What’s happening with Automattic and Wordpress at the moment is a perfect illustration of why capitalism is fundamentally incompatible with positive social or environmental impact.
More money does not equal more impact.
April Fool
Because of my history with Automattic I’ve been back and forth as to whether this was a pie I wanted to stick my finger into (again). Mostly because I still have some acquaintances in that ecosystem who I do not want to gratuitously hurt.
In the end I definitely decided to 100% stay away from the whole sorry mess and, for the third-and-goddamit-the-last-time, trashed an article draft I had been noodling with.
That was the 1st of April.
On the 2nd of April, Matt Mullenweg, CEO of Automattic, announced a fourth round of layoffs at his company impacting almost 300 people.
This time it felt below the belt. Even to someone like me who’s been out of that scene since 2018. Unlike previous rounds, rumours about these layoffs had been categorically denied. But that’s not the mean bit. The really mean bit is that these layoffs specifically affected individuals who had demonstrated a high degree of loyalty to the company and the CEO just a few months back by not taking the two previous “alignment offers” (aka layoffs, aka firings). In Matt’s own words:
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. — Oct 2024
This “excitement” was demonstrated six months later by many of them being unceremoniously dumped with a package that is but a fraction of what ex-colleagues in those previous elective layoffs received. (Roughly speaking, people who chose to leave the company in October received between six and nine months severance pay; those who chose to stay were fired with a mere 9 weeks of severance pay.)
The spin since then from the company and from acolytes has been ridiculous bordering on the banal. Cringeworthy and eye-rolling stuff about breaking down silos and cutting cloth to fit circumstances and similar bullshit bingo.
So in the end I decided to write my own perspective on these events in the hope that I can provide some sense-making to those who need it. Additionally, like I said, it is a great illustration of the problems with extractive finance (that is, venture capital) and how it is generally incompatible with “doing good”.
Out of the Blue?
These layoffs are the latest chapter in a sorry story that exploded into the public domain in September 2024. Since then Mullenweg has engaged in a laundry list of questionable, disingenuous, and self-destructive tactics that threaten to permanently damage the open-source Wordpress project he himself founded. Even drawing criticism from outside the Wordpress ecosystem about the broader damage being done to the ideology of open-source itself.
That said, what’s been going on is not that unusual.
Exploitative hiring practices, broken promises, and mass layoffs due to bad business decisions have become normalised in tech circles.
But Automattic and Mullenweg have always claimed to occupy a higher moral ground than the rest of the Silicon Valley crowd: remote work pioneers, open-source and open-web advocates, champions of diversity and inclusion programmes, believers in communication and transparency, jobs with great salaries and perks, and, crucially, a mission to democratise publishing and commerce that promises positive, real-world impact.
Recent events have therefore come as a shock to many current and former employees, not to mention the thousands of unpaid contributors in the open-source community.
Even if you accept that the whole WP Engine lawsuit, banning, and public shaming strategy was a potentially sound business gambit, that still doesn’t explain actions such as unilaterally banning long-term contributors, stealing code, inappropriate sexual innuendo, ghosting, sleazy marketing, and the pity-party antics.
The level of escalation seems to be both out of the blue and inconsistent with the carefully curated public personas of the parties involved.
What we need to consider then is that this is not actually inconsistent behaviour at all but is instead following a logic that we are not privy to. After all, if you’re caught between a rock and a hard place, it might make sense to bang your head against the wall. So what rock and hard place are Automattic and Matt caught between that could have led to this head-banging?
To understand that we need to look much further back in time than just the events of the past six months.
Ten Years Ago
In September of 2014 I was in Park City, Utah, for Automattic’s annual company meet-up. (The same event that’s been cancelled for 2025 due to, presumably, cashflow challenges.) I had just been hired a few months before as part of a company expansion that followed from their raise of 160M earlier that year.
My job was to turn a product called Jetpack profitable which until that time was little more than a skunkworks project.
The meet-up was an opportunity to spend time with colleagues in a non-transactional manner and one of my first such interactions was a pleasant walk around the resort grounds with a senior leader; a long-timer I respected. This individual had surprised me in ending our conversation by stating that they believed the pitch deck used to raise that most recent round was “fraudulent”.
This was quite the allegation.
What the person meant was this: the growth and revenue projections promised to investors were not merely optimistic or over-inflated; they were impossible. Impossible because they were based on a seriously over-inflated market share assessment.
This market share assessment is the much touted “X% of the web” number that talks about how Wordpress does compared to competing content management systems. At the time it was in the region of 25% and now it is just over 40%. This is of course incredibly impressive and something to be justifiably proud of. As a result, both Automattic and Wordpress have coasted on this measure for years, using the metric as an indicator of success and predictor of future financial performance.
Instant turn-on for any VC! We’re talking about almost HALF THE INTERNET?! Holy shit! Where do I sign up?
Now that number is completely correct. Not a typo: correct.
It is independently assessed and verified. (You can check.) It is true that Wordpress can lay claim to such an impressive achievement: 40% market share and growing.
So where’s the alleged fraudulence?
Well, the best lies are based on facts, but slightly distorted or with important bits craftily hidden. Automattic disingenuously leaves out a hell of a lot of very important information and context which make its use of the statement often misleading.
The first part of the misdirection is that actually Wordpress powers 40% of websites not 40% of the web. In their reckoning you see, both my and Matt’s blogs as well facebook.com and google.com, to take a couple of easy examples, have the same weight. They are all “websites”. Unique domains. So out of those four websites, half are powered by Wordpress. But the level and kind of activity is incomparable and not at all monetiseable to anywhere near the same degree, even when you include all active Wordpress sites. And that 40% includes a truckload more sites than just the large active ones making it very much a vanity metric from the perspective of what is and isn’t monetiseable internet activity.
The second part of the misdirection is the implication that there is some kind of centralised control over that 40%, that that control is exercised by Automattic, and that consequently it can be easily converted into revenue. In reality Automattic only has some level of control over a much, much, smaller portion of that 40% because Wordpress, being open-source, is by definition and design, de-centralised and uncontrollable.
What my colleague back in 2014 meant by the assertion that such growth is “impossible” was more accurately that it was impossible given the de-centralised and open nature of Wordpress.
For Automattic to reap enough profit, some surgery would be required.
The Business of Democratisation
Wordpress’s stated mission is to “democratise publishing“. Automattic’s is to “democratise publishing and commerce“. (Emphasis mine.)
What they mean by this is that by making Wordpress and associated projects like Woo Commerce open-source they are making it possible for anyone to express themselves online or build a business. So not only teaching people how to fish, but giving them fishing rods as well. Democratising publishing and commerce.
I think that at the beginning this may have started as a somewhat genuine goal aimed at creating positive impact in the world.
But what is “democratisation” really?
Democratisation at its core should mean shared control, shared ownership, shared responsibility, and shared benefit. Unfortunately you can’t democratise anything if you yourself aren’t democratic and despite outward appearances and niceties neither Wordpress nor Automattic are in any way democratic.
Quite the contrary.
Matt’s designation is very unapologetically that of “dictator for life” and he has absolute control over the open source Wordpress project and community. (The official claim is that he is a benevolent dictator for life. However, factually speaking, we can only assert the “dictator for life” part as benevolence is not universal, it is highly subjective, and often episodic.) Internally to Automattic, aside from retaining full executive control of the company, Matt is well-known to operate an extremely micro-managey, seagull-y, and passive aggressive management style.
I’m not saying he should change. He can do as he likes and needs neither my permission nor my blessing.
But what I am saying is that when you couple that kind of setup and atmosphere with huge pressures to deliver outsized financial returns, democratisation doesn’t stand a whelk’s chance in a supernova. So it is more accurate to state, in my humble opinion, that Automattic’s mission is to monetise publishing and commerce.
From this perspective the mindset changes. It is no longer about democratising publishing or commerce in the sense of enabling and empowering people. It now becomes about “bringing our brand of democratisation” to the entire web because democratisation is, it turns out, our growth lever. (If you’re noticing a smidge of colonialist mindset here you’re ahead of the curve.)
And so despite the spin of “we need more money because we use it to have more impact”, the reality is that “we need to impact everyone because that lets us make more money.”
Impact is now subservient to financial return.
Surgery
To date Automattic has raised almost one billion US dollars in venture capital funding with a most recent public valuation of seven and a half billion US dollars in 2021. (Although that’s probably at least 10% smaller by now.)
A valuation of 7.5 billion USD at the time of the last raise means that the expectation by investors of Matt and Automattic is that they need to hit a valuation of, say, 50-75 billion USD within five to ten years of the raise. (Based on a conservative assumption that the VCs are looking for a 5-10x return on their investment) and we’re already four years into that.
Tick tock.
Tick tock only works as a storytelling device when things are not going well and we can only infer, from the desperate nature of recent events, that things have not been going well.
Specifically, what hasn’t been going well, is that monetisation of the Wordpress ecosystem that was required to make Automattic more profitable. Automattic’s big bets on achieving this was two projects: WooCommerce and Jetpack.
Automattic acquired WooCommerce about ten years ago and, while it is a successful e-commerce product, it doesn’t come even remotely close to challenging Shopify. By the same metric that attributes “40% of the web” to Wordpress, Shopify comes in at a lame-looking 5%. Despite that, Shopify boasts a valuation of 122B USD (April 2025) — around sixteen times that of all Automattic. Its not my place to opine as to the whys of that, but that’s nonetheless the state of play.
Jetpack however is a different story. Jetpack was Automattic’s attempt at that “surgery” that’s required to change how the Wordpress ecosystem works. Jetpack was, and is, Automattic’s play at actually controlling a larger percentage of that 40%. It establishes a connection between the independent Wordpress user and Automattic. Being completely down to user choice, Automattic attempted to get around this by pre-bundling Jetpack into Wordpress installations by striking up deals with the largest web hosting companies in the industry.
Many hosting companies found some benefit in partnering up with Automattic; a combination of brand goodwill, increased traffic, and some revenue share. And since my time the offering has expanded into services for agencies, affiliates, and managed cloud infrastructure.
But one kid never wanted to play ball: WP Engine.
Burn the Forest Down
Actually there were more that wouldn’t play including, for example, GoDaddy.
But GoDaddy is too big to pick a fight with and Wordpress only forms a small share of their business. WP Engine on the other hand are Automattic-sized and completely dependent on Wordpress. That’s their entire offering: managed Wordpress hosting.
Coincidentally, exactly what Automattic offers through its WordPress.com and Pressable services.
Even more annoyingly WP Engine did a really good job of attracting high-quality customers. People running sites with a long lifetime value. Folks who paid handsomely monthly and stuck around for years. Businesses happy to pay a premium for reliability. WP Engine are so good that Automattic even invested in them back in 2011.
But despite the investment relationship and partnership overtures WP Engine never bit the Jetpack bullet. Their customers were of course free to use it but what Automattic wanted was for all of WP Engine’s customers to use it by default because that would represent a really juicy and monetiseable part of that 40%.
By 2021 Automattic had now sold its stake in WP Engine in the Silver Lake buyout divesting itself of any fiduciary conflict of interest.
With Covid playing havoc with the company’s growth predictions and WP Engine refusing Automattic’s latest ploy — paying for trademark use — the scorched earth we recently witnessed became the last best hope of getting hold of those customers and for permanently changing the geography of the Wordpress world.
State of the Word
How will it end?
I don’t know whether what transpired since then was in any way anticipated or a complete shock for Matt and it is impossible to predict how and in what way Wordpress and Automattic will come out the other side after dust from the lawsuits, staff exodus, and brand damage has settled down.
But three things are clear.
First: the state of Wordpress has been changed. Matt has demonstrated his ability and willingness to use his financial and legal status in the system to do exactly what he wants, without consultation and without dissent allowed. The community and democratisation pretence has fallen away.
Second: the financial pressure to extract more than what you put in that venture capital investment exerts will always be more powerful than anything else. The open source Wordpress project is no longer a societal goal that Automattic exists to support. Instead it has become a mine designed to supply Automattic with a pipeline of monetiseable resources.
Third: structures matter. How you start and set yourself up sets the tone for what you’re allowed to do. Just saying that you are focused on impact, or democratisation, or wellbeing isn’t enough. The legal and cultural foundation of the organisation needs to embody that.
I am not predicting the downfall of Automattic. I have no reason to wish that and I have no evidence to think it will happen.
My purpose here is to illustrate with a real example what we mean when we say that capitalism is not genuinely compatible with impact. Like two slightly diverging paths they can travel alongside each other for a while but eventually there will be a parting of the ways.
When that happens, there will be suffering and a loss of purpose. Trust is broken, livelihoods may be harmed, mental and physical health is compromised.
And most crucially to the starting point, the potential for positive impact is lost.
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Photo by Micah Williams on Unsplash