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Reflections on our investment in Wish

Today’s IPO marks an important milestone for Wish and an exciting day for our firm.

Over the last decade, CEO and founder Peter Szulczewski and his team grew their company from a small ad recommendation engine into America’s third largest e-commerce platform.

As investors, we co-led the angel round in 2010, led the Series A in 2012, bridged the company after the A and co-led the Series B.

My enthusiastic early support wasn’t so much a bet on the company as it was a bet on the talent and work ethic of the founder and his team. Peter was an iconoclast at Google, where entrepreneurial personalities are rare. His genius and contrarian nature stood out early on. Peter built an algorithm with over 40% better click-through rates than AdSense and we were seeing star engineers from Waterloo joining him. That’s when I first got involved with Wish — then called ContextLogic — and helped lead their angel round at $6M post.

Aside from having tremendous technical talent, Peter has exceptional leadership instincts. He created a culture that encourages experimentation and rewards results. Peter is obsessed with finding things to improve and exploring new ideas. To this day, he starts every board meeting by identifying what is working and what isn’t, and immediately dives into bold changes he’s making. This competitive, solutions-oriented framework attracted the best and the brightest to work with him, and let the best ideas win, continually improving his business and metrics over time.

The best venture investments combine top talent with something that’s newly possible in the world. Wish explored and defined what’s possible in mobile commerce. Peter realized that data harnessed during mobile interactions tells you a lot about customers and their preferences. Wish first collected this info by letting users create wish lists to learn what motivated them to click-through. He then started connecting thousands of merchants on the platform, focusing on cost-conscious consumers – and letting the data and AI and trial and error do the hard work of merchandising.

The demographic of Americans whose earnings fall below the median household income was generally ignored by other founders starting e-commerce companies. In Silicon Valley, many built businesses catering to their wealthy friends – but cost-conscious consumers are a much larger market.

With no one else addressing this segment of the market, Peter realized that Wish could become the e-commerce platform for cost-conscious consumers. Wish could do a better job than the incumbent discount retailers in serving these consumers. Rather than relying on humans to guess what merchandise to stock the shelves with, Wish could predict consumer preferences by gathering data at scale and conducting experiments to figure out which items people actually wanted to buy.

Soon, Wish had connected millions of consumers with hundreds of thousands of merchants selling low-cost goods and built out a merchant marketplace.

This early success didn’t come without a host of problems. The team at Wish tackled fraud and stopped illegal goods from being sold by creating robust anti-fraud protections and incentivizing merchants to behave. Wish dealt with a variety of international trade rules and challenges, while testing pricing to improve profit margins while keeping prices low. They constantly iterated to make logistics more efficient, improving shipping times by figuring out which items were most in demand and how these could be stored closer to the consumer for faster delivery, and what could be shipped together. Eventually, this led to Wish Local, which allows mom and pop businesses to become depots for Wish packages, earn revenue, and increase the foot traffic in their stores – a great example of technology empowering small businesses and local economies. Wish’s resilience was tested time and time again, but the solutions-oriented culture that Peter nurtured allowed the company to persevere through the challenges and emerge stronger.

Investors are often glorified cheerleaders, and Peter and his key lieutenants deserve all of the credit for Wish. But there are times when we get to play a small role in a company’s growth. In the early days, we brought in investors and advisors to help Wish wherever we could. Jerry Yang, who participated in the Series A we led, helped navigate a variety of strategic issues including China. Michael Ovitz helped Peter iterate on branding and acquire the domain Wish.com.

Despite the company’s impressive metrics and ambitious vision, back in 2013, few believed in what Wish was doing. I failed one of my duties as an early board member when I introduced the company to friends and acquaintances up and down Sand Hill Road and got turned down by Sequoia, Kleiner Perkins, and other funds. Many of them lectured me on what I didn’t understand about e-commerce and retail as a newer VC. They didn’t believe that data could replace merchandisers. In retrospect, they understood too much how the world of e-commerce worked in the past to realize that Peter was uncovering valid new possibilities in mobile commerce.

Despite these “no’s”, it was our job as lead investors to help Wish secure the funding that it needed to achieve its mission. I ended up bringing in a large number of friends and supporters to bridge the company between the A and B rounds. Our venture firm even led the first part of the Series B, convinced that as the progress continued, we would find other capital.

Fortunately, Hans Tung at GGV, who heard about Wish via his network in China where merchants were starting to have a lot of success on the platform, ended up leading the rest of the Series B in 2013. Since then, Hans has been extremely helpful, drawing on resources from his networks and experience with big wins in this area, and offering great advice. In time, investors that had sat out earlier rounds began taking note as Wish continued to scale. Ahead of Wish’s Series C, my friends at Founders Fund decided to take another look and Geoff Lewis and Brian Singerman ended up leading the round. Ever since, Brian has been a very helpful person to have around the table. Yuri Milner of DST, who maintains a great network in China and has had some of the biggest investment wins globally, led the D and the E. Temasek, Wellington, and General Atlantic are among Wish’s more recent investors who have provided the resources the company needed to scale to its size today. Rahul Mehta of DST and Tanzeen Syed of GA have done amazing work with the company these last few years and for this IPO.

There was a time when no one believed Wish could succeed. Investors didn’t understand much of the complexity, genius, and potential of Wish in the early rounds and it’s possible that many still do not today. Today, the company connects more than 100 million monthly active users in over 100 countries to over 500,000 merchants selling ~1.8 million items per day. The lessons I’ve learned from watching Peter and his team build the third largest e-commerce company in the U.S. (and a leader in Europe and elsewhere) are timeless and have reinforced our investment philosophy. As a board member of this now public company, I’m not allowed to make any forward-looking statements — but I can say that I’ve been honored to be part of this journey with Wish over the last decade.

Wish’s incredible journey is proof of what happens when you bet on top talent, focus on solving overlooked problems, and persevere. I’m excited to celebrate future milestones as Wish continues to innovate in global retail and ecommerce in the decades to come.

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