Leonardo da Vinci, born in 1452, was left-handed and developed the skill of writing in mirror, from right-to-left. Most likely, this was to avoid smearing the ink with his palm when writing in the “normal” direction. The primitive state of the art of metallurgy, and technology in general, made his futuristic ideas infeasible during his time. Many of his substantial discoveries in fields such as civil engineering, geology and optics were unpublished. Da Vinci had no way of reaching a wide audience.
Da Vinci's Codex Forster I (National Art Library, Museum no. MSL/1876/Forster/141/I)
Fast-forward 568 years. In the year 2020, anyone can use Adobe Fresco on an iPad to create realistic oil-based paintings—perhaps the next Mona Lisa. Teams from around the world can collaborate on Slack, and scientists—as well as Renaissance men and women—can publish on Wix.
Wix—which I used to build this website—is a fully programmable web platform for publishing and customer interaction. The company’s mission is “to be the #1 website builder for all types of users—small businesses, designers, agencies, mid-market businesses & enterprises.”
If da Vinci were alive today, he would likely have his own website to help disseminate his ideas—very likely, on Wix. In his conception, an inventor is someone who “created an artifact or work of art by assembling various elements into a new configuration that did not appear in nature.” 
Wix, founded in 2006 by Israeli developers Avishai Abrahami, Nadav Abrahami, and Giora Kaplan, was also enabled this way: the combination of standard internet protocols (first proposed in 1989), cloud computing providers (AWS, launched in 2006), HTML5 (2008), and React (2013).
I built my first website in raw HTML in 1995. I was applying to college and remember reading about how to do it on an academic website. It was a revelation to me that I could publish something at an internet address and anybody in the world could read it.
That same year, the first packaged software for website creation would appear: ColdFusion, created by J. J. Allaire. Two years later, Macromedia launched Dreamweaver (both ColdFusion and Dreamweaver are now owned by Adobe).
In 2003, Matt Mullenweg and Mike Little launched WordPress, a content management system written in PHP and released as an open-source project. Its functionality is extensible through plugins, of which 55,487 have been created.
WordPress became quite popular; it now runs about 60 percent of the world’s websites and nearly a third of the top ten million websites. I’ve tried using WordPress, but its plugin architecture is a mess. You never quite know if the constant updates will break anything, and the system requires a full-time administrator.
A year after Wordpress’s launch, Anthony Casalena couldn’t find an all-in-one system with content management, great design, photo hosting and database management. So he built and launched Squarespace, while attending the University of Maryland.
By 2010, both Wix and Squarespace had grown enough to attract venture capital. Wix raised a $10 million Series C and by the following year had raised a total of $61 million.
Squarespace raised a first venture round of $38.5 million. The company clearly had product/market fit: from 2009 to 2012, its revenues grew an average of 266 percent per year. It’s unclear how big Squarespace is today, only that Wix is bigger.
When rebuilding my website from Wordpress, I evaluated both Squarespace and Wix, and decided that Wix was the more capable platform. It’s fully programmable, yet can be built very quickly and easily by anyone. The rich editor environment—accessible through any browser—reminds me of the sophisticated tools built by Adobe. The ease with which Wix allows the purchase of add-ons (like beautiful stock photos with a couple of clicks), and provides paid features that grow with the business (like automations and marketing) also make it a great business.
And what a great business it is: since its IPO in 2013 through 2019, Wix grew revenues nearly tenfold from $80 million per year to $758 million; this year, the company should deliver around $1 billion in top line, all while generating free cash flow and investing heavily in growth.
Wix has been developing its offerings by clever segmentation: for total newbies who a one-click solution there is Wix ADI, which uses algorithms to build a website to one’s liking. For those who need more control, there’s the easy-to-use Editor, allowing anyone to build a site in minutes using pre-baked templates. For agencies and professionals Wix recently introduced Editor X, a sophisticated tool allowing full, granular control.
The company has also systematically added to its capabilities by vertical: Wix Stores, Restaurants, Events, Hotels, and many other apps allow customers to book appointments, create a store and manage their businesses, with integrated payment and accounting. Since the platform is fully software-based, Wix can add new features on a weekly basis; it recently added “Facebook Ads for businesses to run dynamic campaigns that reach customers they want to target on the Facebook platform” and “Virtual Numbers” which enable “our users to have their own dedicated business phone number while keeping their personal number private.”
Like successful platforms today, Wix has an app marketplace that extends its functionality. Apps sold share 30 percent of their revenues with Wix (a split like the Apple App Store’s).
Wix has also started a Partner Program, which we’ve seen work so successfully at our company Shopify: agencies help customers build solutions on Wix and retain a percentage of the revenues Wix earns from those customers. It’s a win-win relationship that helps build Wix’s extended ecosystem.
User evangelism is a key pillar of successful software-as-a-service businesses. Like other companies we own, Wix has had success with virtual events, hosting many more attendees than during pre-COVID, in-person meetups.
Another of Wix’s differentiators is customer service. Have a problem with your Wordpress plugin? Good luck figuring it out on your own. Wix has world-class phone and email customer support (I speak from experience).
In sum, Wix is the first web publishing enterprise that has gone from shrink-wrapped product (ColdFusion, Dreamweaver) to platform. WordPress is a platform too, but Wix is beating it at its own game.
Wix’s founders—all of them still key executives at the company—have also proven remarkably shrewd in terms of financial management. The company consistently reports its return on marketing investments (currently around 7-9 months for newly acquired users to pay off) as well as the amount of cash flow expected from each cohort of customers joining the company.
Initially, when COVID-19 hit, I opened our discounted cash flow model for Wix and typed in “0” for growth this year, down from 25 percent. I was dead wrong. Growth accelerated:
Source: SEC filings, Heller House analysis
Wix usually adds about 5-6 million new registered users per quarter. In Q2, that jumped to 9.3 million. Leaning into the opportunity, the company ran an operating loss, plowing an additional ~$48 million into marketing (up 90 percent from the same period last year). “In response to the dramatic surge in demand, our marketing team responded quickly and aggressively by substantially increasing our investment in user acquisition in Q2.” These are exactly the types of investments we like to see our management teams making.
Asked in June about “market saturation,” Wix chief operating officer Nir Zohar replied, “First of all, I did not think that it was in saturation before. And obviously, now after corona has hit, it's clear-cut that there’s no saturation. When you think about it, we—on average, we were adding roughly 2 million registered users a month for years now. That was pretty much the attach rate of new registered users on a monthly base. April, that number went up to 3.2 million. It's a big, significant increase. Naturally, there is demand, and people are looking for solution.”
OK, you might be thinking, but what about paying customers? Here’s the same chart, but for net premium subscribers added per quarter:
Source: SEC filings, Heller House analysis
Premium sub growth was so strong, Wix added nearly as many in the first half of 2020 as in all of 2019.
[Note: this post is an excerpt from one of our letters to investors, originally published on October 9, 2020.]