23 Comments

  1. Carl Hancock

    Unfortunately after taking VC funding it’s not up to Matt. It’s up to the investors. Eventually they will expect a return on their investment and that typically comes via an acquisition exit.

    Ultimately does it really matter? WordPress the software is open source GPL and even if Automattic is acquired, Matt will continue at the helm of the WordPress Foundation which is a separate organization.


  2. @Carl Hancock – But doesn’t it matter how much money was taken in and whether that money translates into ownership shares of the company? What if it’s just money with no actual ownership of the company?

  3. Carl Hancock

    @Jeffro – That isn’t how venture capital funding works. They don’t give you millions of dollars because they are nice people. While smaller angel investments typically do not see a large chunk of ownership change hands, venture capital investments typically do.

    I can assure you that the almost $30 million that Automattic raised in their last venture capital funding round involved ownership in the company. It’s also been mentioned that a chunk of that money went directly to Automattic’s founders to buy out some of their ownership and enable them to “cash out” early. Translation: Matt pocketed a nice chunk of that $30 million and cashed out some of his shares.

    You can read more here:

    http://gigaom.com/2008/01/22/wordpresscom-creator-raises-29m/

    So ultimately if Automattic’s investors wanted an exit, you can be sure they would get one.


  4. Ultimately does it really matter? WordPress the software is open source GPL and even if Automattic is acquired, Matt will continue at the helm of the WordPress Foundation which is a separate organization.

    @Carl Hancock – While this is very much true, selling Automattic and WordPress.com would have an impact on the open source part of WordPress too.

    Don’t forget that lots of the code that is committed to the WordPress core, finds it’s way to there via a real life test at WordPress.com. WordPress.com is a huge group of users who are automatically testing new features, without even knowing it. Only bugs will be reported.


  5. Please no! Could not bear it if someone else got there grubby little hands on WordPress!!!!

    WordPress is the reason I took an interest in the web an one that has spurred me on to keep learning. I seriously doubt Matt would bother selling WordPress, he seems like a pretty stand up guy and not at all money orientated.

    Although when propositioned with vast amounts of cash how many of us would seriously turn it down?

    Yikes.

  6. Carl Hancock

    @Coen Jacobs – Agreed. It would impact the WordPress project itself and could bring the end of a lot of Automattic funded free labor on the project. But it doesn’t mean whoever acquires Automattic “owns” WordPress and plenty of contributors aren’t Automattic employees, including some very active core contributors such as Nacin and Jaquith.

    @Jobalicious – I guess you didn’t read my response above. Ultimately it’s not entirely up to Matt. It’s up to what the investors behind Automattic’s venture capital funding want to do.


  7. @Carl Hancock – Sorry got caught up in the moment, did not read the ‘its not up to matt’ part!

    Suffice to say it would be a shame, I know that any company taking over a platform such as WordPress would angle some form of monetization. Maybe not at first but further down the line.

    In fairness they would have to, to recoup some of the initial expenditure/investment. This obviously makes sense to you and me. Would it cause a back lash and switch people over to a different platform, irrespective of whether the platform went paid for or not?

    This remains to be seen, no doubt screaming fan boys would boycott if WP was taken over by a large corporate. However if push come to shove would you invest in WordPress as a paid for solution?

    Would be interested to hear peoples thoughts on this….


  8. @jobalicious – Your last two comments have me wondering if you think that WordPress the open source project is owned by Auttomatic? It’s not. In fact, no one can acquire WordPress the open source project as it’s owned by no one. No company would take over a platform, they would only be taking over a service.


  9. Hi Jeffro,

    Thanks for the reply, and sorry for the confusion, I was muddled it’s nearly 12pm here! Brain is lagging need sleep.

    I guess what I am ultimately getting out is the following: (bear with me!)

    Whilst I understand the difference between the hosted and open source versions (this is me not explaining or not going into detail in the first place, so apologies) and Auttomatic being acquired by a large corp. Will WordPress as an open source project cease to exist?

    This may seem grandious in gesture but it could potentially become a reality. If the hosted version was purchased outright by, lets say MS. Do you think the open source version would suddenly be treated like an ugly step child, because of its relation to the now M$ owned Auttomatic?

    Or do you think that it will be forked?

  10. Geraldine

    Currently, who decides who can have commit access to WordPress, the open source project – is it Automattic employees?

    Who makes decisions about WordPress.org, and WordCamps – is it the WordPress Foundation, ie Automattic employees?

    If Automattic was acquired by Microsoft, would Microsoft then have control of decisions made by it’s new employees in these areas?

    This isn’t a pop at Automattic or Matt, I’m just interested in where the actual delineation is, and what acquiring Automattic would mean.


  11. @jobalicious – the future of wordpress.org would basically depend on what got included in the deal. Obviously Microsoft can’t buy the wordpress software, but they can buy the site where it lives.The wordpress.org domain is not currently owned by either Automattic or the WordPress Foundation: it belongs to Matt personally. This gives him the choice, when the time comes, between selling it off along with Automattic or handing it over to the non-profit foundation which currently owns the trademark. (Microsoft could probably manage without the trademark, if they had to, and might even prefer to rebrand.)

    If the wordpress.org site was acquired along with Automattic, the official software would probably limp on for a while, but the main focus would be on encouraging people to move their content and personal data to wordpress.com instead. Obviously the community would fork the project in response, but there’s no telling which, if any, of the forks would survive.

  12. patprzybilla

    hopefully tomorrow so everybody uses drupal and I am getting rich and a porsche :)


  13. Strategically, Automattic would be worth the most to Facebook because all those WordPress.com blogs represent a substantial portion of the Web and shifting/merging WordPress.com comments to Facebook identities would be right in line with their goal of becoming our main form of identity online.

    Providing ads for all that content would also be a huge asset to anyone who harbors serious hopes of challenging Google’s ad network, a business in which scale is everything. Some candidates there would be Microsoft, Yahoo, AOL, or some sort of combination of two or all three. Potential buyers would be willing to pay quite a premium in return for being able to expand their reach so rapidly.

    Facebook, too, would value the opportunity to operate an advertising network beyond the confines of their own site and the relatively social nature of blogs would be suited to their existing expertise in matching ads with social content.

    Google will, of course, seek to block any attempt by Facebook to increase it’s already terrifying social reach and, without a doubt, they will do all they can to stop any competing ad network getting such a vital boost – Google know all too well that, despite all their varied activities and products, advertising is still the only thing that brings in any real money.

    Facebook’s main problem is that, dogged by irritating legal challenges and worryingly shaky market conditions, they have not yet been able to launch their IPO, which they need in order to make any large acquisitions and, make no mistake, Automattic will be a seriously large acquisition.

    If Facebook does manage to have a good IPO, they will try to rope in a few major acquisitions early on, to counter the predictable claims that their growth has peaked and that the stock is ridiculously overvalued. Targets will include Automattic and smaller fish such as Disqus. Twitter has most likely already made a deal with Apple to give it first refusal on any Facebook or Google offers.

    Google knows that it needs to block any Facebook acquisitions but they also know that, until the IPO actually happens, they are not under any real pressure to make pre-emptive offers.

    Automattic and their investors know, too, that they will not get the amounts they really want until Facebook is in play and Google has to counter offers with real money behind them, so, don’t expect anything to happen on the Facebook vs Google front until after the IPO, possibly next year but it could be pushed back much further if the markets continue to spasm.

    Microsoft

    Microsoft has clearly been courting Automattic for quite some time but, although it has plenty of money, it has nowhere near the same level of strategic synergies – Automattic is simply worth far less to Microsoft than would be to Facebook.

    Having said that, acquiring such a pro-Open Source company – and the willingness of that company to be purchased by Microsoft – would be yet another attempt to signal to the world that Microsoft has changed.

    Although currently still ludicrously profitable, Microsoft is living on old glories and their image desperately needs a revamp. Some would even argue that, far deeper than image, the company actually needs a completely new direction and an infusion of fresh blood from Automattic might be just what they need to re-energize their online efforts.

    Ballmer is very much part of the original Microsoft and has failed to lay out a credible vision for the future. The rumor is that he will soon be shown the door and, who knows, perhaps his successor will attempt to establish his new vision with the purchase of a company full of Open Source hippies who just happen to be sitting on some prime Web property.

    Talented, experienced, respected new blood is also a very rare asset and, as bizarre as it may sound, I could well imagine Matt being groomed to become the CEO of Microsoft in a decade or so. On the whole, though, I don’t see Microsoft making a serious attempt to buy Automattic until Ballmer is gone and, even then, I don’t see how anyone at Microsoft could justify the amount that would be needed to beat both Facebook and Google.

    Implications for WordPress.org

    None.

    Any buyer will bend over backwards to be seen as being respectful to the Open Source project. If anything, it is likely that more employees will be funneled in, resulting in more code contributions over the longterm, not less.

    Obviously, some people will rage that Automattic is selling out and that the larger company is Satan but the likely result of WordPress.com being integrated into a larger company, especially Facebook, will be an increase in the number of people blogging and the number of people reading those blogs. That, in turn, will increase the number of people who become interested in the Open Source project and the WordPress community.

    My impression is that the Automattic folks would get a rougher ride within Google, as their interests don’t really coincide with Google’s main focus, Google tends to neglect purchases and, unlike Facebook, PHP is not held in very high regard in the Googleplex.

    I believe that there is zero chance of Apple ever buying Automattic.

  14. Ben Ackles

    @that girl again

    I know I’m restating this, but Automattic is completely independent of the WordPress Foundation. They are an entirely separate entities. One is a for-profit entity and the other is non-profit.

    WordPress.com is owned by Automattic. WordPress.org is owned by the WordPress Foundation. The only common thread is a shared founder. Automattic does not OWN (they use) the software, wp.org domain nor the trademark WordPress. The only thing they share is a founder; Matt.

    Just think of Matt as a serial entrepreneur. If he started two companies and one company were purchased would the acquiring company own both assets? No, not unless explicitly specified in the terms of sale. Matt would never sell his position in the WordPress Foundation. He might sell his stake in Automattic. I have never seen an founder so dedicated to a community as Matt. His leadership has been incredible and one of the keys to his leadership style has been his devotion to making these two entities completely independent. The last straw in his vision to cede control of the WordPress community was when he transferred possession of the WordPress trademark. Automattic used to own the WordPress trademark, but as of late 2010 the company transferred ownership to the WordPress Foundation.

    As far as an acquiring company for Automattic. I hope they eventually find a home where they can have resources to scale their massive infrastructure, but remain autonomous from their parent company. Amazon seems like the best prospect for an agile company where Matt has expressed admiration for their founder and CEO, Jeff Bezos.


  15. @Jeffro

    Morning Jeffro,

    While I appreciate the write up, there are a few inaccuracies.

    1) WordPress Foundation

    In fact, no one can acquire WordPress the open source project as it’s owned by no one. No company would take over a platform, they would only be taking over a service

    Yeah that’s wrong. WordPress Project and trademark is owned by the WordPress Foundation.

    The “WordPress Foundation” is a company.
    Like any other company it too can be acquired. That company owns the rights to the WordPress name/trademark. It also owns all WordPress.org, information (such as the information on trac). It also owns the licence for the WordPress code.

    Matt personally owns WordPress.org name.
    He has yet to transfer it to the WordPress Foundation, but I’m confident that is in the works based on some rumbling last year.

    All of this could be acquired.
    Though in honesty it won’t, we really should not be saying things like:

    WordPress.org which is also known as self-hosted software is an open source project that is owned by no one. WordPress is a trademark that is controlled by the WordPress Foundation. Therefore, the open-source project can never be acquired while WordPress.com and or Automattic could be.

    The idea, indeed the tone of the article, that nothing can ever get inbetween us and our beloved software is nonsence, and simply wrong.
    Has Matt made real efforts to ensure that it doesn’t, sure, but the ideas that something could “never be aquired” is crazily off the mark.

    Any company, charitable foundation or otherwise, can be acquired.

    On a side note, and something I raised last year, if the WordPress Foundation is separate from Automattic and it’s WordPress.com service, why isn’t it being sued over trademark infingement?
    You’re not allowed to call this website WordPressTaven as it’s trademark infringement, but WordPress.com isn’t? Don’t you love it when the “inner circle” treat everyone else differently than themselves.
    (that’s a joke folks, but food for thought)

    2) VC funding

    The 2nd round of VC funding had some buy out for Matt (well deserved) as well as taking some of the decisions regarding acquisition of AutoMattic out of Matt’s hands.

    Toni Schneider, left Yahoo in 2006 to join venture Capital firm True Venture Partners.
    That VC firm bought a large chunk of Automattic, then installed Toni as the CEO to protect their investment and ensure that Automattic grew to the point that it would be aquired and all the VC firms would get their money back.

    Long and the short of it is this: AutoMattic will be aquired one day, and it won’t be up to Matt (though I’ve no doubt he’ll have a lot of say on the matter).


  16. @Kevinjohn Gallagher – Regarding point number 1, please refer to this comment by Matt Mullenweg in 2008 which I still hold to be true and accurate. http://markjaquith.wordpress.com/2008/01/23/automattic-secures-295-million-b-round/#comment-88087 The WordPress trademark is owned by the WordPress Foundation but the WordPress.org open-source project is owned by no one. There are project leaders, project founders, but not project owners.

    If the open-source project is not owned by anyone, then how could acquisition ever happen?

    On a side note, and something I raised last year, if the WordPress Foundation is separate from Automattic and it’s WordPress.com service, why isn’t it being sued over trademark infringement?

    Matt answers that question in the following comment – http://ma.tt/2010/09/wordpress-trademark/#comment-485325

    With regard to my domain, it’s acceptable because the domain itself is WPTavern not WordPress Tavern. However, I do have the explicit permission of the trademark owner to use the trademark in the name of my show, WordPress Weekly.

    The more I read into it, especially the post announcing the second round of funding, the more depressed I get as it’s just a matter of time before the company is acquired. But on the flip side, Matt took steps such as the Trademark transfer that were huge in making sure that the most important things regarding WordPress would be kept under the foundation rather than a company that he may not have much influence over.

  17. Carl Hancock

    @donnacha of WordSkill – I agree completely. I think that if anyone were to ever buy WordPress, Facebook would make the most sense as a suitor.

    Google has Blogger, Microsoft already got out of the blog game when it transitioned it’s Live blogs to WordPress… FaceBook doesn’t have a blogging platform. That isn’t to say they couldn’t purchase one, but then again they could just buy Automattic and merge both WordPress.com identities and Gravatar’s into Facebook single sign on.

    They would make the most likely buyer in the current technology landscape and they have the financial means to pull it off.

  18. Ben Ackles

    @Chip Bennett – Thanks Chip! I stand corrected. That’s an important point. I have a feeling it’s only a matter of time before he transfers ownership since the trademark isn’t owned by Matt nor Automattic.


  19. @Ben Ackles – yeah, it is an important point, that’s why I made it. Obviously I’m aware that Automattic and the WordPress Foundation are separate legal entities, that’s why I referred to them as such. But the wordpress.org domain currently belongs to neither of them. If Matt wished to transfer it to Automattic, he could. If he chose to transfer it to the WordPress Foundation, he could. Hell, if he wanted to sell it to Google tomorrow, he could. In theory, the Foundation, as owner of the trademark, would have the right to veto use of the wordpress.org domain by any entity other than itself. In practice, the Foundation is run by Matt and a couple of Automattic employees and I don’t think he’s likely to oppose his own decisions. In addition to that, if you search for ‘WordPress’ at the US patent and trademark office, you’ll find that while the Foundation own the WordCamp mark and the WordPress logo, the WordPress name is still listed as property of Automattic. It’s a grey area, to say the least.


  20. I doubt WordPress.org is at any real risk. I don’t think Matt would let that happen. He cares too much about the software.

    I think a deal with Microsoft is more likely to involve integration with Microsoft services in some way rather than a buy out.


  21. @Carl Hancock – Facebook also uses PHP, so there’s an extra synergy in there too.

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