Automattic's Wordpress: the company without a price tag

The world’s most functional and accessible blogging platform is perhaps the hottest internet properties that isn't up for sale. But how long before it gets an offer it can't refuse?

Last week, Yahoo CEO Marissa Mayer once again put the company credit card to good use with her $1.1 billion acquisition of the blogging platform, Tumblr.

It's Mayer's 12th acquisition since her appointment last July and less than a week since her big spend on Tumblr, she’s reportedly on the hunt for video service Hulu.

Needless to say, Mayer has demonstrated that she is willing to do, and spend whatever it takes to turn around Yahoo's fortunes. But if money is no object, and any company is fair game, then why didn’t Mayer invest in the one platform that is silently, but surely dominating the internet: Wordpress? 

Last year it was estimated that almost half the blogs in the world are powered by the Wordpress operating system. It also recently reported that it has over 50 million users worldwide, a significant jump from the four million it reported five years ago.

Wordpress is consistently ranked as the world’s most functional and accessible blogging platform. It’s run by company called Automattic, which aside from the odd media mention and the occasional blog post from its founder Matt Mullenweg, flies under the radar.

Its growth prospects make it the perfect candidate for an acquisition. But there’s a catch, Wordpress is a company without a price tag. And before investors start drooling, its not looking to list any time soon either.

Truth is, it doesn’t need to. As Mullenweg explains in a recent blog post:

“Automattic is healthy, generating cash, and already growing as fast as it can so there’s no need for the company to raise money directly — we’re not capital constrained.”

“We’re building an independent company that’s going to be a growing part of the fabric of the web for many years to come.”

The idea of maintaining independence is rare in an era where some startups are founded on the concept of hitting paydirt through being absorbed by one of the tech titans.

But so far, Mullenweg has been a man of his word. Back in 2007, he could have sold out for a rather sizeable $200 million sum, but he declined the offer. A good move on his part, given that Automattic’s been recently valued by Fortune magazine at being around $1 billion.

Wordpress' secret sauce

Mullenweg’s success in keeping Automattic independent comes as result of two factors: he created a strong business model and found patient investors.

The company’s main business, Wordpress.com, operates on a freemium model where you can start a blog for free but will have to pay to tweak your site and make it unique from any of the default themes.

But the real genius of the model lies in the way it gets an injection of cash no matter what its users do. Even if they don’t invest in any of the add-ons and still generate clicks, Automattic gains some revenue from the advertising placed on the user sites.

The site also generates a significant amount of income from charging news sites to run their blogging platforms. The company last year reported revenue around the $45 million mark, but we’re yet to get an update on that figure - which may now be substantially bigger due to the company’s rapid growth.

As for its investors, Mullenweg has opted for companies that are either happy to wait for a return or that have an interest in the site remaining independent.

Keeping shareholders happy

One of the company’s major investors is The New York Times, which uses Wordpress’ systems at the core of its business. That integral synergy means that the New York Times isn't after a return but rather the guarantee of a stable, secure content management system.

As for its other investors, Mullenweg hinted in his blog post that they will be rotated out of their shares using funds from newer investors. As Mullenweg explained, the company doesn’t need to raise capital, so it can use the funding to remain independent.

It’s a solid plan, and so far it seems to have paid off for Mullenweg and his ever growing team. Automattic is also expected to hit 200 employee mark at the end of this year.

Its success relies on the continued growth of Wordpress, and given that it has already moved into being more than a blogging company and providing the back-end systems for numerous publications, that seems likely.

The real question for Wordpress and Automattic is the price tag. Is there an amount that’s simply too high for Mullenweg to refuse? And what would his investors say if he turned it down?

Automattic’s in a situation that most start-ups and established companies could only dream of, but one wonders just how long this idyllic set-up can last.