"Wix wanted to buy us but missed the chance"

Yoni Luxsenberg and Ariel Klikstein

Web design editing tool developer Elementor, the runner-up in "Globes" most promising Israeli startups of 2020 rankings, was founded by ultra-Orthodox yeshiva graduates.

A year and a half ago, the founders of the website building platform Elementor, Yoni Luksenberg 36, and Ariel Klikstein, 37, faced a dilemma. At that time, the company they'd founded in 2015 had already grown to 60 employees, the number of customers was expanding, and annual recurring revenue rate (ARR) just crossed the $10 million mark. At this point, acquisition offers began coming in, ranging from $70 million to $100 million. Not bad at all for a couple of guys who, only a few years earlier, still built websites for customers from a ground floor Bnei Brak apartment, and had a hard time making a profit.

"Those are amazing amounts for someone just starting out, and it could be that the right decision was to sell and take a trip from coast to coast," laughs Luksenberg. "But on the other hand, we felt we could make more of an impact, we wanted to solve the pain we'd experienced as frustrated webmasters, and we could take it to the max. It was a difficult decision, but fun to see what we've managed to do since then."

This wasn't the first time Elementor had received a takeover bid. Luksenberg reveals that Wix.com Ltd. (Nasdaq: WIX), the Israeli website building company, had also been interested in acquiring them. "They wanted to buy, but it was too early and too little," Luxsenberg says. "They missed their chance, and today it's no longer relevant."

Regarding the Wix purchase offer, he claims, the decision to respond in the negative was actually easy. "Just a blink, nothing more," he defines it, and is quick to make clear the difference between the two companies. "Wix does a great job, but it appeals to a do-it-yourself audience, while we appeal to professional webmasters and designers."

Instead of selling, Elementor decided to grow. They raised $15 million last year from Lightspeed Venture Partners, the company's first significant fundraiser, after an initial $850,000 seed investment from an angel investor which was used to quickly expand the company. "It wasn't a big funding round, because we didn’t really need money to breathe, but we got amazing partners who taught us how to build a company, look at opportunities and plan ahead," Luxenberg says.

Elementor employs 200 people in large, lavish offices, spread over 3,000 square meters on the 15th and 16th floors of the Sapir Tower in the Ramat Gan diamond exchange. There are currently 6.8 million active sites on the Internet built by Elementor, and the company has hundreds of thousands of users paying $49-149 per month for premium versions of the company's design tools, and its annual revenue has tripled, to about $30 million (in ARR terms).

The Photoshop of web development

If Israeli startups were to compete based on their founders' background stories, Elementor would probably rank very high. Luksenberg and Klikstein, graduates of ultra-Orthodox Jewish Bnei Brak yeshivas, were raised far away from the classic roots of Israeli high-tech entrepreneurship. Both studied their professions independently, Luksenberg learned graphic design and Klikstein, web development. In 2010, matched through a mutual acquaintance, they joined forces and together built a business, building custom websites on WordPress for customers and organizations, both ultra-Orthodox and secular.

They found, however, there was a shortage of satisfactory tools. Although WordPress is the world's leading website creation platform, with 37.5% of websites built on it, without external plugins, it has very limited options in terms of website design. "WordPress has 50,000-60,000 plugins so seemingly everything exists, but at that time there was no product that offered a one-stop shop solution to set a uniform industry standard," says Klikstein.

This situation often made work inefficient, and Luksenberg and Klikstein found themselves losing projects. "We looked at ourselves at one point, and we asked, what had we done over the year. We built 30 sites, and 30 times we had to rebuild their contact pages from the ground up. The contact pages weren't identical, but in the end we had to do the same actions over and over again," Luksenberg recalls.

Their entry into technology entrepreneurship was relatively small-scale when, in 2014, they launched Pojo, a site for selling WordPress web design templates for Israeli market. Two years later they went a step further and launched Elementor, a comprehensive web design editing tool for professionals. "Pojo was our first product, it was nice, not very complex, but from that we gained insight into the fact that there was no professional tool available. There was nothing comparable to Word or Photoshop for professional website building," says Luksenberg.

Elementor went live on July 1, 2016, and even without much marketing gained momentum quickly. "In the first month we had 1,000 installations, and within three months we went up to 10,000," says Luksenberg. "After ten months we reached 100,000 and within two years a million. Today we grow by 250-300 thousand a month, with 10,000 new sites created every day with Elementor. People use Elementor as their work-tool, and it allows them to build a business."

The fact that they are ultra-Orthodox entrepreneurs stalled Luksenberg and Klikstein in the beginning. "We didn't have a professional network and we didn't know a lot of army unit programmers whom we could bring in. We didn't know how to build a development department or a marketing department, or how to find the right people," says Klikstein. "So everything was done by trial and error."

However, they say, in the end, their ultra-Orthodox background contributed to their willingness to take necessary risks. "We have no rules because we never learned them, so there's nothing that's impossible for us. You have to be a little stupid to think this way -- like little children who aren't afraid to fall down. When you get older is when you start getting scared," says Luxsenberg.

How is this lack of fear expressed?

"Global experts, investors, entrepreneurs and industry people sat us down and told us how we wouldn't be able to get users. We were told to look at the reports of this and that company, see their customer acquisition costs (CAC), and how unreasonable it would be for us to do it. But we didn't know it was hard, and we did it anyway. Today we have hundreds of thousands of paying users. None of these experts took into account the power of community, word of mouth, and the viral love users have for the product. Not all users need to be bought."

Klikstein: "When we set out, everyone we talked to said we were lagging behind, that we wouldn't succeed, and that it wouldn't work. If we came from the usual place that trains you to do things a certain way, maybe we really wouldn't have done it."

Open source and community

Even today, Elementor's product continues to be based on the same painful past experience the two founders had in building websites. "Because we appeal to webmasters, people whose job is web design, any time that can be shortened during the work process affects their daily lives and how much money they'll make at the end of the month.

"That's why we brought a lot of elements from the world of development into the product. Developers are the laziest group of people in the world, because whenever they have to do something twice, they write some code that will do it for them. So we put in a lot of tools that you can use globally to shorten processes."

One of those tools allows users to easily copy and paste graphic elements from one site to another. "Imagine that you built a website for Shoshana's Jewelry and another website for Moshe's Restaurant, and you want to move a pop-up window or an image slider from one to another," Klikstein explains. "Before, that was impossible - you had to go and build it again on the second site. We're now working on the next generation, which will make it possible for different site developers to share elements between more easily, in the cloud."

Users are another source of new developments at Elementor. The company relies on open source code - unlike Wix, which is a closed system product - allowing users to develop their own add-ons and updates to the tool. It has also given rise to a vibrant, active user community who react, critique, and also request specific updates. "By and large, almost all of our features go through users, and if there's something our users want, we can't ignore it. I still remember one user who wrote a post about our not responding to his request for two years," says Luksenberg.

"We have 20,000 users who are beta testers, and they help us improve the product for free," Klikstein adds. "We send them prototypes , tell them how to test the product, and they give us feedback. We've had some very interesting sessions with users, and something strong and good comes out of that."

Still paranoid

Elementor's user community is also a source for employees, both in Israel and in unexpected places around the world. "It started with a worker who brought his cousin from Ukraine to work on technical support. Then we also added community and training personnel in Jamaica and Bangladesh.

"There was a developer in South Africa who wanted to participate in Elementor, so we said we would outsource a project to him. These are people who know the product from the inside-out, so what do we care where they live? It doesn't always go well with the legal department in terms of employment contracts but we manage," says Klikstein.

How has your life changed as a result of Elementor's growth?

Luksenberg: "Ask my wife, I hardly see her. We work hard, from dawn till dusk. From our point of view, we're still at the beginning. Apart from work, we have normal lives. I have two children and Klikstein has four."

Klikstein: "There's not much difference. Aside from getting up every morning with pride because we're making some kind of mark on the world."

Looking ahead, what are dangers you foresee for Elementor?

"We've been eulogized many times already, and we ourselves are paranoid about everything. Our goal is to be the best web editor in the world, and that's something which never ends. We constantly have to think about how to improve, how to listen to users, and how to empower them."

Luksenberg: "I think the danger lies in complacency. When you're a customer-facing company, you mustn't be so in love with your product that you think you've got it made. The industry is constantly shifting, there are competitors and other players. You have to think ahead."

Which company do you view as a model?

"Fiverr is a great company that operates on a model like ours, of B2C. It's a company that has managed to educate the global market. Monday.com does that too. Overall, there's a lot of knowledge that gets transferred between all of the companies in the industry with love, regardless of the fact that, in the end, they'll poach one out of two of your employees."

Elementor: A software company providing web and development services founded in 2015 by Yoni Luksenberg and Ariel Klikstein

Capital raised: $16 million

Employees: 200.

The Startup of the Year rankings are part of the Enterprise Technology Summit held by "Globes" and JP Morgan.

Published by Globes, Israel business news - en.globes.co.il - on December 9, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Yoni Luxsenberg and Ariel Klikstein
Yoni Luxsenberg and Ariel Klikstein
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018