Why I think Marissa Mayer should buy Automattic

September 12, 2012 | 9 comments

WordPressPandoDaily reports that Yahoo! has sold half its stake in Alibaba for $4.5 billion. Their take is that Yahoo! needs one or two big products to turn the company around, and that Marissa Mayer should look to successful large acquisitions like PayPal and YouTube.

I agree. And I can’t think of a better company for them to buy than Automattic, the company behind WordPress.

For every 100 new domains names in the US, 22 of them run WordPress. Around 10% of all websites in the world run WordPress. Those are two amazing statistics.

Automattic’s CEO, Toni Schneider, worked at Yahoo!, and actually created the Yahoo! Developer Network. Meanwhile, the open source WordPress now contains Jetpack, a tool that links each disparate installation to the WordPress.com hub.

Automattic makes around $45m a year, with a valuation of $300-500m. Yahoo! can afford that, with or without the Alibaba transaction.

What would it get, beyond a connection with the platform powering between 10-20% of the web? Well, let’s think about Yahoo!’s origins: a curated index of the web. Not algorithmic search, but edited channels that were the best of the web for any particular topic.

In the mid-2000s, Yahoo! acquired Flickr and Delicious. It no longer has the latter, but it’s started hiring again for the former. Flickr’s a great way to find photos of things or collections of things. (And of course, Delicious was too.)

Yahoo! also has a pretty cool set of semantic API technologies under its belt, for extracting meaning from free text, for example.

By curating content from blogs, Flickr, its Hollywood connections, plus integrating with its APIs and content-specific grouping and filtering tech, it has the potential to be how we find new content online. (Google, of course, is how we find specific content that we know we need, Facebook is how we keep in touch with our friends, and Bing is trying to be Google.)

Is Yahoo! a technology or a media company? It could be neither: a platform company, in the truest sense of the word. It can provide a platform for content creators to find an audience, and for audiences to find interesting content. That’s still, really, missing in 2012.

Going back to WordPress, what if Yahoo! integrated its own ad platform with WordPress, allowing bloggers to make money from their content quickly and easily, while simultaneously finding an audience through curated topical channels? What if it then acquired the OpenPhoto Project (run by another Yahoo! alumnus) and pulled the same trick there, integrating those photos with Flickr and allowing photo owners to pull the Flickr trick of allowing licensing through Getty? Rinse and repeat for video and other partnerships.

Yahoo! could embrace the distributed, creative anarchy of the web while at the same time consolidating an ad presence, declaring once and for all what it actually does, and – I would argue – positioning itself to take over from other, declining media models.

WordPress, meanwhile, would gain from Yahoo!’s resources, assuming the Automattic team and the WordPress open source community retained control. And an unconstrained Matt Mullenweg would make both companies fly.

Related entries

9 Comments

  1. Now this makes sense

    Richard Jones September 12, 2012 (7:44 pm)
  2. unlikely Automattic would sell to Yahoo… or at least I hope not.

    Chuck Reynolds September 12, 2012 (7:56 pm)
  3. Yes, provided that yahoo promise not to just let it rot like every other product they’ve bought.

    At least if they sucked up Automattic the open source wordpress could continue being developed, avoiding the fate of the likes of Flickr and Upcoming.

    While I wish Marissa Mayer all the best, I have no love for Yahoo whatsoever and I think it’ll take a lot to turn the company around.

    Marcus Povey September 13, 2012 (12:59 am)
  4. I don’t think it would go that way. If Yahoo buys Automattic, I am going to turn off Jetpack straight away and so would a lot of other people. I imagine there would be a fork of the open source WordPress and calls for a nonprofit foundation to oversee it. Automattic has the trust of the open source WordPress community and is a good custodian. Yahoo has none of that. It would be similar to the debacle surrounding Oracle’s purchase of Sun. Matt Mullenweg knows where his bread is buttered so I strongly doubt this would ever happen.

    Next you’ll be telling us that Yahoo should buy Curverider :)

    Matthew Leifer September 13, 2012 (3:50 am)
  5. While this may sound great for Yahoo, I would fear that such an acquisition would spell the demise of WordPress (.com) as a usable service. While things would plod along initially, Yahoo has a bad habit of letting things rot… although this is a new Yahoo under Mayer…

    Paul O'Flaherty September 13, 2012 (5:42 am)
  6. I definitely agree with all of that. They would have to make serious assurances that the WordPress community remained intact – which of course it would, because the open source community isn’t the same as Automattic. In fact, Curverider (the commercial company founded to support Elgg) is a great example, because it functionally doesn’t exist any more – it’s part of Thematic Capital. TC don’t have any influence at all over Elgg development, although they do own the name, domain names and branding. The Elgg community flies on its own.

    Ben Werdmuller September 13, 2012 (8:02 am)
  7. This makes a hell of a lot of sense. Especially from Yahoo’s perspective.

    The only issue I would foresee is the willingness to sell from Automattic (but cash usually trumps this argument eventually), and the community backlash. Yahoo would have to be extremely hands off in their running of the company, and yet tie in a few key integrations in terms of advertising and channels.

    They could possibly heavily promote their channels as Worpress plugins, and battle for installations in a more organic way, instead of forcing installations. This could possibly appease the community and instil a real belief in a new hands off approach from Yahoo.

    If they dive in head first and try to take control of what is a vibrant global community, they will get their fingers burnt….again.

    Remy September 13, 2012 (8:31 am)
  8. [...] Expected to do $45mthis year.Had a valuation of $150-200m early ’08, and expected to be twice that now. [...]

  9. I dont think Automattic would sell to any company anytime soon. They are better off independent as they have full control of their company

    James October 23, 2012 (10:17 am)

Leave a comment