As you may know, Monday’s founder, Roy Mann - an interesting, and intensely private guy is an Israeli tech exec who was the CTO of Wix prior to founding Monday.
This reminded me of something that Matt Mullenweg said in an interview w Patrick O’Shaughnessy on the Invest Like the Best podcast. Mullenweg is the founder of Wordpress.
Bold is mine…
And then are you capturing all the value in your ecosystem? Wix, Shopify are both amazing businesses. Wix probably captures 98% of the value in its ecosystem. Shopify is probably capturing high single digit. So between 10-50%. They’re not a platform, but they’re not, not a platform either. And they’ve done a good job navigating that.
Patrick: [00:41:09] The Wix/Shopify comparison is one I haven’t really thought about before. What is it about how Wix is run as a business that dictates that 98% capture? What’s the denominator in that ratio? And same thing for Shopify. Just want to make sure I understand the lesson between those two deeply.
Matt: [00:41:25] Let’s say Wix’s revenue is about a billion dollars. They are making most of the revenue in their ecosystem. There’s not that many businesses built on top of that. And I would say part of that is they’re incredibly aggressive. By the way, not a bad thing. It’s good to have that in the market. But to just give one quick example. Wix literally doesn’t let you export your content. Their support page says there’s no way to do it. Even Facebook lets you export your content. I’m amazed they get away with it. That’s not an antitrust thing or something, or user efficacy. Everyone else lets you export your content. And so that’s just maybe an example of how aggressive this company is in trying to capture every bit of value and really lock in every single customer. Other companies that do this, historically, you could think of companies that bring you in really cheap and then upsell you or make it difficult to cancel. That can be profitable in the short term. They can capture a lot of revenue in the short term. I think that long-term, that creates the seeds of your own demise.
Obviously, Monday is a different business than Wix, and Mann was the CTO, not the big boss. He’s got a reputation as a very charitable guy, who gives major discounts to non-profits and mentors entrepreneurs. But the point is if you have the revenue capture aggression of Wix with a little more heart, it’s probably what we want to see from the culture of our companies. After seeing high ratings on Nutanix I downgraded my interest in Glassdoor ratings, but Monday has very high ratings - 91% rec biz to a friend, 94% approve of Mann. So it just seems unlikely to me that Monday’s aggression is so intense would trigger Mullenweg’s “seeds of your own demise” concern.
And for what it’s worth the site looks great - monday.com - lean, mean, clear, easy to navigate, bright, fun, well told story (literally). And I love the name Monday. There’s an attitude about tackling the toughest work day head on.
Lastly, and pardon anecdotal evidence, three people in my family who know I’m into software stocks, texted me just last week on it. One has it and loves it. Two said companies are considering adding it now. One of those companies is gigantic.*
The stickiness seems massive - just can’t imagine a company collaborating with it, getting the staff up to speed and then losing the business, unless something egregious happens.
CEO Mann as elite guy with proven track record - Wix is a beast. This story plays out over and over again - guy has big success at top company then wants to run his own show - Girouard, UPST, Yuan ZM, to name two off top of my dome.
I’m in for a 4% position and likely to bump it up.
- With the results gleaned from this board my crowing is so voluminous even I can’t bear to listen to me. But on bright side, I do find it useful to hear from people who use the products we invest in. And the crowing has attracted some insights.