As announced by Automattic and covered by TechCrunch, I want to take a moment to welcome Elijah Potter and Harper to join Automattic. Harper is a super-fast (way faster than LanguageTool and Grammarly), local English grammar checker. The technology is nascent, but I’m very excited to embed this throughout all of Automattic’s products, and then expanding it to other languages, all in an open source way that can be embedded everywhere. I’m a huge fan of Grammarly and use it every day, but I think we’re doing too much in the cloud right now and there is so much compute and potential at the edge, and I’m excited to drive that forward with projects like Harper, Gutenberg, and Playground.

Last Friday we said goodbye to 159 colleagues as part of our alignment offer. It was a tough day, there are a lot of close relationships within Automattic, and goodbyes are always hard.

On Monday, I got to be Oprah for a few minutes. We had scheduled a town hall for leaders around the company to speak to everyone, and our Woo team had ~350 people in person at a meetup in Tulum. I had five minutes to talk, and over the weekend, I had been brainstorming with finance and HR for something nice we could do for everyone who stayed. We couldn’t give them all a six-month bonus, which would have cost ~$126M, but we did take how much we spent on severance for the 159 people, rounded up a bit, and granted everyone at Automattic 200 shares of A12 stock, so about a $12M bonus for the employees.

What’s A12 stock? This is probably the first time you’re hearing about it, we haven’t had a chance to talk about this publicly much before.

Usually, options or common stock in a private company is fairly illiquid, with rare opportunities to sell or lots of restrictions like what Uber had; it’s not an efficient or predictable market. Options are “nice” because they can defer taxes, but you still have to exercise them, and they can go underwater. Also, as a fully distributed company, we have people in 91 countries, so security and tax laws around options make them not worth it in most places outside of the US.

When thinking about a stock plan for Automatticians, we thought, our most sophisticated investors have nice protections like a 1x liquidation preference, what if we gave that to employees, too? So to summarize, A12 is a special class of stock available only to buy if you’re a current Automattician with these characteristics:

• There are twice-a-year windows to buy. You have to hold for 1 year, but then there are quarterly windows to sell, which is very predictable.
• Automattic maintains the internal market, and provides a backstop so you can always sell the shares at what you paid for them or more, like a 1x liquidation preference.
• Current employees can buy, but former employees are eligible for every selling window, there’s no politics like can happen with tender offers. It’s reliable and predictable.
• Unlike options, A12 stock never expires. Once you own it, you own it.
• Initially we only allowed $25k/year of A12 to be purchased, but as our business has scaled we now allow up to $1M/yr of A12 stock to be purchased. (Remember, the company has to backstop the purchase price.)
• A12 is just economic rights, it doesn’t have any voting rights.
• A12 stock can be transferred to a trust.
• The price is set by an external firm, just like our 409a. Because that process discounts us so much for being private, it’s a pretty good deal compared to what investors would pay for a share.
• We’ve mostly moved away from options, which really only work for already wealthy, sophisticated hires. We pay very generous base salary (which banks love, makes it easier to get a mortgage) and then people can make a personal decision whether the characteristics of A12 fits with their financial planning alongside index funds, stocks, and bonds.

We’ve been running this program since 2016. The main downside risk for A12 holders, which isn’t that different from common stock, is that we go out of business and can’t keep our commitments. But that’s true of any stock investment, and we have a pretty solid track record.

We want everyone to have an owner mentality, so we’ve also now started granting 1 share of A12 stock to every new hire.

Our legal team has their hands full right now with the Silver Lake / WP Engine stuff, but we’d like to open source our docs around this so other companies can offer the same thing easily, I’ll see if we can make time for that in the next few weeks.

We also announced something else cool for employees on Monday around our Grand Meetup in 2025, but to know that secret you have to work with us. We are one of the most open companies, but we can’t publish everything! ☺️

Winston Churchill said, “Never let a good crisis go to waste.” Since I last blogged here, WP Engine filed a meritless lawsuit and Automattic responded, and there’s been a hurricane of public activity and press. Inside of Automattic, there’s been a parallel debate and process.

Silver Lake and WP Engine’s attacks on me and Automattic, while spurious, have been effective. It became clear a good chunk of my Automattic colleagues disagreed with me and our actions.

So we decided to design the most generous buy-out package possible, we called it an Alignment Offer: if you resigned before 20:00 UTC on Thursday, October 3, 2024, you would receive $30,000 or six months of salary, whichever is higher. But you’d lose access to Automattic that evening, and you wouldn’t be eligible to boomerang (what we call re-hires). HR added some extra details to sweeten the deal; we wanted to make it as enticing as possible.

I’ve been asking people to vote with their wallet a lot recently, and this is another example!

159 people took the offer, 8.4% of the company, the other 91.6% gave up $126M of potential severance to stay! 63.5% were male. 53% were in the US. By division it impacted our Ecosystem / WordPress areas the most: 79.2% of the people who took it were in our Ecosystem businesses, compared to 18.2% from Cosmos (our apps like Pocket Casts, Day One, Tumblr, Cloudup). 18 people made over 200k/yr! 1 person started two days before the deadline. 4 people took it then changed their minds.

It was an emotional roller coaster of a week. The day you hire someone you aren’t expecting them to resign or be fired, you’re hoping for a long and mutually beneficial relationship. Every resignation stings a bit.

However now, I feel much lighter. I’m grateful and thankful for all the people who took the offer, and even more excited to work with those who turned down $126M to stay. As the kids say, LFG!