Optimizely Raises $57 Million | Hacker News Reader

Optimizely Raises $57 Million

blog.optimizely.com

133 pointsdsiroker56 comments

I love this company. We use them every day and we recommend them to all of our merchants (who in turn love them). Their product is in a small but distinguished group of tools that are so good they set a new standard. I consider circleci amongst that group, for reference.

Congrats guys

I would love to know what other products are in your group.

Congrats on the funding.

Perhaps Optimizely should run a test on their blog to see if their overall revenue is truly boosted by blocking cmd/ctrl+click on the "homepage" link (or pricing, or about). I'm reading the blog post, but want to also open their sales site in another tab, and... I can't. Feels like a bad idea to me, but maybe there's some logic behind it?

Weirdly, middle-click (at least for me) does open the link in a new tab. If I were to venture a guess, it would be that that behavior was unintentional. If it wasn't, I'm also curious about the logic behind it.

Just in case someone from Optimizely looks at this: I was curious so I examined the JS source. It appears the "munchkin.js" helper is the most likely candidate. The code is obfuscated but I see a click event listener that is doing logic related to detecting the control key and simulating a mouse event. It's probably broken on Macs.

(In general, intercepting browser events and generating your own interacts poorly with obscure behaviors like ctl-click as well with popup blockers.)

For me it was chrome's popup blocker. (or an extension). Once I allowed popups, the click + cmd worked fine. Still odd behaviour though.

ctrl+click and middle mouse both work for me here. You might have an issue with your browser?

Wow huge round for 7,000 users, but I think I missed something. The plans range from $14 to $293/month and then there is an enterpise plan. If we say the average revenue/user is $100/month that would be $700,000 in revenue/month * 12 = $1.14M/year? Pretty impressive for 7,000 users, however, with 200 employees the burn rate is $10M/year?

Despite that the valuation is $200M, what did I miss?

$700k/mo * 12 = $8.4M/year (not $1.14M). So they're nearing profitability, have triple-digit per year growth, and the latest investors get liquidation preference that limits their downside.

EDIT: Fred Wilson has a good explanation about why "frothy" valuations make sense right now: http://avc.com/2014/03/the-bubble-question/

A sorry for the miscalculation, did that on the way out the door.

Just thinking how big the market is. According to https://www.quantcast.com/top-sites/US?jump-to=110000 there are 110,000 sites with >10k monthly visitors, so I think that's the market of which they probably can get 30k users max for which they can charge $100/month on average: 30,000 $10012 = $36M/year revenue.

So for web, that's the cap it seems. According to http://www.appbrain.com/stats/android-app-downloads, there are 200,000 Android apps that have >100,000 downloads, which probably equates to 10k monthly active users, with iOS apps that's 400,000. So this will probably bring another $72M/year making it $108M revenue cap for Optimizely. So looks like the money for Optimizely is in the app market.

With 300 employees at max that's a burn rate of $15M + $25M marketing + $10M other costs, we got a profit of $58M = maybe $700M company, not bad.

Back of the envelope calculation, probably totally wrong, ok now back to work :)

I can guarantee their TAM is >$108M / yr.

I am involved in two websites that get a lot more than 10k visitors / month. Neither are listed in Quantcast. Using (crummy) traffic estimates based on Alexa ranks, I'd wager that there are at least 600,000 websites that would qualify for your >10k monthly visitors mark.

But I suppose it's all a moot point: They convinced at least one VC to invest, and that's all that matters. (Having used their product in the past, I probably would've invested too given the opportunity. Their product is pretty slick and saves a lot of time compared building your own A/B testing framework.)

Agreed. One of my sites is ranked 490,000 or so in Alexa. The worst month in the last year was 165,000 visits.

Inflated valuations due to a frothy market propped up by interest free cash fueling speculative tech stocks?

I'm guessing a meaningful percentage of the companies interested in an A/B testing service like theirs (e.g. online retailers) are over 200k monthly visitors and are on the $400/month plan, if not an enterprise plan.

Enterprise plans go well into 4 digit/mo territory (I'm an enterprise customer.) These plans are based on visitors, and they also have custom targeting to specific locations.

True but for each enterprise customer paying $4k/month, there are 25 bronze customers paying $14 month.

Your assumption of $100/month is way too low.

you can probably 10x that average per month

Rather than starting with an assumption on avg revenue per user, start with the valuation, figure out what that would imply about revenue/revenue growth, and you'll probably learn something about their likely avg revenue per user (i.e. it's a lot higher than your estimate).

I was a huge user of Google Website Optimizer. It was so easy -- you just put Google's JavaScript in your site and it shows your users different versions of the page.

When Google shut it down, I tried Optimizely a few times. It was so much more complicated, I didn't have the time or skill to setup tests.

Optimizely- Congrats on the funding. I still want to use you. And maybe I'm dumb, but I have trouble figuring you out. Anything I can do?

Anyone know of a simpler alternative to Optimizely?

Sorry to hear that! Our goal is to make Optimizely so easy to use it just works. Clearly we've failed in this case. I'd love your feedback on what we could have done better to improve your experience.

FWIW, two weeks ago we launched our Optimizely Academy to help folks like you go from zero to hero: https://learn.optimizely.com/hc/en-us

The thing is that, when you need an academy or getting people certified, your product is too complicated to use.

You are generally right. The vast majority of our customers don't need help and hence our homepage is basically just a text box to enter a URL and get started.

That said, there are other folks who do need a little extra help so we built them an academy.

On the contrary, it might just mean that their product is expanding beyond its original tech-centric customer base and is now reaching a much larger but less tech-savvy demographic as well.

I hear sentiments like this a lot, but I don't agree. Many companies have training on how to use Google Calendar/Drive properly. That doesn't mean these products are too complicated.

>Many companies have training on how to use Google Calendar/Drive properly

Is this really a thing? I would be embarrassed if I couldn't figure out a site as simple as Google Calendar/Drive. How should I take advantage of this?

That's a very naive view of the role of an academy. Most of the best ones go far beyond product training and into best practices and skill development.

It's not the role of HootSuite's product to teach you the theory & best practice of being a great social media manager. It's not the role of HubSpot's product to teach you how to be a great marketer. But that's precisely what HootSuite and HubSpot's academies do, and why those certifications actually mean something.

You can even see in Optimizely first iteration of their academy, they have wisely split into separate learning tracks: strategy, configuration, product, and results. https://learn.optimizely.com/hc/en-us/sections/200386128-Beg...

Finally even on the product side, that doesn't make sense one you get to high value products. On one end of the spectrum are consumer apps – and I agree with you there. E.g. If you needed an academy to learn how to use the Twitter iphone app, something is seriously wrong. On the other end of the spectrum are products bought by businesses for $100k+. These products generate a ton of value, when implemented properly, and touch many processes – they are complex and they need to be. As an executive, if I'm buying software for $250K you will be absolutely sure I'm paying $5K for all my admins to get certified on the product ASAP. You can't wait 6 months for them to learn it when there's thousands of dollars of value on the line every day tied to their efficiency. B2B products lie at different points along this spectrum and academies generate great ROI at almost every level when done properly.

Disagree. Academies can also help customers get more out of your product, or use it better or more effectively.

Car analogy time:

This isn't GM saying "we have an academy so you can learn to drive a GM" - this is GM saying "we offer driving lessons". Not everybody is born knowing how to drive like a boss.

I find at times like this, it's good to offer an alternative perspective as well, as public criticism of a product can be easy to take personally.

For what it's worth, I found the product incredibly intuitive and very easy to setup. (This was 2 years ago, and the product was young, so I don't know what new features, read complexity, have been introduced to the product.)

Yeah, I've had no trouble dipping my toes in, trying things out, and then expanding beyond the simpler stuff to more advanced things. In a couple months my company has achieved some awesome results already, and we've been able to put together little fun promos like an Easter Egg Hunt that would have been much more complicated to do without (outsourced) back end support if we didn't have a tool like Optimizely to let us play around with our website.

The simpler alternative is VWO: http://visualwebsiteoptimizer.com/

Sadly, I don't think paraschopra posts here on HN much anymore, though.

Actually, the newer VWO is much simpler and intuitive: https://vwo.com/early-access

Note: I'm one of the engineers who works on VWO

How much did you guys pay for the 3 letter domain :)

We paid $30k

New VWO UI looks amazing. Great work on it.

What an amazing username/domain.

I do (sometimes).

Hey Pud - we were avid GWO users and became converts to Optimizely and/or Visual Website Optimizer where more appropriate.

Happy to walk you through a 5-min real-world tutorial.

Drop me a line @ profile email if you like.

Haven't tried Optimizely, but visual website optimizer is very easy to use.

I've been using website testing tools for quite a number of years, and I've literally never heard anyone refer to GWO's testing setup as easier. GWO was an implementation nightmare.

Every test had a distinct set of JavaScript tags that had to be individually implemented for every single test. You had to place the scripts on each of the pages, and then verify that all 3+ of the script snippets are in the correct place (and if your test failed validation, you couldn't launch it). Making changes on the fly was difficult. If you misconfigured your goal, your data was forever lost (and you couldn't know if you misconfigured your goal until the data came through, and that wasn't in real time).

Contrasted with Optimizely, for every project, there's a single global JavaScript snippet that goes everywhere. No need to change snippets for every test. You can configure your tests from one place. And, for page-view level goals, you can add goals after an experiment starts, and they'll retroactively apply experiment data.

For a simple test, you can implement an Optimizely experiment in less than 5 minutes and feel assured that everything is working immediately, since it has real time data. If you need more power or complexity, it's there, but if you don't need it, it doesn't get in the way.

(Disclosure: I've been using Optimizely for nearly 4 years and recently spoke at their user conference.)

The initial learning curve is a bit steep -- but once you are over it, usage is quite smooth. If you are using a lot of AJAX and dynamic stuff it's another story.

Google Website Optimizer is still around. It's called Content Experiments now and it's under Google Analytics.

Optimizely is cool because it lets you run arbitrary javascript for tests without modifying the code base in most cases.

No multivariate testing and have to use 2 different pages now. Really miss GWO, very easy multi-variate testing, simple, FREE. Not real time was the only downside.

You can have Experiments running on client side (JS) without redirect to different versions of the page, but setup process is... strange to say the least - https://developers.google.com/analytics/solutions/experiment...

Still, after setting it up it worked just fine for us.

Also, I have yet to figure out how to run multiple experiments on the same page (rather than multivariate single experiments). Usually frowned on, but when you're testing a new search box site-wide and different CTA buttons, they're discrete tests.

Most comments here focus on the immediate revenue potential. But this is part of a much larger ecosystem, that spends billions of dollars deploying enterprise marketing platforms with Adobe, IBM, SAS, Oracle. Performance Optimization is just one of the many areas in this space.

The enterprise marketing platform is an area ready for disruption. Few large, expensive and slow players. Most offering clunky proprietary products, that require a huge learning curve.

After (if?) Optimizely solidify presence in this space, they can move up the food chain: tagging, re-targeting, DMP, personalization, campaign management, content management, etc.

So far they're off to a good start. And worst case scenario, they'll be acquired by Adobe and will become the new version of Test & Target.

Congrats.

"Triple digit year-over-year growth in annual revenue since launching in 2010."

Is easily misleading without context.

I don't expect companies to divulge revenue numbers, but a company founded on data driven insights for site content, could probably choose more appropriate metrics to share.

2010: $10k

2011: $25k

2012: $80k

2013: $200k

Easy :)

From a blog post last year, you can calculate an absolute minimum;

March 2013 - "Double digit millions revenue run rate."

So a minimum monthly rate in 2013 would be ~$850k, so a minimum monthly rate for March 2014 would then be $1.7M.

http://blog.optimizely.com/2013/04/10/optimizely-raises-28-m...

Random thought: Companies like optimizely have key data on its customers (conversion rates) and it may be valuable to a VC to have a board seat / access for the data alone. Not alleging any malfeasance here, just think it is an interesting angle.

I am not sure why this got downvoted. Using cloud services for your a/b testing can reveal key competitive information to the company. So trust is a big issue. That is one reason why I try to keep everything inside GA.

One of the most important products to happen to marketers in a long, long time. Congratulations guys! I love your product and find it incredibly easy to use.

Congrats Dan & Pete!

It's been amazing to watch the growth of Optimizely from seed stage to the massive success story it is today.

Shame they can't get their website to work in FF 29...

Congrats Dan & Team! Amazing work

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