Matt Mullenweg, founder of Automattic
Source: Automattic
Matt Mullenweg, who turned 40 in January, has spent more than half his life working with WordPress. He had never had such a crazy two weeks.
Best known as the leading content management system, WordPress includes: hundreds of millions of sites I’m currently using its templates, tools, and plugins. But the WordPress world is a complex mix of open source products, non-profit and for-profit companies, trademarks, and licenses.
A normally unassuming but highly important part of the internet, where WordPress powers about 40% of all websites, has suddenly emerged as a major source of drama in the tech industry, at least from the outside. It threatens to upend the ecosystem that has been in place for years. , thanks to its longevity and the variety of fun camps and learning sessions it holds each year.
WordPress technology is open source and anyone can install and use it for free, but Mullenweg is also the founder and CEO of Automattic, a venture-backed startup. Valued at $7.5 billionas of 2021. WordPress.com is Automattic’s core business and is available to individuals and businesses. pay Services such as advertising products, security, customer support, and inventory management can cost anything from $4 a month to more than $25,000 a year.
The story, which was suddenly released to the public in September, featured the normally mild-mannered Mullenweg as a central figure in the battle with WP Engine, one of the leading providers of WordPress hosting. Silicon Valley private equity firm Silver Lake majority stock In 2018, it invested $250 million in WP Engine and won three seats on its board of directors.
“I’ve been doing WordPress for 21 years and have great relationships with every company in the world,” Mullenweg said in an interview with CNBC this week.
Mullenweg says WP Engine violations and suspensions letter His lawyers, sent to the company on Sept. 23, center on WP Engine’s claims of years of trademark infringement and bringing “WordPress to the masses.”
“We at Automatic have been trying to sign a license agreement with them for a very long time, but all they did was drag us along,” Mullenweg wrote. Posted on September 26th His personal website, ma.tt. “Finally I drew a line in the sand and they’re jumping over it now.”
Since then, the problem has escalated almost daily. WordPress took the drastic step of prohibiting WP Engine from using WordPress resources necessary to serve its customers ahead of the lawsuit WP Engine filed against Mullenweg and Automattic on Wednesday. The company argued in its lawsuit that it did not violate trademark law and that Mullenweg was using the trademark for anticompetitive conduct.
Mullenweg later posted another post calling WP Engine’s lawsuit “worthless” and announcing that he had hired former Acting U.S. Attorney General Neal Katyal to provide legal defense.
Tomasz Tungs is a venture capitalist. theory venturessays this dispute illustrates the enduring challenges of open source software.
“What are legitimate ways to monetize open source? And how much control should commercial entities created by authors have over commercialization efforts?” Tungs said. In this case, “there are hundreds of millions of dollars of revenue at stake between the two parties,” he added.
“Silver Lake has nothing to do with it.”
Mullenweg said the fight had been years in the making. He has been actively pursuing a deal since January, but says he has finally grown tired of it.
But to the outside world, it all felt very sudden. Mullenweg addressed the issue publicly for the first time on September 17th. blog post Ahead of WordCamp, the largest annual gathering of WordPress users in the United States. The event was held in Portland, Oregon for four days starting September 17th.
In his post, Mullenweg criticized WP Engine for not contributing enough to the WordPress ecosystem. He said Automattic spends 3,786 hours per week on WordPress.org (“That’s not even counting me!”), compared to WP Engine’s 47 hours.
WP Engine alleges in its lawsuit that those numbers are false and that its contributions to WordPress through events, conference sponsorships, and the development of educational resources were far greater.
Mullenweg had this message for businesses and developers considering who they want to support: “Silver Lake doesn’t care about open source ideals. We just want return on capital.”
A Silver Lake spokesperson said WP Engine is responding to all inquiries. A WP Engine representative referenced the company’s complaint against Automattic and Mullenweg, filed on October 2, and a spokesperson highlighted the introduction of the complaint.
“This is a case about abuse of power, extortion, and greed,” the complaint begins. “The fraud at issue here is all the more shocking because it occurred in an unexpected place. It is built on promises of freedom, promises that are broken and betrayed by the wrongdoings of a few.[Matt Mullenweg and Automattic]-It will be a disadvantage to many people, including WPE. ”
WP Engine also said in its complaint that Automattic’s first request for large sums of money came days before the conference. The company says these demands were accompanied by unsubstantiated claims and threats against WP Engine.
In a follow-up statement to CNBC, a WP Engine spokesperson said Mullenweg’s antics “damaged not only our company, but the entire WordPress ecosystem.” The spokesperson added that Mullenweg’s “conduct over the past 10 days exposes serious conflicts of interest and governance issues that, if left unchecked, threaten to destroy trust in the WordPress community.”
On September 20, three days after Mullenweg’s first post, the WordPress founder indicated he would not be backing down.
In his keynote address at an event that drew an estimated 1,500 WordPress enthusiasts, Mullenweg warned the audience from the start that this “might be one of the most exciting WordCamp presentations ever.” I did. After reading an earlier blog post, Mullenweg heavily criticized Silverlake, naming its partner Lee Wittlinger as the man behind WP Engine and calling him a “schoolyard bully.” ”.
Before taking questions, Mullenweg said about WP Engine’s presence at WordCamp, “I don’t think there will be a future WP Engine.”
He wasn’t finished yet.
The next day, Mullenweg wrote in a post titled “WP Engine is not WordPress” that even his mother couldn’t tell the difference, and that WP Engine “profits from confusion” and “needs a trademark license.” said. Keep up the business. ”
His mother wasn’t the only one confused.
Bob Perkowitz, president of the environmental nonprofit EcoAmerica, told CNBC that he has known Mullenweg for 16 years and is an investor in Automatic. Perkowitz said he has been a long-time WP Engine customer for many of his organizational and personal websites. He watched the channel remotely and listened to Mullenweg’s WordCamp presentation.
“I always thought it was part of WordPress,” Perkowitz said, referring to WP Engine in an interview with CNBC. “They are misleading and do not serve the community.”
Perkowitz said he is having website administrators migrate all websites to another hosting company.
Shortly after Mullenweg’s presentation, WP Engine sent a cease and desist letter to Automatic’s general counsel on September 23. This is due to what the company calls Mullenweg’s self-proclaimed “scorched-earth approach” and smear campaign against WP Engine. According to the letter, Mullenweg asked for a “very large sum of money” before his WordCamp keynote, but WP Engine never paid.
The letter said Mullenweg’s “false, misleading, and derogatory statements may be subject to legal action.”
Two days later, Mullenweg Written on the WordPress.org site WP Engine has been banned, meaning it “no longer has free access to WordPress.org resources.” Mullenweg encouraged WP Engine’s thousands of customers to contact the company and “ask them to fix the issue.”
WordPress then temporarily unblocked WP Engine and gave it until October 1st to agree to the terms of the license agreement, which Mullenweg announced publicly. At the heart of the deal is whether WP Engine will pay Automattic a royalty fee of 8% of its monthly revenue or commit 8% of its revenue “in the form of salaries for WP Engine employees” who work on WordPress features at WordPress.org. is.
No agreement was reached. The ban took effect on October 1st.
For WP Engine customers as a whole, Mullenweg’s actions were harsh and clumsy. Mullenweg says what his critics don’t understand is how long he’s been trying to reach an agreement.
“They’re forever behind,” Mullenweg told CNBC. He decided, “Unless you tell me, I’m finally going to start talking about the evil things you’re doing.”
counterattack
Instead of negotiating, WP Engine filed an explosive lawsuit against Mullenweg and Automattic on Wednesday.
WP Engine accused Mullenweg of libel and defamation through public comments, saying the WordPress founder has many conflicts of interest in the community and how the company is run given the open source nature of the technology. Ta.
“Over the past two weeks, Defendants have been implementing a plan to ban WPE from the WordPress community unless it agrees to pay Automattic tens of millions of dollars in trademark licenses that WPE does not even need,” the complaint states. are. “Defendants’ scheme occurred without warning, and WPE had 48 hours to either agree to reimbursement or face the consequences of being banned and publicly defamed. .”
After WP Engine filed a 61-page lawsuit demanding a jury trial, Mullenweg fired back, calling the complaint “baseless” and “flawed from start to finish.”
Mullenweg acknowledged on his personal website that the ordeal has caused major conflict within the company.
“It has become clear to me that a significant portion of my colleagues at Automatic disagree with me and our actions,” Mullenweg wrote.
He said the company had decided to offer a buyout package to anyone who quit by early Thursday afternoon, offering them $30,000 or six months’ salary, whichever is greater. Those who sign this contract are not entitled to a “boomerang,” which means reemployment.
Mullenweg said 159 people, or 8.4% of employees, accepted the offer, but 91.6% who chose to stay turned down a total of $126 million.
“I feel much lighter now,” Mullenweg concluded.
“We are grateful to everyone who accepted our offer and are even more excited to work with those who turned down $126 million to stay,” Mullenweg wrote. “As the kids say, LFG!”
While Mullenweg may be openly enthusiastic and grateful for his still-tenured employees, the WordPress community is confused. Many of WP Engine’s customers are suffering, and Automattic is preparing for a legal battle against a private equity firm with more than $100 billion in assets.
clock: The future of open source
