Matt Mullenweg, the founder of WordPress, has taken a strong stance against tech investing giant Silver Lake.

• After over 20 years of working on WordPress, Matt Mullenweg is facing his toughest competition yet.
• Silver Lake, the majority owner of WP Engine, is facing a legal battle with Automattic, the company behind WordPress.
• On Thursday, Mullenweg admitted that several of his employees did not share his views and opted for a buyout deal.

Matt Mullenweg, who turned 40 in January, has now spent more than half his life working on WordPress. He's never had such an insane two weeks.

WordPress, a widely recognized content management system, boasts hundreds of millions of sites utilizing its templates, tools, and plugins. However, the WordPress ecosystem is a complex amalgamation of open-source products, nonprofits, for-profit companies, trademarks, and licenses.

WordPress, which powers about 40% of all websites and is known for its typically quiet but important role in the internet, has recently become a major source of tech industry drama, potentially disrupting an ecosystem that has long been viewed as friendly and collaborative due to its longevity and various fun-loving events.

WordPress is an open-source technology that anyone can install and use for free, but its founder and CEO, Matt Mullenweg, is also the founder and CEO of Automattic, a $7.5 billion venture-backed startup. WordPress.com is Automattic's central business, and individuals and companies can pay anywhere from $4 a month to over $25,000 a year for services such as ad products, security, customer support, and inventory management.

In September, a public saga unfolded with Mullenweg, the normally calm character, at its center, fighting against WP Engine, a leading WordPress hosting provider. Silver Lake, a private equity firm from Silicon Valley, bought a majority stake in WP Engine in 2018, investing $250 million and gaining three board seats.

In an interview with CNBC this week, Mullenweg stated that he has been working with WordPress for 21 years and has established strong relationships with all other companies globally.

WP Engine's offense, as stated by Mullenweg and a cease-and-desist letter sent to the company on Sept. 23, centers on years of trademark infringements and WP Engine's assertion that it's making "WordPress accessible to everyone."

"Mullenweg wrote on his personal website on Sept. 26 that Automattic has been trying to make a licensing deal with them for a long time, but they have only been stringing them along. Finally, Mullenweg drew a line in the sand, which they have now crossed."

WP Engine was banned by WordPress from utilizing its resources to serve its customers, which led to a lawsuit filed by WP Engine against Mullenweg and Automattic. Mullenweg responded by calling the lawsuit "meritless" and hired Neal Katyal, former U.S. acting solicitor general, for legal defense.

According to Tomasz Tunguz, a venture capitalist and founder of Theory Ventures, the conflict highlights the ongoing struggle with open-source software.

Tunguz stated that there are legitimate ways to monetize open source and that the commercial entity created by the authors should have control over the commercialization efforts. He also mentioned that hundreds of millions in revenue is at stake between the two parties.

'Silver Lake doesn't give a dang'

Since January, Mullenweg has been actively trying to strike a deal, but finally got fed up and the battle has been years in the making.

The suddenness of the matter was felt by the outside world. Mullenweg first mentioned it in a blog post on Sept. 17, before WordCamp, a four-day event in Portland, Oregon, which began on the same day.

WP Engine was criticized by Mullenweg for not contributing enough back to the WordPress ecosystem. While Automattic contributed 3,786 hours per week to WordPress.org, WP Engine only contributed 47 hours.

Mullenweg conveyed that Silver Lake is not concerned with businesses' and developers' commitment to open-source principles; instead, it seeks a profitable investment.

WP Engine is handling all inquiries regarding the complaint filed against Automattic and Mullenweg on Oct. 2, as stated by a Silver Lake spokesperson. The complaint was introduced by WP Engine, according to a WP Engine representative.

"The filing highlights a case involving the misuse of power, extortion, and greed, which took place in an unexpected setting - the WordPress open source software community. Despite being built on the promise of freedom to create, run, modify, and distribute without restrictions, the community was betrayed by the actions of a few, specifically Matt Mullenweg and Automattic, to the detriment of many, including WPE."

Three days after Mullenweg's initial post, WordPress founder demonstrated his resolve not to back down.

Mullenweg warned the WordPress fanatics at the event that his keynote might be his spiciest WordCamp presentation yet. He then took aim at Silver Lake, naming partner Lee Wittlinger as the man behind WP Engine and comparing him to a "schoolyard bully."

WP Engine will not be present at future WordCamps, according to Mullenweg.

He wasn't done.

Mullenweg wrote in a post titled "WP Engine is not WordPress" that even his mother couldn't differentiate between the two, and he accused WP Engine of profiting off the confusion and needing a trademark license to continue their business.

His mom wasn't the only one confused.

Bob Perkowitz, the president of ecoAmerica, an environmental nonprofit, has known Matt Mullenweg for 16 years and is also an investor in Automattic. Perkowitz has been using WP Engine for his organizational and personal websites for a long time. He tuned in remotely to hear Mullenweg's WordCamp presentation.

"Perkowitz stated in an interview with CNBC that he believed WP Engine was part of WordPress, but he found them to be misleading and not contributing to the community."

Perkowitz stated that he will have his website administrator transfer all websites to different hosting providers.

WP Engine sent Automattic's legal chief a cease-and-desist letter on Sept. 23, accusing Mullenweg of using a "scorched earth nuclear approach" in his WordCamp keynote. The letter claimed that Mullenweg had demanded a large sum of money before his speech, which WP Engine refused to pay.

The letter stated that Mullenweg's "false, misleading, and disparaging statements are legally actionable."

WP Engine was banned from WordPress.org's resources two days later, as Mullenweg wrote on the WordPress.org site. He urged WP Engine's customers to contact the company and request a fix.

WP Engine was temporarily unblocked by WordPress and given until October 1st to agree to the terms of a licensing agreement, which Mullenweg made public. The key aspect of the deal is that WP Engine would pay a royalty fee of 8% of monthly revenue to Automattic or hire 8% of revenue "in the form of salaries for WP Engine employees" to work on WordPress features for WordPress.org.

No deal was made. The ban went into effect Oct. 1.

Mullenweg's critics found his actions towards WP Engine customers to be harsh and clumsy. Mullenweg believes that his critics do not comprehend the length of time he has been attempting to reach a deal.

"They've been delaying forever," Mullenweg told CNBC. He decided, "I'm going to finally start talking about the evil stuff you're doing unless you talk to me," he said.

Fighting back

On Wednesday, WP Engine filed a lawsuit against Mullenweg and Automattic, without any negotiation.

Mullenweg is being accused of slander and libel by WP Engine, who claims that the WordPress founder has conflicts of interest in managing the community and his company, given the open-source nature of the technology.

"The lawsuit alleges that Defendants have been implementing a scheme to exclude WPE from the WordPress community unless it pays Automattic millions of dollars for a supposed trademark license that WPE does not require. The plan was sudden and gave WPE only 48 hours to either agree to pay or face the consequences of being banned and publicly discredited."

Mullenweg responded to WP Engine's jury trial demand by calling the lawsuit "baseless" and "flawed from start to finish."

Mullenweg admitted on his personal website that the ordeal was causing a significant internal conflict at his company.

Mullenweg wrote that it was evident that a significant portion of his Automattic coworkers did not share his views and the course of action.

He announced that he would provide buyout packages worth $30,000 or six months of salary, whichever is greater, to anyone who resigned before early afternoon Thursday. Those who accepted the offer would not be eligible to "boomerang," or return to the company later.

159 people, or 8.4% of the workforce, accepted the offer while 91.6% who chose to stay declined a collective $126 million.

Mullenweg concluded by saying, "now I feel much lighter."

"Mullenweg expressed gratitude and appreciation for those who accepted the offer, and even more excitement to collaborate with those who declined $126M to remain. He concluded with, "As the kids say, LFG!""

Despite Mullenweg's enthusiasm and gratitude for his remaining employees, the WordPress community is in disarray. Numerous WP Engine customers are facing difficulties, and Automattic is preparing for a legal battle against a private equity firm with over $100 billion in assets.

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