WordPress Founder Matt Mullenweg talks Tech on Bloomberg TV

WORDPRESS FOUNDER MATT MULLENWEG TALKS TECH ON BLOOMBERG TV

MARCH 26, 2011

SPEAKERS: MATT MULLENWEG, FOUNDER; WORDPRESS

CRIS VALERIO, BLOOMBERG NEWS

(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)

CRIS VALERIO, HOST, VENTURE: South by Southwest, the annual music film and technology festival in Austin, Texas has become the ultimate meeting ground for entrepreneurs. It is also a launching pad for platforms like WordPress, which now powers 12 percent of the web. I'm Cris Valerio, welcome to Venture, your inside look at what it takes to succeed in business.

This week on Venture, we'll be talking to Texan Matt Mullenweg, the founder of web development company Automattic, and its leading project WordPress, which has grown into an internet giant who is debuting at South by Southwest in 2005.

MATT MULLENWEG, FOUNDING DEVELOPER, WORDPRESS: WordPress is the publishing platform for the web. It is a free and open source way that you can make a blog or really any website you can imagine.

VALERIO: You guys host 12 percent of the web essentially. I want to know the type of overhead that it takes to maintain infrastructure like that, for that much of the web.

MULLENWEG: We're lucky in that WordPress is - it scales well, and so it is relatively efficient. And so even though we have 13,050 servers, that is a relatively small number compared to the number of servers that say Google has, or Amazon has to run the things for the things they are doing.

It is also true that the cost is relatively low for us. So our think our total infrastructure costs are like in the $300,000, $400,000 a month, and when you think about it, that is nothing. Ten years ago, it would have been $3 million to $10 million a month, and I don't know if we would be around just because it would have been so much more expensive. But Moore's Law is on our side. Every year it gets cheaper and cheaper to do what we do. In fact, sometimes we get rid of servers.

VALERIO: How many employees do you have right now?

MULLENWEG: So we are now at 80 people, and I believe that is across 62 cities.

VALERIO: How do you run a company like that? How do you manage the HR needs, -

MULLENWEG: Very carefully.

VALERIO: - hiring the correct people? What does that look like?

MULLENWEG: So it was a natural evolution for us because we can't have an open source project and how open source projects work. The best example for regular folks is like the Wikipedia. I mean you have something that thousands of people are contributing to from all over the world, and it's sort of the comments and what you create together is better than what you could create if you were all working on your own.

WordPress is like that applied to software. Open source is that applied to software. So as we were starting and there were people spread out all over, I think our initial folks were in Vermont, Ireland - Cork, Ireland the rebel county, Texas, and (inaudible) around San Francisco. I mean why not keep working that way?

As a business, it evolves a little bit differently. So, for example, we have almost no email internally at Automattic. All the email I get is from other people. We use blogs actually. We use WordPress to sort of coordinate our work with each other. There is a theme for WordPress called P2theme.com. That's where you can check it out.

And it's this free open source thing. And it is kind of like a Twitter in a box. It's like our own internal Twitter. And what people do is they post what they are working on, mock ups of new products they are thinking about, ideas, conversations they had. After this I'll post talked to Bloomberg TV.

And each one of those can turn into a whole thread about from anyone in the company talking about that. And it is a pretty cool way to communicate because it is better than email because you can now really rich text powerful conversations that are archived.

And that's - so let's say someone new joins the company, I don't have to give them a gigabyte worth of email. They can just read through the archives of this blog and catch up on everything we've been talking about for the past year.

And it is better than chat because it stays synchronized. So it doesn't require everyone being in the same place at the same time, which you can imagine gets a little tricky across 18 times on however many who were in. People can just drop in as they need be.

VALERIO: One of the things that you like to say a lot is that WordPress is not just about blogs, it's really websites, right? And one idea that that carries over really well to is not just when you are talking solutions internal - business solutions, but also how many media companies have adopted WordPress to use as their website versus blogs. So you talk the Huffington Post, Mashable, CNN, Fortune, Fox.

Was that just something that happened at the beginning? Or was there a marketing effort that you felt this is something that would be helpful for them?

MULLENWEG: Actually we've never been very good at marketing. That's something we're still learning. But it always come from the bottom up.

So what happens is that WordPress first and foremost is creative for the end user, someone adopts it. And it is small. It is easy. It is cheap. They will join our VIP program, which is really inexpensive, or something like that.

And there will be like a blog over in the corner and everyone using it loves it. And they're like, wow, we can launch a website in a few days versus the three months it used to take with our custom CMS or with an outside vendor or something like that. And it really empowers folks, and then it just starts being a larger and larger portion of their web presence.

VALERIO: One of the things that we've seen really come to the forefront in the last two to three, four years, is micro blogging, right?

So you have sites - not only Twitter, which I think what everyone thinks of when they think of micro blogging - but also Posterous and Tumblr and a bunch of these other sites, suddenly blogs are not as common as perhaps these micro blogs where you can just post a picture, just post a quote. How has that played into the development of WordPress and the products that you offer?

MULLENWEG: It's something, particularly with our latest release 3.1, that we are starting to incorporate a lot more. I started micro blogging probably like six or seven years ago on my own blog. I called it Asides, which was basically little, short entries or just short links, something that I could fire off really quickly because I was getting busier and busier with WordPress. I didn't have the time to write a longer entry.

And I think there is more of those posts. It is just a function of the length. It is much easier to just click a button and post a link than it is to actually write something around it. So there will always be sort of proportionally more of those than there is the longer posts. But the cool thing about WordPress is you can do both.

So how WordPress is working in this world is kind of a digital hub. So you have your own domain running open source software that you have complete freedom and control over, WordPress hopefully. That's sort of your hub. And what you can do is you can post something there and we can auto post it to Facebook and Twitter and everything else.

So you get the distribution of these new mechanisms that are undeniably cool. Like who doesn't use Twitter and Facebook every day? But you still get people coming back to your own site, and you have the ultimate control over your destiny there. It is not something that Facebook could turn off tomorrow if they want, or that Twitter decides you're against their terms of service. It's you.

VALERIO: Up next, how WordPress got its start.

(BREAK)

VALERIO: So let's talk a little bit just kind of the beginning and how you got started because you actually founded WordPress.org in 2003. Talk to me a little bit about you were at Houston, Texas - University of Houston, -

MULLENWEG: Yes.

VALERIO: - coding away in your dorm room. Give us the - paint the picture.

MULLENWEG: I was blogging. And the software was frustrating to me a little bit. I felt like it could be easier and it could be more (inaudible) to folks. And the lead developer of the software had stopped working on it, so I teamed up with this other guy named Mike Little in Spokane, England and we started working together on what would become WordPress.

VALERIO: And you guys met obviously online I'm assuming?

MULLENWEG: Actually we had never really even interacted one on one, but I had done a blog book saying wouldn't it be great to have something that had the ease of use of a blogger, which is actually the only one still around that I mentioned, and the flexibility of moveable type, and the elegance of text pattern, and the flexibility of B2, which is also what I was using. And he left a comment saying, well, if you're serious about this, let me know, I'd love to help.

VALERIO: What was it that you were doing and what did WordPress.org become as kind of an open source location?

MULLENWEG: So at the time, if you wanted a website, you were either coding all the pages by hand manually and if you updated - wanted to update say the title of your site, you'd update like 30 different files. Or you were running one of these really complex webscripts that would require more coding knowledge and things like that.

And what we tried to do was just make it sort of push button easy so there would just be instead of having to go into a configuration file and change something if you wanted to change say the title of your site, you could just open a webpage and update it, which now sounds so ridiculously silly, but at the time was a big deal.

VALERIO: Now your background, Matt, was actually in music, if that's correct? You were at Houston. You played the jazz saxophone.

MULLENWEG: Jazz saxophone.

VALERIO: How did you go from that kind of music side and really decide eventually to quit school to pursue this to the coding?

MULLENWEG: The first websites I made were for musicians. So because I was - there are a lot of great jazz - actually there is a fantastic jazz team in Houston, and a few of the guys I was taking lessons from. And I would build computers at the time - so I'd buy parts and put computers together, and make webpages - obviously they go together - in exchange for lessons. So I'd get $500 worth of private lessons or something like that. So really music was at the very beginning of my web experience.

VALERIO: So I want you to take me through how WordPress.org eventually became WordPress.com. It took about two to three years and obviously it took off. So talk to me a little bit about how you went just from working at that little apartment to really scaling it to a level that you did drop out of school and work on it full time.

MULLENWEG: What happened was about a year and a half, maybe two years into WordPress, I was at San Francisco for the first time. And it was just like mecca, like I couldn't imagine someplace where I wanted - was just as passionate about the web as I was. And while I was out there, I visited Google and Yahoo and CNET and all the different companies.

And when I returned to Houston, a few of the companies followed up and contacted me. And the most interesting opportunity was CNET, which I guess now is CBS Interactive.

But because they were a media company, they were completely okay with me retaining the intellectual property rights to the software I was creating with WordPress. So I could still release it as open source and continue contributing to WordPress, which was obviously the most important thing to me at the time.

They offered me a job and it was just, you know, this is the job I could hope to get in a few years when I graduate, or I could do this now and move to San Francisco.

VALERIO: So you move out to San Francisco and you start working for CNET and I guess tell me how that - in 2005 you decided to found a company, Automattic, which basically is kind of the grandfather of WordPress and several other sites at this point.

MULLENWEG: Well, in some ways it is like the son, the grandson of WordPress. I learned tons in the CNET experience, but I also wanted to be more in control of my own destiny. And WordPress was really starting to take off and it became obvious that there were some commercial opportunities around it, more than just having this free software that people could download and upload, etc. There were businesses starting to use it, and CNET was starting to use it, and big people were starting to use it.

So we had this idea, well, what if we can make WordPress just one quick, easy to use. If you could just put in your email and have a blog seconds later?

VALERIO: Was it scary for you, Matt, coming from the Houston world, not a massive tech scene, coming from the music scene? I mean how did you navigate all of that?

MULLENWEG: I think we were very fortunate in that we didn't need money in the very beginning and we had our choice of partners. And that I sort of approached it almost like a marriage, like these are people who really understood the core mission of WordPress first and foremost, which is to democratize publishing, and how Automattic would fit within that world. So it wasn't something that we were going to take everything that used to be free and charge for it deliberately or not deliberately screw over our existing users.

VALERIO: I want to talk a little bit about funding because your Series A was $1.1 million - True Venture, Polaris, Radar. When did you get that? And how did you get it? Did you find people coming to you and offering you money?

MULLENWEG: I don't think it was a typical fund raising experience because almost very soon after moving to San Francisco, I joked that we weren't VC funded, but I was VC fed. I kept going to these meals with these investors and got to meet a lot of wonderful folks.

But I also thought that it wasn't (inaudible) what sort of opportunity Automattic was, whether it was going to be a big thing that required a lot of capital or whether it was going to be - well, now it is quite common, sort of something we could boot strap with a very small amount of money. And so what we did in the beginning was just go with a few partners. I guess that was Polaris, True, and actually (inaudible) has invested some and raised that $1.1 million round.

VALERIO: Inside the Automattic business model when we come back.

(BREAK)

VALERIO: You have this kind of seed money, $1.1 million in today's world, right, is seen as seed money. How did you start to scale? Or where did you start to put those resources at that time?

MULLENWEG: There were two things with the initial funding. One, although we were making money, it was very much month to month. And so I really wanted to have more of a buffer. That was definitely part of it. I wanted to be able to say even if the business things didn't work out or our revenue streams went to zero, we would have a year or two to figure out what to do next.

And two, was to invest in infrastructure. So WordPress was already starting to grow really quickly, and one of the things people are scared about at that time was that all the big services were just having constant downtime. The bloggers and live journals and everything of the world were just falling over. And so we wanted to invest proactively ahead of time in just really excellent - a really solid foundation so we could handle any amount of growth that came to us.

And actually, that has been something that has paid off really over the past five years is that we've had little - very, very little downtime. So that where if it happens, it is still a story.

VALERIO: Can you explain in layman's terms then how you - if it is all open source, how you are making your money for WordPress?

MULLENWEG: I think the value shifts from being just about the code and so that intellectual property is all open to everyone. So we're not like most technology companies. Where we make money is on the services around that. So there is now 12 percent of the web on WordPress.

We provide different tools for those folks, so it could be back up and security. It could be anti-spam. It could just be additional functionality that makes your blog better or your site more performance. Those sorts of things are like our razors - or razor blades for the razor of WordPress.

VALERIO: You make money from different types of services that you are offering. What do margins look like in that type of business, when you are servicing something that is free?

MULLENWEG: We're not at the point in our business where we really think about margins or anything like that -

(CROSSTALK)

VALERIO: So you are not cash flow positive at this point?

MULLENWEG: We're in the black, but it is just sort of a function of how quickly we can hire, rather than, you know, we're focusing on our profit margin or anything like that. Really a lot of growth phase in this business. I mean it is 12 percent of the web, but I want that to be 20, 30, 40 percent. And I really believe that the web as a whole needs an open source platform we can build on.

VALERIO: So we were talking a little bit about kind of these other micro blogging sites and how they come together. I want to know what is more important for you guys or for a service such as you offer - the number of unique people that are building these sites, or the number of people that are visiting the sites, right?

So, for instance, PageViews, Tumblr has more page views now, correct, than WordPress blogs. But you guys have more unique users and pages out there. So which one matters to you?

MULLENWEG: I think that page views as a metric are a lot less important than they used to be. If you want to, it is easy to get more pages on your website. We've all seen - I won't mention any names - but, you know, you go the websites and there is a slide show and you have to click to go to every single slide and you just drove 18 pages instead of one to an article. So I think it is a metric that is going away a little bit.

Uniques we think about a lot. So we have a half a billion visitors to about ten million bloggers. What we're talking there is that every single blogger perhaps because they - WordPress tends to be the high end of the market or because they invest more time trading their (inaudible) and everything like that, can gather a much larger audience. And I think that is what it all comes down to is the medium is somewhat secondary.

VALERIO: The medium sure, it is all about, you know, what you want as a consumer. But from your perspective as a business owner, that medium obviously drives a certain number of unique views or whatever, will drive money towards your company, depending on if you are servicing those sites and stuff.

MULLENWEG: So if we can create an amazing experience for you, the author, just be invisible, get out of the way, like it should be just something that you think about the contents, you think about what you are writing, you think about your message more than the software you are using, then we are successful.

And on the other end, if we can create a really fantastic user experience for your visitors, so the site should load instantly. If there is going to be a slide show, for example, just have it be on the same page and just have it be something that rather than reloading every single time and being slow just to drive more pages, I mean things like that they are optimizing for the wrong metrics.

And I truly believe that if you optimize for the user experience, for happiness really of people using your product and visiting your product, in the long term you will figure out the business model because ultimately more and more of the web, more and more of the people in time will be on your property.

VALERIO: Coming up, Mullenweg on what is next for his company.

(BREAK)

VALERIO: You obviously are in an astute and a very smart individual, so there has to be some kind of watching what other people are doing and who do you consider competition?

MULLENWEG: I think innovation comes from everywhere. Everything that WordPress has ever done has been done before. There is really nothing original. And that because WordPress does so many different things to so many different people, for so many different people, it competes with different folks at different levels.

So on the open source CMS side, it is two other open source CMSes called Drupal and Joomla. On the sort of (inaudible) publishing side, we compete with Twitter, Tumblr, Posterous, SquareSpace - all of these folks. Those are really the big ones.

And I'm always also watching out for like the next little thing, like the next kid in Houston building a CMS, who just has a little bit different of an idea about it or thinks about things differently. And I try to learn from all those.

VALERIO: Would you acquire companies or eyes acquisition something that you are thinking about doing with the money?

MULLENWEG: Yes. We have acquired companies in the past. We acquired PollDaddy, which is an amazing way - sort of a survey (inaudible) competitor. It can do great surveys and polls. They are actually located in Sligo, Ireland. They are talking about a global company. We've done I think four or five acquisitions.

VALERIO: What kind of companies are you looking at right now if were going to acquire? Like what area?

MULLENWEG: You know, at our core DNA we are a technology company. We build products. Here's the best way to put it. WordPress is becoming the platform for the web, so in the future, someday, all websites are built on WordPress. We are working under that assumption.

VALERIO: You're not worried about any anti-press issues there?

MULLENWEG: No, no, no. It's open source. So anything that plugs into a website is potentially very complimentary to WordPress as a platform.

So, for example, polls and surveys isn't on the surface something that just plugs into a blog. But when you think about it larger as businesses and people running websites, they need to find out what their audience - who their audience is and what their audience thinks about things. PollDaddy is an amazing platform for that. So those types - we are always on the look out for smart, small teams like that.

VALERIO: So, Matt, you have dabbled in angel investing. In fact, now you have Audrey Capital where you are investing in several different types of companies. Foodfee (ph) I think was one of those, right?

MULLENWEG: Foozie (ph), yes.

VALERIO: Yes. What is your strategy for angel investing at the ripe age of 26, 27, especially since you were someone that was invested in at such a young age?

MULLENWEG: Sure, well, my first focus is always WordPress and Automattic. So the angel investing is very much on the side. And basically what Audrey does is I think the strategy is just looking for businesses that in my very short of amount of experience map well to those experiences.

So anything that is open source is potentially something I could help a lot with. Things that work with communities. You know, companies that really have community at the core and creativity at the core of what they do are things I can get excited about.

In my short experience, I have had a really fantastic ride. And to the extent I can impart any help to any other entrepreneurs I feel like that is just a good way to pay it forward and give it back.

VALERIO: So what is it like to be 26, working towards a product that you love obviously, but clearly having gone so far in the last six years?

MULLENWEG: It's fantastic because it seems like the road ahead is much further than the road behind. So even though I've been doing this for six or seven years now, I go to bed every night and wake up every morning thinking about the possibilities, what more we can do, the next things WordPress can do, the next ways we expand the platform and make it easier for people to build. We started with blogs, moved to websites, move to - and the next step is sort of people moving applications on top of WordPress. It just delights me every day.

VALERIO: Matt, thank you so much. I appreciate it.

MULLENWEG: It's been a pleasure.

VALERIO: Thanks for watching Venture. Be sure to join us on Facebook. You can also follow me in Twitter. I'm Cris Valerio.

***END OF TRANSCRIPT***

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