Joshua Strebel — the CEO of Pagely — shares his view of the current state of the WordPress economy, and why he is confident in both its strength and future.
Editor’s Note: This is a guest post by Joshua Strebel, the CEO and co-founder of Pagely. Pagely was one of the first managed WordPress hosts and continues to be a market leader. Josh has some thoughts about the WordPress economy, which I asked him to share here for the Post Status audience. He’s been around for a while, and I think he’s got a pretty good hold on the state of things. I hope you enjoy his commentary. And if you like this post, you’ll also enjoy Post Status Publish.
There’s been some recent speculation on whether or not the WordPress economy is beginning to slump. I would answer ‘yes’ and ‘no’; it is clearly evolving, and some areas are contracting while others are growing. I believe we are feeling the effects of market maturity.
Are downmarket “one stop shop” alternatives and in house teams the best solution for the future of WordPress? No, because hosting providers, developers, and agencies who specialize in this space are where the concentrated real quality resides, and people are always willing to pay for quality. Ultimately WordPress has staying power because of its ecosystem, so let’s take stock of that.
The current state of the WordPress economy
In 2017 WordPress is used by major publishers, enterprises, universities and even custom SaaS applications. In fact the world’s leaders in business and marketing trends use WordPress (and aren’t necessarily leveraging in house teams to do so). To name a few:
WordPress powers an estimated 28% of all websites which run the gamut of single contributor blogs and simple websites to applications and complex portals. That’s nearly 75 million websites built by anyone from the very beginner to the professional with an extremely advanced level of technical skill. WordPress is both easy to use and graceful in its complex abilities to do just about anything you would need a website to do.
There’s also the community behind WordPress, an ecosystem of people around the world with this one thing in common. As an open source community, our entire industry is plugged into every update. We can contribute to testing or code. We have all the power to make sure the WordPress economy stays strong and continues to grow.
New businesses are constantly being formed around plugins, themes and services built specifically for WordPress, with no signs of stopping. In fact, we’ll continue to find more and more creators of WordPress specific companies, with full time jobs elsewhere, using this as an opportunity to contribute to the community.
However, the near constant flow of new entries into an already saturated market is outstripping demand. The WordPress pie overall is still growing but not quick enough to absorb the new sellers entering into the lower third of the market. The new players are typically unable to challenge the dominant players for a significant market share, and the demands and needs of the customers are also moving up the value chain. Yes, some newcomers do disrupt the established WP players, but it is happening with less frequency, and the barrier is ever higher.
Economies ebb and flow: Apple and Airbnb (and WordPress)
The companies and brands that have changed the way people live experience low points. Just like the ones we’ve feared will appear in our own industry. But you know these companies well, and they and their economies have persevered.
Take the classic example, one of the greatest comeback stories of all time: Apple. Apple defied all odds and went from near bankruptcy to the powerhouse hardware leader it is today with over one billion iPhones currently in use. They lost Steve Jobs and many feared they would lose their focus and tumble downward. Instead they’re the largest and most profitable they’ve ever been. Walk down the streets of New York City or San Francisco and you’ll see brick and mortar shops dedicated to alt-genius-bar services and shattered screen replacement. The Apple economy is strong.
Just like Apple, Airbnb almost flopped, but came out on top. It has an ecosystem of its own with tons of offshoot companies that support various aspects of the community, just like WordPress. After near failure Airbnb now supports a community of over 100 million and is valued at over $30 billion. They also face growing pains and — at times — volatility, but companies like this — the ones that fundamentally change the way the world works — aren’t going anywhere.
WordPress itself isn’t in danger of a near flop, but these are valuable examples of economies that fared far worse and still made it through.
The core strengths of WordPress
WordPress possesses fundamental characteristics that so many of today’s great leaders encompass. All leaders like this are built to support a growing economy for a long time to come.
In Pagely’s own recent user survey, the most important factors for choosing a service were reliability and security. These are cornerstones of the WordPress brand (haters gonna hate – but core has been really solid for many years in both respects) and reasons why such a large percentage of the internet continues to choose it to power their websites. As a brand, WordPress is synonymous with being one of the most reliable and secure CMS options available. Quality service providers that support WordPress, like Pagely, also often encompass these brand characteristics. We often hear of these same characteristics as pain points from customers trying to work in-house or with downmarket alternatives.
WordPress users span nearly every industry in the world. Publishers, Fortune 500 Companies, Music, Fashion, Tech, Politics, you name it. Like I mentioned above, ~75 million websites use WordPress, and they are published in dozens of languages. WordPress is literally a web that has woven itself through the digital and physical world.
The WordPress community is made up of contributors, coders, engineers, designers, marketing professionals, and every other title necessary to run a business. The community reaches so far that it touches every corner of today’s tech workforce. Not only is the community large, but it cares. We care. The number of blogs and forums dedicated to helping people understand WordPress are impossible to count. Events like WordCamp, LoopConf, Publish, and PressNomics occur all year long and prominent core contributors participate. Don’t hate me for loosely quoting Lincoln. But, it could be said here that “[WordPress] of the people, by the people, for the people shall not perish from the earth.”
The WordPress ecosystem rewards quality
While the core strengths of WordPress support the service itself, quality is what supports the economy as a whole. And the fact remains that people are willing to pay for quality. To paint the picture, at Pagely a core aspect of our mission is to bring a flexible, friendly, and first-rate experience to all our customers. In staying true to that high standard of quality we’ve seen substantial year over year revenue growth since 2014. With an ecosystem that strives for and rewards quality, the larger WordPress economy is in a position to keep growing — and continue to take us along with it.
Any “economy” will ebb and flow, but when a technology powers 28% of something, it has staying power; WordPress and the ecosystem we’ve built around it isn’t going anywhere, but it is changing.
The ecosystem is maturing — and growing
I would argue that after 12+ years the WordPress ecosystem has firmly moved from “New market” territory where there were wide open spaces for entrants to dominate. As an example, commercial themes really took off in 2008, managed WordPress hosting came to prominence in 2010, and commercial plugins rose to fame in 2011. These, and most channels in the ecosystem are now clearly defined “Existing markets.”
Since 2015 or so, the majors players in each category have been well known, with few exceptions from new entrants claiming significant market share. Those who are doing this are using strategies common in existing markets: Resegmentation based on price, and resegmentation based on a niche strategy.
Borrowed from this article, we can identify six signs a market is maturing. Not every point applies completely to our ecosystem, but enough do that I believe we can safely make this call.
- Customer needs/desires do not appear to be evolving rapidly.
– eCommerce and membership sites are the most recent ‘asks’ that come to mind, and that was a few years ago.
- Consolidation by leading competitors is reducing competitive intensity.
– GoDaddy, EIG, Envato, and Automattic are rapidly consolidating products and services into their domain.
- Disruptive innovations and new entrants are gaining share only gradually and top out at relatively low levels.
– Some really innovative things are happening, but they’re around the corner and seem slow to pick up traction.
- Market shares of leading competitors have solidified and are changing gradually, if at all.
– We pretty much know who the leaders are in every category and the price points they own.
- Price, brand, and/or channel strategy have supplanted product innovation as key value drivers.
– Refining the value proposition to our customers has greater focus at Pagely vs. shipping the latest tech du jour, which is happening just behind the scenes at measured pace.
- Cash flows are increasingly turning positive and being returned to investors rather than invested into the market.
– Not in all cases, there is still a lot of energy being focused on market expansion.
The massive low-cost hosting providers are enrolling many thousands of new WordPress users a day. Their product offering is good enough for the price point, their marketing spends are huge, and any new customer starting to use WordPress is landing there.
It is the same with eCommerce on WordPress — there are just two or three plugins and services absorbing new users.
In the agency space, the buyers willing to spend capital (enough to sustain a high-end WordPress agency) on WordPress solutions are not buying $500 websites, or $5,000 websites as they once were. They are buying $50K-$1M custom-built WordPress backed applications. The resources and talent required to serve these clients is concentrated at a handful of established and well known shops.
These examples continue into every segment of the ecosystem.
WordPress is getting easier and easier to use right out of the box. If the majority of the new WordPress users needs are solved on install (via core, bundled plugins, or the hosting platform) then a wide swath of the current ecosystem is going to shrink.
In all channels, new market entrants or existing small shops are being out-gunned by the established players, or the buyers needs are being met upon install.
Adapt to win
So is the WordPress ecosystem shrinking? Yes, segments of it are and will continue to do so.
It’s like in any industry: the car replaced the horse and the robot replaced the factory worker. What was successful in the New Market phase may not work in the more mature, “Existing Market” phase we are in.
Other segments, many not even identified yet, will expand. There are still big challenges that need to be solved in WordPress, the solutions for which will surely prove to be innovative and profitable. Go find the next blue ocean.