Investments in the WordPress ecosystem

One of the positive side effects of the saga between Matt Mullenweg and WP Engine is all of the new information being shared from and about key people in the WordPress ecosystem. Given the importance Mullenweg has placed on investments—naming specific investors in multiple posts—let's take a look at some notable investments disclosed or discussed during this saga.

Before we get ahead of ourselves, it's important to remember that, with a few exceptions^[1], minority investors have limited control over the companies they invest in. However, even a minority investment can create a conflict of interest for the investor or company, and certainly creates the possibility of a conflict of interest.

Consider a thought experiment: travel back in time to the summer of 2004. You make an early investment of $500,000 into a budding social network startup called "Facebook", for a 10.2% stake. You now have a vested interest in the success of this startup, wanting it to succeed and grow so that you not only make back your original investment, but make 10x or 100x your original investment.^[2] This is how investment works, at both larger^[3] and smaller scales^[4].

Your new investment in "Facebook" doesn't inherently transform you from a human being who's looking out for the best interests of society into a self-serving monster, who only cares about money and profit. But, it could! And, what's most important here is the possibility or appearance of a conflict of interest. This possibility or appearance is precisely why journalists list potential conflicts of interest when reporting stories, letting you, the reader, make a determination about how to interpret their writing.

With that in mind, there are some notable "WordPress ecosystem" investments, which could impact how you receive commentary from specific individuals. Some of these investments are well-known within the community, but others have been newly discussed during this saga.

Automattic & WP Engine

Well known within the community, Automattic invested in WP Engine in 2011, as part of WP Engine's Series A financing. This investment has always been framed as a "strategic" one—in investor parlance, this often means the investment is more about the investor than purely a money play. In WP Engine's case, they likely wanted insight and guidance from the co-founder (and one of the stewards) of the WordPress open source project.

What I haven't seen actively reported is when Automattic "exited" its investment in WP Engine. Outlined clearly on the "A8C Ventures" landing page^[5], Automattic notes it exited its investment in 2018, when Silver Lake acquired a majority stake in WP Engine.

Prior to the ongoing saga, I had not discovered the A8C Ventures page. Page meta notes that it was first published on June 17, 2022 and last modified on September 17, 2024, just days before Mullenweg took the stage at WordCamp US. Interestingly, the prior version in the Wayback Machine (from August 28, 2024) does not list dates for the WP Engine investment or divestment. Make of that what you will.

WP Engine & Silver Lake

At this point, it's no secret that Silver Lake purchased a majority stake in WP Engine in 2018. What feels unknown is the precise stake Silver Lake acquired. In its press release at the time, WP Engine called it a "strategic growth investment," but it's clear that some investors exited their positions (e.g. Automattic). After its press release, WP Engine never noted or discussed additional investment, nor investors exiting their positions.

It's entirely possible that Silver Lake fully acquired WP Engine, as the A8C Ventures page implies. However, it's more likely that certain shareholders continue to own a material stake in WP Engine and have yet to fully exit their positions. In situations where private equity takes on a majority stake in a company, founders and prior investors often negotiate to maintain a material stake.

Given Mullenweg's push against Silver Lake, in particular, understanding the actual stake Silver Lake has in WP Engine feels like a missing piece to understanding the overall situation. Put another way, if key long term leaders like Jason Cohen and Heather Brunner retain material stakes, don't they also have a voice in the boardroom—is this saga solely about Silver Lake?

Automattic & BlackRock

It should come as no surprise to anyone that BlackRock is among Automattic's ownership group—they are listed as a "key investor" on its website.^[6] In fact, Mullenweg listed BlackRock on his blog, alongside other investors who participated in Automattic's Series E round.

What has not been known is the precise stake that BlackRock held. Mullenweg published on Twitter, and has subsequently mentioned in interviews, that BlackRock owns a 0.6% stake in Automattic. BlackRock, in turn, publishes a "Consolidated Schedule of Investments", which includes more details about its investment in Automattic.

According to that document, as of March 31, 2024, BlackRock holds 94,117 shares of Automattic, at an original valuation of $7,999,945 (let's call it a cool $8 million even), but a present value of $4,127,030, or ~51% of their original value. The valuation is based on BlackRock's internal estimates, and not necessarily representative of the value these shares would have on the open market. Extrapolating a bit, we can guesstimate that Automattic had a valuation of ~$1.3 billion when BlackRock acquired its shares in 2021, while BlackRock now values Automattic at ~$690 million.

Correction: After this post was published, I was made aware of additional investment from BlackRock, spread across a separate financial vehicle. Please read my correction.

If this feels like inside baseball... it is! But it's fascinating nonetheless, as Automattic is such a large presence within the WordPress ecosystem and community and rarely talks about its finances or valuation.

Syed Balkhi & Automattic

This investment was unknown to me. In a post about contributing to the WordPress ecosystem, Syed Balkhi, the founder and CEO of Awesome Motive revealed in a footnote that he is an investor in Automattic:

It’s important to emphasize that I’m an investor in Automattic. Of course I want a great return on my investment, but I believe in Matt’s vision that both good return and incredible contributions can happen at the same time.

Balkhi did not note what his stake is today, and this is the first I've personally seen mention of it.^[7]

Inherently, this is good. More investment in the WordPress ecosystem is good for the overall success of WordPress as a platform. And it's fantastic that Balkhi explicitly calls this out, just as a journalist would.

Still, I wonder when this investment occurred. Had it been previously disclosed more broadly, would it have affected how the community views Balkhi's leadership?

What does it mean?

Ultimately, my question is this: What other investments exist between WordPress companies, or from private equity or venture firms?

Circling back to the beginning, "a minority investment can create a conflict of interest for the investor or company, and certainly creates the possibility of a conflict of interest."

The WordPress ecosystem is, without a doubt, incestuous—companies invest in each other, friends invest in each other's businesses, behemoths in the industry invest in and acquire smaller players. On the one hand, this can be a sign of a vibrant and ever-growing community, one that we want to continue to grow.^[8] On the other, it's a consideration that should be made each and every time you read or interact with community members, including me! Is it the only consideration? Certainly not, but it should be part of your mental framing.

Paraphrasing the great detective, Lester Freamon:

You follow WordPress, you get committers and contributors. But you start to follow the money, and you don't know where the fuck it's gonna take you.

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1. Perhaps very inside baseball, but Mullenweg has noted that Automattic's funding since 2011 includes a proxy assigning him the right to vote those shares. In practice, this likely means Mullenweg maintains majority voting rights, with a minority of shares. This path is common at tech firms, with Mark Zuckerberg using a similar setup at Meta. ↩︎

2. Peter Thiel went on to sell his stake for over $1 billion, or an over 200x return. ↩︎

3. Few companies require as much capital as OpenAI does today. ↩︎

4. Pre-seed rounds tend to be quite small, often under six figures. ↩︎

5. Those curious about Automattic's investments both within and outside of the WordPress ecosystem would do well to look at its list of investments. Notable WordPress ecosystem investments include the likes of Pressable, Delicious Brains, Codeable, Frontity, Strattic, PeachPay, Extendify, InstaWP, and GridPane. While there are non-tech investments (Taika?), Matt Mullenweg seems to prefer to invest in other industries through Audrey Capital. ↩︎

6. At the time of this post, they list: Tiger Global Management, Salesforce Ventures, Insight Venture Partners, ICONIQ Capital, True Ventures, Wellington Management, BlackRock, Alta Park Capital, Addition, Schonfeld, New York Times Company. ↩︎

7. Syed maintains a page on his personal site that lists all of his companies and investments which, at the time of this post, did not list Automattic among his investments. ↩︎

8. Or, perhaps, one whose consolidation is part of an underlying problem, but that's a different post entirely. ↩︎