The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:48:37 · Harry Stebbings, Jason Lemkin, Rory O'Driscoll
[00:48:37] S0: think he should be freed? [00:48:38] S2: I mean, he seemed like the biggest scammer of all mankind when the... What was this all way back in 2023? It is weird he didn't enrich himself as far as we know materially, right? It is weird that... This is very arguably, very arguably. It's of course terrible that he moved assets between Alameda Research and... It's terrible, but the argument that it was allowed by terms of use is an interesting argument. It is an interesting argument. He did not self enrich. The reality is if you use a generous version of made whole, folks were made whole, should he go to jail for most of the rest of his life and have to pay 11,000,000,000 when he get out? It seems like a lot in the era of sentient AI that could kill us all. It does seem like a lot today. But at the time, you know, Silicon Valley Bank failed. I lost 10,000,000 over the weekend. I don't know about you guys. It seemed like it was just desserts at the time. Right? [00:49:26] S1: For what it's... One, hadn't prepped on this because it wasn't on the list. And I don't like a part... My wife, who is a lawyer, gets mad when I practice law without a license. But I will say it was so low down, Harry, I didn't think we'd get to it. You never do. [00:49:38] S0: Oh, that we get. Well, very honest.
00:49:40 · Rory O'Driscoll
[00:49:40] S1: Very honest. Genuine comment here. Separating the fine, which there might be issues, doesn't matter, but there was misallocation of funds. It was white collar crime. It should be punished. I actually think thirty years was probably disproportionate with... I mean, think... What was it? I'm trying to remember the ex Goldman Sachs guy who misallocated brokered funds and MG Brokerage about ten or fifteen years ago. I I think he walked entirely, I can't from memory think. I think white collar crime should be punished, and it's a shitty world where someone steals $20 and they go to prison and someone else steals $10,000,000,000 and they don't because they're white and upper middle class. But I'm also not sure if thirty years is the commensurate thing. Now the interesting thing is that's not the issue at hand in the Supreme Court. I don't think they're appealing the sentencing... On the sentencing guidelines issue, they're appealing the facts and circumstance of the case. So we'll see. Yeah. And I don't think it matters that fact the that he took the money and was a brilliant investor doesn't excuse him for taking the money. Because by definition, if it worked, then anyone could take money provided it worked. Hey. I stole your money, Harry, but I bought put call options and the stock went up, so we made money. Here's your money back. You shouldn't mind. Well, of course you're going to freaking mind because when you took the money from you, you didn't know what the outcome would be, and there was a 50% chance it would go down. So you're going want that guy punished because you're going to want that behavior stopped because you're not going to want the next guy to think they can do it. So it doesn't matter that he was the most brilliant, genuine... The most brilliant equity investor of our generation between Entropic and Cursor. It just matters if he took money and if that was against the rules, and I haven't heard the terms of service argument, Jason, that will be interesting. If he took money, was against the rules, then he should be punished. If he took money, it wasn't against the rules, then he probably should walk, and the process will take place. Not my problem.
00:51:20 · Jason Lemkin, Harry Stebbings
[00:51:20] S2: What happened to Matt Mullenweg? He was he was out for a day and back. What happened to poor Matt? Did someone not read the bylaws, Rory? What happened? Did someone forget to pull the certificate of incorporation from Delaware? [00:51:29] S0: So so Matt Mullenweg is the founder and CEO of WordPress, and he was ousted by the board, and then he came back and overrode them, it would seem. And now he is back as the CEO, and the power to the founder has reigned true here. He is back as CEO.
00:51:44 · Rory O'Driscoll
[00:51:44] S1: Correct. And this is a company, Automa, that has been the steward of the open source project WordPress, which is one of the most commonly used blogging and website platforms out there. Very successful product. Matt's the CEO of the company that manages the product. I think it's fair to say that the stewardship in the last few years have been troubled. He's been in a big argument with WP Engines about... The argument is WP Engine is a hosting company that is hosting WordPress sites, and I think Automattic wants some of that revenue, so they've been pushing WP Engines. But the way in which he's behaved has been unhelpful to the open source project because it's kind of like, I will use the leverage of my company to try and frankly prevent other people from benefiting from the open source ecosystem, which seems to be antithetical to the idea of it. So I think it's been a troubled situation for a while. I think the truth is the real issue is the world is passing that product. It's kind of a sad little thing because the world is passing that product by and Jason will be able to tell you that you can build most of what you have in WordPress with Lovable or Replit or any one of 10 things. And increasingly, they are, as I've quoted before, the Henry Kissinger thing about academic arguments, the fights are so vicious because the prize is so small. The truth is automatic doesn't matter a damn anymore. It should try and build something new, but it's it's kind of on the tail end of... I mean, to Jason's point about me, it's on the tail end of the tech trends. They should be doing things totally differently to try and survive in the brave new world. Instead, they're arguing internally. So that's kind of the zoom out comment. Within that context, that's kind of the big picture. And the funny thing is, like all litigations, when you get caught up in the detail of the day to day, you forget the big picture. The big picture is this company needs to point WordPress in a forward direction to think about how you take advantage of what's going on in AI and become a relevant player in the next five years, otherwise you won't be. That's the corporate imperative. Instead, the corporate imperative has turned into a pissing match between the board and the CEO, when now it looks like the CEO has won. Congratulations. You've won the poison chalice.
00:53:46 · Rory O'Driscoll
You get to keep your diminishing empire. And it's worth pointing out, this is not a board full of evil VCs. And I've been on boards as an evil VC where you've had to replace the founder. It sucks to the end. This is actually a board of... I think Salesforce is an investor. They have some really good independent board members. They don't need this grief. I'm well about what happened. Like, now down in the tactical weeds, I think Jason probably nailed it. You probably have a board. They probably have a majority. They probably said to the CEO, we're a majority of the board, we're independent directors, we think we should replace you. And my guess is the founder CEO went deep into the bylaws and says, you are the board and you can vote to replace me, but I can actually also vote to replace the board. I'm hereby voting. I've seen this once. I'm hereby voting to replace the board. You're all off the board. Oh, look, the new board is me, my pet dog, and my ventriloquist dummy. And after due consideration, we've decided I would be a great CEO. There you go. And all the independent board members at that point promptly resigned because there's no point wasting your life and getting into a whole bunch of litigation about an ever... Is this... Remember, Jason, your aisle was at the Fortnite Island that's continually You getting are fighting to maintain control of an island that's getting smaller and smaller. So congratulations, Matt. You're in charge. I feel like going, if you are in charge, well, how about you turn this thing around? So, yeah, that's my takeaway of this. It's kind of sad in a way these things happen. People behave how they're gonna behave. I think a lot of other people were involved in that company and put a lot of effort in. You know, one of the guys with Tony was at True Ventures did a lot on it early on. It's kind of a bleh situation. Yeah. It's been pending for a long time and you kind of just go, gosh, I wish there surely should be more of a win win here.
00:55:28 · Jason Lemkin
[00:55:28] S2: Well, Automatic would have been a great company if it hadn't raided venture capital because Matt could do what he cared about, right, which is having a commercial arm of an open source product he created, right, very young. Imagine it's doing 500,000,000 a year, spinning off 200,000,000. It's like a bigger base camp. Those guys aren't venture backable, and they don't give a rat's ass with their 22 Lamborghinis and Panganis and villas in Italy. And they're fine growing 30% at 60,000,000, spinning off 30,000,000 or 40,000,000 in cash here. It doesn't bother them at all, does it? This is... Don't know the full funding history, but one could imagine it didn't really need to raise all this money. A version of it and it might have done just fine. It's easy to say, but that might be the one... And that might be why Matt's frustrated. It would haunt me as well. Companies do get overfunded, boys. And I might be sitting here, I'm like, this could have been 37... Like, I could have been like 37 signals. I could be running this... I didn't need this... What the hell did I need this 800,000,000 and a bunch of people running around doing nothing all day long? I could have run WordPress and Automatic both side by side with 80 people, like DHH and be making 100,000,000 a year and and and who the fuck cares if I'm growing? If this is my mission in life. If you're making 9 figures a year out of your company and your growth is 5% and you're happy and you're and you're doing a good deal for the world, you know, screw you VCs.