Optimizely Raises $28 Million to Go Global | Hacker News Reader

Optimizely Raises $28 Million to Go Global

blog.optimizely.com

123 pointsjwblackwell56 comments

Aside from just what a solid company Optimizely is, I think that if you read Dan's blogpost you get a hint at the ultimate direction they may be going.

"We firmly believe that 10 years from now people will look back at today and be shocked at how generic, impersonal, and one-to-many what we call the web is... We are striving to become the layer on top of the web that powers that experience."

I'd guess that Optimizely may be becoming less about page optimisation and more about experience optimisation. Should my navigation and experience at Tesco be the same as that of a mother of four or a student? My recommendations may be personalised but what if the entire experience at the site including the advertising, design and calls-to action could be personalised and optimised for key customer segments.

If you've ever used Test and Target you'll know that it can get pretty complicated but equally that that that sort of segmentation can equally have a huge impact. If Optimizely can pull off a way to easily curate site experiences for different visitor segments and perhaps intertwine those experiences with social then they could have some huge topline impact in those companies.

yeah, i thought so too! The personalization/recommendation space is super crowded though -- it'll be interesting to see how Optimizely tackles it.

Quite easily. Take a look at Monetate's website. No transparent pricing.

Making it clear what the costs is and making the set up ridiculously easy.

Exactly the same strategy as they did with A/B testing.

It's shocking to me whenever I see company nowadays that makes you contact them for pricing.

It is unfortunately a necessary evil of most enterprise sales situations. My company started out by providing clear, public, easy to understand pricing on our website. We quickly discovered that many large companies expect to get large discounts off of "list" price, and even if your pricing is on par with, or less than your competitors, you end up talking to people who say things like "I won't sign anything if I don't get at least 20% off list price". It's a weird weird world. Companies like Oracle who routinely discount 80+% off of "list" set these expectations in the market.

That actually makes some sense. I feel like they could at least say something like "We are enterprise only product. Pricing varies, but starts at $XXX" Of course I just assume that if there's no price tag, it's going to be high, but still.

From Jason Cohen

"This is always how the conversation would go:

PM: What kind of discount are you offering?

Me: We don’t discount; instead we put our pricing on our website so there’s no misunderstanding.

PM: Well I’m going to need some kind of discount. How about 30%?

Me: As it says on our website, we don’t discount.

PM: But I’m buying 400 seats!"

http://blog.asmartbear.com/startups-emotionally-draining.htm...

In enterprise sales, setting a common open price is very hard. If you look at the current offerings of Optimizely, they want to call you if you want to buy a package that is > $360/mo. The reason is, it might be based on the site traffic, level of service you are picking and a few other factors. Also, each sale will have legal contracts that might drag on for months with pitches to several members from the buying organization and negotiations.

In addition, your product offerings keep getting better every quarter and you also want to test varying price points, offer discounts and compete well against several competitors in the process. If you are going after a market trying to acquire 1000s of customers paying $xxx/month having a transparent open pricing works great but it doesn't when you are targeting enterprises.

Disclaimer: I work for monetate and we do have a pricing page that explains to the buyers on what to expect. http://monetate.com/products/packages-and-pricing. Also, most of the enterprise buyers are used to this kind of setup and putting a price tag on your website doesn't really work.

> I work for monetate

Looks like you have some serious competition.

He still makes some good points though.

Right, it looks like they're going to build something similar to Monetate http://monetate.com/products/personalization. There are already high quality, established players in this space. I'm curious to see how they'll differentiate themselves.

Did you notice the graph in that post? I think you mean to say "I'm curious how they've been differentiating themselves."

Without size cohorts that graph doesn't mean much. I'm sure that if you'd have those it would be very impressive but just by itself that graph is not interesting other than to show very good growth and very good future prospects. It's the kind of slope investors like to see :)

If optimizely is as well represented in the top 100 and top 1K as it is in the top 10K then that would be a much stronger statement.

Hi Jacques, we have pulled together the same data in terms of adoption for the top 100k and top million and they look very similar.

A great source for this data if you are looking to dive into it is http://trends.builtwith.com/analytics/Optimizely

Would it be a lot of work to get that data for top100 and top1000?

If it holds there too that would be absolutely awesome.

I am not sure how that would make sense. VWO has Microsoft and Groupon, but I am sure it is a tiny portion of their total traffic. What are you really measuring?

The thing is we are talking about .5%-3% share here, and the top 100 would be statistically meaningless. What you really want is revenue, and I am sure that is private information.

VWO advertises about 2500 customers and Optimizely claims 4000.

Frankly, I'd be more interested in how the Google numbers were calculated. It is now so integrated with Google Analytics it is pretty hard to detect.

If I were a betting man, I'd guess their revenue run rate is around $10M.

Selling into the top 100 would be statistically meaningless but it would be extremely important to optimizely to show their adoption. If F500 companies rely on your service that is an excellent arrow in the quiver of your sales staff to pull smaller companies over the dotted line.

If the representation in the top 100 and top 1,000 would be percentage wise just as high as in the top 10,000 then I believe that would be an extremely powerful tool in optimizely's sales arsenal.

Selling to 'the establishment' serves as a very strong validation, especially because there may be a ceiling at which it is easier/better to roll your own A/B testing. If optimizely can prove that there is no such ceiling (that for instance, even Amazon would be better off to use optimizely than to roll their own) you can expect their value to skyrocket.

I see your point, but they already provide their top customer list:

https://www.optimizely.com/customers

also see VWO:

http://visualwebsiteoptimizer.com/customers.php

You are asking for data that is publicly available.

Really hope Dan come here to respond questions.

You got it! Any questions in particular you'd like me to address?

I'll take a stab at the answer:

1) Their PPC marketing has been solid since the beginning. They really did an excellent job at targeting and remarketing to build the brand name since the beginning.

I have to laugh, as they are the top result for "Google Website Optimizer".

2) Google's shutting down of GWO as a standalone product seems to have benefitted them nicely.

Frankly, I was seriously considering Optimizely after GWO shutdown. I decided to give the Google's new optimizer built into GA a try, and it is actually much nicer to use than their old standalone product.

Of course GWO/Experiments is terrible when someone other than developers are designing the A/B tests.

Apart from the investment (well done guys!), the revenue figures here are staggering. That is an awesome achievement for what was completely niche when they started a few years back.

It used to be that people would refer to VWO when talking about A/B testing. In the last 18 months, every new article has talked about Optimizely. I guess this shows they are completely taking over the market.

Looks like awesome execution. This is fantastic guys!

I was quite astonished when reading about their insane growth. Most of the companies we talk to in The Netherlands (Telco's, E-commerce, Banking / insurance, travel) are using VWO, Sitespect and last week I heard two clients talk about Maxymiser. Not one time I heard them talk about Optimizely. Seems there is still a lot of room for growth (at least in NL).

We (usabilla.com) are using Optimizely with great satisfaction though!

We're thrilled to have opened our first international office in Amsterdam! We have a phenomenal team of sales and support folks who speak many of the languages out there. Our hope is to delight our European customers as much as we've delighted customers back here in the U.S.

Here is a video of the office in Amsterdam: https://vimeo.com/63432751 Come by and visit!

Congratulations to the Optimizely team for raising such a huge round. We (Visual Website Optimizer http://visualwebsiteoptimizer.com) regularly keep getting mentioned in most of the articles that talk about A/B testing. Just as a current comparison, we're growing at a breakneck speed. Here are some stats:

* 2400+ paying customers across 75+ countries. We have added 1000+ customers in last 9 months alone

* Millions of USD in annual revenue

* Serving 10 Billion+ pageviews/month across all our customers

All this we have been able to achieve with a team of 17 people right here from Delhi, India and without raising a penny of external funding. We have consciously chose not to raise any VC funding so far as we're very happy with the organic growth we're seeing and the product that we're able to build. Our company vision extends much beyond A/B testing and as an independent company, it is very exciting to see where we can take it.

We have a lot of interesting plans for this year. Stay tuned!

Congratulations, always been interesting to follow the VWO progress. Given A/B testing would benefit a massive amount more companies than the numbers of customers quoted here for both companies I am sure there is plenty of room for multiple players in this market.

I heard through the grapevine that no one wanted to fund Optimizely the first time they pitched for a series A because VCs pigeonholed A/B testing as a crowded space with too small a market. So then, Optimizely went out and executed like crazy, is now making millions per year, and was able to basically define whatever terms they wanted for their fundraising round.

This story, if true, would explain why it's such a massive round: it's payback for the annoyance of having to pitch a second time around.

Anyway, that's all hearsay. The team deserves nothing but praise -- I hear love for their products regularly from my customers (my startup is next-gen content analytics provider for large sites).

> it's payback for the annoyance of having to pitch a second time around.

I really don't see how you would make 'payback' work. If you can do a better round you should do a better round, payback doesn't enter into it. Everybody involved thought this was a good deal otherwise there would be no deal. You can't get a (sane) investor to pay a premium over and beyond what they feel the company is worth.

Why do people call things `verb`ly? Does it make more sense to native English speakers than to me?

Some even go through the trouble of getting a Libyan domain, which is simply foolish.

I think we'll look back on this and other similar fetishes like .io TLDs and laugh just like we chuckle at the geocities web designs and AOL CDs of yore.

.io sort of makes sense as I/O, and is from a less unstable territory to boot.

As a .io company... when we bought our domain over a year ago, the only other io I had heard of was http://drop.io (now gone). It has been nuts how many other new companies became .io in the past year.

Because all of the dictionary domain names went a decade ago.

IMO, it's just a formulaic way of naming a company that sends a predictable message.

In the 90s, dotcom meant internet startup. 'noun'dotcom told people it's an internet startup to do with noun. verbly or nounify tell people this is a post bust, Web 2.0-ish company to do with noun/verb.

'x'soft, 'y'systems, 'q'solutions... There are lots of ways this is done. Once a convention is established, it's just an easy way of naming a company that projects more or less the right signal and getting on with things.

I'm saying the word doesn't make sense to me. "Quickly" makes sense. "Jumply" doesn't mean anything.

"Bookify" sort of makes sense, vaguely.

In English, many adverbs end in -ly. Adverbs modify verbs.

Often, adjectives can be turned in to adverbs by adding -ly, as in the case of quick and quickly, or sly and slyly.

Obviously, Optimizely is like jumply, in that it doesn't make sense. But it sounds good, it's descriptive, and it was available. Also, it's probably better to make up a word rather than use an existing word so that it can be identified easier in search engines and conversation.

When optimizely started in lat 2009/2010, that was a popular naming scheme. In my YC batch (w2010), there were a lot of '-ly's (including optimizely).

I've been impressed by how many odd cases their website editor handles. When I first started experimenting with Optimizely I got curious and tried loading maps.google.com and replacing one of the map tiles with a picture of my dog. I didn't expect it to work, but it did.

So then I made a little torture test page with all the different ways I could think of to insert content into the page dynamically, and they handled them all perfectly.

Kudos to the Optimizely team: This is some serious attention to detail.

Hi there! I'm one of the engineers who worked extensively on the editor, and it warms my heart to hear of your successes! An overarching goal for our team was maximum compatibility with as many sites as possible. Glad it was beneficial to you!

Optimizely is a fantastic product; no doubt it creates a lot of value for its customers. That said, it's very difficult for tool vendors (Visual Website Optimizer, Optimizely, Unbounce, etc.) to capture a lot of that value. This deal makes sense in so far as Google, Adobe, etc. will need to buy up all the players in this space so as to beef up their advertising or web tool offerings.

As Optimizely's CEO is an ex-Googler and Google's current A/B testing tool is crap, I'm just waiting for when Google buys Optimizely. Right now, Optimizely is growing so fast that they haven't reached a place where they'd maximize their price, but I think an acquisition inevitable once their growth plateaus.

Google don't seem to be advertiser friendly in the same way they used to be.

Adwords is increasingly becoming a black box where advertisers aren't really encouraged to understand what is going on. In all lot of cases they seem to want to deny advertisers information. I'm not sure what the thinking behind this all is but I suspect one of the biggest reasons is leveraging data without exposing it to advertisers or allowing them to do creepy seeming stuff.

That doesn't mean Google won't buy them or won't want to provide these kinds of services. They do provide a crappy product in this category which has very few use-cases these days.

Anyway $28m considering the SAAS/SME model should be viable at a range of scales. I wonder if they are planning any big changes that require this kind of cash. Maybe something freemium or a new product that will take a lot of time before it can be profitable. Just speculating.

You say that, but the article claims >$10m annual revenues. It sounds like they're having no problem capturing that value.

Google Ventures is part of this round of investment and prior rounds too.

... and awaiting the right moment to acquire!

Wow! A blog where clicking the logo takes you to the actual website!

Slight tangent: What are the benefits/reasons for a company to be so public about raising investment? Is just a good opportunity for name recognition boosting PR?

For some reason, this seems strange https://dl.dropbox.com/u/131615/screenshots/Screen%20shot%20...

One benefit is that if you're going after big businesses and enterprises, they want to make sure your product has longevity. This proves that it's not just a couple guys in a garage with no resources.

There are a couple of good reasons, actually. For one, it improves the morale of the team. Twenty-eight million dollars give a false impression of security to team members. In terms of the market's perception, the perception of company's solidity improves. Don't mind that outside investment is actually a loan (which for me is a risk, and not an asset). The word investment brings in a lot of positive connotations with it. There is also the morale-crunching effect it has on the competition. Everyone else starts to scramble in order to raise money, instead of actually improving their offerings. Its a weird psychological effect mostly found on founders. Investment announcements from competitors make them suffer a lot, and a fair amount simply lose concentration and or quit.

How is stock sale a loan?

A series 'B' round is not a loan, and it is definitely not a risk but a huge asset.

It can be a risk, it redefines the kind of exits you can have in future and still be successful. The founders would likely see little now from a $50 mil sale where as that would be a big windfall for a bootstrapped or angel invested only company.

You trade one risk for another, and you are ignoring that post money optimizely has $28M in the bank so it's balance sheet is simply $28M fatter than it was pre-money.

A buyer would simply be buying cash and would have no problem with paying $78M.

If optimizely now spends this $78M in a way that does not contribute to the balance sheet (superbowl ads, whatever) then they have limited their future options.

Validation and free press are really good reasons to go public about raising an investment, you also signal to potential customers that you are now in for the long haul and have a serious warchest so you are not going to go out of business any time soon. This communicates that you're a safe bet when it comes to investing time, money and manpower into integrating the product.

Great accomplishment by Dan & Pete. It really validates the space for a disruptive A/B testing tool at great price-points.

Dennis CEO of A/B testing tool http://www.convert.com

Optimizely is a ridiculously well done product, and it's great to hear they're succeeding. I just started a test today on an app using a huge amount of Backbone, and it's incredible how easy it was to set up.

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