>> It's a tough time for some public company CEOs with the SAS apocalypse. That is more true for this CEO than almost any other. The Wix market cap is about $2.8 billion. They are doing $2.1 billion in revenue. They have Base 44 which is now well over 150 million in ARR growing incredibly quickly. And quite frankly, the public markets just won't give them a break.
Um, but uh I want to be direct. You got a market cap today of like $2.8 billion and you do 2.1 billion in AR, give or take. What does the market not see Abashai that they should see?
I think that's kind of a thing now with all SAS companies, right? Where the multiples went to [expletive] and I think a lot of it is because the market don't know how to calculate the danger for SAS companies with AI.
Well, there you go. I've provided you with some good news for today. I mean Atlassian's come up again, CrowdStrike never went down, Palo Alto Networks is up obviously, Box is up. So Salesforce is down, Service Now is down, right? Figma would be down. So there's a lot that at the core, I think it's still down.
For example, Salesforce, what is the biggest value Salesforce provide? It's not the CRM. It's the fact that you trust a SAS provider with your data, right? You have huge banks, huge companies that actually allow Salesforce to hold all of the customer data because they trust Salesforce. You're not going to vibe for that because the trust is massive.
What other platform will JP Morgan trust for their customers data outside of the JP Morgan closed garden DMZ secure environment?
None. The answer is none. They don't trust anybody else with that. But they do trust Salesforce, right? And that's huge. That's not a small thing. It's huge. It means that, you know, and like it's extremely hard to change that.
Base 44 is doing 140 150 million in revenue last announced. I'm sure more now. It kind of ascribes zero value to the core business. Is that just completely nuts to you or are you like yeah I get that in a new world where technology creation is easier than ever.
I think it it descric less than zero value to the current business because if you look at peers they're doing a vibe coding the multiple is much higher than the one we would get for base to be at 2 billion right so basically on its own should probably be at 8 billion.
H we tried it twix, one of the first thing we did with B 44 is that okay should we integrate the business logic of our vertical offering into B 44 and we make a test and we said can we build a hairdresser just a business logic to manage a hairdresser business in B 44. So we had a team, they try professional developer, they try to do it for a week they ended up doing a little bit and so we said okay we're going to bring a stronger team β actually the team that wrote it in Wix β and two weeks later they still didn't achieve that. Those things are complicated.
So, I think this is where Wix is, right? This is our β those are our customers. And to assume that they're going to one day just say, well, you know what? I'm going to start building all of those things maybe, but we don't see it yet.
>> I totally get that. But then the counter would be okay so it's just a TAM reduction because some will and maybe that's 20% and that means the TAM that was 100% is now 80%. So it's like a smaller market. Is that fair?
You're not going to vibe called Shopify no matter how good you are, the business stock is too hard. Essentially the way I look at it today is that there are three different options... some people will be here, some people will be there, which is I'm guessing the more likely scenario to happen in the next five, six years.
Can you talk to me about the decision to do your own model? It's a big technological decision to choose to do that versus use open source off the shelf or Frontier models.
We have a huge amount of training data that is happening for that we're getting on Base 44 right and because we get you know we see what user are trying to do, I see where it fails. We think we can actually create a model that is better for Base 44 than the frontier models that are more way more generic.
We did it already on Wix. So on Wix when you generate a website today, we are running a model that we trained. It's faster, it's cheaper, but it's also better. And it makes less errors. We keep improving it because we have a continuous improvement loop, feedback loop.
>> How much cheaper is own model versus using a frontier model? >> It depends, but I would say between 1% to 30%. >> Wow, that's not nearly as much as I thought it was. Chimath came out and said that when he uses open source, it's 14 to 16x cheaper. >> Yeah, but he's using it on a smaller task. When you want to use a complicated model, for example, what you need for something like B 44, it's not going to get to that much of a level, but you can achieve 5% or 10%.
>> Do you think we're in the cost optimization period for base 44 yet given you have like a rapid who do like multi-agent uh and multimodel modes? They are not cost optimizing at all but they are delivering a good customer experience. We're not in the cost optimization stage for these businesses yet are we? >> No, I think it's more about quality. If you let me have 20% more quality, 20% less cost, I'll definitely go for the quality. It's a new market. It's just happening. It's starting.
>> You said that we have a lot of cash. How much cash do you have? I should know this and it's public but like >> yeah it's complicated. We make about $400 million a year in free cash flow. And we invest about 200 and something million into Base 44.
You said one person company there. It did break news when it happened. It was a great story. One person, $80 million, and since it's been an unbelievable acquisition, obviously it's now probably double the revenue that you bought it for price.
To be fair, very easy. We have a really good board, really smart people, and we explained the logic behind it and they were like, yeah, it makes sense. None of them was that "why are you willing to pay so much for one person?" They actually focus on the business, the business logic.
>> With the price today, does it make M&A impossible? >> Well, we still have cash and we can get more cash if we need. I think our issue today is that... we built a company with one person and then we put a lot of people from Wix into that, right? So that's actually complicated M&A because you have to build a company around it. So I think that our challenge today is actually execution on execution, not finance.
>> You did do the buyback. How did you think about the buyback and any thoughts and reflections on that? >> Well obviously we had terrible timing. It's very hard to time the stock market. I think the big question is now what happened in the last 3 months, it's where it's going to be in 3 years, right? And I hope that by that time is proven to be a smart decision.
I think that buyback are a fantastic tool for a company and companies should use that and I think they don't use it enough. I think it's another way of giving a dividend to all of your stockholders.
>> How many people are in Wix today and how many are in base 44? >> So base 44 is around 400 people. >> Wow. >> Wix in total is about, including, about 3,500. We have a lot of small businesses. We need to support them.
>> What are 3,500 people β where's the majority of them? >> in customer support β customer support is our biggest department. >> Wow. Are you using AI that must get taken to like zero pretty soon? >> No. I don't think ever it will be right. Zero. Maybe 10.
>> Did you build your own customer support AI or do you use off the shelf providers? >> We built our own it. It doesn't work.
We actually tried not to build our own. You know, we tried, we tested many different things. It doesn't work. We tried it didn't work. We tried again. It didn't work. We tried again. It didn't work. We kept working on our solution on the side. At some point, it was like, okay, that's enough.
>> you said that base 44 is 400 people today. >> Yes. >> How many people is it in two years time? >> That's one of the things that it's very hard to predict because it depends how well AI does... I would imagine probably 800 to a thousand and the majority of them will actually be engineers.
On talent retention: I think it's a huge challenge. First of all, I don't think there's a magical solution. Everybody going to lose talent and we are losing talent. As long as you don't compromise on who you keep and you make sure that the people that you allow to stay are really great people, you're going to find you have a lot of talent that you never noticed before.
In three years time, how big will a Wix team be then? >> It's very hard to say. I would love to say well team in 3 years will be a thousand people in B 44 and a thousand people in Wix and everything else would be AI agents. I'm not so sure it is possible.
I think that we all give too much credit for AI and what it can do, right? And when you start looking at the details, it's not really doing that well for a lot of the things. It's amazing. It's incredible. It's super powerful, but and the butt is pretty big.
>> Do you find SMBs are excited or terrified by AI? >> I didn't see that with SMBs actually. I think that we see it more with everybody else... As opposed to if I would be in the university studying today, I would be terrified. That's the truth of AI because like why am I learning this? Would it even exist in a year?
>> so if you were genuinely advising a 22 year old son of yours, what would you say to him? >> I would not be that concerned with LLM replacing every kind of white collar jobs. It's not that smart. It keeps making silly mistakes. It's not very good. Actually, it's not very good at reasoning. It's very good at collecting data and reframing it. However, if we get another two or three jumps in algorithms, then I think we all become a bit like monkeys.
Every time I see a doctor trying to do research by using LLMs, I get horrified because that's the wrong tool. It will probably read, it will answer you, but something it read somewhere on Reddit β for the perspective, it's equivalent to the best research done on Nature. There's no difference. For legal stuff I think that's really good because law is mostly about textual context.
>> do you buy that for health? I think open AI and chat GBT is a lot better than the majority of doctors at this point. >> I'm invested in a company called K Health... they've proven that they diagnose better than most of the doctors. All right, that's not the same as doing research, right? >> No, it's very different to doing research.
>> they cannot do those things. You cannot do research on astrophysics with an LLM. They don't have the capacity for that. It's not what they do... you have to move for like the deep minds, they do some of that but not just an LLM unless they connect different kind of models and different kind of architecture.
I spoke to Eron at Monday before the show, and he told me that you stay up insanely late. Is that true? >> So, I usually go to sleep at around 5 to 6 a.m. And I'd wake up around 11, 11:30. I have a few hours where I can actually think and work in things and plan things β probably 4 hours where I can do real work and not just talk to people.
>> your whoop or your aura must absolutely hate you and your sleep score must be [expletive] respectfully. >> I don't use it, dude. I don't need another device to tell me that I'm [expletive]. Life is hard enough. I've got a girlfriend to tell me that I'm not doing well enough. I don't need an aura.
Money give you one thing beyond everything else. And that's freedom. Freedom from fear that you won't have food tomorrow, and freedom also to know that you are here because you've chosen to be here. If I'm here, I need to be fully committed to what I'm doing because I've chosen to be here. Nobody made me.
How did making money change you as a leader? >> I tend to agree β when you're less afraid of things you're more reasonable but you're also a bit more lazy. I wish someone had told me that you get much more impatient. I'm not necessarily a nicer person... you got to a higher level of expectation. Nicer food, nicer service, nicer treatment all around. And so when it's not that, I'm impatient.
What would you say to someone who wants to build resilience for a storm that's about to come? >> I think that the first thing to accept is that it will happen... You never know when the next storm's coming from. It will go like this and then boom, and then boom. This is how reality is.
We're going to get there when we get there, right? And the weapons that we have are the weapons that we have. This is the most you can do. The big question is: are you doing the best that you can in the situation that you are in? If you are able to be honest with yourself and say I think I am, then that's a lot of the pressure going away.
What advice would you have for me on how to be the best father that I can be? >> I think that kids don't care so much for the amount of time that you're with them as much as they care for the quality in that time... it's more about how you're there than how often you are there or how long you're there.
What have you changed your mind on in the last 12 months? >> Actually, a bit on AI. I was very concerned with how quickly we're going to find humans being replaced with AI. And I think I'm now looking at the same thing β I think it's going to take much longer than I anticipated.