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- [00:00]
A
All right, today's episode of Special. We've got Matt Mullenweg. Matt founded a company called WordPress, which is used by something like 45% of all websites on the Internet. So it's this huge thing. And we talked to Matt about a bunch of interesting things. Sean, what do we talk to him about?
- [00:14]
B
He had an offer to sell his company for $200 million when he was 24 years old. He turned it down. We asked him what that was like. We talked to him about some of the recent drama that they've had. We talked about how they've been acquiring companies. They bought the small company in South Africa and how it turned out to be a huge thing for their business. Like, you know, a billion dollar plus win. And he's just a student of the game. He's been doing it for like 20 years. This guy started this company when he was 19 years old and is still doing it. And it's become this absolute juggernaut. So enjoy this episode with Matt Mullenwig.
- [00:42]
C
Let's travel. Never looking back, tell me if this.
- [00:45]
A
Is right because this sounded like almost too good to be true, but I'd read that in 2008 you had an acquisition offer. I think you're only 24 years old for $200 million. At that point, I think you'd only raised $1 million, and I think you raised $1 million at $3 million in valuation. Something like, relatively, you're 24, you're going to be worth nine figures, something crazy like that. You turn it down. But then you talk about how you didn't have control of the company because you were young and maybe just made some mistakes with funding something like that. What's the conversation like with yourself when you're like, I'm turning down something that might make me worth over $100 million at the age of 24.
- [01:19]
C
You talked about and your name, the first million. It's kind of funny. Like, I guess technically on paper, my first million was that first funding round, right? In theory, I owned like half the company that was now worth $4 million. But as you know, like, that's paper money. I was still eating ramen and Mountain Dew and pizza, like living a very broke San Francisco college kid life. But it was in 2008 that we had this acquisition offer. And you're right, it was about two and a half years in this company. Someone tried to buy us for 200 million. And the investors at the time did something which now is quite common, but at the time was. Was pretty forward Looking, which is a secondary. So they said, wow, you know, we're 20 people. We've been doing this for two and a half years. A $200 million exit would be pretty amazing. And like I said, I would walk away personally with a lot of money, but we think this could be actually way bigger. So let's build that. And so we took that acquisition, made it a valuation, turn that into a funding round where we put a lot more capital into the company so we could really build things out. And I sold some stock myself. So that was my first million. Liquid was kind of in 2008, I think I was 24. And that was a step change. I was able to pay off my credit cards and buy my mom a house and like, you know, all that sort of stuff that you want to do that you dream of, and it sort of removed some of those sort of early economic things, and I was really able to focus on just the business and swinging for the fences, which is what they wanted me to do.
- [02:54]
A
All right, so when I ran my company, the Hustle, I think we had something like 2 million subscribers, and we made money through advertising. We didn't actually make that much money per person reading the newsletter, because advertising in general is kind of a crappy business model. And so I remember sitting down and I'm like, what are all the different ways that I can make money off the Hustle that aren't advertising? And so to make sure that you don't make this mistake, Sean, me and the HubSpot team, we went and looked at a bunch of different ways to monetize your business. And we put it all together in a really cool document where we lay it all out along with our research. And we call it, very appropriately, we call it the Business Monetization Playbook. Go to the description of this episode, and you're gonna see a link to that Business Monetization playbook completely free. You just click the link and you can see it back to the episode.
- [03:43]
B
You know, I hear these stories, like, Zuck turns down a billion dollars from Yahoo or whatever. This story about you at such a young age, turning down the opportunity to exit and have this huge payday. I think you're a better man than me. I don't think I would have been able to resist that. Was that an easy decision for you? Was that a hard decision? Like, what? And like, you're like, I think this could be bigger. Let's go for it. Is that just like, not blind faith, but just like an extreme amount of self confidence and faith? Like, how do you even.
- [04:11]
A
Or did you even want to do it? And the investors were like, nah, too bad.
- [04:14]
C
No, it wasn't an easy decision at all. Of course, you have to really seriously consider these things also as a fiduciary, you know, like, you have a responsibility to shareholders. Consider every acquisition. And we've had other acquisition offers and people trying to buy automatic, you know, as recently as this year. I think you have to ask yourself, with any acquisition, like, will the mission that we're doing be accelerated by this transaction, or will it be hampered? It's like we acquire a lot of companies like WooCommerce, I think did a lot better because we acquired it than they would have on their own. But there's probably other things that we try to buy that we didn't buy that did really well on their own. Reddit was one. Actually, we looked at Reddit at one point.
- [04:57]
A
Did you look at them in their Conde Nest $10 million valuation days?
- [05:02]
C
I actually really wanted to buy Reddit. I couldn't convince my board. They thought it was like, too outside of our early stuff. So we never got that far in the discussions or anything. But, yeah, there was a point when they were like four employees and for sale and kind of in the Wired offices on Third street in San Francisco. I just thought it was really cool. So obviously they did very well.
- [05:21]
A
But when you created WordPress, it seemed like it took off, like, within a year. I forget which year you started it, but like I said earlier, I think I was using it starting in, like, 10 or 11. 20. 10. 2011, like, pretty early on. And I at the time was like a Tennessee college kid. So if I had heard about it, then a lot of people had heard about it. What was the first version of WordPress?
- [05:39]
C
Like, 2003.
- [05:41]
A
Oh, wow, okay.
- [05:42]
C
I wrote a blog post on this called, like, Meaningful Overnight Success or. Because basically, like, what people see as overnight success is often a thousand days of irrelevant. So people haven't heard of you. You know, at one point there was a joke that WordPress had more developers than users. The first few blogs were just ones I set up for my friends in high school because no one was using software. So I just kind of like, would manually set it up for people early. We used to do these upgrade parties where just I'd say, like, a new version of WordPress would come out. I just open up my apartment, go to Costco, bought some booze, ordered some pizza, and said, hey, just come to my apartment and I'll upgrade your site for you. So really, you know, the early days were very much bootstrapped, you know, just doing everything. It looks like overnight success. Later we had some breakout points, you know, when Movable Type changed our license and other things. I think fortune favors the prepared. It was because we had put in a lot of grind and a lot of work, a lot of community building, a lot of contributions, a lot of code, a lot of everything in the many, many days before that.
- [06:46]
A
But what's crazy to me is I remember like four, six years ago it said that WordPress was used by something like 30 or 20% of all the websites on the Internet. Then recently I went and looked at it and now it's like 40%. And like the thing that struck me, I was like, are you the most under monetized business on earth? How are you not like the biggest company on earth? Because I used WordPress and I used WooCommerce, which you also own at my old company. My Woo commerce license, Sean, I think it was a $300 lifetime or $300 a year. And the product that I was using, it was making many millions of dollars. And I've got a friend, Sean, you and I both have a friend who made a hundred million dollars off of the $300 a year license or whatever it was. It was like nothing. You guys have to be like the least monetized company there is.
- [07:34]
C
I think the way I'd put it is WordPress is almost like kind of the dark matter of the web. You know, when you build like a list of like, what's the top website, you know, we're not going to show up. I mean, WordPress.com will be in the top 100 or whatever. The beauty of it is that the ecosystem of WordPress is probably like $10 billion a year at least of revenue. Now my company, Automattic is 5% of that. But if you add up all the companies and all the people, I'm not even counting like all the stuff that you talked about, like people selling things on WooCommerce, which we know is like, I think last year was over 30 billion of goods and services sold through WooCommerce. But actually more than half of Automattic's revenue comes from things that aren't just WordPress. So we have a variety of different businesses. Some really cool mobile apps like Day One or Pocket Cast, a new one called Beeper.
- [08:22]
B
What were like the top two acquisitions? Right? Like even Buffett, for example. If you study Buffett's portfolio, it's like a huge amount of the gains Came from like a couple of like really key acquisitions at key time. Right. See's Candy at a specific time has given them over a billion dollars, I think of free cash flow over, over the years.
- [08:38]
A
What's the revenue number that you could say the whole company does?
- [08:41]
C
We've publicly say we're. We're over half a billion in revenue now.
- [08:43]
A
Okay, got it. All right. So yeah, to answer challenge question, what's been the surprising thing?
- [08:47]
B
What are like the crown jewel, like best acquisitions that you feel proud of?
- [08:50]
C
Our most successful is probably WooCommerce. And so this came a lot from you know, WordPress is a platform. And so I did a lot of study of platforms and so that led me to do a lot of deep reading on Microsoft actually. And it was funny, like if you look at some of the press around Windows 95 coming out, they talked about how for every dollar that Microsoft made from windows, there was $20 made by the Windows ecosystem. By the way, that ratio is similar to what I talked about earlier where Automattic makes about 5% of the money in the WordPress ecosystem. I sort of found that platforms often do this. They create a lot more value. A true platform.
- [09:29]
B
Have you heard that story of Bill Gates talking about the. When he meets Mark Zuckerberg, he talks about the Facebook platform. Have you heard this? There's like a quote I remember reading which was like Gates was like, this is not a platform. He goes, a platform is when the companies built on top of it generate far more value than the host platform. Whereas the Facebook platform at the time was like Facebook was this gargantuan thing, all the small things on top. And Facebook was just sucking a lot of the value back in. And he, he kind of famously was like, that's not what a platform is.
- [09:58]
C
I would agree with that assessment. And also that's not a platform which now a lot of businesses are built on. There were some that sort of came up in the early days like Zync or whatever or Spotify even, but it's now not something that like every business is built on because you can get rug pulled like a not true platform. They might give you some distribution early on when you align with their interests, but then they can easily pull the rug on you, which I think Facebook ended up doing to a number of companies. So yeah, I want to build a true platform. But of course Microsoft famously had Microsoft Office. So they had an application built on top of Windows which ended up being very lucrative. So it was like, what's going to be, you know, I have this platform, WordPress, which is now becoming like an operating system for the web. We were obsessed about backwards compatibility and auto updates and things like that. Learning a lot from successful operating systems in the past. What's our Microsoft Office? And that ended up being WooCommerce, which was a sort of small company, like I think 40 people based out of South Africa, a plugin for WordPress. It actually started as a theme company. It's called Woo Themes. They developed this actually a fork of another open source E commerce thing and they started doing it just to sell more themes because themes were kind of the big business for WordPress at the time. And this E Commerce plugin took off a bit. Actually. We looked at buying it years prior. Candidly, the code was really crappy and so we were like, oh, this is really crappy code. We're, you know, automatic's very much like an engineering led, like technology R and D company. So we're like, oh, this is. But it just kept taking off because they did such a good job like building something people want. So even though the code wasn't scalable, well organized, you know, they built something they were really great at, that product market fit. So WooCommerce was taking off. So that was an early acquisition that we did. Funnily enough, the competitor there was. There were. There's some private equity that was trying to buy this plugin. So we kind of won over the private equity because they wanted to join like our culture and everything like that. And Woo, you know, like I said at the time it was 40 people, pretty small. They only had like four engineers by the way. So a lot of those people were like customer support or other things. We were able to take what we were really great at, which is like engineering, scalability, all that sort of stuff, and apply it to what they had done really brilliantly, which is like create this thing that people I love to use. And that's like I said, I think last year did over 30 billion of goods and services sold. So that's definitely one of our best acquisitions that we've done. But I will say that E Commerce is an incredibly competitive space and we're blessed to have an incredible competitor in Shopify, which is a company I have a ton of respect for the founders and entrepreneurs and the whole thing. They're actually a really, really great company. Toby and I think have a lot of mutual respect for each other. Know drivers have to be better.
- [12:40]
B
So do you look at that. This is again like we're kind of giving you a compliment and an insult at the same time. So the backhanded compliment is in full effect here. So on one hand we're saying oh my God, there's 43% of the Internet uses WordPress or you know, yalls products. There's 500 million websites using WordPress. Like that is just such a mindboggling number. And so on one hand that's in absolutely incredible. And on the other hand Sam was saying, are you the most like under monetized given that? Are you the most under monetized? Because you look at like a Shopify. Shopify alone right now, market cap is 150 billion. The ruthless capitalist could say, Matt, you're doing all this work. Your whole company including woocommerce and all this stuff is going to be worth several billion dollars. But the closed source Shopify variant of the E commerce side is worth 150 billion. What should I take away from that? And what do you take away from that? What meaning put on that?
- [13:37]
C
There's definitely some things that are easier in a proprietary sort of closed ecosystem software model. You know, it's easier to, you know, Shopify is really great at forcing people to use their payments for example. And in Woocommerce, you know, you can use ours, but you can also use a lot of other stuff. I think their sort of average revenue per subscribers is like 10x. What WooCommerce is, how I think about it, is very much sort of short term versus long term. So one, we have this philosophy of open source. I want all of the work I do, all of my creative output to increase the amount of freedom and liberty in the world. It is something I believe very morally. So that's why I've dedicated my life to open source. Because open source software, you sort of have a bill of rights attached to it, right? The freedom to use this software for any purpose, to see how it works, to modify it, to redistribute its modifications, the four freedoms of the gpl. To me that's a moral decision. The software I create, I want not to have a proprietary license. Shopify is amazing. If Shopify changed their policies tomorrow, their customers are stuck with it. They have no recourse or their proprietary license. Or with open source we could change our policies tomorrow. I could become evil or whatever and Automatic could sell or be a terrible company. You would still own all the code. You know, WordPress and WooCommerce, etc. Belong just as much to you as they do to me. And that sort of freedom and liberty is I think better in the long term. So I'd say open source has a slow burn, so it often is kind of slower to start up, but then over time it builds sort of this compounding momentum that is a bit unstoppable and does two things. One, it can be very successful on its own, right as WordPress has. You know, it's 10x the number two in the market. But two, one great thing it does is it forces the proprietary folks to be a bit more open. So I use proprietary stuff myself and a lot of Apple things are proprietary. I really love their products. I think Apple is probably a bit more open than they would be otherwise because Android exists, there's an open competitor which is by the way, open source. It kind of influences the market. So even if we don't have make as much money as Shopify or don't have the market share of Shopify in the e commerce space yet, although, you know, check in in 10, 20 years, let's see where we are. We force the proprietary folks to be a bit more open with how they do things.
- [16:00]
B
The short answer there is basically I do it because that's what I believe. I believe in open source. I just believe that the moral decision comes first and secondly in the long run, let's see in the long run we'll see. Is that a good, good summary.
- [16:15]
C
Proprietary. It's just as easy to have a failure of a proprietary company as it is an open source one. So I think, you know, being proprietary, open source is a little bit orthogonal, are not causal to like whether you're a successful product or not. People get really attached to it. But I would say in the short term it's definitely usually a bit easier to monetize purely proprietary stack. But over the long term you can create a much, much bigger thing if you have this kind of like flywheel of an open source community, adoption, et cetera, innovation, you know, a ton of innovation happens with open source.
- [16:50]
B
All right, let's take a quick break because I got to tell you about a friend of the POD who's got their own podc. If you know Steph Smith, she is a legend. She's been on MFM many times and she's got her own podcast called the A16C podcast. And it's all about technology. If you think about it, technology has evolved like crazy. I mean I grew up in the 90s. I had CDs, phones had cords. You couldn't use the Internet if your mom was on the phone. And now there's like 3D printers and there's rockets that can go up into space AI. There's so much crazy stuff going on and you gotta have a place that helps you stay ahead of the curve. And that's what the A6C podcast is trying to do. It's a podcast from the VC firm Andreessen Horowitz, and it's trying to give you an inside look at the trends that are shaping our future. They've had guests like Mark Cuban and Neal Stephenson on, and they talk about topics like deep fakes or the science behind GLP1s or autonomous drones. No small boy stuff at all. Steph is the host. She's awesome. I think you'll enjoy the podcast, so check it out. It is the Async Z podcast and I like this tagline. They say it's like eavesdropping on the future. That's pretty cool. That's a good tagline. So check it out. The A16Z podcast, wherever you get your podcasts. By the way, Sam, isn't it nuts that Matt is clearly like this thoughtful, almost like soulful entrepreneur who has been building this thing since he was literally like a kid, 19, 19 years old.
- [18:05]
A
Like a guy you'd call wise when he was 21?
- [18:08]
B
Yeah, exactly. Like, oh, he's an old soul type of thing. Works on open source software, like you said, it's widely used. It's almost free. So, like, only good. All I hear is like, only good. And then you had this, like, random villain arc that people tried to paint on you in the last, you know, year with this, like, drama that's going on. I couldn't believe it. I was like, if I was gonna put money on who's like, the least drama attracting founder, it might have been you. So I thought that was nuts. Sam, quick, your reaction to that real quick. And then I want to hear Matt's thoughts on it.
- [18:38]
A
So I didn't follow it too much. I'm a WordPress user, but I just. And I'm friends with Jason Cohen of WP Engine. You guys had a fight. But I was actually shocked. Matt. I thought that some of the stuff that you said, I was shocked. You, like, people were insulting you and you felt like, insulted them back. I was like, I've read a lot about Matt's work. I don't know Matt. And I've listened to him. He doesn't seem like someone who would ever, like, insult someone. And I was actually surprised that you were going as hard as you were. And I guess your perspective is like, they're coming after everything I made or they don't contribute, whatever. But I was actually surprised that you were pissed off and I didn't think that you would be the type of guy that would come off pissed off.
- [19:17]
C
You know, a failure mode and a thing that can kill many open source projects is one that get taken advantage of. And so just like a schoolyard bully, like you kind of have to stand up for yourself. It's kind of funny because you say you don't think of me as doing this, but actually if you look at the history of WordPress, there has been maybe four or five times the history where I had this kind of villain arc. People were like, we had a fight to protect like our principles and like the sustainability and like the future of WordPress.
- [19:48]
B
Can you give the one minute summary of what happened? Because I even half followed it and I'm sure there's a bunch of people listening that don't even know what we're talking about. Could you give like the one minute and try to be objective with this? Like, like not, not just the, your side of the story, but what, what happened? Can you explain?
- [20:02]
C
You know, it's an ongoing legal battle, so I can only say so much. Basically there's a company called WP Engine, started off like very positive in the community. Jason Cohen I think is awesome, by the way. But in 2019 they were bought by a private equity firm called Silverlake and sort of in the subsequent five years started becoming, I would say more parasitic of WordPress. Also creating with how they were marketing themselves and branding themselves. A lot of confusion in the marketplace in a way that was threatening our trademark, the WordPress trademark. So people would sort of say, oh, it's WordPress engine. And they wouldn't correct them and they would think it was official. I even had very close friends who were WP Engine customers who thought that was my company. And I would frequently get support requests for WP Engine, like my site's down and things like that for a long period of time. And two years prior to this fight started, I was doing our best to partner with them and resolve all these things and, and resolve the trademark stuff. They just weren't responding.
- [21:02]
A
And basically WP Engine is a web hosting service, maybe only for WordPress sites. And the accusation, I believe, was that you felt they weren't contributing to the project as much as they should have been, given that they make like a lot of money. And also people confused the two companies.
- [21:18]
B
On the contribution thing is that like, like, I guess, like what's your leg to stand on on that, you know, for example, you know, like does somebody have to contribute? Is that like a rule or is that a suggestion?
- [21:27]
A
Right?
- [21:27]
B
Is this like you're at church, you should put something in the tray, but you don't have to technically, but it's frowned upon. Like what is the take there?
- [21:35]
C
So WordPress, we do have this program we call Five for the Future, by the way. This is all voluntary open source license. You don't have to do anything, you do whatever you want. But we say that if you're building a business on WordPress, you can allocate somewhere between 01 and 5% profit or revenue, it doesn't matter. However you want to define it. Could be time, could be hours, could be whatever, but, and put that back into what we call core. Core WordPress, which is something that belongs in the open source project so it's accessible to everyone, doesn't just benefit your company. That's part of what's made us sustainable and allowed us to be a open source project which has really thrived more than some of other great CMSs that were open source that came up at the same time, like Joomla or Drupal or something like that, which haven't had as much success as us, by the way. I think this is great self interest as well. WP Engine is fairly unique in that pretty much every other company in the WordPress ecosystem does this quite a bit. And in fact if you look at old versions of WP Engine's website, they were very supportive of this and actually even say on their website they would dedicate two or four full time people and everything like that. Fast forward to 2024, they had less than that on Core. So I think that's, that's a whole like sustainability, health of the ecosystem, health of the product issue. It's not a legal issue at all. The trademark abuse of not just the WordPress but also the WooCommerce trademark. So you could argue that WordPress, WP, whatever, but like they're also using the WooCommerce trademark, which is fully owned by Automattic. You have to protect that. If you don't protect your trademarks, you lose them. And so we're having discussions around that. We have trademark licenses with other web hosts, great relations with every other. And they are just a web host, they're not a tech company, they don't really create a lot of IP and they're a web host which people think is the largest, but they're actually, you know, probably the sixth or seventh largest WordPress web host. There's a lot of bigger ones. They're a single digit percentage of all the WordPresses in the world. They probably have like 700,000, 800,000 or something. So people have made this into a bigger deal than it is. You know, some of these previous controversies that got mainstream media coverage as cnn. I had this hot nacho scandal in the first couple years of WordPress or a thesis fight or the Easter massacre of themes. All these things I'm mentioning you probably haven't heard of. It used to be like half my Wikipedia page. Now it's not. Today if you go to my Wikipedia page, their PR firm has a whole paragraph about this. I think in five years maybe it'll be a sentence or not even out there at all. So it's not my first rodeo. Sometimes you have to fight to protect your open source ideals and the community and your trademark. By the way, I expect this to resolve in the next few months. Although it's easy to find. Like if you go on Reddit or Twitter, I get a lot of hate.
- [24:23]
A
A lot of people were pissed at you. I tweeted out that you were coming on to the pod yesterday. There was a lot of angry people and I was, I was a little surprised by that to be honest.
- [24:32]
C
Yeah. And you know, some of the people are uncomfortable with, you know, us having to, to fight, protect ourselves. WP Engine took some very aggressive legal action. So it turned out when we thought we were sort of good face negotiating, they were preparing a legal case to attack us. Because you know, three days after I gave this presentation they launched this huge lawsuit with Quinn Emanuel. It's kind of like the, one of the biggest, nastiest law firms and you know, private equity is so famously like goes in, hollows out businesses, extracts all the value, kind of kills it. There's this crazy story, I don't know if you saw it recently where like one of the reason there was like shortages of fire trucks in LA was like the fire truck manufacturers have been like rolled up by private equity and they've been like jacking the prices and that was like huge waiting list for like fire new fire trucks and fire truck repairs. And there's lots of examples. And not all private equity is bad. There's good investors and bad investors in every asset class.
- [25:26]
B
Look, I didn't follow the story in depth. I didn't need to. I'm not a lawyer, don't need to be. It's common sense to me. Whose side am I going to be on the. The private equity backed company that you know Sounds almost like it's made by the by you guys, but it's not. Or the founder who's been working on this for like, you know, 20 plus years of his life, open sourced, it is, you know, used by everybody. It's kind of like a staple of the Internet and, you know, captures like a tiny bit of the value along the way. Is pretty obvious to me, you know, which side I was going to. Going to come down on. So I think it was, it was actually a common sense test, I think, for most people. And I can't believe how many people are like, you know, on the PE side. It actually reminds me a little bit of like the AI stuff right now.
- [26:08]
A
Wait, Sean. We did a whole podcast about the founder of this PE firm, though, and how, like, fascinated we were with them.
- [26:14]
B
We do profiles on ruthless killers, and then we're at the end, we're like, isn't that awesome? And we're like, yeah, do you want to be that way? Hell no. That's not me. But, like, I'm glad that these people exist. Like, you need all these people in an ecosystem. Like, it's not. They're not all bad. And there's impressive things about how I think his name, Egan Durbin or whatever, I think that's the guy that we talked about. You know, it's impressive in the same way that David Goggins is impressive, but I'm not going to go out there and run until my toenails bleed. Like, I like that he exists. That doesn't mean I want to be like him or even that I think that's the right thing for most people to do.
- [26:46]
A
I think it was on, on your blog. It could have been on the Tim Ferriss podcast. You wrote about how, I think WordPress or Automattic has, like, roughly 2,000 people. And I think you wrote about how you tried a bunch of different ways to hire people you like, did all these tests, like Google does, like these, like, brain teasers. And you tried a bunch of other stuff and you said two interesting things that stood out. You said, what I found is that the people who are the best writers oftentimes are the best people who we hire. Not PhDs, not master degrees. It was a correlation between your ability to write and communicate via the written word. And then the second thing you said, that was pretty wild. You used to hire people just by. By like, emailing or texting. Like, it was like just through chat, not ever face to face, not phone calls, things like that. Do you still hire people strictly through text Communication.
- [27:35]
C
For some roles we might do a zoom. If it's a sales role or something like that, you know, obviously it's important to see how someone interacts, but basically, you know, for a lot of our roles, you know, written communication is going to be the primary thing. But also if like people want to talk to someone, like, we're not going to be like, no, you can't. Yeah. A lot of our hiring process can be completely asynchronous and completely text based. And for the first thousand or so hires, I did a final chat for every single person.
- [28:01]
A
Is your chat like Slacking or G chatting or something?
- [28:04]
C
Yeah, it ended up being on Slack when, when Slack was invented. You know, before that I think it was on like Skype or AIM or something, you know, in the early days or irc.
- [28:12]
B
I think the way you said it was we do auditions, not interviews. So what, what does that mean? How do you, how do you do auditions?
- [28:18]
C
Well, we do a trial project. So we actually hire people on a standard sort of 25 an hour contract. And so we pay them to do, you know, we have screens with, you know, resumes and a little interview and stuff. But then we say like, let's actually do some work together. And, and there's various versions of this for different roles. We've done sandbox versions. We've also done that where they were actually talking to real customers, you know, like a support person was actually like answering real tickets. We've always been smaller than a lot of the big tech, but we compete with them. And so we need to have like the same caliber or better of talent. So part of, I think Automattic's advantage is we've created an environment and also sort of a way of hiring that finds people who might be overlooked by sort of a meta or Google or something like that. And we give them an opportunity not just to be hired, but also to participate in a company in a way that they can still be just as influential and have as much impact. Because even like, you know, there's other companies that might have remote workers, but if you're not at headquarters, you're not going to be close to the sun, you're not going to be next to the CEO, you're not going to be able to grow or have an impact. But we've tried to create it where our center of gravity, our headquarters is really on the Internet. And you know, I have colleagues in 90 countries. 90. Even though we're only, you know, 750 people. And another sort of innovative thing, we do we didn't do this in the beginning, but we moved to it probably in like 2012, 2013, is we pay people the same salaries regardless of location. So it's kind of funny because with all like the equality, DEI stuff, whatever, so much of I feel like is virtue signaling. Because if you ask these companies and say like, hey, you know, I'm not going to call anyone out by name, let's say big tech company, do you pay someone in Pakistan the same that you pay them in California? Usually the answer is no. If they're doing the same job, you know, the same like code wrangler, engineer or whatever like that. And they usually say no. And they usually have some reason like cost of living or local markets or whatever. But we sort of moved to where we said, hey, same work, same pay. You know, it's kind of a something that, you know, the past hundred years, that wasn't always true for men and women even, you know, or racial things or something like that. So I think the same moral reasons why you say like, same work for same pay of people of different skin colors or something like that within a country. I think you should do that globally. And I think that's the future of work actually, because to the extent that you can be equally as valuable and generate as much value for a customer, wherever you are, you should receive the equal pay for equal work.
- [30:51]
A
So I'm obsessed with being transparent about money, particularly with ultra high net worth people. The reason being is that there's not a lot of information on this demographic. And so because I own Hampton, which is a community for founders, I have access to thousands of young and incredibly high net worth people. We have people worth hundreds of millions and sometimes billions of dollars inside of Hampton. And so every year we do this thing called the Hampton Wealth Report where we survey over a thousand entrepreneurs and we ask them all types of information about their personal finances. We ask them about how they're investing their money, what their portfolio looks like. We asked them about their monthly spend habits, we ask them how they've set up their estate, how much money they're going to leave to charity, how much money they keep in cash, how much money they're paying themselves from their businesses. Basically every question that you want to ask a rich person, we went and we do it for you and we do it with hundreds and hundreds of people. So if you want to check out the report, it's called the Hampton Wealth Report, just go to join Hampton.com, click our menu and you're going to see a section called Reports, and you're going to see it all right there. It's very easy. So again, it's called the Hampton Wealth Report. Go to join Hampton.com, click the menu, and then click the report button and let me know what you think. Have you guys read American Kingpin, the story of Ross Albright, the Silk Road? Have you read that, Matt?
- [32:04]
C
I think I've read some of the long form wild articles, but I've never read the whole book. Yeah.
- [32:08]
A
Oh, you got to read this book, man. I'm rereading it now because you just got released and it's like the best book I've ever read. It's like total page turner. The story of it for listeners. Basically, Ross Albright was accused, and I think he did it where he started, Silk Road, which was ebay for drugs. In two years, it did 2 billion in sales. Gross sales, something like that. But what's crazy is it kind of sucks because this whole business was documented because he chatted with everyone. Like he had 12 coworkers. And he did two things that were interesting that I actually think are going to be common. The first thing is that he obviously, because it was an illegal enterprise, he never. They didn't know the identity of the workers. It was just their username. Like one guy's name was like, Chronic Pain. That was his username. So he just. He didn't know this guy's real name. He just knew Chronic Pain as like, the guy.
- [32:53]
B
Ross knew everybody's name. They didn't know each other's names or his. He made them send a license so that he could basically have that, like, you know, always have that in his back pocket, have leverage.
- [33:03]
A
But Chronic Pain didn't know Ross's. Sorry, I forgot. That was actually important detail.
- [33:07]
C
That's actually very similar to, like, early hacker culture. You know, everyone was sort of known by their username.
- [33:12]
A
There's like, interesting merits to that. And then the other thing was that they only communicated via messaging. I was reading this book, I'm rereading it now, and I was like, those two attributes are kind of interesting for a company which is like anonymous workers and. But you're still oddly friends. Like, he developed relationships with his coworkers.
- [33:29]
B
This is a great LinkedIn post for you, Sam. Like, 13 management lessons I learned from the Silk Road. Here you go.
- [33:37]
A
I believe that he did murder for hire four times. He did a lot of bad shit, but he was actually an inspiring leader. Like, when you read, like, some of.
- [33:44]
B
His, like, like stuff, well, he was very idealistic, right? Like he, he had certain beliefs that drove him, right? He didn't intend, like, he didn't necessarily intend, like, for example, he wasn't super interested in selling guns on the platform, but he believed that people should be able to sell what they want. And his team was like, no, no, you shouldn't do this. This is going to increase the target on our back. Like, you're cool with the drug side, but you don't care about this, so let's just ban it. It's going to cause problems. And he was like, well, no, that's not the ethos of what we're doing. Like, we wrote a creed of what we stand for and why we're doing this. And therefore we got to stand by it.
- [34:16]
A
And they called them captain. You know, it was very much just like we are revolutionizing things. And that's like a really interesting thing.
- [34:22]
B
Matt has a. You don't get called captain, but what is your, like a benevolent dictator for life, right? Bdfl.
- [34:28]
C
It's a term in open source that's applied to like Linus at Linux or Guido Python or something like that. David Heimer Hanson at Rails. It's sort of a joking thing and one that I think none of us like really attach ourselves to. Just kind of like an Internet lower thing.
- [34:43]
B
Well, you do a couple other interesting things, right, because you got this like multibillion dollar company used by most of the Internet. But you run your company in these interesting ways where remote work, I think is. You're famously. We're early and heavy into remote work and you've talked a lot about that, but you do a couple other interesting things. So we talked about auditions instead of interviews. But you also do everybody in the company, including yourself, works customer support, I think one or two weeks out of the year. Can you talk about that one?
- [35:08]
C
Yeah. Part of our hiring process is your first two weeks of doing customer support for every single hire, whether you're like our new CFO or chief legal officer or whatever role it is. And then once a week, a year, you rotate back into doing customer support. By the way, lots of companies have versions of this, so it's definitely not the first to do this or anything like that.
- [35:27]
B
Why should a company do that?
- [35:29]
C
If you look at every successful business, the closer they are to customers, generally the more successful they are. And so it's very easy, especially when you're running something on the Internet and distributed for people to become numbers or stats or something on your looker dashboard or something like that. And so, you know, getting back to, like, every individual, every number of your signups. You might have 5,000 signups in a day, but each one of those people is, like, has a story. You just learn a lot about your product, and it's, I think, the best way to sort of do iterative customer developments. I think Eric Ries talked about this, or Steve Blank, you know, the kind of, like, get out of the office and go meet the customers. And I'm very inspired by, like, leaders at Salesforce. Talk to Mark Benioff or something like that. They'll typically spend a quarter to a third of their time with customers. Even at that scale.
- [36:16]
B
Is there a story or any epiphany you had from doing this? You've probably done this now, you know, for decades. So is there, like, an insight that came from this?
- [36:25]
C
Just the other day, a few days ago, I spent, like, 30, 45 minutes with the gentleman who kind of checks expenses at the company. You know, because we have, like, these ramp cards and people expense things and stuff like that. You know, sometimes we, like, say, you need a receipt for this or question it expense. And I just kind of wanted to understand more about this and also make sure that the way we were doing.
- [36:47]
A
This was the most hated man at the company, by the way.
- [36:50]
C
Like, well, I had gotten some feedback from folks. They felt, you know, some of the questions they were getting felt a little aggressive. And so, you know, we want to talk about one. I just kind of want to see, like, the tools he used and how the work did and stuff like that. So some of that was just shadowing. So I was like, okay, because I want to understand the interfaces. This was also really helpful, like, going through support. I realized that some of our internal tools, like, don't represent, you know, best practices in design or usability. You know, sometimes, you know, so the internal stuff doesn't get the love that your external stuff does. But then also, we just sort of talked about, like, the culture of automatic bedside manner, if you will. Like, how can we, like, you know, hold these principles? Like, we need to really enforce our policies and make sure we do, you know, we get audited and everything. So, like, we need to have these things from, like, a good accounting principles point of view, but also doing it in a way that, like, when we have these conversations, we're talking about the principles of it, the reason why. So it's not just like, I'm giving you, Sean, a hard time because you didn't have a receipt, but, like, hey, if we don't have this receipt, you know, a certain Art of firm might question this and then you know that might create an issue for XYZ or something like that.
- [38:01]
B
When I first moved to Silicon Valley I came to work with this guy, Michael Birch and he was, he represented everything I wanted. He had already built like successful tech companies and he had made it. And I was a 23 year old kid who wanted to make it. And so I'm super excited to go into the work the first day and I'm like, I'm gonna learn so much from this guy. Cause he's not just done it one time, he's built like four successful companies. I'm ready for him to teach me kind of like the dark arts. I'm like what's the strategies, the growth hacks, what this like super like high level strategic thinking. And the very first week he puts me on not the new like the oldest company that he had started, something had started back in 2001.
- [38:39]
C
This is like birthday calendar or something.
- [38:40]
B
Or yeah, Birthday alarm.
- [38:42]
A
Is that still going?
- [38:43]
B
Birthday alarm still going. And so I as like 25 year old company now. So I at the time I was like oh man, like I got to do this, like whatever. And he tells me the story. So I actually learned this really valuable lesson in it. I go, so what's the. I got curious because instead of just like being bored at doing like birthday alarm which you know, seemed like this old outdated product at the time, a little curious. So I started asking him like where did this come from? Like how did you even come up with this idea? Why did you build this product? And what he told me was he goes, my very first startup, I had quit my job, I wanted to like build a successful tech company, like do an Internet company. Internet was like the new thing back in 99, 2000 and he quit a high paying insurance job while his wife was pregnant and was like I'm going to make it. So he tried to create something really fancy. So he's like oh with the Internet he tried to create something that many people have tried. Like Sean Parker tried to create this, a self updating address book which is like, you know, I have your information, I have your name, your address, but you move Matt now I don't know that you moved. So wouldn't it be cool if you could just update your info in one place and it updated in all your friends address books. So we now have your latest and greatest address. So that's what he wanted to build and he's spending like nine months heads down, like doesn't leave the bedroom Coding this thing and it's not really going anywhere. But because he was a one man show, he was also doing, you know, he was the designer, he was the developer, he was the ops guy, he was the customer service guy. Like he did all of it. And he was like, it's the customer service that was actually the key because he was answering support tickets. And he's like, over and over again he's like, I spent like, you know, seven hours a day banging my head against the wall trying to figure out why nobody wants to use our product. I think it's so cool, but nobody wants it. And then in the hour I was doing customer support, he's like, I noticed that a bunch of people kept thanking me for the birthday reminder feature I had built in. Like just the one feature which was like a throwaway idea which was just if, you know, forget the address. If it was someone's birthday, I would just tell you, you know, hey, it's their birthday today. Remember that this is before Facebook existed, right? So you didn't have Facebook or a bunch of other ways that people could do this. So he just threw away the whole product and renamed the company birthdayalarm.com and he's like, I expected to go nowhere. And that was the thing that took off. And you know, at that time, Birthday Alarm had generated for him and his wife personally, like probably $20 million of pure profit by that time because it was just, every year was just generating a few million dollars of profit and it's still to this day generating a few million dollars a year of profit. Like it's this incredible business that's just the gift that keeps on giving. That only came because he was answering the support tickets and he got curious like, huh, like why are they keep talking about this birthday reminder thing? Like, is that, is that actually maybe I should do that. And he did it on a, on a whim and then in two days had built the product that actually people wanted. You know.
- [41:21]
C
That's awesome.
- [41:23]
B
I have one last question for you and it's on AI, so there's a lot of stuff you could talk about with AI, but I just, I'm curious on your quick take about Deep Seek because it's also, you know, they came out with this open source thing that there's a lot of people on either side of how much they believe about the story. But what's your quick reaction to what you saw with Deep Seek?
- [41:42]
C
Deep Seek's a really cool model, so every model has kind of a vibe and the way it's tuned and everything like that. And so it's a really fun one to play with. And I would say the thing I tell people with all this AI stuff, just use it, play with it because it's such early days and there's kind of a. The way to prompt it, the way to interact with it. There's a skill there that you'll learn. And the vibes of the Deep Seq model are very cool. I think what I'm most excited about as an open source guy is that they actually open source the model, wrote really amazing papers about how they built it and they'd open weights, for example. At my company, I would say don't use deepseek.com you know, for various reasons that's hosted in China and stuff like that. But like we can run the model ourselves, you know, locally and that's pretty cool. Or you can get it through Perplexity, which hosted in the US So like there's, there's lots of ways to access it. It's, it's a really fun model. So all these models have, are like good at different things. They have a coding version. They just released a cool image thing. And so think of these as like little entities that you interact with and run and spin up and boot and you should just learn the nuances and kind of flavors of each one.
- [43:00]
A
Matt, do you guys actually believe that they've only taken the amount of funding that they've said? Didn't they say something like five or $10 million?
- [43:07]
B
They said that's what it cost to run the final training.
- [43:10]
C
That might be true for like some something but obviously like I'm sure they've spent, invested a ton and, and other things, so. And I know there's kind of this theory that maybe that's like a PR or psyop or whatever like that.
- [43:26]
A
When I started reading about them, I got fearful. It was pretty insane, right, that the market reacted the way it did, that, you know, it wiped out $1 trillion of value in 24 hours. It was pretty wild how big that announcement was. I didn't think, I didn't think that was going to happen. And I think you called it. Matt, didn't you like tweet about this during Christmas time?
- [43:46]
C
Well, Andre Kapathy, so Full Credit tweeted about this the day after Christmas and I saw his tweet and retweeted it. So that's when I first learned about Deepseek and started playing with it. Yeah, I think that with all these things there's some you can verify all the things. They made some amazing advancements in how they train things and how they run things and how they did memory interconnects and working within constraints. That has some really cool engineering breakthroughs. And they shared it. And this is stuff that I think OpenAI had also figured out, but they hadn't like, shared it publicly. And so what I love about the deep Seat guys is they, they're open sourcing it all. So. And it's all available under like a true open source license. It's not like the Llama license where it's free until you have 700 million users or something. Or I think Quinn Alibaba1, which is also a really great model that people are sleeping on. So check out Quinn and some of these other models coming out China. They're really, really good. But it's a true open source license, so that's awesome.
- [44:43]
B
Matt, thanks for coming on. Matt, it's good to see you again and thanks for sharing everything you did about about WordPress.
- [44:48]
C
It's been a pleasure.
- [44:49]
A
Yeah, we appreciate you, man. All right, that's the pod.
- [44:51]
C
I feel like I can rule the world I know I could be what I want to I put my all in it like no days off on the road, let's travel, Never looking back.
- [45:05]
B
Hey, Sean here. I want to take a minute to tell you a David Ogilvy story. One of he said, remember, the consumer is not a moron. She's your wife. You wouldn't lie to your own wife, so don't lie to mine. And I love that. You guys, you're my family. You're like my wife. And I won't lie to you either. So I'll tell you the truth. For every company I own right now, six companies, I use Mercury for all of them. So I'm proud to partner with Mercury because I use it for all of my banking needs across my personal account, my business accounts. And anytime I start a new company, it's my first move. I go open up a Mercury account. I'm very confident in recommending it because I actually use it. I've used it for years. It is the best product on the market. So if you want to be like me and 200,000 other ambitious founders, go to mercury.com and apply in minutes. And remember, Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve bank and Trust members. FDIC all right, back to the episode.