Joost de Valk, co-founder of the Yoast SEO plugin, published an article calling for more equitable contributions from large WordPress companies, greater financial transparency, and a new board that represents the voices of contributors and companies.

Joost de Valk Supports Matt Mullenweg

Joost de Valk’s article is supportive of WordPress and agrees with Automattic’s CEO Matt Mullenweg that WP Engine should contribute more to WordPress. He praises Mullenweg and Automattic for the amount of contributions they make to WordPress, contrasting Mullenweg’s example against those who are financially benefiting the most from WordPress but don’t contribute on a level that’s reflective of their rewards.

He writes:

“I agree with Matt about his opinion that a big hosting company such as WPEngine should contribute more. It is the right thing to do.”

Joost writes that these aren’t just words to him, that they reflect his values and actions, sharing that his organization contributed so much time to the Gutenberg Project that it was literally at the expense of his own for-profit venture in that, while they “still made a lot of money” their revenue did experience a dip.

He thus envisions creating a board that’s representative of stakeholders as a way to encourage a healthy sustainable open source ecosystem with greater transparency and community representation.

Business Success Informs His Opinion

His idea for cultivating a health self-perpetuating open source community has been his guiding principle and is what he credits for his business success. In a 2013 WordCamp presentation he shared his experience of spending many years contributing to WordPress and creating a wildly popular plugin while not yet making any money. He reached a point where he had a day job to support his WordPress hobby and had to decide how to flip that so that they hobby became his day job.

In that presentation (The Victory Of The Commons) he described two ways of thinking about his situation, one in which he just goes all-in and focuses on doing what’s best for him and another path where he does what’s best for him and the WordPress community.

Joost credits his wife with suggesting to solve his problem by looking at it within the framework of the Tragedy Of The Commons. The Tragedy Of The Commons is a concept of how individuals can decide to either manage a shared resource to create a sustainable living for the community or behave in self-interest and eventually deplete the resource, thus harming the entire community.

He shared the following in that 2013 WordCamp presentation:

“So, if everyone in the WordPress community, if we all looked at it like this, we can make money and make sure that we reinvest that money, we’d grow.”

He said that creating something and giving it away is not necessarily good. He said it’s better for everyone to make “piles and piles of money” with the work but giving some of that back supports you and the community in a self-sustaining circle. He insisted that reinvesting “in the pasture” was paramount to working within the WordPress open source community.

“Reinvest some of that profit into all of our main pasture, WordPress. We all benefit.”

New WordPress Foundation Board

One of the solutions that Joost suggests is the creation of a board that provides representation to those who contribute to WordPress. Joost uses the analogy of taxation with representation as the basis for a WordPress Foundation board so that those who contribute can also be heard as part of the decision making process.

What he envisions isn’t a governing board with decision making power but one that serves in an advisory position that can participate as part of a dialogue within the decision-making structure.

He writes:

“I think this could actually help Matt, as I do understand that it’s very lonely at the top.

With such a group, we could also discuss how to better highlight companies that are contributing and how to encourage others to do so.”

The three main points he makes are:

1. Representation Of Stakeholders

“In my opinion, we all should get a say in how we spend those contributions. I understand that core contributors are very important, but so are the organizers of our (flagship) events, the leadership of hosting companies, etc. We need to find a way to have a group of people who represent the community and the contributing corporations.”

2. Facilitation Of Transparent Discussions

“Now I don’t mean to say that Matt should no longer be project leader. I just think that we should more transparently discuss with a ‘board’ of some sorts, about the roadmap and the future of WordPress as many people and companies depend on it.”

3. Encouragement And Recognition Of Contributions

“With such a group, we could also discuss how to better highlight companies that are contributing and how to encourage others to do so.”

Transparency With Money

One of the points that Joost brings up is somewhat separate from the creation of a contributor board and it’s about the payments made to Automattic for trademark deals.  He says that thing mingling of money creates a situation where it’s uncertain how much of it is used by Automattic as contributions to WordPress.

He writes:

“…let everybody see how the money flows.

Currently the way it works is that the money for trademark deals flows to Automattic, but we don’t know how much of the contributions Automattic does are paid for by Newfold, whom we now all know are paying for the use of the trademark. Maybe the money should go directly into the foundation? If not, I think we should at least see how many of the hours contributed by Automattic are actually contributed by Newfold.”

WordPress May Be At A Crossroad

WordPress may be at a historic crossroad that could lead to different outcomes. Joost suggests doubling down on open source by engaging with the entire WordPress community, returning to the ideal of reinvesting in “the pasture” to create a sustainable system that allows everyone to make “piles and piles of money” and achieve the goals users are working toward.

Featured Image by Shutterstock/Shutterstock AI Generator

Matt Mullenweg posted on WordPress.org that WP Engine users have been granted a reprieve from the block on the WordPress plugin and theme repository until October 1st, allowing them to access updates as usual.

WordPress Versus WP Engine

Matt Mullenweg and popular web host WP Engine have been locked in a conflict for the past week over a commercial licensing fee that other web hosts pay but WP Engine does not. The issue between them stems from the frustrations on Mullenweg’s side with the perception that WP Engine is not giving back enough to WordPress in the way that they should. Prominent figures in the WordPress industry like Joost de Valk agree with Mullenweg that companies, including WP Engine, should give back more to WordPress.

WP Engine has offered their side of the story have gone as far as to send a formal cease and desist letter for what they perceive as an unfair attack on their business.

Regardless of who is right or wrong, WordPress users on WP Engine are caught in the middle of this conflict, with their businesses disrupted by Mullenweg’s decision to block WP Engine from accessing the WordPress.org plugin and theme repository, preventing them from updating plugins and themes.

Temporary Reprieve

Mullenweg posted on WordPress.org that he has heard from WordPress users and has decided to give the WordPress users a chance for WP Engine to set up a solution so that they won’t be inconvenienced. WP Engine has until October 1st to engineer a workaround.

He wrote:

“I’ve heard from WP Engine customers that they are frustrated that WP Engine hasn’t been able to make updates, plugin directory, theme directory, and Openverse work on their sites. It saddens me that they’ve been negatively impacted by Silver Lake‘s commercial decisions.

WP Engine was well aware that we could remove access when they chose to ignore our efforts to resolve our differences and enter into a commercial licensing agreement. Heather Brunner, Lee Wittlinger, and their Board chose to take this risk.

…We have lifted the blocks of their servers from accessing ours, until October 1, UTC 00:00. Hopefully this helps them spin up their mirrors of all of WordPress.org’s resources that they were using for free while not paying, and making legal threats against us.”

Read more at WordPress.org:

WP Engine Reprieve

Featured Image by Shutterstock/Vladimka production

Total addressable market (TAM) is an estimation of how much you could earn if you could sell your product or service to every possible customer in your market.

The basic formula for calculating TAM is:

TAM = (Total Number of Potential Customers) × (Average Annual Revenue per Customer)

Understanding TAM helps you figure out the size of your market and the amount of money you could make if you captured all of it.

TAM is also a key metric for startup investors. It shows whether a business idea has a big enough opportunity. Investors often look for a TAM that is “just right” — not too big or too small. A TAM that’s too large might mean the market is crowded with tough competition, while a TAM that’s too small could mean limited room for growth.

In this guide, you’ll learn how to estimate TAM using three methods, where people often make mistakes, and how to refine your estimations to make them plausible to investors or stakeholders and actionable for your business.

1. Top-down approach

How to use

Example

2. Bottom-up approach

The bottom-up approach builds the TAM by starting with specific, individual data related to your business and scaling it up.

This method is great when you have detailed knowledge of your customer base and pricing. As far as I know, investors prefer this method, which offers the most accurate and actionable TAM estimation.

 

A few birds in the hand is worth billions in the TAM. Early-stage (pre-Series-B) startups shouldn’t worry too much about calculating a precise TAM. As long as it’s in the right ballpark for their thesis, investors care a lot more about the traction you can show with paying customers. That’s why bottom-up is far more convincing than hand-wavy top-down methods that only rely on finding a big enough pie to claim as your market. 

How to use

Example

3. Value theory approach

The value theory approach estimates TAM based on the value your product provides to customers and how much they might be willing to pay for it.

This approach is especially useful if you’re introducing a product or service that disrupts existing markets; traditional market size calculations may not accurately reflect the potential.

How to use

Example

TAM is typically used to make a compelling story about the potential for growth, so it’s easy to be over-optimistic and make mistakes that could make your TAM look better.

Here’s an example. I used a tool that calculates TAM automatically based on a URL to find the market size for netflix.com. The tool told me that there are 7B people who “need it (…) even if they’re not willing or able to make a purchase” and 6.3B ready to make a purchase. Something that I find hard to believe since there are an estimated 5.3B people with internet access worldwide.

Also, the way that the tool defines my potential customers doesn’t sound convincing to me, either, let alone logical.

Other mistakes you should avoid:

• Falling into the “everything trap”. This is when businesses assume that their product or service could appeal to everyone in the market, leading them to calculate TAM based on an overly broad audience.
• Sizing the problem instead of the market. This happens when businesses focus on the total number of people who might benefit from their solution without considering how many are realistically willing to pay for it.
• Overlooking market trends and dynamics. The market can grow or contract, consumer preferences can change, government regulations can influence the market, etc.

The basic data sources for TAM calculations are industry reports you can find on platforms like Statista and census data (like the US census data). However, there are other places where you can look for more detailed data.

Explore the market using search data

Search data is information about what people are looking for online. It can help you understand what customers want, where interest is growing, and what regions are most active.

Google Trends provides some of that data for free. For example, you can check if interest in a plant-based diet is still strong and where in the US you could find the most customers.

But that’s how far this tool goes. You don’t know what terms are “inside” the topic or how popular a keyword is (the numbers in Google Trends are relative). Also, sometimes Google won’t have the data, just like for the term “baby food subscription”.

Alternatively, you can use Ahrefs. I’m sure you’ll find more search terms there and a lot more data points. Let me take you through three examples.

Gauge demand with search volume

For example, while Google Trends didn’t have any data on “baby food subscription”, Ahrefs’ Keywords Explorer shows that there are an estimated 1.2K searches per month in the US of that term. Plus, it shows you the forecast for that keyword.

If you’d be planning to start a new business in this niche, you’d need compelling arguments to justify a high TAM estimate, because the current demand for this type of service appears to be relatively low.

Learn what people want and how they look for it

Keyword research can tell you what people want in which countries. All you need to know is a few broad terms related to your product.

For example, for plant-based products, you could just type in “plant-based, vegan” and then go to the Matching terms report to see the popularity of certain types of products. You can also see if the demand for these products has grown or fallen over the last three months.

So, if you find that the demand for most vegan products has increased, you could assume that your TAM is going to expand in the near future because more people seem to be interested.

You can also use the tool to automatically translate these keywords and see what search terms people use to find the same products around the world and how popular they are.

And if you’re unsure what keywords people could use to find a product or service like yours, just use the AI suggestion feature.

Learn from your competitors

For example, say you’re a SaaS company offering a project management tool. If you used Ahrefs’ Site Explorer, you would find that one of your competitors ranks for terms like “engineering project management software”. This could indicate a niche market with unique needs, where there’s considerable demand but less competition.

While you’re at it, go to the Organic Competitors tab to see who else competes for the same audience. Chances are, you may find some new potential competitors.

Use S-1 filings and quarterly reports from public companies

Public companies’ quarterly reports (10-Q) and S-1/F-1 filings offer rich data for estimating TAM. They provide detailed breakdowns of revenue by product line, geographic region, and market segment, along with insights into market share and growth potential.

For example, if a company generates $500 million from a particular service and claims 10% of the market, you can estimate the TAM at $5 billion.

Both reports can also provide guidance on future growth trends, helping forecast your TAM’s evolution.

You can use AI like ChatGPT to analyze the documents for you (they can be quite complex). Here’s a sample analysis of an over 500-page F-1 filing by an Esports company.

Interview potential customers

Use PitchBook for investment and market data

PitchBook offers broader market data and investment trends. It provides reliable information on market valuations, funding rounds, and industry growth, which helps you gauge the overall size and growth potential of a market.

PitchBook also helps identify key players, making it easier to estimate how much of the market is currently being captured and what remains untapped.

For example, based on Stripe’s post-valuation of $152 billion and an assumed 30% market share, Stripe’s TAM would be approximately $506.67 billion (TAM = valuation/market share).

Other tools for SaaS companies

If you’re in SaaS, there are a couple more sources of data you may find especially useful: BuiltWith and Latka SaaS Database.

BuiltWith is a tool that shows you what technologies websites are using. This tool is great for identifying your ideal customer because you can see which companies use certain tools or platforms that align with your product.

Enter a competitor into BuiltWith, and look for the list of their customers. For example, here are some of the sites that use Salesforce. You can sort the list by employees or traffic to find the size of the company you think you could get on board. 

The next one is Latka SaaS Database. If you can’t find a SaaS company on PitchBook or BuiltWith, there’s a chance you will find it on Latka. It’s a SaaS-specific database that tracks metrics like revenue, customer growth, churn rates, and funding for thousands of companies.

Knowing your competitors’ revenue and the number of customers they serve can help you better estimate the size of your potential market.

• Use competitors’ ARPU or ACV (Annual Contract Value) to estimate your own future metrics.
• Use the competitor’s revenue or valuation and apply a market share estimation to calculate TAM.

Final thoughts

Got questions or comments? Find me on LinkedIn.