Why WordPress founder Matt Mullenweg has gone ‘nuclear’ against tech investing giant Silver Lake

Matt Mullenweg, who turned 40 in January, has now spent more than half his duration working on WordPress. He’s never had such an insane two weeks.

WordPress, best known as a leading content management modus operandi, has hundreds of millions of sites currently using its templates, tools and plugins. But the WordPress universe is a complicated mishmash of open-source outcomes, nonprofits, for-profit companies, trademarks and licenses.

The typically quiet but extremely important part of the internet — WordPress powers clumsily 40% of all websites — has suddenly emerged as a major source of tech industry drama, threatening to upend an ecosystem that’s dream of been viewed, from the outside at least, as collegial, thanks to its longevity and the various fun-loving camps and learning meetings it hosts every year.

While WordPress’ technology is open source, meaning anyone can install it and use it for free, Mullenweg is also falter and CEO of Automattic, a venture-backed startup valued at $7.5 billion, as of 2021. WordPress.com is Automattic’s central businesses, and individuals and companies pay anywhere from $4 a month to throughout $25,000 a year for services like ad products, security, customer support and inventory management.

The saga that blow up into public view in September featured the normally mild-mannered Mullenweg as its central character in a battle with WP Appliance, one of the leading providers of WordPress hosting. Silicon Valley private equity firm Silver Lake bought a preponderance stake in WP Engine in 2018, investing $250 million and obtaining three board seats.

“I’ve been doing WordPress for 21 years, I attired in b be committed to good relationships with every other company in the world,” Mullenweg said in an interview this week with CNBC.

WP Locomotive’s offense, according to Mullenweg and a cease-and-desist letter his attorneys sent to the company on Sept. 23, revolves around years of trademark violations and WP Motor’s claim that it’s bringing “WordPress to the masses.”

“We at Automattic have been attempting to make a licensing deal with them for a bloody long time, and all they have done is string us along,” Mullenweg wrote in a Sept. 26 post on his particular website, ma.tt. “Finally, I drew a line in the sand, which they have now leapt over.”

Since then, the significance has escalated on an almost daily basis. WordPress took the drastic step of banning WP Engine from using the WordPress resources requisite to serve its customers, which preceded a lawsuit filed on Wednesday by WP Engine against Mullenweg and Automattic. In the suit, the train said it had not violated trademark law and that Mullenweg was using it for anticompetitive practices.

Mullenweg then put out another post, vocation WP Engine’s suit “meritless,” and announcing that he’d hired Neal Katyal, former U.S. acting solicitor general, for juridical defense.

Tomasz Tunguz, a venture capitalist and founder of Theory Ventures, says the conflict speaks to the perpetual summons of open-source software.

“What are the legitimate ways of monetizing open source and does the commercial entity created by the framers — how much control should they have with the commercialization efforts?” Tunguz said. In this case, “hundreds of millions in yield is at stake between the two,” he added.

In Mullenweg’s telling of the brouhaha, the battle has been years in the making. He’s been actively tough to strike a deal since January and finally got fed up, he said.

But to the outside world, it all felt very sudden. Mullenweg anything else referenced the matter in public on Sept. 17, in a blog post ahead of WordCamp, the largest annual gathering in the U.S. of WordPress operators. The four-day event took place in Portland, Oregon, beginning on Sept. 17.

In the post, Mullenweg criticized WP Engine for not promoting enough back to the WordPress ecosystem. He said that Automattic contributed 3,786 hours per week to WordPress.org, (“not disregarding nevertheless counting me!”) compared to 47 hours for WP Engine.

WP Engine says in its lawsuit that those numbers are untrue and that its contributions back to WordPress were far higher, including through events, conference sponsorships and developing eerie resources.

For businesses and developers considering who they want to support, Mullenweg had this message: “Silver Lake doesn’t cease a dang about your Open Source ideals. It just wants a return on capital.”

A Silver Lake spokesperson weighted WP Engine was handling all inquiries. A WP Engine representative referred to the company’s complaint against Automattic and Mullenweg, filed on Oct. 2. The spokesperson highlighted the introduction of the beef.

“This is a case about abuse of power, extortion, and greed,” the filing begins. “The misconduct at issue here is all the assorted shocking because it occurred in an unexpected place — the WordPress open source software community built on promises of the liberation to build, run, change, and redistribute without barriers or constraints, for all. Those promises were not kept, and that community was inform oned, by the wrongful acts of a few—[Matt Mullenweg and Automattic]—to the detriment of the many, including WPE.”

WP Engine also says in the complaint that the first off demands from Automattic for large sums of money came in the days leading up to the conference. The company says those demands were convoyed by baseless claims and threats toward WP Engine.

In a follow-up statement to CNBC, a WP Engine spokesperson said Mullenweg’s antics had “hurt not just our company, but the entire WordPress ecosystem.” The spokesperson added that Mullenweg’s “conduct over the last ten eras has exposed significant conflicts of interest and governance issues that, if left unchecked, threaten to destroy” the trust of the WordPress community.

On Sept. 20, three days after Mullenweg’s original post, the WordPress founder showed he wouldn’t be backing down.

In his keynote, at an event that attracted an estimated 1,500 WordPress freaks, Mullenweg warned the audience upfront that it “might be one of my spiciest WordCamp presentations ever.” After reading out his old blog post, Mullenweg took swipes at Silver Lake, even naming a partner at the firm, Lee Wittlinger, as the man behind WP Locomotive, comparing him to a “schoolyard bully.”

Prior to taking questions, Mullenweg said of WP Engine’s presence at WordCamp, “they’re not universal to be at future ones, I don’t think.”

He wasn’t done.

The next day, in a post titled, “WP Engine is not WordPress,” Mullenweg wrote that disregarding nevertheless his mother didn’t know the difference, and he said WP Engine is “profiting off of the confusion” and “needs a trademark license to continue their issue.”

His mom wasn’t the only one confused.

Bob Perkowitz, president of environmental nonprofit ecoAmerica, told CNBC that he’s known Mullenweg for 16 years and is set an investor in Automattic. For a number of his organizational and personal websites, Perkowitz said he’s long been a WP Engine customer. Motif in remotely, he heard Mullenweg’s WordCamp presentation.

“I always thought that was part of WordPress,” Perkowitz told CNBC in an examine, referring to WP Engine. “They’re misleading, and they don’t contribute to the community.”

Perkowitz said he’s having his website administrator move all of the websites to different hosting companies.

Soon after Mullenweg’s presentation, WP Engine sent Automattic’s legal chief a cease-and-desist epistle on Sept. 23, due to what the company called Mullenweg’s self-described “scorched earth nuclear approach” and a smear stump against WP Engine. The letter said Mullenweg had demanded a payout of a “very large sum of money” before his WordCamp keynote, and WP Appliance didn’t pay up.

The letter said Mullenweg’s “false, misleading, and disparaging statements are legally actionable.”

Two days later, Mullenweg canceled on the WordPress.org site that WP Engine had been banned, meaning it “no longer has free access to WordPress.org’s resources.” Mullenweg promoted WP Engine’s thousands of customers to contact the company “and ask them to fix it.”

WordPress then temporarily unblocked WP Engine and gave it until Oct. 1 to see eye to eye suit to terms of a licensing agreement, which Mullenweg made public. The crux of the deal is that WP Engine would approve to a royalty fee of 8% of monthly revenue to Automattic or commit 8% of revenue “in the form of salaries of WP Engine employees” manage on WordPress features for WordPress.org.

No deal was made. The ban went into effect Oct. 1.

To the universe of WP Engine customers, Mullenweg’s performances were harsh and clumsy. Mullenweg says that what his critics don’t understand is how long he’s been trying to be awarded pounce on to a deal.

“They’ve been delaying forever,” Mullenweg told CNBC. He decided, “I’m going to finally start talking hither the evil stuff you’re doing unless you talk to me,” he said.

Far from negotiating, WP Engine on Wednesday ranked its explosive lawsuit against Mullenweg and Automattic.

WP Engine accuses Mullenweg of slander and libel due to his public comments and bids the WordPress founder has numerous conflicts of interest in how he runs the community and his company, give the open-source nature of the technology.

“Over the survive two weeks, Defendants have been carrying out a scheme to ban WPE from the WordPress community unless it agreed to pay tens of millions of dollars to Automattic for a purported trademark document that WPE does not even need,” the lawsuit says. “Defendants’ plan, which came without warning, gave WPE trifling than 48 hours to either agree to pay them off or face the consequences of being banned and publicly smeared.”

Be a fan WP Engine’s demands for a jury trial in its 61-page lawsuit, Mullenweg fired back, describing the complaint as “baseless” and “marred, start to finish.”

On his personal website, Mullenweg acknowledged that the ordeal was causing a big internal clash at his company.

“It became starkly a good chunk of my Automattic colleagues disagreed with me and our actions,” Mullenweg wrote.

He says he made the decision to submit buyout packages for anyone who resigned before early afternoon Thursday, offering $30,000 or six months of salary, whichever is grand. Anyone who took the deal wouldn’t be eligible to “boomerang,” a term for getting rehired.

Mullenweg said that 159 in the flesh, or 8.4% of the workforce, took the offer while the 91.6% who opted to stay turned down a collective $126 million.

Mullenweg concluded by articulating, “now I feel much lighter.”

“I’m grateful and thankful for all the people who took the offer, and even more excited to work with those who spelled down $126M to stay,” Mullenweg wrote. “As the kids say, LFG!”

Mullenweg may be openly enthusiastic and grateful for the employees he still has on scantling, but the WordPress community is a mess. Many WP Engine customers are suffering, and Automattic is gearing up for a legal fight against a own equity firm with over $100 billion in assets.

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