Why WordPress founder Matt Mullenweg has gone ‘nuclear’ against tech investing giant Silver Lake
Automattic founder, Matt Mullenweg
Source: Automattic
Matt Mullenweg, who turned 40 in January, has now spent more than half his life working on WordPress. He’s never had such an insane two weeks.
WordPress, best known as a leading content management system, has hundreds of millions of sites currently using its templates, tools and plugins. But the WordPress universe is a complicated mishmash of open-source products, nonprofits, for-profit companies, trademarks and licenses.
The typically quiet but extremely important part of the internet — WordPress powers roughly 40% of all websites — has suddenly emerged as a major source of tech industry drama, threatening to upend an ecosystem that’s long been viewed, from the outside at least, as collegial, thanks to its longevity and the various fun-loving camps and learning sessions it hosts every year.
While WordPress’ technology is open source, meaning anyone can install it and use it for free, Mullenweg is also founder and CEO of Automattic, a venture-backed startup valued at $7.5 billion, as of 2021. WordPress.com is Automattic’s central businesses, and individuals and companies pay anywhere from $4 a month to over $25,000 a year for services like ad products, security, customer support and inventory management.
The saga that burst into public view in September featured the normally mild-mannered Mullenweg as its central character in a battle with WP Engine, one of the leading providers of WordPress hosting. Silicon Valley private equity firm Silver Lake bought a majority stake in WP Engine in 2018, investing $250 million and obtaining three board seats.
“I’ve been doing WordPress for 21 years, I have good relationships with every other company in the world,” Mullenweg said in an interview this week with CNBC.
WP Engine’s offense, according to Mullenweg and a cease-and-desist letter his attorneys sent to the company on Sept. 23, revolves around years of trademark violations and WP Engine’s claim that it’s bringing “WordPress to the masses.”
“We at Automattic have been attempting to make a licensing deal with them for a very long time, and all they have done is string us along,” Mullenweg wrote in a Sept. 26 post on his personal website, ma.tt. “Finally, I drew a line in the sand, which they have now leapt over.”
Since then, the matter has escalated on an almost daily basis. WordPress took the drastic step of banning WP Engine from using the WordPress resources necessary to serve its customers, which preceded a lawsuit filed on Wednesday by WP Engine against Mullenweg and Automattic. Mullenweg then put out another post, calling WP Engine’s suit “meritless,” and announcing that he’d hired Neal Katyal, former U.S. acting solicitor general, for legal defense.
Tomasz Tunguz, a venture capitalist and founder of Theory Ventures, says the conflict speaks to the perpetual challenge of open-source software.
“What are the legitimate ways of monetizing open source and does the commercial entity created by the authors — how much control should they have with the commercialization efforts?” Tunguz said. In this case, “hundreds of millions in revenue is at stake between the two,” he added.
‘Silver Lake doesn’t give a dang’
In Mullenweg’s telling of the brouhaha, the battle has been years in the making. He’s been actively trying to strike a deal since January and finally got fed up, he said.
But to the outside world, it all felt very sudden. Mullenweg first referenced the matter in public on Sept. 17, in a blog post ahead of WordCamp, the largest annual gathering in the U.S. of WordPress users. The four-day event took place in Portland, Oregon, beginning on Sept. 17.
In the post, Mullenweg criticized WP Engine for not contributing enough back to the WordPress ecosystem. He said that Automattic contributed 3,786 hours per week to WordPress.org, (“not even counting me!”) compared to 47 hours for WP Engine.
For businesses and developers considering who they want to support, Mullenweg had this message: “Silver Lake doesn’t give a dang about your Open Source ideals. It just wants a return on capital.”
A Silver Lake spokesperson said WP Engine was handling all inquiries. A WP Engine representative referred to the company’s complaint against Automattic and Mullenweg, filed on Oct. 2. The spokesperson highlighted the introduction of the complaint.
“This is a case about abuse of power, extortion, and greed,” the filing begins. “The misconduct at issue here is all the more shocking because it occurred in an unexpected place — the WordPress open source software community built on promises of the freedom to build, run, change, and redistribute without barriers or constraints, for all. Those promises were not kept, and that community was betrayed, by the wrongful acts of a few—[Matt Mullenweg and Automattic]—to the detriment of the many, including WPE.”
On Sept. 20, three days after Mullenweg’s initial post, the WordPress founder showed he wouldn’t be backing down.
In his keynote, at an event that attracted an estimated 1,500 WordPress fanatics, Mullenweg warned the audience upfront that it “might be one of my spiciest WordCamp presentations ever.” After reading out his prior blog post, Mullenweg took swipes at Silver Lake, even naming a partner at the firm, Lee Wittlinger, as the man behind WP Engine, comparing him to a “schoolyard bully.”
Prior to taking questions, Mullenweg said of WP Engine’s presence at WordCamp, “they’re not going to be at future ones, I don’t think.”
He wasn’t done.
The next day, in a post titled, “WP Engine is not WordPress,” Mullenweg wrote that even his mother didn’t know the difference, and he said WP Engine is “profiting off of the confusion” and “needs a trademark license to continue their business.”
His mom wasn’t the only one confused.
Bob Perkowitz, president of environmental nonprofit ecoAmerica, told CNBC that he’s known Mullenweg for 16 years and is even an investor in Automattic. For a number of his organizational and personal websites, Perkowitz said he’s long been a WP Engine customer. Tuning in remotely, he heard Mullenweg’s WordCamp presentation.
“I always thought that was part of WordPress,” Perkowitz told CNBC in an interview, referring to WP Engine. “They’re misleading, and they don’t contribute to the community.”
Perkowitz said he’s having his website administrator migrate all of the websites to different hosting companies.
Following Mullenweg’s presentation, WP Engine sent Automattic’s legal chief a cease-and-desist letter on Sept. 23, due to what the company called Mullenweg’s self-described “scorched earth nuclear approach.” The letter said Mullenweg had demanded a payout of a “very large sum of money” before his WordCamp keynote, and WP Engine didn’t pay up.
The letter said Mullenweg’s “false, misleading, and disparaging statements are legally actionable.”
Two days later, Mullenweg wrote on the WordPress.org site that WP Engine had been banned, meaning it “no longer has free access to WordPress.org’s resources.” Mullenweg encouraged WP Engine’s thousands of customers to contact the company “and ask them to fix it.”
WordPress then temporarily unblocked WP Engine and gave it until Oct. 1 to agree to terms of a licensing agreement, which Mullenweg made public. The crux of the deal is that WP Engine would agree to a royalty fee of 8% of monthly revenue to Automattic or commit 8% of revenue “in the form of salaries of WP Engine employees” working on WordPress features for WordPress.org.
No deal was made. The ban went into effect Oct. 1.
To the universe of WP Engine customers, Mullenweg’s actions were harsh and clumsy. Mullenweg says that what his critics don’t understand is how long he’s been trying to come to a deal.
“They’ve been delaying forever,” Mullenweg told CNBC. He decided, “I’m going to finally start talking about the evil stuff you’re doing unless you talk to me,” he said.
Fighting back
Far from negotiating, WP Engine on Wednesday filed its explosive lawsuit against Mullenweg and Automattic.
WP Engine accuses Mullenweg of slander and libel due to his public comments and says the WordPress founder has numerous conflicts of interest in how he runs the community and his company, give the open-source nature of the technology.
“Over the last two weeks, Defendants have been carrying out a scheme to ban WPE from the WordPress community unless it agreed to pay tens of millions of dollars to Automattic for a purported trademark license that WPE does not even need,” the lawsuit says. “Defendants’ plan, which came without warning, gave WPE less than 48 hours to either agree to pay them off or face the consequences of being banned and publicly smeared.”
Following WP Engine’s demands for a jury trial in its 61-page lawsuit, Mullenweg fired back, describing the complaint as “baseless” and “flawed, start to finish.”
On his personal website, Mullenweg acknowledged that the ordeal was causing a big internal clash at his company.
“It became clear a good chunk of my Automattic colleagues disagreed with me and our actions,” Mullenweg wrote.
He says he made the decision to offer buyout packages for anyone who resigned before early afternoon Thursday, offering $30,000 or six months of salary, whichever is higher. Anyone who took the deal wouldn’t be eligible to “boomerang,” a term for getting rehired.
Mullenweg said that 159 people, or 8.4% of the workforce, took the offer while the 91.6% who opted to stay turned down a collective $126 million.
Mullenweg concluded by saying, “now I feel much lighter.”
“I’m grateful and thankful for all the people who took the offer, and even more excited to work with those who turned down $126M to stay,” Mullenweg wrote. “As the kids say, LFG!”
Mullenweg may be openly enthusiastic and grateful for the employees he still has on board, but the WordPress community is a mess. Many WP Engine customers are suffering, and Automattic is gearing up for a legal fight against a private equity firm with over $100 billion in assets.
WATCH: An open-source future
Courtesy: Opendoor
On June 6, online real estate service Opendoor was so desperate to get its beaten-down stock price back over $1 and stay listed on the Nasdaq that management proposed a reverse split, potentially lifting the price of each share by as much as 50 times.
The stock inched its way up over the next five weeks.
Then Eric Jackson started cheerleading.
Jackson, a hedge fund manager who was bullish on Opendoor years earlier when the company appeared to be thriving and was worth roughly $20 billion, wrote on X on Monday that his firm, EMJ Capital, was back in the stock.
“@EMJCapital has taken a position in $OPEN — and we believe it could be a 100-bagger over the next few years,” Jackson wrote. He added later in the thread that the stock could get to $82.
It’s a long, long way from that mark.
Opendoor shares soared 189% this week, by far their best weekly performance since the company’s public market debut in late 2020. The stock closed on Friday at $2.25. The stock’s highest-volume trading days on record were Wednesday, Thursday and Friday of this week.
Jackson said in an interview on Thursday that the bulk of his firm’s Opendoor purchases came when the stock was in the 70s and 80s, meaning cents, and he’s bought options as well for his portfolio.
Nothing has fundamentally improved for the company since Jackson’s purchases. Opendoor remains a cash-burning, low-margin business with meager near-term growth prospects.
What has changed dramatically is Jackson’s online influence and the size of his following. The more he posts, the higher the stock goes.
“There’s a real hunger for buying the next big thing,” Jackson told CNBC, adding that investors like to find the “downtrodden.”
It’s something Jackson’s firm, based in Toronto, has in common with Opendoor.
When Opendoor went public through a special purpose acquisition company in 2020, it was riding a SPAC wave and broader gains driven by low interest rates and Covid-era market euphoria. Investors pumped money into the riskiest assets, lifting money-losing tech upstarts to astronomical valuations.
Opendoor’s business involved using technology to buy and sell homes, pocketing the gains. Zillow tried and failed to compete.
Opendoor shares peaked at over $39 in Feb. 2021 for a market cap just above $22.5 billion. But by the end of that year, the shares were trading below $15, before collapsing 92% in 2022 to end the year at $1.16.
Rising interest rates hammered the whole tech sector, hitting Opendoor particularly hard as increased borrowing costs reduced demand for homes.
Jackson, similarly, had a miserable 2022, coinciding with the worst year for the Nasdaq since 2008. Jackson said his key client withdrew its money at the end of the year, and “I’ve been small ever since.”
‘Epic comeback’
While his assets under management remain minimal, Jackson’s reputation for getting in early to a rebound story was burnished by the performance of Carvana.
The automotive e-commerce platform lost 98% of its value in 2022 as investors weighed the likelihood of bankruptcy. In the middle of that year, with Carvana still far from bottoming out, Jackson expressed his bullishness. He told CNBC that April that he liked the stock, and then promoted its recovery on a podcast in June. He also said he liked Opendoor at the time.
Investors willing to stomach further losses in 2022 were rewarded with a 1,000% gain in 2023, and a lot more upside from there. The stock closed on Friday at $347.52, up from a low of $3.72 in Dec. 2022, and almost triple its price at the time of Jackson’s appearance on CNBC in April of that year.
After Carvana’s 2022 slide, “then obviously began an epic comeback,” Jackson said. Opendoor, meanwhile, “continued to roll down the mountain,” he said.
Jackson said that the fallout of 2022 led him to pursue a different method of stockpicking. He started hiring a small team of developers, which is now four people, to build out artificial intelligence models. The firm has experimented with several models —some have worked and some haven’t — but he said the focus now is using what he’s learned from Carvana to find “100x” opportunities.
In addition to Opendoor, Jackson has been promoting IREN, a provider of power for bitcoin mining and AI workloads, and Cipher Mining, which is in a similar space. He’s seen his following on Elon Musk‘s social media site X, which he said was stuck for years between 32,000 and 34,000, swell to almost 50,000. And after a lengthy lull, investors are reaching out to him to try and put money into his fund, he said.
Jackson has a lot riding on Opendoor, a company that saw revenue and number of homes sold slip in the first quarter from a year earlier, and racked up almost $370 million in losses over the past four quarters.
In early June, Opendoor announced plans for a reverse split — ranging from 1 for 10 to 1 for 50 — to “give us optionality in preserving our listing on Nasdaq.” With the stock now well over $1, such a move appears less necessary, as shareholders prepare to vote on the proposal on July 28.
“I think it’s a terrible idea,” said Jackson. “Those things usually further cement a company’s move into oblivion rather than hail some big revival.”
Opendoor didn’t respond to a request for comment.
Banking on growth
Analysts are projecting a more than 5% drop in revenue this year, followed by 20% growth in 2026 and 12% expansion in 2017, according to LSEG. Losses are expected to narrow over that stretch.
Jackson said his analysis factors in projections of $11.5 billion in revenue for 2029, which would be well over double the company’s expected sales for this year. He looked at the multiples of companies like Zillow and Carvana, which he said trade for 4 to 7 times forward revenue. Opendoor’s forward price-to-sales ratio is currently well below 1.
With Zillow and Redfin having exited the instant-buying home market, Opendoor faces little competition in allowing homeowners to sell their property online for cash, rather than going through an extended bidding, sales and closing process.
Jackson is banking on revenue growth and increased market share to lead to a profitable business that will push investors to value the company with a multiple somewhere between Zillow and Carvana. At $82, Opendoor would be worth about $60 billion, which is roughly 5 times projected 2029 revenue.
Jackson said his model assumes that “like Carvana, Opendoor can prove that it can permanently turn the tide and get to sustained profitability” so that the “market multiple would get reassessed.”
In the meantime, he’ll keep posting on X.
On Friday, Jackson wrote a thread consisting of 11 posts, recounting the challenge of having “99.5% of my AUM” disappear overnight after his primary investor pulled out in 2022.
“Translation: he fired me for losing him too much money,” Jackson wrote. He said he almost shut down the fund, and was even encouraged to do so by his wife and accountant.
Now, Jackson is using his recent momentum on social media to try and attract investor money, while still reminding prospects that he could lose it.
“All I have is my reputation,” he wrote, “and, unless I keep picking good stocks, it will be gone.”
PERTH, AUSTRALIA – NOVEMBER 18: Chris Martin of Coldplay performs on stage at Optus Stadium on November 18, 2023 in Perth, Australia. (Photo by Paul Kane/Getty Images)
Paul Kane | Getty Images Entertainment | Getty Images
Astronomer, a provider of open-source technologies that was hardly known until this week, said on Friday that it’s launched an investigation after CEO Andy Byron was shown on video at a Coldplay concert in an intimate embrace with the company’s head of human relations.
“The Board of Directors has initiated a formal investigation into this matter and we will have additional details to share very shortly,” the company said in a post on X.
“Our leaders are expected to set the standard in both conduct and accountability,” the company said.
The post comes a day after videos went viral on social media that showed Byron on a big screen at the concert in Boston. Byron, who is married, had his arms around Kristin Cabot, the company’s chief people officer.
Seconds after showing up on the big screen, the pair ducked and hid their faces.
Byron and Cabot have been put on leave, according to a report Friday from Axios.
Astronomer didn’t immediately respond to a request for comment.
In May, Astronomer announced a $93 million investment round led by Bain Ventures and other investors, including Salesforce Ventures.
The company, which is behind the open-source data operations platform Astro, relocated its headquarters last year to New York from Cincinnati, Ohio.
Technology
Ether and trading stocks take the crypto spotlight as Congress passes historic stablecoin bill
Jonathan Raa | Nurphoto | Getty Images
Ether and other crypto related stocks climbed to end the week as the GENIUS Act heads to President Donald Trump’s desk to be signed into law. Bitcoin and its proxies took a breather.
The price of ether was last higher by 3.6% at $3,558.68, according to Coin Metrics, trading at highs not seen since January.
On Thursday, ETFs tracking the price of ether saw daily inflows top those of bitcoin ETFs for the first time ever. The funds logged $602 million in net inflows, led by BlackRock’s iShares Ethereum Trust (ETHA). Bitcoin ETFs on the same day saw inflows of $522 million. A day earlier, the ETH funds saw a single-day record inflow of $726.7 million.
Stocks tied to crypto trading gained as well. Coinbase rose 4%, hitting an all-time intraday high surpassing its initial pop on its IPO date in 2021, and pacing for its fifth positive week in a row. Robinhood also added 4%. Ether treasury stock Bitmine Immersion continued its rally, jumping 12% Friday.
Meanwhile, the price of bitcoin slipped 1%. Bitcoin treasury giant Strategy, formerly MicroStrategy, fell 4% and Mara Holdings, the mining company and bitcoin proxy, hovered under the flat line.
Ether has advanced 19% this week, bringing its two week gain to about 43.6% — its strongest two-week period since August 2021. Bitcoin is down less than 1% for the week.
“No coin seems to have more [momentum] than Ethereum of late,” Wolfe Research’s Read Harvey said in a note this week. “We began suggesting it was time to start gaining exposure in May, as ETH began to show some life relative to BTC. Fast forward to today, and we’re not just seeing life, but a potential trend reversal.”
Now trading near five-month highs relative to bitcoin, the leadership pendulum in crypto may be shifting, he added.
On Thursday, the House passed a bundle of crypto bills, sending one, the stablecoin legislation known as the GENIUS Act, to President Trump’s desk. It is expected to be sign into law Friday afternoon and become the first ever piece of major crypto legislation in the U.S.
“This is the biggest deal in crypto so far this year, up there with the change in the SEC – it’s the first crypto-focused law in the history of the United States, home to the largest financial market in the world. Just the symbolism alone is worth getting excited about,” said Noelle Acheson, economist and author of the Crypto is Macro Now newsletter.
Being law rather than an agency ruling “means that future Administrations will not be able to easily overturn its provisions. Should any try, by then stablecoins will be so deeply embedded in the global financial landscape, it would be futile,” she added.
House lawmakers also passed a second, much broader crypto market structure bill, the CLARITY Act, that will now go to the Senate.
On Thursday, BlackRock also filed with the SEC to include staking to its ETHA ether ETF, which also boosted sentiment for crypto’s second largest coin.
—With reporting by CNBC’s Nick Wells and Adrian van Hauwermeiren
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