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RUNNING HEAD: Automattic – Parent of Wordpress

Automattic – Parent of Wordpress Stephen B. Pickering October 14, 2012

Florida Institute of Technology Dr. Anthony L. Iaquinto

Automattic – Parent of Wordpress


Automattic – Parent of Wordpress Company Background Wordpress was begun by 19-year-old Matt Mullenweg in 2003 as a “fork” (a new direction) of open-source blogging software b2. His intention was to improve the blogging platform he was using at the time, extending its capabilities, and reviving the dormant development of the original product (Colao, 2012). Matt’s work developed into a tightlyintegrated software product in the open-source tradition: well designed, highly functional, and attractive to writers and bloggers of all sorts (DVorkin, 2010). By 2005, Wordpress had captured an audience and Mullenweg had a product with which he could launch a company: Automattic. Mullenweg partnered with Toni Schneider, a software developer, entrepreneur, and venture capitalist with experience and a successful company, already sold to Yahoo, already on his resume. The software foundation for the company was established, along with a company culture that stressed open source development of software, reliance on the Wordpress user base for development assistance, and a philosophy that a product developed for users would create demand (Gannes, 2012). Looking forward to 2012, the company employs 126 people in 24 US States, and 23 additional countries (Press Fact Sheet, 2012). Revenues are in the range of $45 million (Gandal, 2012), and the company produces a number of open source products, all focused on blogging and web development. Two revenue-generating products, and VIP Wordpress, build on the open source base of other products, but have proprietary elements that allow the company to develop a competitive advantage. It is the largest blogging software company in the world, with 54.4% market share in the blogging category, and is the base software for 17% of all web sites on the internet (Usage of content management systems for websites, 2012). The Wordpress platform supports blogging as its core function, a distinctive competency, and also allows users to develop non-blogging web sites, a core competency. From the very beginning, Wordpress was designed to be a global product (Welch, 2009). At a very early stage, tools were provided to users that allowed the Wordpress core to be adapted for different languages. For most of its existence, language variants were not developed by the

Automattic – Parent of Wordpress


company, but by its user base. Users who requested Wordpress to be offered in their own language were politely invited to participate in making language adaptations (Translating Wordpress, 2011). Translations tools like Glotpress, along with third-party tools, were made available to help with the translation process (Glotpress, 2012). Automattic’s early translation tool efforts have helped the company to avoid many of the costs of offering the software in multiple languages (currently 37), but also allowed Wordpress to develop specific features desired by users for specific languages, nations, or regions.

Company Strategy Automattic’s strategy has remained deceptively simple. It develops and distributes software that is useful to its user base. Most software is open source and delivered over the internet at no charge. A few services on its hosted site, such as adding a domain name to a user’s web site, involve a reasonable fee, but the great bulk of Wordpress users pay nothing to the company. Large companies with special customization needs pay to have the software adapted. For the most part, users are able to adapt and customize the software to meet their own needs. Automattic uses a market niche strategy, choosing to serve the blogging software niche. Its market is any person or organization that wishes to communicate using a blog or web site, including professional organizations such as large companies, magazines, and newspapers. From a revenue standpoint, Automattic focuses more closely on large companies with complex programming needs, and small users who desire a range of services for their blogs on the hosted site. While only 1% of users pay a fee for Automattic’s services, the private company is purported to be making a profit margin in the 15-20% range on its $45 million in sales (Gannes, 2012). Automattic seems to be currently focusing more on being the best at what

Automattic – Parent of Wordpress


it does, as opposed to maximizing revenues. Certainly it has a large enough user base to increase its revenues, but is now choosing to move slowly in that regard. International Strategy As mentioned previously, Matt Mullenweg planned for international expansion early in the development of Wordpress. As an open source project, he knew that Wordpress would not be able to compensate translators to extend the software into other languages, so he supported the translation process by providing software tools that simplified the task of adapting Wordpress for use in other languages. Even before Wordpress was able to offer language-specific versions, however, it was quite simple to write blog posts in almost any language, a very advantageous situation. This allowed Wordpress to spread internationally while language-specific editions were being developed. In addition to the language development effort, Mullenweg and Schneider took an additional step that would assist Wordpress to grow internationally. As the company grew, the two top managers decided on a distributed work environment that would allow employees to work from wherever they felt most comfortable. They could work at home, while traveling, or from across the world (Work with us, 2012). Their intention was to allow the company to hire the very best developers, no matter where they were on the globe (Schneider, 2010). While this certainly helped the company to build a team of the highest caliber, it also had the effect of spreading the company across the globe, one person at a time (Staff Map, 2012). While the company’s growth occurred in a North American- and European-centric fashion, with gaping holes in many places, the precedent for international growth was set. A further factor in Automattic’s international growth is its open source roots. The various Unix projects, Mozilla, MySQL (on which Wordpress is based) and a number of other

Automattic – Parent of Wordpress


large open source software projects have developed with international teams (Fitzgerald, 2006, and Gandal, 2011). Automattic was able to plug in to this phenomena, enhancing its growth. A last reason for Automattic’s international growth is its free WordCamp events, held worldwide. These one-day events are sponsored locally, but usually include a representative from Automattic, often Mullenweg or Schneider (Past WordCamps, 2012). When a company takes the time to speak with users all over the world, trying to understand their needs and concerns, global growth often follows. Recommendations for the Future While Automattic seems to be progressing favorably at this point, perhaps it should consider two ideas to enhance international growth: 1. Appoint or hire people to act as “champions” for certain geographic areas. The duties of a champion involve spreading the Wordpress concept throughout their area, talking in front of small audiences of developers and other users, ensuring that Wordpress receives ample attention at the local level. 2. Develop a functional approach to Wordpress that appeals to specific groups of users. A Medical Users Group could concentrate on software issues or ideas for medical professionals, while a Financial Users Group could concentrate on development in the financial arena. Each group might have a special need for a tool, template, dictionary, etc. that would enhance the appeal of Wordpress, and perhaps generate revenue ideas for specific groups. As Automattic continues its growth internationally, hopefully it will find new and useful ways to serve the world, and additional ways of generating revenue and profits for itself.

Automattic – Parent of Wordpress


References and Bibliography Colao, J. J. (2012, Sept 5). With 60 million websites, Wordpress rules the web. So where's the money? Forbes. Retrieved from DVorkin, L. (2010, Nov 22). It’s all about the author: The focus of WordPress’s Matt Mullenweg. Forbes. Retrieved from Fitzgerald, B. (2006). The transformation of open source software. MIS Quarterly, 30(3), 587. Retrieved from Gandal, N. (2011, Sept 15). A brief look of the economics of open source software. VOX. Retrieved from Gannes, L. (2012, April 25). Automattic grows up: The company behind shares revenue numbers and hires execs. All Things D. Retrieved from Glotpress. (2012). Retrieved from Kumar, V., Gordon, B. and Srinivasan, K. (2011). Competitive strategy for open source software. Marketing Science, 30(6), 1066-1078. Retrieved from Montalenti, A. (2012, May 14). Fully distributed teams: Are they viable? [Blog Post]. Alter or Abolish. Retrieved from Past WordCamps. (2012). Retrieved from Press Fact Sheet. (2012). Retrieved from Sharma, A. (2012). Open source software - Breaking the commercial myths. International Journal of Advancements in Technology, 3(1). Retrieved from Schneider, T. (2010, March 8). 5 reasons why your company should be distributed [Blog Post]. Retrieved from

Automattic – Parent of Wordpress


Staff Map. (2012). Retrieved from Translating Wordpress. (2011). Retrieved from Usage of content management systems for websites. (2012). Retrieved from Welch, L. (2009, June). When you're coding, you have to be in the zone. I'll listen to a single song, over and over on repeat. Inc., 114+. Retrieved from melb26933&it=r&p=AONE&sw=w Work with us. (2012). Retrieved from

Automattic - Parent of Wordpress