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.