Much has been made about the verbal and legal spat between Automattic/Matt Mullenweg and WP Engine. There are plenty of arguments to be made for each side.

However, I’d like to examine what I see as a broader issue. And it has nothing to do with Mullenweg’s role as project leader and Automattic CEO (there’s already plenty of debate regarding that).

The WordPress co-founder’s blog post, entitled “WordCamp US & Ecosystem Thinking”, calls out Silver Lake – the private equity firm that runs WP Engine:

WP Engine has good people, some of whom are listed on that page, but the company is controlled by Silver Lake, a private equity firm with $102 billion in assets under management.  Silver Lake doesn’t give a dang about your Open Source ideals. It just wants a return on capital.

Matt Mullenweg

Think what you will of Mullenweg, WP Engine, or Silver Lake. The debate has dominated the community. Fair enough.

Private equity’s role in WordPress hasn’t gotten much attention, though. We shouldn’t let it get lost in the noise, though. These firms could have a major impact on the long-term health of the ecosystem.

Let’s discuss what that might mean for the future of WordPress and its users.

The Community Builds It, Private Equity Buys It

One of my favorite aspects of the WordPress community is how organically it came together. It felt like a bit of magic took hold.

I started using the content management system (CMS) because it filled a need. I wanted to build websites on a platform that could be customized and extended. Something that didn’t have a massive learning curve. WordPress turned out to be the perfect fit.

The tool was amazing and the community even better. I found friendly folks who exchanged ideas and code snippets. Friendships were formed. It’s a big part of why WordPress has lasted 20+ years.

I’m not alone in that experience. Others became interested in WordPress and built a career around it. Some of us became developers or power users. Others started theme or plugin shops. A few big thinkers opened WordPress-focused web hosting companies.

This innovation didn’t come from giants like Google or Microsoft. It rose from the bottom. Think about how many small teams and solo entrepreneurs entered this space. They built the robust ecosystem we have today.

Private equity firms tend to notice when an ecosystem is thriving. It happens in every sector. Everything from healthcare, to housing to veterinary clinics is on their radar.

They often enter a market by buying up successful businesses. They’re a natural match for entrepreneurs who are ready to sell.

It makes sense. There’s no need to start from scratch when you can acquire a business with an established foothold.

However, private equity firms aren’t necessarily obligated to keep things as-is. And that’s where things can take a turn for the worse.

A Different Perspective on Contribution

Many of the entrepreneurs in the WordPress ecosystem also participate in the community. They attend WordCamps. They contribute to the open-source project. Some are even thought leaders.

Those who have made a living with WordPress often want to give back. It fits with a long-term vision of a thriving community. Everyone stands to benefit from these efforts.

That’s not always the case when private equity comes into the picture. The hallmarks of a worst-case scenario are all over the news. Some firms cut corners. Customer service and product quality take a nosedive.

The long-term isn’t much of a consideration. Squeezing every ounce of profit is the priority. If the whole thing crumbles, so be it. You can always move on to the next thing.

The WP Minute spoke1 with Carl Hancock, CEO and co-founder of Gravity Forms. He pointed out “significant differences” between private equity and venture capital investments.

“While both provide investment, their goals and approaches are quite different. Venture capital focuses on the long term, nurturing brands and helping founders build sustainable businesses, often with an eventual exit in mind. They mentor and support companies to grow and innovate.”

“Private equity, on the other hand, is laser-focused on the exit. They typically work within a set timeline, often 3-7 years, aiming to flip the company through an IPO or sale—frequently to another PE firm—starting the cycle again. Their strategy involves making the company look good on paper, often through acquisitions and aggressive cost-cutting.”

Hancock isn’t a fan of private equity, adding “In general if a PE acquires something I love… It usually makes me shudder. Because I know the clock has started.”

It’s the antithesis of what the WordPress community has built over the past two decades. It’s not people helping people while still making a profit. Rather, it’s about getting what you can while you can.

The idea of contribution comes in a distant second place. Fair or not, that’s the reputation of private equity. 

Private Equity Is Already Here

It’s worth noting that the WordPress ecosystem is no stranger to private equity. Silver Lake’s investment in WP Engine is the one getting the most attention. But there are others.

Popular plugins like RankMath, WP Rocket, BackWPup, and more are part of a firm called group.one. Plugin developer StellarWP is part of Liquid Web, which is owned by One Equity Partners. Managed hosting provider Kinsta has received investment from McCarthy Capital.

These are just examples. It shows that WordPress has grown to the point where investors are interested. Time will tell their ultimate impact on the landscape.

Awesome Motive founder Syed Balkhi tells The WP Minute that most private equity funds have a 10-year term, with the option for a 2-year extension. According to Balkhi, “…this means that if I invest as an LP (limited partner) in a PE fund…they have to give me my money back plus returns in year 10 and definitely no later than year 12.”

Balkhi also pointed us to “The Private Equity Fund Life Cycle”. It’s a good read for those unfamiliar with how these investments work. I certainly came away with an education.

Awesome Motive is known for its acquisitions in the WordPress space. For his part, Balkhi says his firm differs from private equity: “We’re bootstrapped. I have no investors, and I’m committed to the long-term of the community. We focus on the products and continue to make them better…PE incentives drive people to have short-term thinking. They make short-term decisions due to their horizon.”

Balkhi says he is an investor in several PE funds. He says there’s a personal motivation to “create a different kind of exit/investment option for our community and fellow bootstrapped entrepreneurs”.

Even with a short timeline, much is up to the investor. They can choose to improve a product or service and give back. Thus, it may be all about finding the right people to come in.

The Threat to WordPress

Perhaps having a few private equity-owned WordPress products isn’t a big deal. There’s always hope that these companies will see the light. Maybe the community can show them how contributing can pay dividends now and in the future.

After all, it’s not whether a firm can contribute to WordPress. It’s more about their willingness to make a commitment.

However, the limited-term nature of their investments may make this difficult. And what happens after they exit? There’s no guarantee that the next investment group will be good stewards.

The real threat is an ecosystem controlled by a few big firms. Imagine private equity purchasing all the top SEO or form plugins. Or if they were to acquire every popular WooCommerce payment gateway plugin.

Free features might be eliminated or cut to a bare minimum. The price of premium products could skyrocket. Products and services could become stagnant. And any legitimate competitor could be scooped up and placed under the same portfolio.

That’s only half the potential catastrophe, though. Companies that are in it for the short-term may not be compelled to give back to WordPress core.

Do you think the pace of WordPress innovation is slow now? Wait until there are fewer companies donating time to fix bugs and build new features.

What’s left is a CMS and community running on fumes. How long until neither party can stay afloat?

What Can the WordPress Community Do?

If any of this sounds alarmist, I hear you. However, I think it should concern anyone who cares about WordPress. 

I also hear those who want to talk about leadership and governance. Those are also worth discussion. But they’re not the only things that should be on our mind.

It’s easy to focus on what’s in front of us. The legal battles and accusations are understandably attention-getters. Things are messy – you’ll get no argument from me.

On the other hand, none of what I described is impossible. Private equity has turned a few industries on their head – with real consequences. To say it can’t happen here is out of touch with reality.

As consumers and business owners, we can only control so much. We can encourage companies to do right by their customers and by WordPress. We can do our homework and buy according to our values.

Maybe that’s not a lot. But it might be our best bet to preserve the future of our favorite CMS.

WP Minute Founder, Matt Medeiros works full-time at Rocketgenius (maker of Gravity Forms). The company had no influence on this article, and the interview was performed by Eric Karkovack.

Join The Newsletter

Get your favorite 5 minutes of WordPress news for busy professionals every week — 100% Free! Join the WP Minute Newsletter below 👇

Hidden

Similar Posts