Startup: IPO and Exit
by Jeffrey Barg
October 16, 2014
Imagine you’ve sunk the entirety of your life savings into a company you’ve helped build from the ground up. Through hard work and determination, you’ve built your company into a premium service provider, identified as one of the leading companies in your industry. Then another richer, more powerful company comes along and asks to buy yours for hundreds of millions of dollars, making everyone at your company instantly rich, with plenty of leisure time. Do you say yes?
“I was inclined to say yes,” said Avishai Abrahami, co-founder and CEO of Wix.com. “Everyone would get rich, but everyone also felt it was too early.”
In the end, the answer was no. It was not an easy response to make, though.
“For me personally, I love the beach in Brazil,” he said.
At the 15th Annual World Knowledge Forum in Seoul, Mr. Abrahami gave a speech on the creation and development of Wix, and offered words of wisdom for any prospective entrepreneurs in the audience.
Mr. Abrahami shared his insights about how to find investors.
“The most important message to venture capitalists when you first want to raise money is that you have a big dream,” stated Mr. Abrahami. After all, when the investors devote their finances, they are not purchasing a product, they are buying into your dream, he explained.
“You raise money with your dream,” he said.
On the subject of how to best raise funds, Mr. Abrahami was kind enough to offer some advice.
“The best way to raise money is when you want it but you don’t need it,” he said. After Wix’s initial success, the company found it easier and easier to draw investors into its circle.
Wix is now the fastest growing website builder in the world. Their business model is unique among modern commercial websites, with no salespeople and no commissions among its staff, and it is free to use in its most basic form. Revenue is generated through website upgrades such as increases in data usage and the elimination of ads.
Mr. Abrahami believes that the success of his company is derived from its capacity to deliver customers exactly what they need.
“What we sell now is designing something, the ability to create what you want,” Mr. Abrahami explained.
Wix’s success led to several other companies attempting to purchase it, but Mr. Abrahami, along with his associates, decided to stay the course. Eventually the company went public, offering an IPO to overwhelming success.
“The best part is you still have the same chair, in the same office, at the same company, working with the same people,” said Mr. Abrahami. In the end, the company saw the IPO not as an endgame, but as another part of a successful journey.
“An IPO is just a step in the road, unlike a sale, which is the end of the road,” Mr. Abrahami said.
Speaking on what it takes to succeed, Mr. Abrahami added, “Never build a product to solve someone else’s problem. Build a product to solve your own problems, because those are the problems you understand.”