Wix at $10 billion: 10 lessons Wix taught me
I originally invested in Wix in September 2007 about 12 months after the company’s founding and six months after I joined Bessemer Venture Partners. In honor of Wix crossing the once unfathomable $10 billion market cap (now $11 billion), here are ten important lessons Wix and its team taught me over the years. While some of these lessons were gained in near real-time, others have only been distilled through the passage of time and through the work with other portfolio companies of mine.
The Wix founders always had a disarming degree of humility, preferring substance and performance over recognition and admiration. Avishai Abrahami, the CEO and co-founder, never played the “CEO card” always preferring to empower, delegate and promote intense debates among his team. His co-founders, Gig Kaplan and Nadav Abrahami, never hesitated in sharing their broad product and technology responsibilities with all of the strong talent they hired over the years. When you’re growing fast and teeming with self-confident talent, the founders’ personal examples set the tone for the company culture. For their first six years, the co-founders didn’t invest in a fancy office but stayed in their third-floor walk-up despite it being cramped as new team members joined; they knew that appearance was dilutive and preferred to hire employees that were inspired by the mission of the company over perks and aesthetics. For as long as I can remember, Avishai has never really had an office of his own, always letting it double as a common meeting room even if it often left him waiting outside. And of course, it’s timely to recall that at the height of the financial crisis of 2008 the management team voluntarily took a 10% pay cut just as they were launching their product.
Avishai and his co-founders always wanted to hire employees who were better than themselves and never found it the least bit threatening. They never stopped meeting and hiring high caliber people, regardless of whether that position was already filled, and always found an excuse to make room for them. They took the notion that “success requires a successor” to a new level developing a deep bench of talent that allowed it to continuously scale and expand. This approach included recruiting fellow entrepreneurs and convincing them they could realize many of their aspirations within Wix. The Wix team had the same approach to empowering and promoting their best from within, regardless of their prior credentials. It helped that the Wix founders never cared much for titles, as in their minds, titles communicated neither seniority nor responsibility. Abandoning convention, the company eventually let each employee choose their own title. Rather than causing chaos, the decision merely proved the irrelevance of title. The overall result has been an incredibly high concentration of talent across multiple disciplines that continues to this day.
Company culture emanates from the founders and the philosophy and values they demonstrate. The Wix leadership team has always fought for their employees more than themselves, offering great employee packages well before it was fashionable in tech. I was slow to recognize and appreciate this as a long-term investment strategy that would benefit all stakeholders. Because of Wix’s investment in their employees’ well being, employees remained incredibly loyal and productive over the years, creating a virtuous cycle that has underpinned Wix’s continued success. I’ve since taken this learning to other companies of mine, sharing the virtues and long-term benefits of generosity towards employees.
When evaluating a new opportunity, investors are often guilty of looking for a successful startup as a precedent. This intellectual exercise, while useful, leads many to forget that the absence of prior success does not preclude future success. There was no real precedent for a small business subscription product company like Wix emerging out of Israel or anywhere for that matter. Investors were grasping for straws, looking at Geocities and GoDaddy, and didn’t always like what they saw. A lot of entrepreneurs fall into this same conceptual trap all the time, pitching their startup as the “this of that,” in an attempt to gather some of the pixie dust that trails a big success story. This may help communicate a startup’s vision, but invariably diminishes their own distinctiveness and innovation. It didn’t matter to Wix that there were no examples of similar success stories, or that they had to write their own playbook. Wix never fell into this trap and now dozens of startups aspire to be the “Wix of that.”
Bessemer released its first 10 Laws of SaaS in 2007, and from the beginning, Wix stood out in all the ways it was an exception to some of the key rules we laid out. Wix focused on cash collections, not CMRR; on monthly cohorts rather than individual customers; on a global market rather than the US alone; and was among one of the last of startups founded in the mid-2000s to embrace the public cloud and finally go public in 2013. Being a little different cost Wix at times but their choices were all correct in retrospect. Defying conventional wisdom at the time, the company never had senior leadership in the U.S., didn’t push social or mobile options when it was especially trendy, and never signed a big, flashy partnership just to gain some headlines. Wix’s insistence on doing things its own way eventually brought venture capitalists and Wall Street analysts to appreciate the nuances of different recurring revenue businesses, benefitting dozens of startups that followed in their footsteps.
Long before all founders began to make the perfunctory declaration that they are “data-driven” or “metric-focused,” Wix was manually tracking every single change to its product in order to measure its impact on customer conversion (using a product from an even lesser-known startup called Sisense). Avishai maintained this “captain’s log” that meticulously tracked every single change from the UX/UI to the backend to record how the day’s cohort would be impacted by new changes. While many startups take pride in measuring everything, Wix’s singular focus on customer conversion and anything that made it improve or deteriorate stood out. Wix understood that it wasn’t necessarily about tracking everything, but tracking what matters most to their particular business. Years later, we updated our 10 laws of cloud, inspired by Wix, and emphasized the importance for companies to discover those core metrics that are unique to your business.
Some companies have a difficult time abandoning their first successful product (their baby) in favor of a better product, especially when the latter cannibalizes the former. Wix had no such sentimental attachments, and cut loose anything that wasn’t key to its long term future. Remarkably, this included abandoning the initial Flash-based product that had put Wix on the map, requiring them to ignore howls of protest from many in the designer community. Wix knew that the size of its future customer base would dwarf that of their existing customer base and did what was right for customers of the future, embracing HTML5 even before it could match the capabilities of their Flash product. Such a prescient decision was obvious in retrospect, but at the time required a level of courage and confidence that is seldom seen.
Startups typically dedicate their development resources exclusively to products customers use or pay for. Always short on resources, most startups would never think to use their overextended development team to develop a tool to assist their own customer success or product teams. Wix always had a more expansive view of R&D, and actively engaged their developers to build internal tools and platforms that improved customer acquisition, internal workflow, backend management, and overall business efficiency. That’s what led Wix to develop their own A/B testing, billing, and media management solutions, among others. Some of these development efforts were so effective they were eventually commercialized, and are the genesis of what is today Monday.com (a Wix spinoff) and the Wix Answers product.
Wix always had a few development projects competing to be the next revenue driver. This was in addition to multiple, parallel development efforts aimed at defending their flanks from the competition (mobile, ecommerce, verticals, etc.). For Wix, this may be two or three engineers working in a separate office or a small team the company just acquired, but Wix was never short on future directions (see Wix Artificial Design Intelligence or Corvid). This held true even when they were stressed for cash, as they realized their future would depend on it. Nurturing a Second Act only recently became one of Bessemer’s top principles when gaining market leadership, but has been a hallmark of Wix for a long time before.
Wix was never a unicorn and even canceled a pre-IPO financing at $400 million pre due to lack of interest at that supposedly unattractive price. At the time the venture community wanted hot consumer and enterprise SaaS trends, and Wix wasn’t really either of these. Not unlike today, the tech press then was indifferent to Wix’s performance and product announcements, unable to find an interesting story in a company that didn’t announce a record-breaking financing and valuation. Capital efficiency doesn’t grab headlines, but it often makes for bigger outcomes. Unbeknownst to many, Wix only ever raised $45 million, using only two-thirds of that amount before their IPO. The disregard continued for several years after its IPO, despite out-performing expectations for quarter after quarter. It turns out that billion-dollar exits are more fun than billion-dollar private valuations. Now at $10 billion, Wix still doesn’t care about the headlines as long as their 150 million (and counting) users are still loving and depending on their products.
Every investment we make as venture capitalists provides us with valuable lessons and guiding principles for tomorrow’s founders and startups that we invest in. I’ve found that the lessons from failure often register quickly, while the lessons from success take years to realize and truly appreciate. This is particularly the case in a company like Wix, whose success continues to grow one quarter after the next. In retrospect, Wix always made decisions for the long term, whether it was their unique approach to talent, product or the business. Admittedly, during my time on the Wix board there were moments when I focused too much on the present and cared too much about the reactions of others. I’ve learned a lot since then and when Wix eventually crosses the $20 billion threshold, I will most definitely have learned a few more.