This interview is about the cycle of the internet going from open to closed and back again. Matt Mullenweg, founder of Automattic, believes successful platforms should capture only about 5% of the ecosystem's value, leaving 95% for others (like Microsoft in the Windows 95 era, where for every $1 they made, the ecosystem made $20). He's bullish on WordPress (powers 40% of websites, core team only 65 people) and wants it to outlive him. He warns about Wix (captures 98% of its ecosystem's value and doesn't let users export content, which could backfire long-term). He also highlights Salesforce (invested $300 million in Automattic and is a great example of 'world-building').
This episode features Automattic co-founder and CEO Matt Mullenweg, discussing the past, present, and future of the internet. The core viewpoint is the symbiotic relationship between open-source and proprietary projects, and that successful companies are essentially "world builders." Key conclusions
Matt Mullenweg is the co-founder and CEO of Automattic, whose open-source project WordPress currently powers 40% of websites globally. The main thread of this episode is the cyclical shift of the internet from open to closed and back to open, along with the company's long-term philosophy as a "world builder." Mullenweg argues that successful platforms should follow the "5% rule"—platform creators should capture only about 5% of the total ecosystem value, leaving the remaining 95% for ecosystem participants. This ratio has recurred throughout history (e.g., during the Microsoft Windows era, for every $1 Microsoft earned, the ecosystem earned $20).
Mullenweg argues that open and closed systems are not opposites but symbiotic—the success of one creates the conditions for the other to thrive.
Once an open system (e.g., open source, decentralized protocols) succeeds, it attracts "parasites" that extract value without giving back. The example of Gmail: it is built on the fully open SMTP email protocol, yet through features like spam filtering and categorization, it has "effectively forked email," turning an open format into a de facto closed one. When a closed system becomes too successful, market participants unite to create new open standards to counter it—such as Kubernetes challenging AWS.
Mullenweg points out that this cycle has recurred throughout history: from Martin Luther (open) opposing the Catholic Church (proprietary), to Encyclopedia Britannica (proprietary) being replaced by Wikipedia (open), and centralized finance versus decentralized finance (cryptocurrencies). He believes the "low point" of the current cycle was around 2013—when people placed Twitter and Facebook addresses on billboards, much like they did with AOL keywords in the 1990s. Facebook then began "harvesting" (making those who paid to acquire followers pay again to reach them), which gave rise to the direct-to-consumer model (Substack, newsletters, etc.).
Mullenweg emphasizes that consumers' tolerance for information overload is underestimated. He receives about 500 notifications daily, yet people are still willing to read and write tens of thousands of words on their phones (Automattic's Atavist publishes one article over 10,000 words per month, with strong demand). He believes that "when we underestimate people, it usually works against us."
Mullenweg believes that in 2021, the internet faces two major threats: Apple's closed ecosystem and "internet nationalism."
Apple, driven by a "perception of being an underdog," has become increasingly closed off, centralizing app distribution control through the App Store—one of the greatest threats to an open internet. The other threat is "internet nationalism," where each country attempts to extend its rules globally: China's pressure on the NBA and Disney, Saudi Arabia's ban on the Jamal Khashoggi documentary, among others.
Yet the opportunities are equally immense. Encryption technologies, decentralized protocols, blockchain, and open-source projects (such as WordPress) are making the internet more open and forcing competitors to open up to remain competitive. Mullenweg argues that cryptocurrencies are still in the "Nokia and BlackBerry era"—prices are a distraction, but attracting more people into the ecosystem is beneficial. Within Automattic, some employees have already chosen to receive part of their salaries in USDC (a stablecoin). The company employs staff across 77 countries and faces issues such as foreign exchange, frozen accounts, and hyperinflation, for which cryptocurrencies offer solutions.
Mullenweg describes the ultimate state of distributed work (Level Five): teams are more productive than any office-based team.
In this state, everyone works in an environment tailored to their own preferences—temperature, scent, music, and pets are all set to personal liking; performance is measured by outcomes rather than processes; individuals are free to design their day (e.g., skiing from 9–11 a.m., working from 11:30 a.m. to 8 p.m.); and collaboration is with the best global talent, no longer constrained by geography ("You believe talent and intelligence are evenly distributed, but opportunity is not").
Mullenweg emphasizes that asynchronous collaboration is core: information transmission should include all necessary content, with no need for real-time communication. When Automattic had just 10–12 people, it achieved 15 days' worth of work within a five-day workweek through a "relay" across three global time zones—he would pass code to a colleague in Ireland at midnight, who would fix it and send it back before he woke up.
The "landmines" of distributed work: trust and relationships still need to be built (Automattic once held an annual all-hands meeting and multiple team gatherings); managers need to check on team members' status more frequently, as the lag in discovering issues is longer under asynchronous work; employees find it difficult to disclose personal crises (e.g., a partner's cancer diagnosis) on Slack, so managers must proactively detect them.
Mullenweg proposes that successful platforms should follow the "5% Rule"—the platform creator captures approximately 5% of the ecosystem's value, leaving the remaining 95% for ecosystem participants.
This ratio has recurred throughout history: Microsoft claimed during the Windows 95 era that "for every $1 we make, the ecosystem makes $20" (a 1:20 ratio). Mullenweg applies this principle to the WordPress ecosystem: Automattic aims to maintain roughly a 5% share—exceeding this would "suck the oxygen out of the room," while falling below it would lead to a "tragedy of the commons" (parasites extracting value without giving back to the core).
Comparative case: Wix vs Shopify. Wix generates annual revenue of approximately $1 billion, capturing about 98% of its ecosystem's value—it does not even allow users to export content ("not even Facebook does that"). Shopify captures roughly 10-50%. Mullenweg argues that Wix's aggressive strategy is profitable in the short term but "sows the seeds of self-destruction" over the long run.
Mullenweg views company building as "world-building": The best companies are not just products but create a world—with a philosophy, mythology, and ecosystem. Salesforce's Trailblazer series, training, and community engagement; Elon Musk's "another world—Mars"; WordPress's "democratize publishing and commerce." He cites Jeffrey West's research: companies die, but cities live—cities can survive a nuclear explosion and continue to exist. The goal is to make WordPress "outlive me, outlive all current participants."
Mullenweg emphasizes that mission statements should be exclusive. Automattic's creed includes "open source is the most powerful idea of my generation" and "I am more driven by impact than money"—both of which are "quite controversial," but precisely for this reason, they attract only those who truly identify with them. The creed is included in the offer letter and requires a signature (inspired by Dan Ariely's research).
Mullenweg describes Automattic’s internal structure as a “hybrid of Berkshire, IAC, and Alphabet”—a fractal organization where 20-person teams and 200-person divisions operate similarly.
Business unit CEOs manage only P (profit), not L (loss)—rapidly growing businesses should receive as many resources as possible, as long as the incremental ROI per dollar is positive. Mullenweg is most proud of instances where a business unit GM proactively said, “One of my teams is more important to another division; please transfer them there”—a move that, in traditional culture, would mean losing “headcount” and appearing less significant.
Mullenweg points out that the hardest challenge is distinguishing between “being correctly misunderstood” and “being stubbornly wrong.” The enterprise business (WordPress’s enterprise edition) once faced board discussions about shutting it down, but he insisted on keeping it; later, Salesforce invested $300 million (reportedly its largest investment). However, he also admits there are cases where “it should have been shut down but was persisted with for too long.”
Mullenweg advises platform builders: Scrutinize every decision by asking, “If this decision were repeated for 10 or 50 years, what would the outcome be?” Using open-source projects as an example: if all contributors are hired (as with MySQL, where 98% of contributions came from employees after acquisition), the ecosystem would be stifled over the long term; if contributors are helped to find jobs at other companies, they will drive those companies to give back to the open-source project. WordPress’s core team has only 65 people, but each version has 600–700 contributors—Automattic accounts for only about 10% of contributions.
| Position | Guest Sentiment | Key Data |
|---|---|---|
| WordPress | Bullish (Core Project) | Powers 40% of websites globally; Automattic aims to maintain ~5% ecosystem share; core team of 65 people, 600-700 contributors per version |
| Automattic | Bullish (Own Company) | Employs 1,400 people across 77 countries; has raised over $1 billion; used only $11 million in external capital from 2005 to 2014 |
| Wix | Risk Warning | Annual revenue of ~$1 billion, captures ~98% of ecosystem value; does not allow users to export content |
| Shopify | Neutral (Platform sits in the middle) | Captures ~10-50% of ecosystem value |
| Salesforce | Bullish (Example of World Building) | Invested $300 million in Automattic (reportedly its largest investment) |
| Microsoft | Bullish (Example of Platform Building) | In the Windows 95 era, for every $1 earned, the ecosystem earned $20 |
| Amazon/AWS | Bullish (Example of API-Forced Decoupling) | Requires all services to communicate via public APIs, no private communication |
| Calm | Bullish (Early Investment) | Mullenweg invested in 2012 |
| Ring (DoorBot) | Bullish (Early Investment) | Struggled to secure funding at the time |
| Flickr | Neutral (Historical Case) | Founder Stuart later founded Stock (sold for $29 billion) |
| Bitcoin | Neutral (Early Adopter) | WordPress.com once accepted it; price was $12 at the time; has since stopped accepting |
| Ethereum | Neutral (Monitoring) | Vitalik once wrote an article for Bitcoin Magazine about WordPress accepting Bitcoin |
| Coinbase | Neutral (Secure Entry Point) | Provides secure access to cryptocurrencies |
| Starlink | Bullish (Future Connectivity) | Will reshape global connectivity |
| Akismet | Bullish (Internal Anti-Spam System) | SaaS service using machine learning to combat spam |
1. “Open and closed are symbiotic, not adversarial” (Mullenweg): The success of open systems attracts parasites, giving rise to closed systems; the excessive success of closed systems prompts the market to unite and create new open standards. This cycle has repeated throughout history—from religion to encyclopedias to finance.
2. “A successful platform should follow the 5% rule” (Mullenweg): Platform creators capture roughly 5% of the ecosystem's value, leaving the remaining 95% for participants. In the era of Microsoft Windows 95, for every $1 earned, the ecosystem earned $20 (a 1:20 ratio). Exceeding this ratio "sucks the oxygen out," while falling below leads to a "tragedy of the commons."
3. “Companies die, cities live” (Mullenweg, citing Jeffrey West): Cities can survive nuclear explosions and continue to exist. The goal is to build organizations that "outlive their founders"—like cities, not companies.
4. “The best companies are ‘world-builders,’ not just product makers” (Mullenweg): Salesforce's Trailblazer series, Elon Musk's "Mars world," WordPress's "democratize publishing"—all create a world with a philosophy, mythology, and ecosystem.
5. “Level five of distributed work: Teams are more efficient than any office-based team” (Mullenweg): Measure by results, not process; a global talent pool (the geographic limitation excluding 99% of the population is artificial); asynchronous collaboration enables 24/7 handoffs (an early 10-person team completed 15 days of work in 5 days).
6. “Underestimated consumers: People will read and write tens of thousands of words on their phones” (Mullenweg): Automattic's Atavist publishes articles exceeding 10,000 words monthly, with strong demand. Quibi's failure proves the assumption that "people only want short videos" is wrong.
7. “The hardest part is distinguishing between ‘correct but misunderstood’ and ‘stubbornly wrong’” (Mullenweg): The enterprise business once faced board discussions about shutting it down; he insisted on keeping it, and later Salesforce invested $300 million. But he admits there were cases where "it should have been shut down but was held onto for too long."
8. “Scrutinize every decision: If repeated for 50 years, what would the outcome be?” (Mullenweg): Take open-source projects as an example—hiring all contributors (as when MySQL was acquired, 98% of contributions came from employees) stifles the ecosystem in the long run; helping contributors find jobs at other companies will drive those companies to give back to open source.