In the latest installment of our What’s New series where SaaStr’s very own CEO and Founder, Jason Lemkin, sits down with the top CEOs and leaders in SaaS to discuss What’s New, what’s top of mind, and what every SaaS founder should be thinking about – Jason sits down with Matt Mullenweg, CEO of Automatic and Co-Founder of WordPress.
Automattic and WordPress and is the classic, old-school, OG open-source leaders, and fun fact, as SaaStr runs on WordPress, we simply wouldn’t be here without Matt and the 2,000 folks who work with him. 🙂
SaaStr was created in 2012 to democratize learning and how to build B2B companies, and WordPress was started in 2003 to democratize publishing. Matt’s been in the game for 20 years, and throughout that time WordPress and Automattic, and even what it means to publish, have expanded and evolved.
Right now, 42% of the market runs on WordPress. But when they started tracking it, it was .8%.
This is a result of the work and not what they work toward. The key is serving customers’ needs, and that number naturally goes up.
So with that, let’s dive into what’s new at WordPress:
Is Blogging on the Decline?
Matt shares that blogging did decline for a while, and it does seem to be all over social how folks are quitting blogging or vlogging these days. Why? Because distribution got fragmented. There was spam, pop-ups, and slow-to-load websites. “We fixed all that, so it’s cool to see it coming back,” Matt says.
What people love about a blog is a person’s voice and their story. It’s an authentic connection to someone with wisdom they want to share. That’s timeless and will never go out of style. Now, it’s exciting to see the pendulum swing back to people doing it. As a core part of Matt’s philosophy, people need to have their own domain and run open-source software because it allows them to control the entire stack of what they’re putting online.
When you put content on someone else’s platform, as valuable as that is for many people, it’s not yours. And if you go long, how that platform runs changes a lot. Speaking of the long game, Matt talks about the launch of the 100-year subscription plan last year. You can subscribe to a 100-year hosting plan, so you have a place to put your stuff that you, your children, and your grandchildren can enjoy. “It’s part of contributing to humanity,” he says.
Putting People In Charge of What They Want to Consume
When SaaStr started, about ~95% of our traffic was from blogging. People would type saastr.com into their PC and get a piece of content. Today, the homepage is about 5% of its direct content. So, in today’s world, how do people get exposed to content?
Matt is interested in a world where users control what they want to consume. Many say, “Hey, visit me, and I’ll tell you what to look at today.” But he wants to be in control of that. Discovery is so different today, and those differences are between the passive and active, the goal-oriented or accepting.
There are a lot of systems designed where you just sit and scroll or watch, and what you’re consuming tells you what you should have — like television back in its heyday. Matt wants active, goal-oriented systems: Here are the things I want to do and the people I want to follow. These are the priorities that I want to put in front of me. This is a better approach to life, where people are happier, more productive, and more fulfilled.
Where we go wrong in social media is when we sit back scrolling, and the algorithm decides what we’re doing and is optimizing for our lowest base instincts. It’s an optimization curve on our amygdala. Let me show you something that gets you mad or excited. What if, instead of doom-scrolling, we ask ourselves what kind of person we want to be?
We say what we want to learn more about and are given that to consume. This is where Matt believes AI is useful and will start to help.
What’s the Business Model Behind Automattic and WordPress?
Matt co-founded WordPress when he was 19. A year later, they created Automattic as a commercial services business around WordPress. He never thought they’d make any money from it since it started as an open-source project.
WordPress is its own ecosystem, a vibrant community of hundreds of thousands of people who create add-ons, plugins, and develop sites. Automattic is a member of that ecosystem and has some products within the WordPress ecosystem, like WordPress.com, Kismet, WooCommerce, or Jetpack.
Then they have things like Pocket Cast, one of the best podcasting apps, Day One, a journaling app where you can share journals that are fully encrypted and synchronized, and now text messaging. Automattic was started in 2005 to democratize publishing, and WooCommerce was purchased in 2016 to democratize e-commerce. Now, Woo is an open-source style Shopify and their largest business.
Then, in 2023, they moved into messaging. There were way too many messaging apps, so Matt and the team decided to bring it all into one, and it’s secure, encrypted, and local to the device. Automattic is a behind-the-scenes brand. It’s not meant to be a consumer brand. These products are part of a shared philosophy around user control of privacy, data, and open-source. They put power back in the hands of the people because technology should enable you.
Under-Monetizing a Platform as a Strategy
There’s a concept out there that isn’t bad; it’s a strategy that held for Matt and Automattic, and it’s under-monetizing a platform. In the last year and a half, many companies have over-monetized, ramming through price increases.
But when you have something beloved that’s open-source or free, you can almost under-monetize it. Some could say that if you own 43% of the web, you could be pulling in $43B in ARR, but the WordPress ecosystem is doing closer to ~$10B per year across hundreds of companies. When you rank these companies, WordPress doesn’t show up in any Fortune 500 because they’re divided into sub-platforms or ecosystems. They’re not counted as one entity, so while it’s not great for leaderboards, it is still profitable while serving Automattic’s ultimate mission and their day-to-day operations.
Where do you draw the line on monetization with such a broad base?
“I always go back to the customer and where they are getting value,” Matt shares. They do a lot of hard, complicated things, some invisible to users and others not. He loves subscription models where people pay for something that gives them value.
That direct, one-to-one relationship with the customer should be cherished and hopefully compound over time.
With a $10B WordPress economy out there, many of its products compete with partners. What’s the best way to handle it when we all want a vibrant ecosystem and for our products to win? Most people don’t mind competition, but they need transparency. So, state your intentions and your goals, and then navigate around them.
You can still support a whole ecosystem of folks who are competitors and partners. Their customers are your customers, too, so you want to give them the best possible experience.
How Does WooCommerce Fit Into a Platform Company?
When WordPress purchased WooCommerce in 2016, they believed it would become their biggest business. Fundamentally, transactions are the economy. Publishing is a good business, and there’s some value there, but transactions are everything else.
In 2016, WooCommerce was the number one plug-in. But it was interesting because it was just a plug-in for WordPress designed by an outside party who created WordPress themes.
It was complicated because they looked at buying it a few times, but the code wasn’t “good enough.” But finally, they agreed that the WooCommerce creators had figured something out that resonated with users, and so Automattic purchased it and fixed the code. Flash forward to now, it’s the #1 revenue driver for them.
No One Feels Trapped Investing in WordPress
How does Matt view the public markets and how things are looking compared to a year ago? Keep in mind, that even though Automattic doesn’t show up on public leaderboards, it does have the potential to IPO at any time.
“I didn’t get here because of my knowledge of the financial markets,” Matt joked. Instead, he focuses on building as many subscribers as possible, with the goal of millions of people getting value from the platform and then compounding year over year over year for many decades to come.
WordPress has had fantastic investors, so they don’t have a lot of the same pressures as other companies to go public at any given time. As a fiduciary, Matt tells his shareholders that if they want to sell a share, he can help them. He doesn’t want to lock anyone up. Automattic is a closely held stock, with mostly employees and a few dozen of the most sophisticated investors in the world. It’s a very small but coveted market.
They aren’t public, but he feels comfortable helping people find a liquidity path if they aren’t aligned for whatever reason. In good product design, you don’t come with a solution. You come with the problem. So, Matt encourages investors to come to him with the problem, and they can get creative with ways to solve the problem.
And, What’s New at WordPress!
Across all of their products, Day One, Pocket Cast, and Text are the most exciting solutions for Matt and team. One of the great problems of all humankind is trying to unify everything and they’ve been working on that since the ‘90s.
Why is WordPress focused on unifying everything now?
Because they’ve got a really genius team that reverse engineers all protocols and unifies them into one thing, and there is a regulatory environment and political environment that supports it. For example, Apple adopted USBC. They probably wouldn’t do this on their own and would have had the lightning cable forever. But many peoples’ lives are immeasurably better now that Apple has USBC and interoperability.
Matt believes that the role governments could and should play is around interoperability because it gives people more freedom. People can set their own rules around data. If they had done this in 2019, all the tech giants would have been crushed. In 2024, WordPress is an ally of Apple, Google, Meta, and all the messaging platforms because it’s fantastic to have something to point to and say it’s open-sourced.
