EP 130: Matt Mullenweg (Co-Founder WordPress): WordPress Controversy, Future of Open Source AI, and Navigating Backlash

32:43Like, uh, I think we're going to get some very, very cool capabilities. Yeah, so I'm just very, very excited about it. And we're still in such early days of the interfaces and the user interactions around these things. So ChatGPT obviously shocked the world with the sort of chat interface with how you work with it. But just as a product creator and someone who's passionate about the design of software, I really love seeing the experimentation that's happening. with sort of the purpose-built UIs around things like Replit or Cursor for coding, GitHub Copilot, or how AI is being applied to sort of these specific verticals.

33:30And I think we're in kind of like the early days of the App Store, you know, when the iPhone first came out. And then, you know, originally it had no apps, right? It was only web apps, and then they sort of had the App Store. And we're kind of in those first days where, like, the apps are all kind of doing different things, and it's a little clunky, and I can't wait to see the next couple of years. And then also that the productivity is enhanced by the AI itself. So it's not uniform, but I have, you know, I presented my company now, which is, I would say, two to three times more productive than they were six months ago because they're really learning and adopting the AI tools.

34:07And one of the things I'm repeating most as a CEO right now is like, hey, spend time with this stuff, learn how to use it because the tools are weird, right now like you have to prompt it a certain way sometimes it doesn't you know it's not just a one-shot thing like searching you can't just ask it once and it works you have to kind of cajole it sometimes you have to ask it to try again sometimes you have to correct mistakes like it's it's it's like a it's a new way of learning a tool which is a very uh weird and odd but when you get good at it you can create amazing things and i can do stuff that used to take me like eight hours of coding now in like 20 or 30 minutes, which is very, very exciting.

34:47You made a comment that like, uh, you're now able to do things in a much shorter amount of time or that people wouldn't, uh, be able to, uh, uh, afford, um, without artificial intelligence, I guess. Are there particular, um, use cases or, uh, applicabilities that you think get you most excited, most optimistic about the potential of things with artificial intelligence? Yeah. Just describe what I've experienced personally is the LLMs today are really good at writing and editing and being a creative generative partner for that. So it's amazing. I think about Hamilton, one of my friends with the Hamilton last night, and I think about Hamilton and like all the rhymes and the rap throughout and how amazed I was at that 10 years ago or eight years ago, whenever it came out, it was just like mind blowing.

35:41And now we have AI that could presumably do elements of what just seemed impossible to me to rhyme all these different things together about the period of time we were going through. And now we have systems that can actually do that. Yeah. And I think, you know, I like how Seth Godin talks about this. It's like, I never just publish what the AI gives me, but I'll put my writing into it, ask for feedback or ask for ideas or ask for an edit or, you know, just even just like grammar checking and things like that. It can be very, very, very, very powerful. In code, I would say it's a little rockier.

36:19You really have to like sometimes prompt it a lot or sort of design things. I think also with context windows, just code is a little more complicated. But, you know, one fun thing is, you know, all the LLMs have been trained on all of WordPress's code and all of the plugins and themes, you know, the 60 ,000 plugins and themes. So it's read all of our GPO code because open source is probably one of the safest things you can train on. The copyright, everything is like pretty clear cut. There's no problems there. and so you know you can ask chat gpt or any of these to like write your wordpress plugin or debug your wordpress plugin or modify things and it just knows it and so i think the sort of benefit ai is going to benefit open source ecosystems and code bases and building on them a lot more and of course you can build something completely custom and bespoke you know you could say, build me a blog and react or something.

37:20But it's far more powerful if you sort of tell it to use an open source tool, which then gets like maintenance, security, updates, security, everything like that. And then it builds on top of it. So I would say as a writing partner and a coding partner has been where I've experienced it most personally myself. And I'm very, very excited. One of the things you touched on in there, which is, it sounds like you're surprised even with how the open source models have caught up. And having lived some market evolution within content management systems, web development platforms with WordPress, I guess, why do you think that's the case?

38:04Why do you think it caught you by even surprise as an open source optimist? And then I'm going to ask you to maybe look forward a little bit on it, but maybe we can look back for a second. open source um i think always wins in the long term but in many markets it's had a slow burn you know wordpress itself was very very small for many many years now 21 years in that we're like you know 40 of websites and 10 times the number two and everything but for a long time we were very very small the growth is very slow but you kind of get this like uh compounding flywheel of like a really healthy open source community.

38:44I think you can also have, and there's examples of this with say, the Chromium Engine or Android, where a company can choose to invest quite a bit of money and they can move just as fast with open source as they can with proprietary. But they're choosing the open source as sort of a business strategy to commoditize the compliments of what someone else might be making money from. So sort of the strategic reasons why, and Facebook's models are not open source. I want to be clear, they call them open source, but they have a term in there. It's not truly open source. But part of the reason why they're making them widely accessible and freely available in a very open-ish way is because I think they're thinking competitively against Microsoft, OpenAI.

39:30Like, you know, they're making a lot of money from these things. How can we, like, give it away for free and then make money someplace else? So I think Joe Spolsky introduced the idea of commoditizing your complements. So taking something that your competitor makes money on, giving it away for free, and then making money in a different way can be very powerful. Actually, to take it back to the early days of WordPress, when we started, our big competitor was this software called MobileType. And it was really good. mobile type, you know, the investors were Reid Hoffman, Joy Ito. They launched on stage at TED.

40:05You know, they had like most of the market, etc. And part of the way they made a lot of money was you could pay them to install the software. And because it was kind of hard to set up, it was in Perl. So you had to set up like a CGI bin, you know, generate static files and everything. And one of our early innovations of WordPress was something we called the famous five minute install, which is basically kind of a self-serve install. And we use a different technology stack, PHP, which worked better on shared hosting. And so instead of making it a business model where we'd make money where you'd have to pay to install it, we've made that super easy so you could install it yourself.

40:44So we tried to take this thing that was, we tried to commoditize the compliment, take this thing that was like a revenue stream for someone else and actually make that sort of free and self-serve. So it could be a very, very good business strategy. And I think good for entrepreneurs listening to this to think about for their competitors, what are things they might be doing that they could offer, as Jeff Bezos famously said, the most scary line of business, your margin of my opportunity. You know, like what are the things you can do that might allow you to sort of commoditize something? We're doing this right now in our battle with Shopify.

41:17So we have a product called WooCommerce, which is open source Shopify. And it typically costs, you know, one-tenth of what you might spend on Shopify. to run a similar size store or something like that. So that obviously means we make a lot less money for how many stores we have than Shopify does. But that's a challenging thing to compete with, you know, when there's an order and magnitude difference in cost. So does that mean that you think in the fullness of time that we'll ultimately all be using open source models and that will kind of be the default way that people use AI? I wouldn't make that prediction.

42:02However, I think it's now pretty undeniable that open source will be a big part of the mix. And one cool thing about open source is even when it's not the dominant thing, it puts some market pressure on the proprietary alternatives to be more open themselves. so Apple Android is a great example of this Apple sort of famously still has this underdog mentality even though they're like a trillion dollar company and so they really like to lock things down right you can't install this or you can't prior to your lightning connector or whatever like that and the open side of the ecosystem I think has forced them to you know open up defaults and be a lot more open than they would maybe naturally.

42:50We finally got USBC. And I just market that's better than regulation. Like regulation can do this as well, but, you know, government moves so slow and by the time they do something, you know, often they're years behind the technology. So it's kind of better when like just the market forces of consumers having choice forces a more open world. And that's part of why I've dedicated my life to open source because I really want, you know, the fruits of my labor and creative work and for the people I work with to go into increasing the amount of freedom in the world. And that sort of idea of freedom and liberty, like as a software we're creating, giving to people, making people's lives more free or less free.

43:28And so I always want to be on the more free side. I know you're excited as I am about Apple transitioning off of their proprietary lightning cable to the standard USB-C. Hopefully this is the final shift that we get taken down, just a different path. I finally went through, I switched out my phone, switched out all my cords as well, but I'm excited to be able to use across different products, different systems, Apple, not Apple, be able to have one standard kind of charging cable, which is a nice example. This is the year I finally went like 100 % USB-C. Besides like maybe my WUBE or something, I have like almost no proprietary chargers left.

44:08And it's, it's a, ah, it's a nirvana. I used to have to carry around so many different types of cables. And I do, I would encourage your listeners. I do this fun post every year. I just posted it called what's in my bag, where I sort of take, you know, the 30 pounds of things I carry around in my backpack and sort of I'm always testing different gadgets and different cables and sort of like, you know, order 20 different things and then like figure out the best one. So I try to reveal that every year. So it's up on my blog. ma.t. We'll link to it. What was the best one or the the best recent purchase you've made that you would recommend for most people to do themselves?

44:45You know one of the things in the past year I've been really excited about is there's actually a company called Baseus B-A-S-E-U-S I think and they have a retractable USB cable which is really really good. I have one here. Retractable cables are like so you can kind of pull it out this goes to three you have a six foot version um they typically have worked but they break down really quickly this is actually quite quite resilient and quite good has just a great feel and everything and they have a little power adapter too i uh i talk about let me see if i have that here oh yeah so this is like an extension cord so it's a six foot extension cord so it's great in hotels it's got a little power brick and this thing comes out so this can be an extra power thing and then this is a 100 watts usbc thing so it's got three usbcs and then a usba so you know i'm on the road uh between this and the six foot retractable cable i can get 12 feet from outlet so you know if you're in your hotel or the outlet's like in a weird place or something so just stuff like this um really really useful and uh i mean this i mean this in a uh endearing complimentary way i've never met someone who's who is nerdier about cables than I am.

46:00And so it's a pleasure. It's a pleasure. One of the gifts I'll give to friends is just like a simple organizing bag, like a$10 thing you can get from Amazon. And then I'll pre-fill it with a bunch of the different, hey, here's an old USB, just in case you have that. And here's an old USB to USB-C, kind of male to female thing. Here's a bunch of, here's a six foot USB. C, here's a three foot USB C, just giving a little bit. And it probably costs, if you put all the component parts together, it's probably 150 bucks or something. But then you just throw it in your bag and you never have to, you always have something there with you.

46:40And so that's one of my, probably, if you ask my wife, many neuroses. But this is definitely one is cords and cables and just having everything organized. And so it's nice to meet someone who even takes it to another level than I do. Well, I love that your love language is also charging in cables. So check out my post and leave a comment. If you found something better or something I should check out, I'd love to hear what you find. Because, yes, it's not my day gig. So I kind of like once or twice a year, I'll go through and order a bunch of stuff on Amazon. And I get Amazon affiliate links for some of this stuff.

47:17So I use that sort of to fund my gadget habit to check out new stuff and sort of post again next year. That's fun. That's fun. Yeah, everyone should go and check that out. I'm curious, you took a sabbatical last year? I did, yeah. How long do you end up taking off? Three months. So automatic as a benefit, where every five years of employment, you're eligible for a two to three month fully paid time off. And the way it works is the clock doesn't reset until you take it. So if you wait seven years to take it, you don't get your next one until 12 years. and sabbaticals are we were kind of inspired by you know it goes back in history actually in academics and many other places have done things like this but um it's great for an organization because it eliminates single points of failure allows leaders to step up it's also great for the person and they can take sort of uh there's sort of a different reset that you get when you're out for like two weeks or even four weeks then three months so um although i created this benefit and there's been thousands of them taking an automatic i was the biggest hypocrite because i'd never taken one myself until last year and so last year i finally kind of got things in a place with our executive team and our fundraising and our growth of the business and everything where i felt very comfortable going away for a few months also had the incredible gift where the former ceo of automatic tony schnider agreed to come in and sort of run things while i was out so So it couldn't be a more perfect – in the CEO role, it's kind of hard to do this, I would say.

48:52I'll just admit that. But having someone who's run Automatic before come in and run it for a few months allowed me to take this. Take me through the journey of that. What did you do during the time? I'm sure there's some, the first couple of days, it's almost like you got an itch that you're, you're, you know, going with your hand and trying to check work emails, but you probably restrained yourself from doing so. Like, how did you actually use that time? yeah and um i would say big this first sabbatical um i wouldn't call it rocky but like i did get pulled back into the business um so you know tony would reach out or sometimes things would come up there was an acquisition that was supposed to close before and it ended up closing like you know a few weeks after so like there's different stuff that happened that um end of the day i'm still the CEO.

49:50So I, you know, had to come back in. But it was try to minimize it and try to do things mostly through Tony versus engaging with the whole company. But what I do, gosh, I spent a lot of time playing chess, played a lot of saxophone, which was kind of how I start, got started was playing the saxophone through a really cool 40th birthday party around the eclipse where, you know, took my friends and we flew to watch the eclipse, did a fun party and everything like that um the the ticket to the party was we have this thing at automatic called flash talks where we do these meetups and uh you have to give a five minute talk but it can be on any topic you talk about anything you show pictures of your dog talk about krav maga talk about dvorak typing which is what i've given a presentation on the past and so um yeah i got like 150 of my friends to all give flash talks on different things because that was pretty fun and we recorded them and uh so yeah it was pretty fun uh and also i took like a month also and like um uh just sort of like chilling like health retreat style and i went to mallorca and just went to like one of these health retreat places where they like cook for you and you get trainers and exercise and stuff like that and it was really nice do you feel recharged and did you come back uh ready to to run or did it force some like, Hey, this isn't such a bad life.

51:20I've, I've run this business for a long time. I'm curious as you, as you really take a step back, like what did that lead to from a, um, I don't know, motivation standpoint consideration. I came back super recharged and like very, very to go. So that was really good. Um, and that's actually what happens in 97 % of the cases now does happen sometimes. And we have had people that take their sabbatical that decide they don't want to work anymore. People think that would be a lot. It was actually when we introduced this, everyone was like, oh, people are going to do this and like half the people are going to resign afterwards.

51:55And it turns out it's a non-zero number, but it's like it's maybe happened five or 10 times in the history of automatic. It's pretty rare. Yeah, it's a fascinating concept. And I think setting the expectations around the amount of time. and I've also heard one of my friends did it recently and what he did was he set some things that he wanted to accomplish during the time and so he took a photography class and learned to surf and so that he could look back on that period of time and feel like there was something that he still got done even though he wasn't working he had some incremental skill or learning to bring with him in his life going forward which I thought was an interesting way of approaching it that was kind of how I approached it too I've also had colleagues that deliberately don't do that because when you think about it that's just kind of like also keeping yourself on this treadmill I always have to set a goal or be productive to be valued in the world and so I also think there's a cool mode to do it where you just kind of like uh the scene to love would say become a flaneur you know just kind of like you know live life in a very uh improvisational way so I tried to do a little bit of that as well As we sit here today, January 2025, you've gone through this whole, my words, shitstorm controversy, and you've had a sabbatical now.

53:21You're 21 years into the WordPress journey. Is that right? Yeah, 21 years. And you're 19-ish into the automatic journey. I guess what keeps you going today? Like what keeps you motivated and excited and energized coming back from the sabbatical?

53:42Oh, yeah. So in WordPress, it's definitely just an inspiration of how people change their lives with the software. And, you know, I go to a lot of work camps and connect with the community and meet a lot of regular WordPress users. and, you know, the stories when people share like, hey, I just started this blog and then I got a book deal and then that turned into a TV series or something like that, like Hugh Howey who wrote the Wool series, which is now Silo on Apple TV. And there's just so many examples of how people have used WordPress to do something incredible. And, you know, being a toolmaker, that's one of the most rewarding things.

54:24It's not unlike being someone who makes canvas for painters or instruments for musicians. You make the tool, but it's what people do with it. That's very, very inspiring. So that gives me a lot of energy. And then on automatic, what's really fun is it's not just WordPress. So we have lots of other products. Day One, Pocket Cast, Tumblr, Beeper, which is a new messaging thing. It's an all-in-one messaging app that takes like your, you know, Telegram, Signal, WhatsApp, LinkedIn, Twitter DMs, everything like that puts it into one app. So this is like a very, very exciting area. So we do a lot of sort of R &D and things that are going to zero as one as well.

55:05So Automatic has, in a given week, I might move between businesses that are very mature and have been around for a while, like WordPress. So that has sort of a certain set of constraints and growth and everything like that. then I might be spending time with a team where the entire project is five people or eight people. It's a lot more working with startups. I also do some investing on the side. I have a thing called Audra Capital Vehicle which I use for investments. Also, we make investments automatic as well. We've written checks up to$30 million in companies. That also, being connected to that broader entrepreneurial ecosystem and other entrepreneurs, is just fine, really, really rewarding.

55:47Organizationally, you touched on some of the component parts of Automatic and all the different products. How do you think about those operating as standalone businesses going forward versus what's integrated between them and the shared services? And do you see that? I know you've taken a lot of inspiration from Berkshire Hathaway and Charlie Munger and Warren Buffett as well. What are the parallels and the differences that you sort of view with automatic and the Berkshire analogy I've heard you use in the past? Yeah, or LVMH or Constellation Software, other things. So, you know, we have sort of what we call our ecosystem businesses and our Cosmos businesses.

56:34So ecosystem is all the stuff built on WordPress. So one advantage of there is you do have a lot of shared platform and technology. and i would say that i always like to say every org chart or every organizational design is just a series of trade-offs there's not one that's better or worse like a functional organization versus like a more gm first organization so we're actually in the process right now of i would say we had kind of like five years of being a little more siloed so where some of these businesses would operate very independently. And they had their own CEOs and roadmaps and executive teams and everything like that.

57:17And we saw a lot of growth and benefits from that. Right now, we're doing a bit of a shift where we're centralizing some things around engineering and design and moving to a bit more of a functional organization, some product stuff that we're centralizing. again i don't think this is better or worse it's just that we've had one set of trade-offs for like five years now we're going to swing over to another set of trade-offs and i think we'll fix a lot of the problems that we had with uh you know the more solid approach uh some of our stuff doesn't integrate as well as i would like there's a lot of variability in the quality of our design product experience between different number of products some i i'm quite proud of and some i'm a little embarrassed of, you know?

58:02And so just kind of bringing that up to a more uniform sort of quality gates, I think is, is a big focus of ours in the next few years. And so we're, we're doing a bit, a little bit of that shift. I've had some great executive hires that have joined that are helping with this. So it's, it's, it's just, I think a, an interesting phase in the company. And, you know, five years from now, we do this call again in like 2030. I'll probably maybe we'll swing it back. And like you said, automatic is structured a little bit like a holding company. So it is plausible that one of these businesses could spin off, be sold or IPO on its own separate from, from automatic itself.

58:43So we have a lot of optionality in terms of how we're structured. I have one nerdy one before we, before we hop I know you've had some interesting structures around share repurchase for employees. Is that right? I guess this is a very tactical thing that I heard come up, but I don't know if you posted about it anywhere. Is there any way for people to get educated on that? And then maybe we can talk about the philosophy. I don't know if you've disclosed any of the details around it, but it's something that, as companies stay private longer, I mean, you guys have been at it for 19 years, and I think for the foreseeable future, it sounds like we'll most likely be private as well.

59:26And so finding employee liquidity is an interesting consideration a lot of our different organizations are seeing. Yeah, we've been blessed with really great investors as well. Some that have held for the very long term. Or, you know, we bring in new folks to buy out the older folks. So create sort of some internal liquidity. Yeah, I think you're referring to what we call the A12 stock program, which A12 is sort for automatic. and gosh, it's actually on our to-do list to like open source this and like make the docs public kind of like the safe things or whatever. Our legal team's a little busy right now.

1:00:00So I don't know if we'll get around to that in the short term, but to describe it very simply, you know, I love the ownership mentality of employees having as much ownership and equity as possible. What we found with options is there was sort of an arbitrariness to them. You know, your foreign IE price can swing very wildly based on most recent foreign, you know, fundraise or things like that. And so people who joined literally two weeks apart might have like vastly different strike prices. And of course, in options that go underwater, there's sort of a lot of things, a lot of it's designed around the U.S.

1:00:37tax system. I have colleagues in 90 countries to which the long term, short term capital gains might not apply. Options that expire, you know, so there's like sort of things around that. So basically, long story short, to describe it, we tried to create this internal stock market where there's a class of stock called A12, which the company issues and has some restrictions. It can only be bought and sold by the company. But we also are able to provide essentially downside protection. So when you buy a share of the stock, we can sort of backstop it, provide essentially like a 1x liquidation preference.

1:01:16The same thing our investors might get with preferred stock. So I can provide that to employees. And so we provide, and then we can also have like set windows when you can sell it. So what we move to is instead of doing a ton of stock and compensation, we pay people sort of everything in their base comp and cash. So it's fungible and they can choose based on the life situation. They could put that into public markets or if they want to put it into automatic stock. We have sort of – that has a growth profile, a liquidity profile, which the most sophisticated investors in the world are very interested in.

1:02:02So it allows us to provide – I think of it a lot more like a benefit.

1:02:08And yeah, we obviously had to put limits on it. I was going to say at some point, I mean, I don't know the number of shareholders. I think it's 2000 and maybe 500 non-accredited investors or something that theoretically the SEC, you must register to go public or something. I'm curious just like how you guys have been able to avoid that situation.

1:02:35Yes, I think we have fewer employees than that limit. Interesting. Um, there's something else there with this class of stock where I think there might be a wider exemption or something like that. So, um, because it's not investors, I think when you're employed, there might be a, even though, even though it's actually shares with preferred theoretically around it. But I guess, I guess a lot of those people are probably still employees or something. So, uh, I'm sure it's something the legal team has thought through. Another reason people should be excited for the resolution of any legal controversies you've been involved in is so that your team can get to open sourcing this.

1:03:17Because I think a lot of people would benefit from at least understanding the different puts and takes that you guys have thought through and the structure around the A12 program. It's been a very cool program. And it's also, you know, you keep the shares forever. So even if you're not an employee anymore, you still get access to liquidity. And again, this was learned from like when we do Tinder offers or other things for holders of options or common stock, that might happen at unknown timeframes. And then you might often those Tinder offers are only available to current employees, not former employees, other things like that.

1:03:49So, you know, these shares you truly own, they belong to you. And it's now that the risk of it is that if the company, in theory, if you goes out of business, you lose this. But we're pretty stable at this point. So that's less of an issue. Well, Matt, thanks for doing this. This was a lot of fun. Appreciate you making the time. Enjoyed it. Thank you for joining this episode of The Logan Bartlett Show with Matt Mullenweg. If you enjoyed this conversation, I'd really appreciate if you subscribed on whatever podcast platform you're listening to us on, as well as shared with anyone else that you think might find this interesting.

1:04:29We look forward to seeing you back here with another great guest on The Logan Bartlett Show. Have a good weekend, everyone.

1:04:50you