Automattic CEO Matt Mullenweg Admits Tumblr Acquisition Was a Missed Opportunity

Six years after acquiring Tumblr for a fraction of its original price, Automattic CEO Matt Mullenweg finally admitted what many have long suspected: the acquisition hasn’t worked. At WordCamp Canada 2025, Mullenweg called Tumblr his “biggest failure or missed opportunity right now,” a remarkably candid confession about a platform that has hemorrhaged value while draining resources from his company’s profitable ventures.

It seems like the admission carries weight. Yahoo paid $1.1 billion for Tumblr in 2013. Then about six years later, Automattic acquired it for approximately $3 million which is less than 0.3% of that original valuation. Yet even at that bargain-basement price, the blogging platform continues bleeding money, sustained only by the profits of WordPress.com, WooCommerce, and Automattic’s other products.

The Technical Trap

Unfortunately, the core problem has been the same since the acquisition day. Tumblr runs on completely different infrastructure than WordPress. Mullenweg had intended to migrate Tumblr’s half a billion blogs to WordPress infrastructure, a move that would simplify maintenance, reduce operating costs, and enable integration with the open social web known as the fediverse.

That migration was put on hold earlier this year. The undertaking proved to be far too expensive given Tumblr’s financial reality. Moreover the platform wasn’t profitable and showed no clear path to profitability. Mullenweg explained at the conference.

“I need to switch it over to WordPress, but it’s a big lift. It’s over 500 million blogs, actually, and, as a business, it’s costing so much more to run than it generates in revenue,”

The WordPress migration would have delivered a bonus feature which is a fediverse integration via ActivityPub, allowing Tumblr users to connect with Mastodon, Threads, and other decentralized social platforms. That opportunity is now indefinitely postponed, representing yet another missed window for the struggling platform.

The Cost-Cutting Cycle

Automattic has repeatedly tried to make Tumblr sustainable with the means of financial engineering as opposed to product innovation. The company implemented layoffs and reallocated Tumblr resources to some more profitable divisions. In April 2025, Automattic cut 16% of its global workforce which is approximately 281 employees across 90 countries. Tumblr was among the hardest-hit divisions.

These measures haven’t solved the main problem though. Tumblr continues operating as a technical island within Automattic’s ecosystem. It continues to require separate maintenance, development resources, and infrastructure spending that doesn’t translate to any meaningful revenue. The platform exists in operational limbo. It’s too large to abandon, too expensive to properly maintain and too unprofitable to justify the huge investment needed for real transformation.

The pattern actually mirrors broader challenges facing Automattic. The company reported $710 million in revenue for 2024, an 11.2% increase from the previous year. Yet investor BlackRock marked down its Automattic investment by 10% in late 2024, suggesting concerns about the company’s $7.5 billion valuation from 2021.

Lessons from the Ruins

Tumblr’s trajectory tells us a cautionary tale about acquisition strategy in the technology sector. Yahoo’s original $1.1 billion purchase represented the company’s largest acquisition, with then-CEO Marissa Mayer promising not to “screw it up.” Within three years, Yahoo wrote down Tumblr’s value by $230 million. When Verizon acquired Yahoo in 2017, Tumblr was already a failing asset.

Moreover , Verizon’s mismanagement accelerated the decline. The company banned adult content in December 2018, alienating core user communities and triggering a major traffic collapse. Monthly visits dropped from 521 million in December 2018 to 381 million by July 2019, a shocking 27% decline in the time frame of seven months.

Automattic inherited this damaged asset, acquiring not just a platform but approximately 200 Tumblr employees and the associated infrastructure costs. The total acquisition expense far exceeded the nominal purchase price. Mullenweg noted that taking on the workforce and operational costs represented

“by far the largest investment or acquisition Automattic has ever made.”

Leadership Crisis

Mullenweg’s Tumblr confession comes amid rising questions about his leadership and Automattic’s strategic direction. The CEO has spent much of the past year embroiled in a contentious legal battle with hosting company WP Engine, which he publicly called “a cancer to WordPress” at WordCamp US in September 2024.

The dispute turned very ugly. WP Engine alleged that Mullenweg demanded 8% of its annual revenue, approximately $32 million, and threatened a “scorched earth nuclear approach” if the company refused. A federal judge later dismissed major antitrust and extortion claims against Automattic and Mullenweg, though other allegations continue.
The WordPress community has badly fractured under all this pressure. In October 2024, 159 Automattic employees accepted buyout offers, making up approximately 8.4% of the workforce, after Mullenweg offered $30,000 or six months’ salary to anyone who disagreed with his stance on WP Engine.

In January 2025, Automattic slashed its WordPress open-source contributions from 3,988 hours weekly to just 45 hours, a 99% reduction that shocked the developer community and was also extremely ridiculous. Prominent tech journalist Kara Swisher, who once worked with Mullenweg on early WordPress projects, wrote on Threads:

“What a pathetic turn for him into a stone-cold asshole.”

The Unspoken Alternative

At WordCamp Canada, Mullenweg’s candor about Tumblr stood in stark contrast to his approach on other topics. When he was asked about the WP Engine controversy, he carefully avoided terms like “bad actors,” instead referring to “bad actions” and hinting that Automattic should create incentive systems for better behavior in the WordPress ecosystem.

He promoted WordPressEngineTracker.com, a site tracking migrations away from WP Engine, claiming nearly 100,000 sites had switched hosts since September 2024. When a court ordered the site be taken down temporarily, Mullenweg cunningly characterized it as an attempt to “muzzle free speech and transparency”. This was a framing technique that positioned him as defending open principles while at the same time, wielding considerable control over WordPress.org resources.

Shedding some light on the actual disconnect here, on one hand, Mullenweg champions the ideals of community and openness. On the other, he keeps tight personal control over the project’s most critical systems. This has understandably made the WordPress community nervous, and people are starting to ask,

“Do we really want to be in a position where one person can make a huge decision we all disagree with?”

What Happens Next

Mullenweg insists he hasn’t given up on Tumblr. “It’s probably my biggest failure or missed opportunity right now, but we’re still working on it,” he said. Yet “working on it” currently means cost reduction, not transformation. The WordPress migration remains indefinitely postponed. The fediverse integration won’t happen without that migration, or would require building entirely new functionality on Tumblr’s existing codebase which too seems next to impossible. 

The platform exists in a state of a somewhat managed decline. It’s maintained but not improved, supported but not invested in, kept alive but not thriving. The half billion blogs remain, but so do the core issues that have plagued Tumblr since Yahoo’s acquisition more than a decade ago.

For Automattic, Tumblr represents the darker side of acquisition strategy in technology. The platform carries brand recognition and a loyal (if diminished) user base. The company has crushing operational costs and debt.

Moreover, the potential for monetization is quite less . Automattic faces a rather unpleasant choice. Either it can continue subsidizing Tumblr indefinitely and actually make the expensive investment to properly integrate it, or finally admit defeat and sell or shut down the platform.

Mullenweg’s public acknowledgment of failure shows that he recognizes these realities. It is yet to be seen if this recognition translates into any meaningful action or simply more years of managed decline.

For now, Tumblr stands as a monument to the challenges of platform acquisition. A billion-dollar dream that became a million-dollar money pit, sustained by the uncomfortable truth that sometimes the hardest decision is admitting when it’s time to let go.