How Automattic CEO Matt Mullenweg grew to $710M revenue with a 4037 person team in 2024.

hello everyone my guest today is matt mullenweg he is the co-founder of the open source blogging platform wordpress the most popular publishing platform on the web and the founder and ceo of automatic the company behind wordpress.com woocommerce and jetpack additionally matt runs audrey capital investment and research company he's been recognized for his leadership and success by forbes bloomberg businessweek and many many other magazine magazines he's originally from houston texas where he attended the high school for the performing and visual arts and studied jazz saxophone in his spare time he's an avid photographer he splits his time between houston new york and san francisco matt are you ready to take us to the top i'm ready all right very good so i'm excited to chat with you now just to i want to put this out there right away when people think about automatic and they think about wordpress how should they think about the relationship between the two so think of wordpress as an open source project and software that people can run anywhere in the world and automatic both provides some wordpress services and uh contributes a lot to the project so they're separate but closely related i think where people get confused is a lot of the same people are behind each including myself yeah you gave a good analogy on stage which uh it was to kind of think of yourself as the as the proctor and gamble between behind brands that we know and love like wordpress woocommerce jetpack and others right yeah all right so give us the backstory here you you know you were early on at cnet i think doing open source stuff was that right out of college yeah i actually ended up dropping out uh to take this xenon opportunity i had visited san francisco uh kind of in between my sophomore and junior year and ended up connecting with a lot of great companies including google yahoo cnet and then when i returned i started get some job opportunities and i decided that you know it was such an incredible opportunity i could stay in college two more years and hope to get that kind of job or i could just go for it and it didn't seem uh i wasn't too into college at the time but i also wasn't going to like amazing schools going to university of houston which was fine but it wasn't like it was great on the text you weren't going to miss the jazz club or anything that's actually the thing that probably got the worst after i moved because in houston i've been playing jazz since elementary school so um i've played saxophone since elementary school so i had very deep connections to all the the groups here and i would actually gig i would generate a good chunk of my income uh from playing around town and when i moved to san francisco that totally stopped what corner was your favorite in houston where did you get the best tippers i think i only bust maybe once or twice normally i would play um like big band gigs or uh played in you know coffee shops a few times like mostly just stuff with friends around town but the big band ones were the best because they were often union gigs so you'd get kind of like an actual paycheck in the mail that's pretty cool guys listening if you don't know obviously wordpress uh we'll learn more about it today but also with matt we're going to touch a bit on his new project gutenberg which was released earlier this year as part of wordpress he also did some early investments in bitpay and coinbase back in 2013 before it was you know hot and cool and doing what it's doing today he then left and returned as ceo of automatic uh which i want to talk about kind of how he did that and then offer also in 2007 he made a well i don't know how to describe it but he made an important decision to turn down an acquisition offer which i think there's probably some lessons there that i'd love to chat about so matt take us back to year one when did you launch wordpress wordpress started in 2003 and that was uh that was you kind of turned did you have you had other opportunities on the table why decide to go do your own thing oh well wordpress was really just like a hobby and it was something i was doing kind of nights and weekends or instead of my schoolwork which was frequently um and it wasn't until about a year after that is when i took the job at cnn and a year after that is when i started automatic so starting of automatic in 2005 was more where there were different opportunities including continuing at my cnet gig and i decided to really dive in on a startup and how did the open source community uh judge you opening up a company that was clearly meant to to kind of build the ecosystem and also make money to enable you to build further how did you manage those expectations with the open source community oh i think people were highly skeptical but rightly so um regardless of who i am or anything like the history of most companies coming out of open source projects is that the open source project really suffers especially kind of years four to six when the company like starts to maybe feel the grind of fundraising or growth or something like that um we now have you know over a decade of automatic and in wordpress so uh even though today there is still some skepticism on my motives or automatic motives or things like that or just people in the ecosystem who work against automatic very directly we now have a lot of history showing that i very much take a long-term view to these things and that the automatic and wordpress can grow very much together and in fact automatic i think has helped wordpress grow far far beyond what it would have without it e today or at least in your 2016 report you shared almost 595 million posts were in in that year on the platform and 457 million comments had hit what do you think that's going to look like here in 2017 as we close out the year i'm sorry for a second oh no i'll go i'll repeat it matt so uh it looks in 2016 in your report you articulated almost 600 million posts were written on the platform what do you think that number will grow to here as we wrap up 2017 oh i don't know i don't follow the number of posts super closely um simply because it can be kind of a it's a good vanity metric so i'm glad that you picked it up but it's not necessarily vanity right i mean a lot of people will lead interviews or questions like this with revenue numbers but revenue can lie if people aren't addicted to your platform so i like to lead with usage-based questions and really the post is a good one for you yeah um maybe i should be thinking more about posts why don't you wait why don't you this is interesting um well i think because you know what we're trying to do is get more people blogging not necessarily more post uh the post numbers can get kind of thrown off a lot by you know kind of the outliers or major publications which use wordpress quite a bit or i think we we take this out of the number you just quoted but uh some of the numbers i look at internally like when people import like let's say people are leaving tumblr which is actually a pretty popular one to leave like that story don't you wow oh no it's actually a little sad because tumblr is a very vibrant platform yeah we're getting a lot of imports and so someone might import like 10 years of tumblr post into the wordpress so those can throw off some of the posting numbers so a lot of what i'm looking at right now is kind of the monthly active users um so weekly and that ratio to weekly and daily and then another thing i'm thinking about a lot is at that ratio to our mobile active users so people using wordpress on apps and i guess i'm thinking about post from the point of view of gutenberg which i know you want to talk about a little bit later but um with gutenberg it's not so much we're trying to get people to create more posts although hopefully that's a good side effect it's that we're we really want them to be able to realize in their posts and pages you know really rich layouts in their imagination right now people are still kind of in that kind of more text blogging mode take that to the next level this i i don't know if i'm misquoting you on this so correct me but was the new york times piece the snowfall piece written on wordpress oh i don't think it was i think that came out of their uh one of their custom dev teams got it i wasn't sure now are they part of your vps yeah they are vip and that's kind of the idea is that what new york times spent probably tens of thousands of dollars to do a few years ago will be able to enable anyone with wordpress and gutenberg to do just kind of out of the box of course the hard part is writing the story yeah but uh but i'm fine with that being the hard part right now both parts are hard matt i have a lot of cold-hearted capitalists that listen to this along with a lot of developers but i don't want to lose my capitalists so i have to ask the question you know you're you're a guy that just seems hyper-focused and we'll talk about what happened in 2007 or 2005 here in a second but um talk money to me for a second how do you guys make money so we are you know vast vast majority 98 99 uh subscription business so uh the three main things people subscribe to are wordpress.com which is hosting for wordpress and jetpack which is services for wordpress if you host it someplace else like uh it could be bluehost or godaddy or rackspace or anywhere and then finally woocommerce which is our ecommerce platform and so that's people who build stores uh listings they sell digital goods physical goods or just take bookings like for salons and stuff people use it for all sorts of e-commerce so between those three we have kind of products you can subscribe to it each and that's really the main driver of the business for automatic and are all the i mean these are all kind of their own sas business you have kind of our puzzles the woocommerce one also take a transaction fee are they all just pure sas plays uh so wordpress.com is pure sas uh jetpack is also sas but there's some software you run yourself and woocommerce is much more of like you're buying software and it's a long-term support model so there's a little bit of sas there but it's mostly more of like selling software yeah and then uh tony who we'll get to kind of tony and i'm really interested in the story of how you kind of left and then came back and did some kind of investing in the middle but tony who was the ceo running uh automatic or wordpress for a while uh shared an interview that you guys i believe it was in 20 was it 2012 or 2014 you guys passed i think 45 million in in revenue um the re one of the reasons i'm intrigued to be talking to you right now is i recently two days ago uh talked with ryan smith who was the caltrix ceo and they just raised a big round of funding and very directly said you know we will be ipo'ing all the messaging around your announcement on the latest round of funding was we're doing this specifically to stay private and so i want to i want to dive more into that with the following question we'll build up to it but you got an offer in in 2005 i believe for 200 million dollars and and or at least it was speculated right get get me into your brain at that point i mean this is a guy where in college you were playing jazz on corner corners enjoying yourself making some money where was your headspace in that moment to turn down that offer and also try and rationalize it with yourself i think we've talked a bit about that publicly it was 2008 so it was about two years into automatic two and a half years and it was a 200 million offer it was of that magnitude yeah and the company at the time was also really small like 20 or 25 people can can you share revenue that year uh i would call it negligible okay so it wasn't really a revenue less than five million uh i don't remember actually but like probably in that range yeah um and so really really cool offer uh would have been great partners and sometimes i wonder not that i should have taken the offer but just where we would have gone if we had done that but the the main thing for me was um it was very early for automatic and it seemed like there was a lot more we could do that we could do that best if we were independent and then from like my day to day the things i was doing then and now which is like leading the product for wordpress working alongside great people automatic creating services trying to create that dent in the web if you will um it's like well if i had 100 million dollars i'd want to do exactly that you know i don't know if i'd want to change my life at all and um so we ended up doing is sort of turning that into a round of funding where we both put some new money into the company matt can you share who that was what company made that offer no okay and uh but when you say you both and i don't understand what you mean when you say you turn that into an investment the company that invested instead of acquired you no so you know it's very common when you get an acquisition offer it sets a value for the company and so you can use that to go back to your investors and say hey you know if not going to sell why don't you invest at this value so we were able to do a round at like a 200 million valuation um and that was uh new york times actually joined that no great and it was largely iron's estate investors so all resisting investors kind of re-upped and we did do a secondary part of that round so they bought some stock from existing folks including myself which you know i would say is good for founders by taking a little bit of money off the table i was certainly in a place that i didn't really need to think about money again and that allowed me to focus on the company not worry about any of that stuff wait matt sorry to be as large as possible how did you get your brain to that point so you launched in 2005 when was kind of that moment money-wise for you where you didn't that wasn't a motivating factor for you anymore how did you make money from that quickly you know i think there was both some of the early revenue and automatic that so for better or worse from a pretty young age from when i was like 22 or 23 um i had a lot of confidence in not having to pay the bills and then i don't remember exactly when the so 28 i would have been 24 i guess that was more where i was like okay i could retire if got it okay so you turn that new investment and then update us today uh how much total have you have you raised i think total at this point raised around let's say around 200 and primary and about another 150 in secondary so somewhere around 350 total got it and i think that last one was may 5th 2017 right around there 20 that would be this year i think our last round was in 20 uh 14 14 got it i'm glad i got clarification on that and then no worries i was thinking i was like wait did we raise money yeah surprise surprise yeah um okay that makes a lot of sense so so and and again i'm curious to understand in the press messaging-wise you were very clear you are not raising this capital to go public you're raising it to stay private why be so clear with that message that's a good question i think well it was three years ago so if we were promising to go public we would have been wrong um i think the main thing it was 160 million dollars which is the size of many ipos um and really felt like being private would give us the most flexibility uh for the next several years including against our public market competitors who are reporting thing quarter things quarter to quarter and while they have access to you know the public capital markets which is great um they're i think lost you lose a little bit of your ability except for very few companies to make really long-term strategic bets and we believe that this is still very much you know the first inning of this space and that we're making investments some of which are going to pay back over three five and even ten years so having a set of investors on board that are thinking long term was really really important and we've been very lucky to really develop that investor base over time in 2010 at leweb it was generally reported by techcrunch so you guys had passed that magical kind of 10 million dollar per year mark and then 2012 obviously kind of tony put out the statement 45 million 70 million sites up from 35 million in 2011 and over 500 000 paying customers in that year are you comfortable sharing kind of where you are today or maybe getting a range are you more or less than 150 million in arr i think the thing that we're saying publicly is that we're into the nine figures so okay got it fair enough into the so past 100 million in ar but we'll say less than a billion in arr that's a good range i can say less than a billion less than a billion so far next year next year will be available right all right good so i want to transition now to more some of the software stuff in the business we got some economics you were running the company walk me through the process uh how why did you replace yourself with tony and strategically how do you recommend other founders do that if they want to go down the same path yeah it's uh it's definitely factually true to say i was running the company in the very beginning but it was also just like five people so it's not like it wasn't like uh although a ceo wasn't like ceo like you might think of a ceo and i had already met tony and knew that i want tony to join the company um so it was more a matter of him kind of wrapping everything up at yahoo where he had sold his previous company to and i knew i wanted tony to be ceo so he joined and um and we always worked super super closely together so it was very much like um [Music] we were paired essentially and i learned a ton working alongside him uh but we were always really clear with everyone because i'd seen coco and other kind of arrangements and that seemed to create a lot of conflict so i wanted everyone in the company to be clear there was like there was a clear hierarchy and tony was at the very top so he had the final say on everything um which i just think is healthy for an organization to have kind of a clear lines of responsibility um but then as it's sort of started to scale and we started talking about this probably oh certainly a few years before we made the switch was tony's passion about smaller teams and i was really excited about taking automatic from like 200 people to 2000 people so um we talked about it for a while and that was actually a good exercise because we started to think well what's the thing that tony things that tony's doing that i'm not going to enjoy or be good at you know and really started to build up the executive team got a great cfo general counsel you know head of hr like sort of building out the team which is something we should have done anyway and uh then the day after my 30th birthday which tony came to celebrate me with uh we kind of passed the baton and he moved to take over a small team on automatic and i became ceo and that's that we still work together today so that's so funny so it's almost like you use the ceo title as a carrot to pull him into the company right from yahoo it worked really well and now it's working well just in a different form yeah i think um tony and i i like to say that we're business soul mates like he's someone i definitely see i hope that we're in each other's lives the rest of our lives and uh the past i guess how many years 12 13 years that's been at automatic and hope that can continue as long as possible and if not we'll figure out other ways to work together well if we learn from history there's somebody else right now that's winding down an acquisition and potential earn out with yahoo who is also kind of in this space are we going to see a david carp at automatic anytime soon oh oh you know it's like when you tried to get me to badmouth tumblr earlier i love uh david and no i wasn't trying to get you to badmouth them i was curious i mean i was just looking at patterns right no yeah i've wanted to work with yeah they would be great to work with he's a like a really brilliant product person and just a generally nice guy switching modes here building things internally to acquiring them we'll talk quickly about acquisitions and then wrap up with gutenberg um you made an acquisition obviously of woocommerce uh back in 2015. i believe it was for for 30 million bucks why didn't you buy wp engine before they did their 2015 round and got way more expensive because you got in early in 2011 there uh that's a good question so i would say that automatic isn't really so much in the hosting space um except for wordpress.com which is like our entry-level product so but matt that's a big deal right um well our strategy with with the many many web hosts out there including wp engine is to really create a great set of services with jetpack that complement what they do i see um i mean w pinch at this point is 450 people you know that's automatics only 650 so just serving their customer base which is much smaller than ours takes almost the same number of people and if you add that up with the other people working on wordpress like godaddy and bluehost i mean you get into many many thousands so just have a different business and um and there's people who will build that type of business and be really passionate about it automatic's really like a technology and product company so that's why woocommerce made a lot of sense is it's both a technology and a product and we'll create sas services for it and yeah you can run it on wordpress.com so there's definitely a hosting piece as well but we believe think of it kind of like google with android like they'll make their pixel phones so we'll make some some versions of wordpress that we think are the best in the world but very key to our strategy is also working with every other manufacturer out there and every other host out there so um maybe they'll be samsung you know maybe they'll be htc like who knows but there's there's lots of space for for many companies in the in the wordpress ecosystem gutenberg why make it your first project when you get back what is it and how can my listeners go use it sure so first i'll say that gutenberg's still in beta so it's an open beta but if you search for it on your plugin directory search for gutenberg um you'll see you'll be able to install it the big idea is that we can basically move editing posts and pages from being kind of a document model where you type a bunch of text in the box to where you're really taking these building blocks be it you know text lists but also things like maps videos contact forms products and you can rearrange them in blocks like building things with legos so this is how the best websites the best layouts and everything work and we just wanted to make something core wordpress that really made it easy for ever to do this changing the editor since that's really in many ways the heart of wordpress is by far the most controversial thing you can do and the hardest because lots of people are very used to how wordpress has worked for the past 14 years and there's lots of opinions on it and it's also just technically difficult like what we're building to build it in a way that works for the you know many many many many many tens of millions of wordpress sites out there um it's just tough it's much harder than doing it in a plug-in so that's part of why we decided to tackle it was the you know wordpress has a great set of developers has had a great set of leaders there's different releases over the many years um particularly helen hussandy who's been like super incredible but for this i was like well let's tackle the very very hardest thing go for it all or you know it's definitely a stretch both leading core and running automatic the company because both are basically full-time jobs but um by working with great folks on both sides i'm able to have a foot in both and uh you know my hope is once we get some of these really really big hard things out of the way that will set up wordpress for kind of the next decade of what's going to happen with it makes good sense last questions on crypto map before we wrap up with the famous five you made bets via your do you call it i mean do you call it a vc from audrey capital that's how it's structured uh it's structured well it's a vc but though i'm the only lp got it so it was a vehicle for me to make these investments yes you made early bets in coinbase and bitpay why this is 2013. oh it's coindesk not coinbase sorry coindesk coinbase would have been awesome yeah um you know i as a believer in open source as believer in distributing nature with the web uh bitcoin from very early days was very interesting to me and wordpress i think was one of the first large uh internet services to add support for accepting bitcoin for our services at the time bitcoin was about 12 and the bitcoin magazine was edited by the guy who later would found ethereum so he wrote the cover there's a big cover article with the word anthony delirio um uh the vitality except his name yeah yeah yeah that's too funny so yeah he was the editor of that magazine which is again really funny wow um you know it's it's been an interesting space i think that right now we're some ways a little bit disconnected from the fundamentals because it's become essentially like a new commodity speculation uh hedge against you know inflation and central banks printing money this capital flight from restrictive regimes like china like there's just a lot of stuff being glommed onto bitcoin which is uh interesting and fun and that's kind of the cool part about open distributed systems is they get used in ways you would have never anticipated but i'm not you know my full-time job is not speculating or investing in these things so i mostly i sold the vast majority of what i have and um over the years and now just keep a bit just for fun so uh to keep an eye out some skin in the game keep yourself up to date with what's going on right yeah all right matt let's wrap up here with the famous five number one what's your favorite business book if you have one so actually i see one behind you which one reading so uh principles by ray dalio you know funny story about this i don't know if you can see i don't know how clear it is but there's actually like two copies up here because um i just did it i was i'm blessed uh portfolio just did a big deal with me and they also publish uh my agent also did uh this book with uh with ray um so i i loved it so much i bought it and then i get a hand signed copy from from rey two days after right so what do you think do you like it amazing uh i'm not done with it so i won't call it my favorite book but i would say i would highly recommend it to everyone uh listening it's um it's not a blueprint right you shouldn't take it you know whole cloth and apply it and in fact he says that but it's um so fascinating to really get into the mind of this guy ray dalio who's created you know far beyond the sort of bridgewater financial stuff just a really interesting organization and i often you know one of my fantasies is like i would love to just work at some of these really companies like google or be inside facebook for just like a year to like learn about their internal systems i would just read the internet the whole year yeah yeah i don't i don't actually want to work with those companies as much as like really deeply understand how they work and how they manage things and everything like that and um and he really kind of opens the playbook for how they do it i'm also excited for the coming year when they're going to release some of their tools around assessments and i think he's going to release a coaching app and a few things he talks about like internal tools they developed at a at bridgewater it's actually been something automatic's always been good about in the past and trying to be better about in the future and that we work in a unique way and we want to open source and release a lot of the tools that we use to be one of the larger totally distributed companies in the world you know coordinate across time zones across you know 650 people in like 62 countries fully also say you're fully remote we didn't touch on this but fully remote team and i really believe that's the future of work and i also believe that the tools aren't that good yet so that's why we've had to develop a lot of our own uh other than that i'll say i'll say two more books and i asked for one that's okay well we'll just make this the big question it's gonna be good um i loved uh black swan by nassim taleb and i'll do two more recommendations final penultimate business book is one called the halo effect which basically talks about how to skeptically read other business books so it's actually a good foundational one particularly tech press and some of the industry books some of which are really good like that recent bradstone one on uber and airbnb you also have to remember that these are very much colored by how well poorly the company is doing at the time so you know yeah i read a really good book on um i think it was called losing the signal on blackberry the rise and fall of blackberry so if that book had been written in 2005 it would have probably said how all their strategies were perfect now written in 2017 it sort of looks at the stuff they were doing in 2005 and saying oh this was a huge mistake so you have to be careful about taking lessons whole cloth from things and then finally something that i've started during the past year or two is just reading a lot more fiction uh i got into a mode where i only read nonfiction and business books and science books and history and stuff for a really really really long time and um actually reading fiction has helped open me up in ways that have helped the business side of my work in a huge way and you know because it's relatively new to me i'm just going to all the classics you know all the light we cannot see or 100 years of solitude or just like books that aren't necessarily new but like uh the people have said are really really amazing and digging in and really loving it number two is there a ceo in particular that you're following or studying and avoid the common ones anyone kind of underground you really like following uh you know i'll go super underground and talk about a company i just joined the board of which is um gitlab and so the ceo there sid is also they're also fully distributed company i would say they take some of the things that automatic does even to a further degree um they're smaller they're kind of you know sub 200 but the um but that's also still pretty large already and they're open source but their business model is totally different because they're doing very much the enterprise side of things so i've been learning a ton both from the company and just...