SimilarWeb CEO On How To Make The Web More Transparent

When SimilarWeb, which specializes in web measurement and competitive intelligence, launched in 2007 it was a case of David taking on Goliath.

Alexa, the clear market leader for Internet rankings, had been taken over by Internet gorilla Amazon. So who would have thought a then-24-year-old Israeli whose previous experience was selling digital pictures of sexy women to his fellow high school students and running his parents’ jewelry business could end up beating the U.S. rival?

Offer: ‘showing double digit growth month after month’

But SimilarWeb went on to beat Alexa itself in Alexa rankings.

“In April of this year SimilarWeb passed by Alexa and today is almost 1,000 positions higher,” SimilarWeb said in an August post on its blog. “As of this week Alexa claims the global rank of 2,137, and at a global rank of 1,336.”

And now the Israeli company is taking on App Annie, Yahoo’s Flurry and ComScore with services launched in October that give a unified view of not only desktop computers but the mobile web and mobile app activity.

The Company Is Rumored To Be Considering An IPO

The expansion into new services is being fueled by an $18 million Series C round from Naspers, the South African media group, that SimilarWeb scored earlier this year. The company is rumored to be considering an IPO in the not-too-distant future.

But as every entrepreneur knows, the path to success is never smooth. CEO Or Offer’s co-founders dropped out at a crucial moment early in the company’s history. SimilarWeb (which used to be called SimilarGroup) had to change its business model twice before finding the right one. “Every time we pivoted we had to lay off half of the team,” says Offer, a scheduled speaker at NOAH, an annual conference in London that focuses on late-stage Internet companies. “It wasn’t easy.”

Offer, who was born in Jerusalem to artistic parents (his father is a painter and his mother is a jewelry designer), took a circuitous route to get to where he is today. He was naturally drawn to computer programming and gained entrance to a high school for gifted children. At 14, he launched his first business, selling digital subscriptions to fellow students interested in racy pictures and the kind of rudimentary online games that were available some 17 years ago. When it was time for him to do his mandatory military service he wanted to join one of the elite computer units. But, says Offer, “in the family we have a strong tradition of fighting — my grandfather was a fighter and my father was a fighter so I had no chance not to go into the fighting army. I had to put programming aside and joined the special forces for three years.”

After his military service Offer traveled around the world and when he came back decided to join his family’s jewelry business. “The first thing I did was to integrate the digital world and create a website to sell models and designs of jewelry in the U.S. You could choose the model and order them; it was very advanced for those days and the business grew very rapidly,” says Offer.

“We Sat In A Garage For A Year And A Half”

The growth scared his parents, who were worried about the pace of work needed to scale the jewelry business. “We had a lot of fights over how to run the business,” says Offer. So I said, ‘ok, I will leave and open my own store.’” Offer opened several and every time he opened a new one his manufacturing needs increased. So he decided to open factories in India and China.

The idea for starting SimilarWeb came after someone mentioned a jewelry designer named David Yurman to Offer during a business meeting. He looked Yurman up online and found that “this guy was my dream — he had the right brand and the right approach — which was the hardest thing in the U.S. in those days. I thought, ‘how did I never hear about him?’ I was really embarrassed. So I searched on Google and asked to see similar sites for jewelry design and I could not find them. So after a week of trying I thought, ‘what if I could create a browser that would give me recommendations and show me all the other similar websites?’ If you went to YouTube you could do that but there was nothing like that for websites.”

Offer called a friend who had spent six years in the army doing computer programming. He agreed to join along with another guy from the same army unit.

“We sat in a garage for a year and a half,” says Offer, trying to come up with collaborative filtering technology that would tell you, ‘if you like this web site here are some others you might like.’” The business was fueled by money that he was making in the jewelry business. The company launched its first product — a browser plug-in that would recommend other sites — in February 2009. “It became huge, people immediately loved it, millions of people were downloading and using it,” says Offer. That was enough to get Israeli super-angel Yossi Vardi to invest and to convince Offer to quit the jewelry business for good and go all in with SimilarWeb. Unfortunately the team did not follow him.

“When we started building the product we were three people and after eight months’ work one of the guys decided to leave us,” says Offer. “Going from three to two was very painful. And then, after SimilarWeb raised money the other employees also got cold feet and decided to quit. They were working part-time and were afraid to give up steady paychecks.

“Everybody Hated It.”

Offer didn’t hesitate. He closed the factories, gave the jewelry stores he opened to his parents as a gift and, he says, “continued on my own path.” The popular browser the company developed was not making any money, even though millions of people were using it. “It was very frustrating,” says Offer. But he realized that along the way the company had been collecting anonymized data about the behavior of users and that it could use that to analyze web traffic. So, he and a new team went to work in the garage for another two years and in 2013 launched SimilarWeb as a web measurement service. It was a hit.

How did they manage to go up against Alexa? “Amazon neglected Alexa for 12 years,” says Offer. The UI [user interface] was horrible and the data was horrible. “Everybody hated it but everybody was using it. We knew we could build a better product that would provide a better experience and better data.”

Shifting from B2C to B2B was more than a bit daunting. “It was tough,” says Offer. “We didn’t know how to do sales. We never had a sales team. We knew it was going to be painful and there would be a learning curve and we would have to find the right people to make the shift.”

“When we launched we gave it away for free, we didn’t have a business model,” says Offer. Soon, though, the company developed a licensing model. The revenue “was nice,” says Offer, but the company wasn’t the exciting start-up he had set out to build.

Then Israel Growth Partners’ Moshe Lichtman, the former head of Microsoft Israel R&D Center, joined as an investor, advisor and board member, and helped the company improve the technology and the interface. “We took our time to build a good product and when we launched everybody said ‘wow’ because we were able to give them the insights and data points they need.”

Bringing Transparency To The Internet

Today, SimilarWeb gathers big pools of anonymized user data from a mix of sources to analyze statistically millions of sites as well as mobile activity. It turns this into rankings by country and sector.

In doing so it is bringing transparency to the Internet, making competitive intelligence data accessible to big corporates, app publishers, advertisers and investors. “SimilarWeb tells you everything you need to know about quantitative and qualitative traffic statistics,” says Marco Rodzynek, a partner at Noah Advisors, the corporate finance firm behind the NOAH Conference. “What blows us away is the great user interface and data accuracy.”

There appears to be a big appetite for SimilarWeb’s data. “We are showing double digit growth month after month,” says Offer. “Every quarter we are adding 20 new employees and adjusting the culture and the structure of the company so that we can grow in a healthy and stable manner.”

It was the quality of the SimilarWeb offering that led to the investment from Naspers, says Offer. Naspers has invested in around 100 companies and “all of their companies started to use our metrics to measure themselves and the competition,” he says. “Then [Naspers] started using our data and we got an email from them asking if they could meet us. I didn’t even know who is Naspers or how big they are but I said, ‘ok let’s meet.’ We had a meeting and they realized that what we offer is just the tip of the iceberg of what we can do and they decided to invest. Our biggest investor is a user and they are giving us feedback on the data quality we have. I can not wish for anything more than that.”



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