Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.
I've been working in tech, mostly in customer success and account management functions for 15 years, running teams professionally for 10 years. I worked for an Israeli tech startup since January 2012, which was acquired by WIX in January 2017. That was my first trip to Tel Aviv and I have returned five or six times since then because it is amazing. My current company is also an Israeli tech company, so I developed a pattern working with Israelis, WIX being the largest of those three employers. Once I went to WIX in 2017, for the first time after they acquired our company, it was shocking to learn that up until then, WIX has never had a single sales person customer success account management or B2B affiliates, nothing.
WIX is the easy to use, do-it-yourself web development platform that's free. You can get started because it's so easy and that was clearly the narrative in 2017 for WIX. Over the course of my five years, I created the customer success org which now has 200 CSMs across several countries. That was mainly because of the demand as WIX has moved itself clearly up market. You no longer hear it in its marketing the words easy, free or DIY. WIX has two very new and important audiences and, collectively, I managed two giant teams there. The first was the account management team which is in charge of the partner community. I know the partner side of the business intimately well and was there at the point of its inception, working with each of the product managers to develop the partner dashboard. I ran the WIX marketplace which is where user needs are funneled to partners, which they obviously love.
On the partner side of the business one major focus was going after WordPress and Webflow. WordPress is half the internet, so that's very interesting to WIX when you start talking to full-service agencies, designers and developers, which will be a relative market share you want to take away from. The other side of the coin is the ecommerce space where I had 45 customer success managers who worked with WIX’s largest ecommerce customers with $100,000 monthly GPV, at a minimum. WIX predominantly ran on creative subscriptions, so upgrades to premium domains and TPA purchases are 75% from that, but 25% from the processing of online revenue for ecommerce customers. That was a very clear target market for WIX who established a beachhead there to help grow GPV from a customer success standpoint, mainly through fighting churn to defectors like Shopify, WooCommerce and BigCommerce. Those were the two big focuses over the course of my five years; developing both departments for the professional community in partners and the ecommerce community.
There were several different verticals – bookings, fitness, restaurants, WIX stores, every one of its ecommerce products. I left in just February this year but would have stayed for the rest of my life if I had not got a weird opportunity where a former boss at the first Israeli company I worked at took a job as the CRO of a new tech startup in a space I'm particularly interested in, which is the world of PTO or paid time off. We have an interesting fintech product which is a big disruptor. It was an Israeli tech startup with a boss I knew before I started, so the universe was whispering to me and I am now the VP of customer success here. I formerly had a team of 50 people but I now have a team of zero, so I will hopefully build it all over again.
From a product standpoint, it's difficult to say WIX has a better offer than Shopify. Shopify has the best product on the market from an ecommerce standpoint if you're already an existing seller who runs an ecommerce business. WIX users outgrow the platform. A good example of that are sellers who start to transact at higher volumes and need to integrate with third party fulfillment platforms, ERP solutions and invoicing tools which help to run their business smoother.
Most self-creators who turned into a business – which is the American dream version of an ecommerce customer – will have several pain points along their journey. Your revenue could be great but your CSAT on the platform could go in the opposite direction. It is hard to correlate growth with user satisfaction. A typical pain point is the inability to integrate, which was the number one reason someone would defect to Shopify, who have out of the box integrations in multiple languages, compatible with multiple countries. That is a fun filter you have to look for in most marketplaces. Yes, they integrate with QuickBooks, but only for English US users, which is only 10% of the market. Shopify has more out of the box capabilities to integrate with third party tools.
It is significantly faster now. Part of my job was to make product managers cry, which is not by me saying the integrations are shit and we are losing customers, as that is simply my opinion versus your opinion as an employee. If the customer voice says that and we can illustrate that through churn, then you have no recourse and have to listen to customers. We have been building that narrative for two years and, since then, there has been a major focus on integrations with third party tools, particularly in the fulfillment space which had the biggest void.
WIX also made acquisitions in the M&A space to do some of this work in house, so they can work with these providers. They also work with sellers who sell on Amazon and Etsy. We lose all that revenue if you click on a WIX website and are redirected to an Amazon marketplace. WIX has done a good job and went from 90 third-party integrations closer to 300 over the course of two years. The application marketplace has been around for over seven, and in the last year and a half it has more than doubled. It still has a lot of ground to cover, mainly in the international space. You might have an out of the box integration with X drop shipping service or Y fulfillment platform, but it's only English-speaking US and Canada. It is a huge step in the right direction and is faster but this will be a never-ending war of catching up to their marketplace. It will take them two or three years, at least, to be where Shopify is internationally.
It's about developing a comfort level, especially with CRM integrations. You can run your social media output, email marketing, digital marketing, SEO, PPC and Facebook ads under one roof. You can integrate with third party CRM tools like MailChimp and HubSpot out of the box, but many users develop a comfort level which originated in the self-creator space, where they built a website and did their blog. Perhaps that same blog turned into a business which then grew. They created this beautiful success story which they attribute, in some way, to the platform itself. It becomes more emotional at that point so it is hard to point to a product.
If you showed apples to apples, Shopify would win as an out of the box product. The only caveat is with Shopify Pro, the subscription costs are 10X. When selling to the ecommerce space, if you slice up the spectrum of sellers by their GPV, the people at the end of that spectrum who do multiple millions per month, it is pennies compared to what you pay from a processing standpoint. The subscription doesn't shift that so you have to compete from a processing standpoint but small to mid-size ecommerce customers haven't reached the point where they need many third-party integrations or customization, which WIX struggles with.
WIX and WordPress have different definitions for partner. A partner is any professional who builds websites for somebody else. That could be a single designer living in a basement, building websites for friends and family through organic references and referrals. They build a few websites, get paid and declare that as their full-time gig. It could also be part time, all the way up to full-service agencies with full stack in-house devs who crank out hundreds to thousands of websites per month. I saw huge agencies doing dozens per day. They could also offer high quality and were charging 10 to 25 grand for a single website. All of those fall under the umbrella of partner on WIX and they have over 40,000 in their partner program. In terms of competitive landscape over the course of 10 years, WIX would look at competitors like SquareSpace, GoDaddy and Weebly at the time, in the realm of tackling WYSIWYG editors for self-creators. As a civilian I can comfortably say that WIX won, but that war is over. If you're trying to build a website for yourself and don't have design or development knowledge, WIX has the absolute best product on the market which is also reflected in its market share.
On the professional side of the space, Webflow is a very interesting one. WordPress is the legacy CMS platform for the professional community and a lot of comfort has developed in that space. They have the largest plugin market with 20,000 out of the box open-source platform plugins. I met with the fifth largest WordPress agency at the time who took a meeting with us strictly because our CMO was going to be there. Their average size client was 35 to 50 grand per website, which is very high for our range. We asked them if they would ever consider building those sites on WIX and they laughed at us and said absolutely not, they could never sell that to their customer that they built it on WIX. We then asked them if we gave them a lead from an existing WIX user who needed a website and had a budget of 35,000, would they build it, and they said yes. The marketplace instantly changed the narrative if we could help traffic the demand there.
Partners on WIX love it because there are so many existing users. 80,000 times a day, somebody goes to WIX and clicks ‘get started’ thinking they can do this themselves because WIX told them they could. It will be so audio: 0:20:05 easy and they will create a website, publish it, connect it to their main servers and do that SEO thing to make it work. Along the way, they realize they cannot do that. There are 70 different entry points in the user journey which are carpet-bombed along the entire product, which allows the user to raise their hand and hire a professional to help them out. The algorithm connects them to a professional in the marketplace and there is a risk and reward function built into that algorithm. That enabled us to get our foot in the door with large WordPress agencies, by helping engineer that demand, as long as they continue to build those websites in WIX.
We did an interesting analysis because we targeted both the WordPress agencies and others who had developed a comfort level on other CMS platforms. We found that it was harder for an agency to build their first website than it was to go from one to 10. We used the marketplace as the fuel to get them to go from zero to one and show them they didn't need to use any development resources to build that website. Publishing and maintaining it is easy and they can still charge their clients recurring hosting, SEO digital marketing fees and PPC, but the cost to design a site was significantly lower. Now they could consider building more of their sites on WIX.
Even if you showed an agency an apples-to-apples comparison of WordPress to Webflow or any other platform, it doesn't change the fact that they hired internal devs and designers to develop a strong comfort level.
WIX created Editor X to provide a completely responsive environment because that was the biggest criticism from the professional market. When they produce a website for their customer, they pull out an Android phone which it hasn't been completely formatted on. Now they have to go into a mobile editor where they cannot customize break points and create flex block images which adjust according to the view port. They could not do that in the classic editor but platforms like Webflow allowed them to do that beautifully. Agencies hate the switching cost of moving the site to another platform. As an ecommerce customer, they would hear ecommerce friends tell them how easy it was to do fulfillment with a warehouse. If they want to move their site, agencies have to build the entire site over again with Webflow, where they are able to access the site's native HTML. That cannot be done unless built in an open-source environment such as WordPress. Fewer agencies choose WordPress as a new solution. Either they already built a comfort level there when the internet was created or they didn't.
WIX caught a ton of the small business market share with smaller websites costing under $5,000, which take a week to turn around and they want to run the website so we simply hand it off. Throughout this game, you have to work with the agencies and be the vendor of choice as often as you can. The best way to do that is to have the best product market fit. Webflow seems to have an increasing larger percentage of those product market fits in those vendor of choice moments, but I cannot say with 100% accuracy why. They won over the designer guild within agencies very meaningfully.
It's an interesting question and the truthful answer is, I don't know. WIX defines a new agency as one which has not built a website on WIX yet. They could have built 10,000 websites on WordPress but if you are building your first WIX one, you are a new agency. The beauty of customer success today is being able to digitally identify when a new agency registers as a partner. We use a built-with application to determine that they are on Webflow and are going to WIX for that first moment, so we have to capture them meaningfully. No user cares where the website is built; they only care about the user experience. If my business is running smoothly, I don't lose sleep over whether it's built on WIX, Shopify or Webflow. End users are product agnostic in their core, whereas agencies are biased to the highest degree.
They develop that bias because of maintenance and hosting costs or general ease of use. They choose to move somebody over; it's not engineered by the user. They offer extremely competitive redesigns. They might have built the website a year and a half ago and it still looks great, but if the client wanted a complete revamp of their home, web and landing pages, email and digital marketing and social media, they will package that and sneak in that the site will no longer be on that platform. Internally, as an agency, they make their lives slightly easier. They make money by making that decision more palatable to the user. I know this because I've told agencies to redesign it on WIX and they moved them to WIX. Saying we were thinking about moving your website to WIX, what do you think about that, is the wrong way to package it.
It depends because some agencies have different methods of charging. Some will charge $5,000 to build a website and pass the costs to the user. WIX has a revenue share of programs, so as long as that user lives on WIX, agencies get a kick back each time they pay us. It is a passive income channel for some agencies whereas others have a different model. They charge for recurring site maintenance, so you get a bespoke number of edits per month if you want to change an image or drag and tag. In terms of packaging, they also get email marketing services and managed campaigns, social media posts and SEO to optimize for organic search. All of that is blended into a $250 monthly fee, whereas the cost to an agency for a good site on WIX is only a few hundred dollars per year. The agency eats that as a cost of doing business, and passes it off to the customer in a monthly recurring fee.
The tolerance level is lower for the user, whereas if the agency hands it to them, they have to pay annual hosting and domain registration fees. Then they need to pay more if they want to do email marketing or PPC, so it feels like the user has to pay more, so that so is where they pull rip cords. The agency has a higher tolerance level as long as it doesn't eat into their own margins, which is a product of charging properly for their services. Most boutique agencies under charge for websites and recurring fees. Their solution is that WIX should charge them less for a partner, when the real answer is that they should charge their customers more for a better service and result.
The stupidest thing I saw from WIX, before we started putting a flash light on the professional market, was they were still charging professionals – who built thousands of websites – the same unit price per website as they were charging my mom who built one. There was no financial motivation to build many websites on WIX, but that changed with the introduction of the partner program. There have also been clever ways in which the premium department at WIX figured out how to nest WIX hosting costs into the recurring agency fees. Historically, the agency might charge an annual hosting fee of $250, per year, to get a website, which is what they pay WIX. Agencies would take the card and buy the premium to reduce their risk. They have no financial impact and they charge the customer $5,000 for the website's delivery and any additional recurring site maintenance or SEO services the customer can add on. The user saw two charges on their credit card statement, one from WIX, another from the agency.
WIX built a way to charge people through the platform using WIX Payments and Invoices, so now you can attach the hosting fees as part of what you're charging, so the user sees one transaction from the agency on their credit card, and WIX takes their share of the money. That is much smoother and agencies love it because it reduces the impact of their cash flow and puts more onus on users. If your card goes down for site maintenance, you get an alert that says your site went down, you need to update your payment information. The partners can still do that because they have a partner dashboard with all their sites, but it's a cleaner user experience that shows this is the way you should be billing as a professional, not as a professional that happens to be using a platform like WIX.
The revenue share kicks in at the highest tier of the loyalty program. Somebody who recently started building professional websites is at the Explorer level – which means they have built and published four websites on WIX – are not able to get rev share until they build more websites. The barometer is 50 websites when you start to earn a percentage of revenue share for every site you produce from that point forward. They may have applied it retroactively, so you can start earning for existing sites at 50. There are two worlds to determine the pricing strategy for partners. The first is rev share which I just described and the second is offering a tiered or discounting service on the cost of new premiums. Revenue share is more a longer-term relationship and you earn money if WIX is your vendor of choice. The caveat there being, as long as you produce websites over time.
Yes, it's not a 50/50 split but it's healthy, and as long as you produce new websites in WIX, it becomes a kick back you enjoy for doing what you were on your path to do anyway. That is option one and the more favorable one which WIX currently offers. The caveat on that is that it is only for websites you buy at full cost, so you couldn't get kick back on a site you bought at a 50% discount for the first year, because WIX happened to be running a sale, which they run every week and a half. If you look at the purchasing patterns before revenue share from partners, it looks like this, and I always wondered why there were so many new sites. People would hold their free sites and wait for the 50% off sale before buying them from WIX. It was the most cannibalistic pattern from a partnership I have seen.
It was clear that partners figured out a way to hack WIXs pricing model, but that's an extremely short-term way of looking at incentivizing your partners. Those 50% windows were meant for self-creators in order to aid conversion and assist with TROI, but there isn't a way to turn that off for partners. It also has a bad rub to it, that their customers could buy it but they had to pay you full price. WIX tolerates that as a cost of doing business but if you're buying sites at full price at the legend level or whatever it is in the loyalty program, you earn the life time kick back for revenue share, which to me is more long term. The preference from agencies is to give them a discount instead of earnings over time or an increasing tiered percentage. They want 50% off for life or they will simply input the code every time. They have been conditioned to think that way because of the product experience which has been happening for a decade.
They do and you enjoy that benefit when you're converting within those windows. From an agency's perspective, it wouldn't be that difficult if you were my client for me to tell you the site is almost live and we will be able to launch in one week. I have to finish up a few touches but I am simply waiting for the sale to save myself $150 a year on the website. People do it, and especially once they have done it once, it becomes their overall behavior. The challenge is that it is 50% off for the first year only on annual peak premiums above a certain threshold. Agencies face this seemingly short-term benefit of tricking WIX, but when that site comes up for renewal a year later, they get charged full costs. Some of them have figured out a fun game of canceling that premium and buying a new one with the code and applying, to effectively, get 50% off for life.
The intention of the pricing strategy was not to offer a flat 50% off for life. WIX needs to figure out how to differentiate between B2C facing sales of 50% off every two weeks for any unlimited annual plan for the first year, from its pricing strategy offer to its partners. I believe it should be an escalator based on collections. If you build websites for people who process a huge amount of GPV because they're big businesses and you helped create that, you should enjoy a percentage of that, the way Shopify does it. If you built five websites this month and 12 the next, your growth trajectory is growing and you get an extra few percent. It doesn't need to be rocket science, but they battle between B2C and B2B promotions.
It is not easy and you don't want to piss off one of the audiences by implementing policy change. What they came up with is that you can chew up all the 50% sales if you want to, but you won't enjoy the long-term revenue share component. It has value propositions on both sides but I would argue they overlap, which is where the mess is created.
If you're paying $250 a year, the agency gets $50 for every website, every year, as long as that premium is active, multiplied by the number of sites they produce.
TROI or time to return on investment is an important KPI at WIX. In the world of self-creators, it was the easiest thing to measure. The first slide I ever saw at WIX was how much money they made, by cohort, from the users they acquired during a specific time period. They were able to take the customer acquisition costs for hundreds of thousands of users acquired this month, and make more than that over the subsequent months. WIX is basically printing money which is what we saw over the course of its first few years, post IPO. That was amplified by Covid because all of those free users who didn't convert needed an online business function, or the users who were running a business but didn't have a business function online, needed to upgrade from premium to a business plan.
That model is extremely predictable and repeatable in the self-creator space, as WIX has moved up market into professional and ecommerce is two big vocal points. It's not as predictable because customer acquisition costs are completely different from an agency to a self-creator, and the production, in order to achieve ROI from those non-self-creators, isn't clear because it differs per partner. Some partners, you invest in user acquisition by paying to acquire traffic then converting it, whereas others are built on organic or referral-based models and will produce at a lower rate. Some businesses are turn and burn where you do a ton of cheap five-page basic websites with no business functions, and others will do one big website, for which they charge $50,000.
To WIX it doesn't matter what you charge your customer because they don't take a percentage of that like most marketplaces such as Fiverr and Upwork do. If you generate a lead as a partner from WIX, you could charge them $150,000 to build it and only pay $250 for the website.
Shopify will gouge you on that as you pay a fee based on what the user pays you. The bigger the transaction, the bigger the cut you have to give, but WIX doesn't take a transaction fee for the connection. A big draw for partners is the ability to source customers from a platform like WIX and not have to give them revenue share. If you charge them a ton of money for the website, that's a great benefit, but it's inside the product and developing the ease of use. Once you're able to understand how to build in the editor, and also at the point where you're working with somebody who wants control, you continue to do SEO and they run their blog or write their own email marketing in third party open-source environments like WordPress, you don't want to let them muck around on your site.
WIX gives you an easy way to create role-based provisioning where you can do those things without touching the site, hosting plans or payment modules. You can still get your hands dirty because it is so user friendly where the agencies like that they can say yes. Each time you have to say no because of the limitation in the product, it deters from its value. The fact that you can also get leads from there and the marketplace is huge, is one of the reasons you will stay.
I worked with Nir, Omer, Avishai and Lior, our big C-suite, but mostly with Omer, our CMO. They are all great people but Omer was in charge of marketing and had the most power, because he decides how much we spend on campaigning for user acquisition. I respect them at the highest level because of their bold decision to go up market against WordPress and Shopify who are insanely terrifying, and now there's a third one in Webflow. WIX could have counted its chips in the niche self-creator space. They already destroyed Weebly who went through an acquisition by Square and are now gone. SquareSpace is losing market share and they were able to tackle and beat them from a restaurant standpoint. They would soon have integration with their own point of sale system which will deteriorate SquareSpace's value prop.
GoDaddy was already out of their rear view so they could simply keep doing this, but their answer was to move up market and build a better product because there is demand and they already had those users. They already had ecommerce customers building websites on WIX and transacting in the multiple millions per month; I worked with several of them. On the other side of that is the professional space with partners who have built tens of thousands of websites over the course of a few short years, multiple million-dollar monthly deals they spend with you. We already have them without trying, so what if we built a product for them and tried to support them in a better way than our call center? That is an extremely bold decision for which I respect them, because it is simply a competitive advantage here.
I do a lot of consulting and WIX is one of the bigger topics that comes up lately. I think it's because of what's happening in the market, but there was an interesting look at WIX; will this pay off. This won't pay dividends for them in the short term, not even this year, but long term, I think WIX will have a better product than open-source CMS platforms like WordPress, who are not developing at the rate WIX currently is. If you look at customer acquisition over the course of Covid between Shopify and WIX, both stocks sky rocketed and so did new users and conversions and upgrades to premium cohorts. The relative number of net new users was larger with WIX than it was with Shopify, which is an early indication, but I think it will work. It is also predicated on WIX's dedication to continue to invest in the product, which has been unwavering since its inception. You could stop spending money on that, or you could continue to invest and win it out in the long run, which is where I would bet.
Fire people faster. It's an amazing company and I worked with so many people. Nobody wants to be in a Netflix who laid off 3,000 people today. Don't do that, but I would fire people faster. Hire fast and fire faster is my mentality. Have you seen the show Silicon Valley?
There's a moment the guys on the roof are resting investing, they're not doing anything but they've been shamed out of it. It's not like that, but it would be so much easier to simply fire you, and I fired many people in my time.
He is, but as you move down the ladder that dissipates. There were 6,000 people there while we were trying to fight two industry giants simultaneously, while not taking away from an investment or human capital standpoint from the self-creator space. We didn't move resources, they simply decided to create another one, and at the same time we didn't go through people getting fired more than I would have guessed. Maybe I didn't hear about it but I would have fired more people if I was Avishai.
It is RSUs, not options, but it's a four-year vesting schedule with a one-year cliff. That is a very attractive part of the offer, but in terms of the talent acquisition space, WIX has changed its offering by moving to a very typical unlimited PTO thing. That would take another hour for me to discredit that model from a financial standpoint, which is my current business. It moved to unlimited PTO and has dropped in value, so the package doesn't look as attractive, but when you're talking to your early to mid-20s market, the equity package doesn't resonate with them as much as it does with those in their late 30s. I currently negotiate my equity package before my OTE, but it's the other way around with the younger generation, which is where a larger percentage of WIX's org is in the customer service or customer care space. They have a huge R&D and engineering guild, but that has deterred hiring per se, and if it did, it only affected the more senior management.
I am still a massive shareholder and yes, I am pissed. For tax purposes, I don't feel like paying capital gains in 2023, so will hold, but my last trade was at $340 and I thought it was going to keep going up, but I was wrong. You would be pissed but only if you're choosing to exercise. When I bought into the company when we were acquired, it was trading at $52. It's $64 today so relatively speaking from when I started it's still gone up. It’s simply how you choose to look at it. I'm sure some people were infuriated and left because of it, but that certainly wasn't the reason I left.
Yes, this was a pleasure. If you need anything let me know.
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The executive spent over 5 years at Wix, leading the agency relationships which included some of Wix's biggest clients. The executive also managed the Customer Success team for the group.
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