learn JavaScript deeply."
And if you fast-forward today, actually a majority of new code in WordPress is JavaScript. So it's really transformed. And again, obvious now, but in 2016 that was a big ask. In 2022, before the launch of ChatGPT, I said, "Learn AI deeply." And just feel very, very strongly that it's going to be an incredibly democratizing technology. And folks, even if you have an idea and good product sense or good design or whatever your skill set is, but maybe code was not accessible to you, or if you're an engineer already, that's kind of like the best, is you'll be able to work with these tools. So just be way more productive. Now even saying that, I would say the adoption both in WordPress and even within my own company, has been uneven. But the folks who are doing it, including some of the founders of startups that we've bought, are now having some amazing outcomes.
And this idea of a 10xEngineer, I used to make fun of, I'd think a lot more of 10x Teams or something like that, but now I'm actually seeing 10xEngineer's.
Turner Novak:
Really?
Matt Mullenweg:
Because they have a team of AI agents or something assisting them that allows them to multiply their creativity, their talent, their time. So it's still early days. These tools are clunky. There's a bunch of different ones, there's new stuff all the time. For a while it was Cursor was the best kind of AI assisted ID. Now a lot of my colleagues are using something called Windsurf, but just play with it. So I would say make a portion of your week where you just turn off all notifications, turn off social media and just play with these different tools. And if you follow me on Twitter, I'm @photomatt, P-H-O-T-O-M-A-T-T, I actually share a lot of this stuff on Twitter. Even though sometimes I feel like Twitter is my biggest vice and a big distraction, there's so much good AI stuff on there, it kind of keeps me on there. And funny accounts like yours. So those are things that keep me on Twitter.
Turner Novak:
Yeah, okay, that's good to know that I'm on the-
Matt Mullenweg:
You're on the good side.
Turner Novak:
So one other question that I have is, I know that Atomic, you do this kind of unique kind of secondary buyback slash giving shares to employees. It's kind of like this liquidity marketplace. I just had a listener ask me, he specifically said, "Can you please just have Matt talk about this and how it works because I'm just interested in seeing if I can somehow implement it in my company." So I'm just curious if you could kind of explain what you do and just how it works.
Matt Mullenweg:
And I will say this is on our to-do list to open source, but in the meantime I'll just describe it really briefly. Typically, how you create more ownership in the company is stock options or RSUs, and typically RSUs kind of later.
Turner Novak:
Yeah, stock options, they have the right to purchase, they use their money to purchase the shares and they get a certain price in the future. RSUs are you give them the stock, essentially. They're granted and then certain things need to happen, but they get the stock.
Matt Mullenweg:
I'll describe just super quickly, these are very deep topics, but just to say some of the downsides of these. Options expire, so they have to be exercised within a certain amount of time. Now, I think that we said 10 years and companies used to go public or something in five to seven years. VCs used to optimize their exits there. I think now the time that companies stay private and grow to very, very huge valuations like Uber, [inaudible 01:17:33] IPO or Stripe today could be in the tens or even hundreds of billions of dollars with something like a SpaceX. So this means that, this actually happened to me recently where I had some options that were granted in 2013 that were expiring, and then you have to exercise them, you can end up with a huge tax bill, all this sort of stuff. And so the other thing is the options, so the pricing.
I think they're really nice at the very early stages of a company when the options are valued in the pennies. But as soon as you start fundraising other things, you have this thing called a 409A valuation that can change it. And it always felt unfair to me that someone who could be hired weeks apart from someone else really, it's just sort of a function of when the board meeting was that approved the 409A valuation or something like that could have a wildly different economic outcome. RSUs, stands for restricted stock unit. And I'd say the main downside there is that if I grant you a hundred grand in RSUs, you now owe taxes on that immediately. And if you're not able to sell that RSU or exercise it, again, that might be tough. Again, if you're a public company and it's totally liquid, this isn't a big deal. But for private companies this can create burdens actually on people.
So it was like, well, what if we could do something that was kind of like an option, kind of like an RSU, give some benefits to employees, but also wasn't necessarily required so they could choose if they wanted to participate in it or not. So fast-forward, again, I'll try to get the TLDR, the Automattic moved to a model where we don't grant stock by default or send offer letters with options or anything like that. Really since 2013 I think, we removed that as kind a default thing we were doing. But what we did was we went up on the cash compensation because cash is fully fungible and you could choose it to invest it in Automattic or you could invest in S&P 500. By the way, probably should do both.
Now one thing that sophisticated investors have, when a VC invests in a company, they typically have what's called a liquidation preference or a 1X liquidation preference, is fairly standard. Which basically means no matter what happens, they get their at least 1X of their money. So they're downside protected. This is huge for returns, right? Because as Warren Buffett or others say, "Just don't lose money."
Turner Novak:
That's the number one rule. So there you go, you solve for that.
Matt Mullenweg:
A big part of the way there. So it's like could I give everyday employees a 1X liquidation preference? And then also a good entry price essentially. So we created this new class of stock we call A12 stock. It can only be bought and sold by the company. Employees can buy it at the foreign NA price essentially, which is typically a pretty good discount to what the open market trading value of Automattic might be or the sort of intrinsic terminal value if we were sold or went public or something like that, especially if we haven't done a fundraise in a while. So usually when you do a fundraise, the 4NA will spike to whatever the fundraise is, but as time goes on, it will typically come down often below what the fundraise was at. So they say don't time the market, but it's actually pretty easy to time, good times to buy this A12 stock or something like that.
And the company provides a one-inch liquidation preference. We also, another restriction is you have to hold it for one year, so that sort of removes a short-term versus long-term capital gains issue that can come up for people, and it's just in total market. So as an employee, you get to choose how much of your compensation you want to put into this. There's a limit for how much you can buy. Obviously this could be really exploited by someone of them who's very smart, but it's a pretty high limit, and you have to trust that the company is going to be able to meet these obligations in the future. So maybe not great if a company is in the very early stages, but once you get into the tens or hundreds of millions of dollars of revenue, solid customer base, I think this could be a good thing for an employee to consider as part of their overall financial plan.
And that liquidity is really nice. Just that sort of knowing that there's going to be regular intervals is huge, which you don't necessarily have if you have common stock, which might happen as a secondary. Another cool thing is it's yours. You bought it and it's yours, whether you're an employee of the company or not, you have the same options to sell it. You can't buy it anymore, but you can always have those selling windows, and I think that's also really good. Sometimes companies famously will give secondary opportunities to current employees but not former employees. And I wanted to create something that was very fair to everyone.
Turner Novak:
So even former employees can participate in this too if they still own the shares?
Matt Mullenweg:
Yeah. Which also means that if, again, when you think very long term, what if someone passes away? All of a sudden whoever they pass these shares to also now has that right to sell them at these liquidity windows. So there's a lot of cool things built into this program that we sort of implemented. And yeah, I'd encourage people to consider something like it. Some other companies have implemented versions of this and it's an honor to do to sort of open source the legal docs and serve some of the technical implementation. So that almost like a safe note, other companies could copy and paste this. We've done this for a lot of our things. So our terms or service that we talked about earlier is available under the creative comments. So you could copy and paste that terms of service if you wanted. Our creed is under the same, a lot of our documentation is open source.
So again, a bunch stuff that we had pay for or do a lot of work for that we can now open source and allow other entrepreneurs to just copy and paste and then build something cool on top of it. I'm always thinking about that sort a remix. And if they build something really cool, maybe we can copy it back and incorporate that upstream. So it's kind of like applying open source to legal docs to everything. And if there's something we end on, I would say this thing we've talked about for open source, think about how you can apply it to areas that aren't just software. What does it look like to share and allow it to remix other creative works or other academic papers or whatever. And if you apply open source to different areas, we already talked about software with things like WordPress and MySQL, encyclopedias with Wikipedia, but you apply open source to finance and you get things like Bitcoin.
Turner Novak:
Yeah, there you go.
Matt Mullenweg:
Ethereum, which is open source. So people don't realize open source is now starting to transform society in so many ways. And I think it's really cool for people, whatever stage you're in your career, to really investigate it and try to embrace it, see how you can be part of... Because you become part of building the building blocks for humanity's future, versus a proprietary product that could have be very successful, but it might not be around 100 years from now. In fact, likely it will not. If you look at sort of the survival rates of commercial companies even that were at the very top of their game.
Turner Novak:
If you look at what are some of the longest standing, it's like GE, which I think went bankrupt, Ford, which is worth less than some of the humanoid robotics company startups now. Yeah, I think Ford went bankrupt. No, GM went bankrupt. So yeah, it's like some of these companies. You probably get in the European chemical companies, I feel like some of those have been around for over 100 years.
Matt Mullenweg:
A foundation I love, a nonprofit, is called The Long Now Foundation and they actually study long-standing institutions and there's some very cool examples. There's temples in Japan that have been around for 1000 plus years and there's some pretty cool examples of standing institutions. And so if you study those, you see what might be the ingredients. One, it turns out is maintenance, which actually is the topic of Stewart Brand's new book, who's one of the sort of founders of The Long Now Foundation. I'd encourage people to check it out.
Turner Novak:
Maintenance?
Matt Mullenweg:
Yeah, just Google Stewart Brand Maintenance. Also check out, there's an incredible documentary. I think Stripe Press actually funded.
Turner Novak:
Oh, really?
Matt Mullenweg:
Called, 'We Are As Gods' or something? And Stewart Brand, it turns out, it's one of these characters who is kind of at the center of five or six different technological revolutions going back to the Grateful Dead and psychedelics and the first computers and the first internet stuff, he did the Whole Earth catalog and all these amazing things. He was an inspiration to Steve Jobs.
We talked about Palantir earlier. I think it's cool to study the contemporary example, but also go back to what inspired Alex Karp and the founders of Palantir to build the way they did. Study Apple, but also study who influenced Steve Jobs. That's a cool way to learn. And if you want to build something. Because the next thing, you're not going to get it just by copying whoever's popular now. You have to build on the foundations of what influenced them and then create something new on top of it.
Turner Novak:
Yeah. Maybe we'll end. I just have one last question. Do you have any favorite classical thinkers?
Matt Mullenweg:
Oh, we mentioned John Rawls earlier and John Stuart Mill utilitarianism. I love studying economic thinkers. So Frederick Hayek, Adam Smith, and then more contemporary folks like a Richard Feynman or a Tyler Cowen, I think we'll look back as super influential and super amazing. So yeah, I'd say of living folks, Tyler Cowen would be one of the best to follow. He has blogged almost every day for the past 20 something years, powered by WordPress, blogs called Marginal Revolutions, and I guarantee if you read it, you will get smarter. So check it out.
Turner Novak:
I do know of him and I follow his kind of sphere, but I didn't realize that he blogs every single day. That's crazy. I know he does this, he does kind of a media grant program. I know a couple people that he's given money to just work on kind of a artistic creative pursuit that maybe it's a commercial project, maybe it's not, but it's just they want to create something and put it in the world. And I think he just gives grants and there's no strings attached. It's like, here's a hundred thousand bucks and just blog or make videos for a year and see what happens.
Matt Mullenweg:
There was a great profile of him in 1842, the Economist's Magazine, sort of a long form profile just came out a few weeks ago, and he's definitely a polymath. There's a lot of folks like that. It's also interesting how many are prolific bloggers. So like a Seth Godin who also has a multi-year publishing streak. Some of the greatest thinkers that get that way by sharing their ideas, not like staying in a cave and working for 40 years. It's all about that engagement that sort of helps it grow.
Turner Novak:
Well, this has been an awesome conversation. Thanks for taking the time to chat.
Matt Mullenweg:
It's been a pleasure and I looking forward to hanging out in the future.
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