Can Wix Become WordPress For The Rest Of The World?

The unusual offering from an Israeli freemium website creation and hosting firm could be a bellwether of what's next for tech IPOs.

Wix, an Israeli web-hosting startup with a popular build-your-own-site service, is going public today. The initial public offering is expected to raise at least $119 million. It's the latest in a series of high-profile public offerings by tech firms, with Twitter leading the helm. But for Wix, it's an unusual launch—both because it's a hosting firm and because it's Israeli.

The usual exit plan for many Israeli tech firms that get big is to get acquired by a larger company. Waze, which was purchased by Google for $1.3 billion, is the best known example of this phenomenon (and Wix was even featured in Fast Company's list of post-Waze Israeli startups to watch). Due to a host of structural and cultural factors, including limited marketing possibilities to Israel's Arab neighbors and the lure of Silicon Valley, Israeli tech firms tend to sell after reaching a certain size. Wix's IPO is sure to be watched by other tech firms rumored to be considering similar moves like Outbrain.

Adding to the novelty of Wix's IPO is what the company actually does. Its model is similar to Squarespace, Weebly, and even WordPress. Wix offers web hosting and drag-and-drop website design for a clientele, primarily small businesspeople, who don't want to deal with hiring a web designer or the messiness of hand-coding HTML and Javascript. It even offer its services on a freemium model—users can put their sites online for free, although they'll include advertisements for Wix's services baked into the home pages. Wix has tens of millions of users, but its still small potatoes compared to hosting giants GoDaddy and DreamHost, neither of which has filed for an IPO yet.

Nir Zohar, Wix's president and COO, told Fast Company that the company is gaining 1 million registered users each month, with much of that growth overseas—its IPO filing notes users in 190 countries and offering platforms in French, Spanish, Portuguese, and Italian. He noted that only one-third of its users are Americans, with most of the rest coming from Australia, Canada, Brazil (an especially strong market for Wix), Argentina, Colombia, Russia, and other countries. It was also emphasized that Wix's future lies more in offering website creation and content management tools for users rather than in hosting infrastructure.

The growth of the Internet worldwide is seen by Wix as an opportunity to boost its user base; Zohar noted that Wix's freemium model helps sign up users in countries where, unlike the United States and Israel, it's less common for customers to pay for services with credit cards online. Also emphasized was Wix's App Market, which offers HTML5 plug-ins for Wix customers' websites. By allowing third-party developers to create plug-ins, Zohar said, Wix is able to expand its functionality set for users while having its engineers work on core projects instead.

In 2012, Wix generated $44 million in revenue and lost $12 million. But in the first nine months of 2013, Wix's losses jumped to $18 million in advance of the IPO. Much of its growth has been tied to the international market—while it offers a popular service, it's also one that makes sense in the context of a larger corporate patron, like Google or Microsoft, just as much as it does as an independent publicly traded company. But to hear Zohar explain it, he sees Wix almost as a utility service that offers easy website creation to the world. "We still have less than 1% of this market, and this market is enormous," he added.

By all accounts, Wix is expected to have an impressive opening day. The question for now is which other tech companies will also pull off IPOs next quarter on prominent stock exchanges such as NASDAQ and the New York Stock Exchange. Any guesses?

[Photo: Flickr user Bfishadow]

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