A Diamond in the Rough: The Story of Israeli SimilarWeb Founder Or Offer
CTech – On the face of it, SimilarWeb’s story may sound like just another familiar story about an Israeli high-tech company that completed a massive IPO. The office of founder and CEO Or Offer looks just like any other office of a successful executive during local high-tech’s current heyday. However, on the 40th floor of the Azrieli Sarona tower, on Offer’s desk, lies one item, a book on jewelry design, which implies: this story here is different.
“My parents are artists, they are jewelry designers,” Offer explained. “All their lives they fought hard to support me and my two little brothers because it is a very unstable career. So immediately after I was released from the military, I wanted to help them, and I set up two stores, in Zichron Ya’akov and Netanya, to sell their works and an online store that was supposed to be our highlight. I wanted to build something big, inspired by jewelry empires from abroad or Michal Negrin in Israel. My parents were very skeptical and at every Friday night meal they told me, ‘Or, there is no money in jewelry, go to high-tech,’ and I said, ‘Look at Magnolia, look at Pandora.’ Back then they may not have been great, but today they are empires. Pandora (an international Danish jewelry maker) is already trading at a value of $14 billion.”
So he remained in the jewelry business until he heard about David Yurman. “My parents designed jewelry that was unique at the time, combining silver, gold, and precious stones. One of my suppliers told me that there was a super-designer who was doing something similar, a groundbreaking combination of stones in silver jewelry. Yurman was an example of someone who was hugely successful in this field and created a brand. I wanted to find similar designers online; I did some market research in this niche and saw that it is very difficult to do so; there were no means to search for products based on resemblance to other products. That was the birth of SimilarWeb, as a browser extension that helped you find similar websites to whatever you were searching for. It’s also the source of the company’s name. I convinced a friend of mine, who had just been released from an IDF elite technology unit, to come and help me with programming and he brought in a few more friends who had served with him in the unit, and in 2007 we founded the company. We operated like that until 2011, with seven or eight people.”
In May, in the midst of the latest round of fighting on the Gaza border, SimilarWeb began trading on the Nasdaq at a value of $1.6 billion, raising $180 million. Tel Aviv was under fire, and in New York, Offer was celebrating. One of the banks that accompanied the IPO, knew the story behind the company and gave Offer a special edition of a book on Yurman’s jewelry. Fourteen years after he set out in search for jewelry, Offer had come full circle.
Even when you look at the generic photo of SimilarWeb launching its trade on the Nasdaq, it is easy to spot something unusual. Offer stands there, prominent in the center of the picture, a sole founder, of which there are almost none. It is extremely rare to come across an Israeli firm that reached the top and it does not have three or four co-founders. Furthermore, Offer does not really fit the mold of an Israeli entrepreneur. He did not go through a military technology unit, did not study computers, and did not set his eyes on the high-tech sector; after all, he was interested in jewelry. His different track created a slightly different company and a different managing style. SimilarWeb may have been born to look for the similar, but somehow constantly introduces an unlikely model.
“People are surprised I didn’t give up in the middle. I’m really a Cinderella story”
Empire is a keyword that came up several times during the conversation with Offer (38), who lives in Kfar Shmaryahu, is married and a father of two toddlers. He always wanted to rule an empire, only that, unlike others, it was not really clear that it would be a technological one.
SimilarWeb is already worth $1.8 billion. Its revenues grew by 32% to $93 million in 2020, and according to the first quarter of 2021, it may end the year with revenues of $120 million, although it is still recording losses. The company employs more than 900 people in Israel and the US, and soon its logo will replace mobile provider Pelephone’s logo on the side of the Rose House in Givatayim, where SimilarWeb will house the entire building. “For a long time I wanted a headquarters that is only mine, and I deliberately looked for iconic buildings that house familiar names, such as Pelephone or Isracard. I look at empires,” Ofer explained. “I see it as a statement, high-tech and start-ups are no longer child’s play. SimilarWeb is a public company and is part of the process by which new high-tech replaces old high-tech.”
It is surprising because you did not come from the old high-tech, nor did you grow naturally into the new high-tech.
“As a kid, I used to be a computer geek, but it mostly came down to playing games with friends from Tzur Hadassah, where I grew up. It was the early days of the internet, and one of the guys would set up a terminal to remotely connect to his computer and we would play together. The IDF’s 8200 unit wanted to draft me because I was already a programmer, but I was not interested; back then, 8200 did not have the reputation it has now. Besides, I wanted to be a combat soldier. It is something important in my family and community; my big dream was to join the special forces, but I did not; however, I ended up in Oketz (‘Sting’ in Hebrew) the IDF’s canine unit.”
If a technological military service contributes to computer people, Offer explained that combat service contributes to entrepreneurs. “It helped me a lot, including my personality. The experiences I had to deal with during those years, today I know that it was the basis for both entrepreneurship and leadership. During a big part of my service, I was caring for dogs in the south, in an outpost inside the Gaza strip. Being a dog operator is a unique position, even as a young soldier, you join experienced combat forces, you casually speak with brigadiers and lieutenants generals. You need to make quick decisions under pressure and tell them whether to keep moving forward or not. It takes courage and a lot of leadership. This is true not only for me but also for Israeli entrepreneurs in general — they have more courage than CEOs who grow up in Europe, for example. It is not for nothing that in the US a large proportion of entrepreneurs are immigrants.
“So it was a military service not in the technology units that made me more resilient than others, and that’s also the feedback I get from those around me. Anyone who hears my story, about running alone for 14 years with product pivots, is surprised I didn’t give up in the middle. I’m really a Cinderella story.”
After his service, he enrolled in school but again did not choose computers. “It was clear to me from a young age that I wanted to be an entrepreneur, and I also did not want a degree that required intensive study. So I only studied business administration at the IDC, three days a week and that’s it. I wanted a degree that would allow me to do more.”
The other things, as mentioned, were the jewelry chain, named Maya Offer, after his mother. But a little over a year after its establishment Offer suddenly became a tech entrepreneur and handed over the management of the stores to his parents (who have since sold them). SimilarWeb’s product went through several incarnations until in 2011 the company changed direction, and since then provides services for digital market analysis — website traffic comparison, number of downloads and app users, and other tools used by both companies and investors, especially hedge funds that want to learn about the startups they are considering investing in.
So in the end, Offer did what his parents said and got into high tech. In general, his parents are a present part of his life. Offer took them and his brother to the IPO event in New York, saying, “They were in ecstasy.” It seems that when an entrepreneur does the whole route alone, without co-founders, his silent partners are especially present.
You started a company on your own, without partners, at the age of 23, without a background in technology, without the connections that are created in the army or other companies. Meaning you managed without the tools most other entrepreneurs have and which make the way a little easier. I assume there were quite a few breaking points.
“It was very difficult for me when I started, at the age of 23. I worked without money for more than a year, until in 2009 I raised some funds from Yossi Vardi (who still owns about 5% of the company’s shares). But often, when there are several founders to a company, each one needs a role to feel important, and precisely because I was alone, a sole entrepreneur, it saved me a lot of politics and allowed me to bring in a good managerial backbone from the outside. It happened to be one of the things investors liked the most, the fact that SimilarWeb’s management had strong people in every field, finance, technology, HR etc.”
“But it comes at a price, of course. There were times I thought of giving up. In 2007, when we were only three employees in the company, one of the strongest minds said he did not believe in the product — and left. I thought there might be no point in continuing if he thought it would not work, but I was 24 and I had nothing else to do, so I continued. It was only when we raised the first money that I became more confident, and everything changed.”
How much did you raise?
“A million dollars,” he smiled, “and it was enough for five years. Today there is no startup that survives such a long time with such a sum. Even after that, there were several breaking points when we pivoted and reinvented the company. We went from a browser ad-on to an independent website and then turned to the business market. Then in 2011, just as we decided to change and move into the business market, a merger proposal came. It was after four years of running the business on my own, and the other company suggested an outside CEO will take over to raise more money and run everything. I said ‘come on, enough, let someone else take the responsibility, I’m tired,’ but after I agreed the company backtracked, so again I had no choice but to continue on my own. So the entire course for me was like a military hike. You want to quit ten times along the way, but you cannot because you know you have to get to the finish line.”
It has been ten years since then. Haven’t you had enough? Many founders retire after the IPO and turn their chair over to a professional CEO.
“On the contrary, I feel like I’m not done yet, I’m still pretty young, and I also do not want to do anything else.”
How do you overcome the loneliness? People say that you tend to consult a lot.
“Yes, I like to consult with other CEOs of high-tech companies. With Moonactive founder Samuel Albin who is my best friend, with Micha Kaufman, co-founder and CEO of Fiverr, with Gil Schweid from Check Point. I really appreciate him, admire what he does, his tenacity and thoroughness. Today, his tips are particularly relevant, because he has been leading a public company for 25 years. Five years ago, I understood much less about what he was talking about.”
Your IPO was successful, but your valuation is not relatively high compared to other Israeli companies that recently went through a similar process. You would have made more with a SPAC merger.
“We were approached a lot, but we felt there was no need. I went through the entire process and I was ready. Why should I take something that feels and sounds like a shortcut and can later come back to me as criticism?”
If you believe so much in the company’s future, why did you realize $10 million worth of shares in the IPO?
“I understood that as the CEO of a publicly traded company it would be difficult to liquidate the holdings later on, because there is a lot of regulation, and an IPO is a good time to make a small liquidation. I have been with the company for 14 years, I had 20 million options and their validity would have expired if I had not exercised them.”
Aside from the disadvantages of being a sole founder, one of the advantages is the ability to maintain a relatively large share in the company, even after many years. Thus, Offer still owns more than 7% of SimilarWeb worth about $130 million — a rare share for entrepreneurs in a long-standing company after several dilutions. The abundance that has landed on the company in the past year has not skipped its employees either. At the end of 2020, SimilarWeb raised $120 million, and most of the money flowed into the pockets of employees who sold shares. There is now another wave of options being exercised after the IPO.
“I am a fanatic about employees, I check everyone”
Employees are the main thing that occupies Offer these days, as recruitment becomes more difficult in a time of unheard-of demand and tough competition for every programmer. “I take from AppsFlyer, Facebook takes from me, and it never ends,” said Offer. “When I rented the offices in Sarona (where the company currently owns four floors) I signed for ten years, and I never imagined we would have to move so quickly.” He also did not imagine how quickly the trend would be reversed: at the beginning of the pandemic, SimilarWeb let go of 50 workers, most of them in Israel. “We started 2021 with 350 employees in Israel, now we are at 550, recruiting 150 people every quarter, meaning 50 employees a month.”
These are exceptional numbers, certainly in light of the current difficulty in recruiting. Any organization, even large and orderly ones, and not necessarily in high-tech, will have a hard time dealing with such recruitment and absorption volumes.
“Beyond the shortage of workers, today it is hard to keep a worker in the same position for a year and a half — everyone wants to move quickly, move on to the next job. Everything changes very quickly, people do several different positions in a short time, and there needs to be an infrastructure to train them.”
Does it make sense, or is it healthy, that in Israeli high-tech today it is more difficult to recruit employees than to raise money or customers?
“It is true, and today a large part of a company’s branding is employee-oriented. It happens because in high-tech every single employee is very influential, with more weight. In high-tech, you build better companies with far fewer people, so it’s a market of employees.”
And employees have become investors –– searching for the best options for better stocks, or companies that are closer to an IPO, and based on that decide where to work.
“That’s right, employees today are thinking in terms of ‘where am I investing my next four years.’ It was not like this in the past, because there were not so many publicly traded companies and employees who worked for public companies were not tempted by startups, where the compensation was up in the air.”
After the IPO, is it easier for you to recruit?
“Of course, including talents who have worked at Facebook and Google. They come with expectations for certain conditions, but as a public company we can already meet them.”
And is there a limit to what you are willing to give or do?
“It’s just like with athletes who competed in the Olympics. If you want to grow the best, you need the best facilities, the best coaches, and the best doctors.”
What does this leave for young startups? How can they recruit? Think of yourself 13-14 years ago –– in today’s conditions you could not survive. We are already seeing a decline in the number of new startups: if in 2014 there were more than 1,400 startups established, in 2019 there were only about 850 new ones, and last year only about 520.
“Until recently there were too many startups and it was not healthy either, a balance is needed. But I still see employees leaving me to set up startups. It was not easy for me either, when I was 24, with no experience, and I had to recruit and train employees, but I had to show leadership and charisma, and sit and work on LinkedIn.”
It is difficult to determine whether “sitting and working on LinkedIn,” meaning investing a lot of time in recruitment, is a constraint imposed on Offer or a hobby that he has quite happily adopted. To this day, he is briefed on the experiences of every employee who joins the company.
“I am a fanatic about employees, I check everyone at the level of professional compatibility according to their profile and I still bring the best leads to our human resources department,” he said proudly. “It was only in 2013 that I brought in the first human resources manager, so I know every position and every role, both with us and the other companies. From a two-second glance at a LinkedIn profile, I know if the person is suitable or not.” Sometimes, by the way, he does this already after the employee has been recruited. It is known in the company that he sometimes sends long emails to the human resources department in which he asks them to explain why a certain employee was recruited, because in his opinion he is not suitable for the job.
“English should be an official language in Israel”
The generous rewards SimilarWeb and similar companies offer potential employees have been at the heart of a public debate in recent months about the rise of a new rich high-tech class and the impact of the jump in their standard of living on the economy as a whole. In this discussion, and while facing a familiar set of data — the average wage in Israel is about a third of the average wage in high-tech, the unemployment rate following the coronavirus is still very high and close to 9% — Offer’s approach is “getting as many people into high-tech as possible.”
“It’s a luxurious, egalitarian, open industry that shares its capital with the workers — it’s an amazing utopia, there is no such thing in other industries,” he explained. “It’s a miracle that happened to this country, so let’s double the power in this area. In the end, it affects the whole economy. Currently, there is a crazy opportunity to produce an everlasting industry here, like what happened with Los Angeles and Hollywood: today anyone who wants to succeed in the movie business knows he needs to get to Hollywood, and that’s what needs to happen with high-tech in Israel.”
And suppose that happens, what do we do with the gap in the meantime?
“Employee issues and gaps are growing pains.”
So in the long run, to overcome the growing pains, what needs to be done? How do you integrate more high-tech workers?
“The government must resolve the issue of manpower. We need to teach more mathematics, English and computer science in schools, even at the expense of studying literature or geography. And we need training. We do bootcamps, equip anyone we think can fit, including ultra-Orthodox and Arabs. There are plenty of high-tech positions that are not in R&D and do not require university graduates.
“In the very short term, I think that talent should also be brought in from abroad — in Silicon Valley, there are 100,000 Israelis who need to be brought home, and it is possible because salaries in Israel are already at the same level. But even if everyone comes back it will not be enough, so if I continue with the Hollywood parable — we need to bring here not only the best actors but also the directors and cameramen. All professions. Europe also has a talented workforce, but those who have no affiliation with Israel or Judaism do not come to work here, mainly because of the wars that break out every Monday and Thursday.
“I am proof that high-tech is not a closed club,” he stated. “I did not grow up in Ramat Hasharon, my parents are not from the field. Look also at Adam Singolda (Taboola), he is from Rishon Lezion, his father is a musician. High-tech is not medicine, you do not need 750 in the PETs and ten years of studies. You just need a reasonable work ethic and training.”
The economy needs workers in all professions, diversity-teachers, doctors, cleaners, and waiters. According to your vision, if about 10% currently work in high-tech, how many more can get there?
“I think 30% of the workers in Israel can work in high-tech. Currently in SimilarWeb only half of our workers are based in Israel, and I want 80% to be here. And this is already a whole industry, not just technologists — out of the 50 workers I recruit a month, only 40% are developers. And I also create new managers for future startups. In another five years, I will be like Wix, with 3,000 employees in the country.”
How are you so confident about the future? Is there no fear of a bubble, that the industry will shrink, that the Nasdaq will fall and that your stock will also crash?
“I’ve been running with the company for 14 years. I came through 2008, I came through the corona. Even if we look at the year 2000, when I was still a soldier, the crash came, but within a year and a half it passed. If your business is real, you survive it. I can take a hit and then for one year things will be difficult. I have a real business, with real technology, and I’m the best in the world at it.”
In the discussion about the high-tech riches, the feeling was that the heads of the companies were unable to hear any criticism of the industry, and within a moment felt attacked or besieged.
“All parts of the economy benefit from the high-tech boom. The architect who designed my offices in Sarona and also designed my new headquarters, for example, previously worked in his mother’s office, and now he already works alone and employs 20 people. Or the IPO event we had in the Dead Sea, before Israeli artists had to wait for Independence Day to make money, today they do not have a minute to breathe because high-tech companies are throwing events. You cannot drop everything on us, both getting things done and being responsible for the outcome. If there was an incentive from the state to open a headquarters in Beer Sheva we would have gone there, but even in the center there are no workers, so what will we do in the periphery? Or English, for example. I prepare my kids for high-tech, they only watch television in English, and three times a week I take them, one and three years old, to an English class. It should be like India, with schools that teach only English. English should be an official language in Israel. It will not make us less Jewish or less Israeli.”