Tech CEO’s Shock Confession: “My Biggest Failure”—The $7.5 Billion Crisis at the Heart of the Internet
Matt Mullenweg, the founder of WordPress, admits the Tumblr acquisition is “costing so much more to run” as a massive investor markdown slashes his company’s value by 63%. In a dramatic confession that has rocked the tech world, the man behind WordPress—the platform powering over 40% of the world’s websites, has publicly labeled his company’s most high-profile deal a failure.
Speaking at WordCamp Canada 2025 in Ottawa, Mullenweg described Automattic’s 2019 acquisition of Tumblr as “my biggest failure or missed opportunity right now,” pulling back the curtain on the financial and strategic strain it has placed on his company. The statement came amid confirmation that Automattic’s valuation, once a soaring $7.5 billion had been marked down by investors including BlackRock by nearly two-thirds, signaling deep concern about profitability and operational efficiency.
The revelation comes as Automattic faces a mounting legal battle with WordPress hosting firm WP Engine, which it accuses of leveraging the open-source WordPress ecosystem for profit without sufficient reinvestment into the community. While Mullenweg avoided labeling WP Engine as “bad actors,” he acknowledged “bad actions” and called for stronger governance and incentives for ethical participation within open-source frameworks.
The intertwined crises—a costly acquisition, collapsing valuation, and escalating legal confrontation, paint a picture of a company at a crossroads. Once the symbol of digital freedom and decentralized creativity, Automattic now embodies the tension between idealism and financial pragmatism. For many observers, this marks a test not just of Mullenweg’s business acumen, but of whether open-source leadership can survive the realities of billion-dollar capitalism.
The $7.5 Billion Failure: The Tumblr Money Drain
Mullenweg’s admission wasn't just humble; it was financial. He told the audience of developers and business leaders that Tumblr, home to over 500 million blogs, is simply a massive drain on cash.
“It’s costing so much more to run than it generates in revenue,” Mullenweg stated, detailing the technical and financial nightmare of maintaining the platform.
This isn't a small problem for a company once valued at $7.5 billion. The market unease over these losses has already hit the balance sheet:
- The Valuation Drop: Institutional investors like BlackRock Inc. have marked down their stake in Automattic by a staggering 63% since 2021.
- The Real Cost: This markdown values the company’s private shares at a fraction of their previous worth, reflecting investor anxiety over how a mission-driven company can sustain a loss-making empire.
Automattic, which also owns WooCommerce and WordPress.com, has been subsidizing Tumblr’s steep operational costs, forcing the company to make cuts, including layoffs, while they struggle to make the platform profitable.
Matt Mullenweg
When Community Code Goes to Court: The Legal War
The drama isn't limited to the balance sheet. WordCamp Canada 2025 took place under the shadow of a separate, fierce legal fight that threatens to redefine the entire open-source software economy.
Automattic is locked in an intense dispute with major hosting provider WP Engine over the use of WordPress trademarks and what it means to ethically profit from a community-built, free codebase.
Mullenweg, while avoiding calling WP Engine a "bad actor," referenced "bad actions," hinting at the gray zone that exists when the free code of the community becomes a corporate commodity.
The legal fallout has been toxic and public:
- Public Feud: Mullenweg previously called WP Engine "a cancer to WordPress" in a highly controversial blog post.
- Community Division: The dispute has led to a proposed class action lawsuit against Automattic by a WP Engine customer, accusing the company of abusing its power over the WordPress ecosystem.
- The Showdown: Automattic had even blocked WP Engine from accessing critical WordPress.org resources, causing an immediate disruption for millions of websites until a U.S. judge later granted a preliminary injunction, forcing Automattic to restore access.
Legal experts warn that these battles could set a critical precedent for how huge companies can leverage and profit from open-source projects in the future. It’s a conflict where the luxury of a free community is crashing directly into the rules of corporate law.
Leadership, Transparency, and the New Tech Reality
The conference in Ottawa, against its stunning autumn backdrop, became a stage for a new kind of executive leadership.
Mullenweg's transparent admission—that moving Tumblr onto the more cost-efficient WordPress infrastructure is a huge, expensive task involving "over 500 million blogs"—didn’t just generate headlines; it built credibility.
As Sarah Guo, a prominent Silicon Valley investor, put it: “The open-source model gives you resilience and scale, but not necessarily predictable returns. The leaders who succeed will be those who design governance and revenue systems as intelligently as they design their code.”
For the public, this high-stakes tech drama offers a rare look behind the scenes: a reminder that even the biggest digital platforms face real financial pressures, and that the ideals of a free internet must somehow coexist with the harsh, bottom-line reality of a multi-billion dollar business.
The challenge for Matt Mullenweg and Automattic now is clear: to find a path to profitability that doesn't compromise the community spirit that made WordPress the internet’s dominant platform.
