[HN Gopher] Optimizely to be acquired by Episerver
___________________________________________________________________
Optimizely to be acquired by Episerver
Author : scootklein
Score : 113 points
Date : 2020-09-03 16:08 UTC (6 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| dsiroker wrote:
| (co-founder of Optimizely here)
|
| HUGE thank you to YC and the entire HN community for all their
| support over the years. It was almost ten years ago that we
| launched here on HN. [1]
|
| [1] https://news.ycombinator.com/item?id=1788634
| petermelias wrote:
| Still remember first time used original Optimizely product for
| my own startup. Was amazing
| mh- wrote:
| thanks for an amazing culture and experience at Optimizely,
| Dan.
| joecasson wrote:
| Ditto!
| the_washout wrote:
| It was great working with you, Dan.
| rickyyean wrote:
| thanks for letting me shadow the sales team. learned a lot from
| watching your guys at work!
| roasm wrote:
| A few years ago, we were a monthly customer of Optimizely for a
| few hundred dollars a month. Reasonable for a startup.
|
| Then they went to the annual cost of $30K+ upfront and ended all
| monthly options. They had to move to high cost, high touch to
| compete with the free/cheap offerings to stay in business. This
| acquisition suggests that didn't work.
|
| We ended up building randomization, remote config, and logging
| ourselves, and did the analysis with our existing stuff.
| neonate wrote:
| https://archive.is/Sz20v
| mrnobody_67 wrote:
| Another proof point that once the founder-CEO is replaced by a
| professional CEO, it's game over more often than not. This
| happened in 2017 at Optimizely.
| the_washout wrote:
| Yuuuuuuuuup.
| dblooman wrote:
| Any alternatives to Optimizely?
| dennisvdheijden wrote:
| Convert.com
| Sandeep89 wrote:
| There's never been a better time to look at Webtrends Optimize.
| In the industry for 20+ years, now independently owned. Strongest
| free tier on the market, best services team, best rated
| satisfaction. Prices haven't changed in 10 years, with cheaper
| offerings opening up.
|
| Agencies have been hopping over to us for the last 12 months -
| everything I've read below rings true with what I'm hearing
| elsewhere.
| [deleted]
| bmmayer1 wrote:
| I used to work two desks over from Dan at the Obama campaign in
| Chicago in 2007, when he was developing and testing an early
| proof of concept of what would become Optimizely. He was able to
| increase fundraising performance significantly by doing (what
| would now be considered simple) A/B tests. He's sharp and
| tenacious, identified a market ahead of its time and invented a
| new product category.
|
| Whether or not this is a "good" exit, it's a great accomplishment
| for Dan and the team and can't wait to see what they do next!
| dr_dshiv wrote:
| Didn't they work on an educational game first? Or something
| about carrots and sticks? I liked their story when I read about
| them ages ago.
| xnx wrote:
| I would not want to be Optimizely and have to compete against a
| strong free offering like Google Optimize.
| BrianOnHN wrote:
| I use Google Optimize. I wouldn't call the free offering
| "strong."
|
| There is a limit of about six experiments at one time. Each
| experiment can have up to 8 variants. And if you want more,
| then be ready to shell out thousands per month (I forget the
| exact number, but that's the ballpark).
|
| Overall, if I were to redo things, I'd probably be better off
| just using Google analytics events.
|
| Edit: that said, I'd never use a piece of bloatware like
| Optimizely for just the split-testing feature. If your product
| would benefit from split testing, then include it as a feature.
| It's not a "hard" feature/problem to implement into just about
| any existing product that would benefit from it.
| ssharp wrote:
| Optimize can run five experiments at a time and it only lets
| you measure 3 metrics. Any other metrics need to be analyzed
| in GA and will almost certainly end up sampled and
| unreliable.
| designium wrote:
| I hope the founder exited well. I remember working with him at
| Google when he was the PM for Google Optimizer. Nice guy.
| [deleted]
| BurntBunting wrote:
| I don't. The founders pushed people who trusted them to work
| hard and value the company over their own needs. While the
| founders and their friends were able to pull out equity, every
| one else was told that they had to wait their turn, which never
| came.
|
| If Dan and Pete were nice guys, they would have take care of
| the employees that built their company. The employees wouldn't
| have been millionaires, but they might be able to scrape
| together a down payment for a house. And not like the mansion
| that Dan has, just something that would move them out of the
| fear of rents increasing and losing their jobs.
|
| They used to be nice guys. I don't wish ill towards them, but
| they do not deserve a good exit with this.
| hitekker wrote:
| Wasn't Dan or Pete forced to step down on account of gross
| incompetence? I recall there being some internal drama about
| their departure.
| dsiroker wrote:
| Haha, certainly no drama and no one forced us or even asked
| us to step down. I wrote a blog post about it:
| https://link.medium.com/mHgtiQ3bu9
| askafriend wrote:
| https://news.ycombinator.com/item?id=24368516
|
| If you don't mind answering, what's the strategy behind a
| hiring tactic like the one in the link above? It seems
| cartoonish and not grounded in reality....
| dsiroker wrote:
| Sure, I just responded because you asked so nicely. :)
|
| https://news.ycombinator.com/item?id=24369766
| [deleted]
| hitekker wrote:
| Completely unsurprised.
|
| Experimentation-done-right is too expensive and too ambiguous to
| sell as a product. Every product experiment requires a complex
| set up, a lengthy running period across a huge base of users, and
| then heavy analysis in order to achieve statistical confidence
| over a specific feature's impact on a business metric. That
| "confidence" is often represented by a subpercentage point that
| may or may not be statistically significant. Fun problem for the
| data scientist, plain hell for the PM.
|
| In my company which uses experimentation for everything, each A/B
| test requires _two weeks_ before the Product Manager can even see
| the results. Two weeks of waiting for a confusing, contradictory
| dashboard that can 't be taken at face value, that needs careful,
| human analysis before it can be called a "win".
|
| That slowness is fine for high-traffic, high-risk & high-value
| lines of business. But it's not fine when you're releasing
| feature that aren't just optimizations.
|
| Competitors like LaunchDarkly and Split.io have recognized that
| critical difference, I think. They know that causality is
| expensive, and are particularly aware that the fine line between
| feature release and metrics impact is tied too heavily with a
| company's politics, i.e. it chafes against the intuition of
| executives.
|
| Instead, they offer experimentation as an add-on to their
| developer tools. You can experiment if you need to, but it
| doesn't obligate you to do so.
|
| That goal is much more realistic than the Optimizely's current
| goal: "helping our customers win in a digital-first world".
| kumarski wrote:
| Maybe I haven't worked in tech long enough, but am I the only one
| who has never heard of Episerver?
| tootie wrote:
| It's an old-school enterprise CMS. And a crummy one. It's done
| a pretty remarkable job of staying relevant all things
| considered. The current market leader in this space is Adobe
| who own AEM and bought Omniture years ago so they can offer
| analytics and A/B testing in one bill of sale. Episerver must
| be working to position themselves the same way.
|
| Lot of big enterprises buy these kind of systems and pay
| through the nose for them.
| cwdegidio wrote:
| I only know of them because they acquired Ektron CMS. Which to
| this day is the worst CMS I have ever had the displeasure of
| working with.
| tpmx wrote:
| It's one of the crappier CMS startups from the early 90s that
| somehow survived. Mostly known in Scandinavia.
|
| I/we competed against these guys 21-23 years ago. We had real
| tech, they had brilliant powerpoint engineers.
|
| I have no idea why they're buying Optimizely.
| worldsoup wrote:
| I interviewed for a marketing role at Optimizely back in 2013...I
| passed all the interviews with the team and then had a final,
| short interview with the CEO. He asked me a few basic questions
| and then asked 'if you only had 3 years to live, would you work
| at Optimizely?'. I responded honestly and said no. Said that I'd
| love to work here to help and grow the business, learn, and
| further my own career but if I had only had 3 years to live I'd
| spend my time differently. The hiring manager called the next day
| and said I would not receive an offer and when I asked him if it
| was because the answer to that question he said yes. That made it
| obvious they had a strange and not particularly healthy
| culture...lucky for me as I ended up at a much more successful
| early stage startup where I accomplished what I wanted to
| accomplish.
| dsiroker wrote:
| Over the years I A/B tested each of my interview questions in
| order to better measure what I was looking for. It sounds like
| you might have been asked an early version of one of the
| questions I used to ask so sorry you didn't get the "optimized"
| version. (there was a big difference in responses between only
| 3 years and 10 years to live)
|
| Also, to clarify, I used to end my interviews with TWO
| questions: (1) if you had 10 years to live, what would you do?
| [wait for answer] (2) if you had 10 years to live, would you
| take this job?
|
| The things I was assessing in these questions were candor,
| intellectual honesty, and passion. Sure, it would be great if
| people authentically were passionate about taking the job if
| they had ten years to live. That was a tiny minority of
| responses.
|
| The only "wrong" answer to these question was when someone
| would answer YES to the second question after clearly answering
| something completely different to the first one. For example,
| if someone would say travel the world to #1 and yes to #2.
|
| The reason why this measured candor was because if someone
| could tell me to my face during an interview they wouldn't take
| this job, then I knew they would tell me to my face when
| something was broken in the company after I hired them. I was
| looking for the exact opposite of what this thread implies I
| was looking for. I didn't want ass kissers. I wanted truth
| tellers.
| teej wrote:
| That question is psychotic.
| smallgovt wrote:
| Huh, I don't know if I know one person who would honestly
| answer that question with a yes.
| riquito wrote:
| he didn't say which was his answer :-)
| igmor wrote:
| that was a test for a particular type of person that OP
| failed to pass. He could not lie to a simple question.
| madboston wrote:
| So I guess lying was one of the skill he really wanted in a
| marketing guy?
| smallgovt wrote:
| Ah, I hadn't considered that the interviewer was testing
| the applicant's ability to lie. Interesting, if true.
| dataminded wrote:
| I used their paid product once and failed to buy it two times
| after that.
|
| They tried to move up-market and did it in an unreasonably
| difficult way in my opinion. It was easier to do business with
| ORACLE and then Google. The sales folks didn't listen, their
| proposals ignored our requirements, it was a mess.
|
| I hope the staff got something.
| adeveloper870 wrote:
| Worked at a company that considered Optimizely for one of their
| possible A/B solutions. We went with another vendor, but I then
| ended up writing an in-house solution that took about a month
| [w/o analytics].
|
| It is very easy to implement this in-house so long as you own the
| systems and don't outsource [too much].
| rogerdickey wrote:
| I remember meeting Dan, the founding CEO of Optimizely, at winter
| 2010 YC demo day. I had just grabbed my name tag and was walking
| toward the building when he stopped me outside to give me the
| pitch. He immediately struck me as a smart, capable guy, but as a
| former software engineer I couldn't understand why companies
| wouldn't just build A/B testing themselves. What did Optimizely
| add? How was it defensible? Dan didn't answer the questions to my
| satisfaction so I thanked him and moved on. As the years went by
| and I saw them raise round after round, get great press, put up
| billboards, and build out a beautiful office that I walked by at
| least once a week, I felt terrible for missing out on the angel
| investment. I was a rookie investor (I think that was my first
| YC) and chalked it up to my inexperience. I even tried to extract
| "lessons learned" and apply them to similar investment
| opportunities. It feels bittersweet to see things end this way,
| with probably no return for the common and a haircut for
| investors. I had built them up and expected them to succeed but I
| guess it's good to know I was right. Lessons: It ain't over 'til
| it's over and vanity traction like press & billboards mean
| nothing. Don't build a big company on a bad idea, it's a waste of
| time and money for everyone, especially the founders & employees.
| [deleted]
| whoisjuan wrote:
| This sounds like a bad exit. From what I can tell the original
| Optimizely space has been slowly becoming a more discrete area of
| progressive delivery, rather than an industry on its own.
|
| Many players have jumped into this space with their own A/B
| testing and Feature Flags solutions as part of their total
| offering, many of those offerings being free, open source or
| cheaper. Also potentially better in the concrete tasks they
| enable. I doubt that Optimizely's feature flag offering is
| superior to something more specialized like LaunchDarkly.
|
| Also there are a couple of strong incumbents' solutions like
| Google Optimize and Adobe Target and it's always hard to go
| against incumbents specially when the incumbents are coming after
| you and not the other way around.
|
| One clear problem for Optimizely in this space is that experience
| optimization became a function of marketing departments through
| out the years but for a while they were positioning themselves as
| a developer tool. This go-to-market strategy opened a lot of
| opportunities for other players who saw a bigger market when
| selling the same type of solution to Marketing Departments.
|
| Maybe I'm wrong but it seems that they just stopped growing and
| have been experiencing a lot of customer churn since this is
| likely an expensive product with a hard to calculate ROI. They're
| probably still selling a lot but nowhere near to the original
| investor expectations / close to becoming profitable.
| tmpz22 wrote:
| I was always very impressed by their office on the end of New
| Montgomery Street in the heart of Downtown San Francisco. You
| could see some very swaggy kitchens and open office space
| through their floor to ceiling windows on the ground floor. I
| was jealous for some of the employees who worked there.
|
| Maybe this is ad hominem, but it seems to me they must've
| raised a lot of money to prioritize that kind of setting,
| likely in the guise of recruiting. Crunchbase lists them as
| having raised $251.2M and their last round being debt
| financing.
|
| If this is a down-round acquisition with most of the employees
| gaining very little I wonder if this is a lesson to founders to
| be more cost-effective and raise less money.
| renewiltord wrote:
| There were a bunch of startups right there. From the fact
| that we rented commercial space there (like a minute's walk
| away), I know that if they leased before 2012 it was going to
| be a sweet deal. I don't remember any of the numbers now but
| I recall that if I could get that deal today I'd take it in a
| heartbeat, even if just CPI adjusted. I think we had just
| under 10k sq. ft.
| richardFINEman wrote:
| Optimize is not an incumbent but a challenger. Google Optimize
| came out years after Optimizely and is less featured and built
| by a smaller team. The main benefit to Optimize is that it's
| cheap.
| whoisjuan wrote:
| I didn't mean to say that Optimize as a tool is an incumbent.
| What I meant is that Google and Adobe as companies are
| incumbents.
| cosmie wrote:
| > One clear problem for Optimizely in this space is that
| experience optimization became a function of marketing
| departments through out the years but for a while they were
| positioning themselves as a developer tool. This go-to-market
| strategy opened a lot of opportunities for other players who
| saw a bigger market when selling the same type of solution to
| Marketing Departments.
|
| I can't speak for all industries, but for the ones I'm familiar
| with, marketing is always the product owner of websites. With
| two practical implications being
|
| 1. The entire website costs (development + software vendors)
| ultimately get booked against their budget, so they have the
| true purchasing authority for pretty much all the website tech
| that isn't centrally mandated/controlled
|
| 2. Website projects (including budget and requirements
| planning) tend to start in marketing loooonnnggg before a tech
| resource gets brought in. So developer awareness/familiarity
| ends up moot, since there's too much incremental effort and
| cost involved for it to be easily get buy-in and added to the
| plan at this stage.
|
| It makes a ton of sense to target your solution at them instead
| of developers. They may not be able to use your product well or
| do the implementation, but they're the ones with the purchasing
| authority and ability to ensure the budget accounts for it. And
| can add it into the project requirements far earlier in the
| planning stage than when tech resources get involved.
| TheBill wrote:
| Google Optimize & VWO hurt them. Free, or low price, low
| friction won at scale with smaller teams running 1-2
| experiments or low level personalization. Everyone I know who's
| going to high volume testing is either on a hosted CMS that has
| this baked into their offering or JAMStack.
|
| No one I know has deployed Optimizely since 15/16.
| ssharp wrote:
| Optimizely's pricing makes no sense for small teams but VWO
| and Optimize cannot compete on features that start to become
| very useful as your experimentation and personalization
| efforts increase.
|
| Any roll-your-own experimentation platforms take considerable
| resources to make accessible to those in the organization
| interested in using it (product, marketing, etc.)
| roasm wrote:
| In my experience, I agree the core functionality (variant
| management, remote config, etc.) is relatively small amount
| of effort compared to the interfaces to make it accessible
| to those non-technical orgs, like you mention.
|
| However, we found that those interfaces only allow very
| limited, shallow tests and you very quickly outgrow them as
| an organization. In other words, once you reach diminishing
| returns on button color and header text optimizations, you
| start wanting to test deeper UI experiences and complicated
| user flows. At that point, you have to involve engineering
| anyway.
|
| When an organization has engineers who are motivated by
| business metrics, they have no problem implementing shallow
| tests (like button colors) while working on tests of the
| deeper UI experiences as well. And at that point, the non-
| technical interfaces have little value.
| ssharp wrote:
| I wasn't really talking towards the WYSIWYG editors.
| Those are trash on all platforms and fall apart quickly
| for all but the most simple tests.
|
| Metric + page management, results analysis, segmentation,
| etc. all work better in Optimizely than they do in other
| platforms.
| adrr wrote:
| Thats the issue. They start at $50k. No startup can afford
| that, so we build our own or use google optimize. I've been
| at multiple startups that have scaled to millions of users
| and Optimizely could have been a player if they had a self
| service budget option. Need to get in early like other
| saas/cloud providers because the cost of switching becomes to
| high as the business scales. Imagine if AWS didn't have self
| service option and you had to go through a sales process with
| min commits. It would have failed.
| alexhutcheson wrote:
| Are there any good open source alternatives to Optimizely that
| can be self hosted?
|
| I'm aware of Wasabi[1], but I believe it's abandonware at this
| point.
|
| [1] https://github.com/intuit/wasabi
| richardfeynman wrote:
| I worked at Optimizely from before its series A in 2012 until the
| end of 2016, so I have a unique perspective on this. For most of
| the time when I worked at Optimizely, the company was all the
| rage. It appeared at the top of most "hot startup" lists, the
| Glassdoor reviews were 5/5, revenue was skyrocketing, and for a
| period in 2014 it became the fourth most valuable YCombinator
| company (after Stripe, AirBnB, and Dropbox). Of course,
| Optimizely's success was't guaranteed. In 2015, the company
| abandoned the self-serve market that had driven its original
| momentum and pivoted instead to vague and indefinite enterprise
| offerings that were (and are) hidden behind schizophrenic
| marketing, an impossible sales process, terrible customer service
| and a general approach of trying to extract the maximum amount of
| money from clients rather than providing them with value. From
| 2015 on, everything (including the internal culture) became
| mumbo-jumbo, a cloud of dishonesty. I used to be able to explain
| what Optimizely did to my grandmother; now I don't even really
| understand it myself.
|
| Th Episerver acquisition is indeed a bad exit, and I think I will
| lose >$100k in stock I exercised (which is OK, I'll be fine). But
| I hope all readers will take from this saga a lesson in humility
| and the pitfalls of intellectual dishonesty and hubris. Just
| because your startup is skyrocketing isn't enough. Success is not
| guaranteed. Your company's leadership needs to be honest with
| itself, which Optimizely's leadership was not. They need to be
| humble and work hard, which Optimizely did not do.
| jmacd wrote:
| Speaking as a customer, it feels like this is exactly what is
| happening to Mode Analytics right now.
| will_lam wrote:
| As a customer of Mode, why not give Taplytics a shot? :)
| poof131 wrote:
| I joined in 2015 and left after 2 months. I had left a fast
| growing late-stage startup, AppDynamics, where revenue was
| doubling every 12 months, from $75M to about $150M when I left.
| The director of engineering at Optimizely who hired me said
| their revenue was doubling too, from $40M to $80M. At the next
| all hands a few weeks later, the CEO said revenue had been
| declining slightly for 2 straight quarters. At lunch, after the
| all hands, no one seemed to care. Someone literally complained
| that their friends at AirBnb got duck for lunch and we didn't.
| The director either lied to me or didn't know. People were nice
| and smart, but it was clearly going off a cliff. It seems for
| many B2B startups the march up the value chain to enterprise is
| challenging, especially with regards to pricing. I remember the
| president of sales at AppDyanmics would not cut prices to
| compete against New Relic in the self-serve market. At
| Optimizely, I recall enterprises were pissed at being charged
| more just for better SLAs. From other comments it sounds like
| they finally figured out the enterprise pricing model by
| jettisoning self-service. Not sure if that was the right call
| or they could have found better success by avoiding the pricing
| consultant fiasco. Though I vaguely recall they were losing too
| much money per customer so that needed fixing. In any event,
| it's hard enough to make money in startups as an employee, but
| declining revenue at a growth stage startup is a death sentence
| for your equity. I liked the people at Optimizely, the
| transparent culture was great, and I wished it would have done
| better, but the writing was on the wall. Sure enough, not long
| after leaving the first round of layoffs came, private equity
| invested, and the announcement was revenues doubled over the
| prior 18 months, minus the detail of the last 6 being flat to
| down. Sorry to hear about the impact on you. This is a problem
| with the current state of startups staying private longer and
| why I likely won't work for one that doesn't have an extended
| exercise window [1].
|
| [1] https://zachholman.com/posts/fuck-your-90-day-exercise-
| windo...
| ryguytilidie wrote:
| I worked there in 2013. I very specifically remember getting a
| speech about how if we didn't believe that the company would be
| worth more than google, we should quit. Seems like that may
| have been a better option for a lot of folks.
| redshirtrob wrote:
| Wow, I was interviewing there in 2013. I was interviewing for
| a fairly senior engineering position.
|
| When they sent me the details for the on-site they sent me a
| role two levels lower. When I asked about it I was told the
| Director of Engineering felt that was a suitable role.
|
| I withdrew from the process at that point. I was pretty
| bummed as I was super high on Optimizely back then. But I
| knew enough about myself to know that wasn't a good way to
| start a job (assuming I got an offer).
| BurntBunting wrote:
| Was that the one where Dan told people that they were
| traitors for wanting more cash instead of stock, not super
| long after some of them cashed out some of their equity?
| pbreit wrote:
| Why Stripe will likely win:
| https://news.ycombinator.com/item?id=24067211
|
| Continuing self-service while expanding "up market" into the
| enterprise. If AWS can be self-service, pretty much any service
| can be.
| polote wrote:
| This is different, both Stripe and AWS users are developers.
|
| I don't know how you can be so sure that Stripe will win,
| Adyen is already on the enterprise space, and they are a
| bigger company than Stripe.
|
| > Continuing self-service while expanding "up market" into
| the enterprise.
|
| Things are more complex than a sentence, the whole company
| needs to operate differently https://blog.luap.info/why-most-
| saas-companies-cant-be-succe...
| [deleted]
| IgorPartola wrote:
| Stripe users are also anyone who wants to run a website on
| Wix or Squarespace or WordPress/WooCommerce and want to
| sell things. I have personally seen people that can't spell
| "HTML" successfully set up basic eCommerce sites and make
| money off them. There is zero reason to pigeonhole Stripe
| as being for developers only any more than Square, etc.
| twunde wrote:
| Stripe may expand "up market" at some point, but at the
| moment they're pretty enterprise unfriendly and don't seem
| interested in becoming enterprise friendly. You can't pay for
| phone support, their PCI compliance can cause some enterprise
| customers to blink and even if you're funneling millions
| through them they won't negotiate on price like other payment
| gateways. Also many of their more advanced features, just
| aren't that well implemented or documented (think connected
| accounts, etc) and since those cases aren't as heavily used
| we've had to side-channel to a C-level to get an issue
| expedited after bouncing around support for a show-stopper
| bug.
|
| Additionally as a sidenote, that market is quite crowded with
| a LOT of choices. This is certainly not a winner take all
| industry, there are literally 20+ choices that will be
| reliable. Typically most large enterprises will end up with a
| vendor that will give them a good deal on rates, which isn't
| Stripe.
| pc wrote:
| Appreciate the feedback. You _can_ pay for phone support
| (indeed, you get it for free, though you can pay extra for
| a premium support package if you like). We think that our
| PCI compliance functionality is best-in-class. And we do
| negotiate price for larger accounts, as indicated on
| stripe.com /pricing.
|
| More broadly, Stripe now works with a long list of
| businesses that are processing more than $1B/year or more,
| and that list is growing quite quickly. Indeed, there are
| more enterprises using Stripe than Adyen, which is often
| cited as an ostensibly enterprise-focused competitor.
| Larger companies using Stripe include Amazon, Shopify,
| Instacart, and Peloton. (There's a longer list at
| https://stripe.com/customers). That's all to say: we're
| very invested in this enterprise thing.
|
| If any enterprises you work with have had a bad experience,
| would welcome any details. patrick@stripe.com
| m3kw9 wrote:
| Love these insights
| roasm wrote:
| If you can share, what was the dishonesty you're writing about?
| I can't tell if you're saying it was fraudulent dishonesty or
| self-delusion (where you think you're in a better position than
| you really are).
|
| And do you know if the self-sever market was drying up for
| Optimizely in 2015? I assume they wouldn't abandon it if it was
| growing at a decent rate.
| codezero wrote:
| That's really interesting. I work along side Optimizely in the
| analytics field and I remember that moment - I used to email
| into support@ to ask about stuff to help improve data across
| our platforms, and always had no problem. Almost over night the
| email support was shut off (in support of optiverse + partners,
| a route I totally get when you're trying to move upmarket) but
| it felt really forced, really fast and I think they could have
| done a better job ramping up enterprise without slamming all
| the self-serve and free customers.
|
| My company is going through a similar phase of trying to move
| more up market, and I'm glad we've tried to keep the free/self-
| serve tiers explicitly because we think they build good
| mindshare.
| tptacek wrote:
| I have a sort of general question about this narrative, which
| seems to apply to lots of startups that begin as self-service,
| developer-focused projects and end in enterprise hell.
|
| Is it not the case that these startups begin developer-facing,
| get market traction, are lavishly funded, and then discover
| that the self-service offering they've built simply can't
| satisfy the projections they've made to justify their
| valuation?
|
| Which is to say: would Optimizely be doing much better if they
| hadn't pivoted into enterprise hell? Or would they be a much
| smaller company?
|
| I see why customers would have a strong preference! But it's
| less clear to me what the right decision for the business is.
| But I'm just asking!
| reggieband wrote:
| > then discover that the self-service offering they've built
| simply can't satisfy the projections they've made to justify
| their valuation?
|
| I suspect a lot of startups sell their investors on
| enterprise from the get-go. Self-serve can be seen as a foot
| in the door, a way to prospect potential enterprise
| opportunities. They watch self-serve sign-ups for a
| bigcorp.com domain and then hand it over to account sales and
| swing for the fences.
|
| I think a big problem is differentiating your self-serve from
| your enterprise offering. You don't want bigcorp.com to feel
| happy enough with your $20/month foot in the door offering.
| And at the same time enterprises aren't stupid money
| fountains and they don't just sign $100k/year contracts
| unless they see major value. I think this creates a volatile
| business where a dozen or so enterprises make up the lions
| share of revenue for a startup and the thousands of self-
| serve customers are just kind of there like background noise.
| richardFINEman wrote:
| I worked at Optimizely for 4 years and can tell you that
| pivoting to Enterprise has been one of the best company
| decisions.
|
| One of the important distinctions between Optimizely and most
| developer-first platforms is that experimentation is a hard
| practice to pick up. Most companies have difficulties getting
| their programs off the ground and keeping them funded, let
| alone grow or scale them. Small digital businesses struggle
| more for several reasons: 1) they have few resources, so
| teams are understaffed and resources are pulled easily, 2)
| they have little money, so the percentage uplifts are rarely
| motivating, 3) they have little traffic, so it is harder to
| get a statistically significant measure in their experiments
|
| Because of these issues, Optimizely always had really poor
| retention in the SMB space. Nonetheless, the SMB customers
| helped Optimizely build up a brand name, build up legions of
| practitioners, and get the skills and experience to go after
| the Enterprise market. When Optimizely started acquiring
| enterprise customers, retention improved substantially.
|
| This isn't to say that there aren't lots of problems with
| Enterprise sales and that Optimizely didn't make tons of
| cultural mistakes in that pivot. But on the core financials,
| Enterprise kept Optimizely afloat. The problem wasn't the
| pivot to enterprise, but the trade-offs that were mismanaged
| along the way. The path to enterprise was inevitable and
| correct.
| cj wrote:
| I agree with the point you're making.
|
| I think the problem is to become "lavishly funded" means that
| you need to have a pitch that creates a narrative of how you
| will reach a lavish level of revenue that is believable.
|
| For B2B SaaS, usually that means moving upmarket and raising
| prices.
|
| I don't think we can say that Optimizely was necessary wrong
| in doing what they did with knowing what they knew at the
| time. There are many examples of B2B SaaS companies
| successfully starting with SMB, then going enterprise. First
| company that comes to mind is New Relic ($3.6 billion market
| cap)
| kirillzubovsky wrote:
| To piggyback on this question, I am also curious - would
| Optimizely choose to go this Enterprise sales route if it
| weren't for their sky high valuation back in the day. How
| much of this change was driven by the customers' need vs. a
| perceived opportunity to grow the company?
| totallynotabot wrote:
| You know the answer to this question. Rationalizations may
| have included lines like "pivoting to enterprise will help
| us help even more customers" but it's all about growth and
| TAM.
| staysaasy wrote:
| I think that this is a great question that isn't asked nearly
| enough. There are all sorts of stories about companies moving
| up market successfully, but I'd love to see more written
| about the cases where it's attempted and failed. The DNA of
| enterprise vs SMB SaaS is really different.
|
| For what it's worth, I would guess that had Optimizely not
| pivoted to the enterprise they would indeed be smaller, but
| more importantly would have had a slower growth rate at least
| at that point in time. In an industry obsessed with high
| growth rates that's the kiss of death and I imagine the
| reason behind their pivot. But that's just my guess.
| smallgovt wrote:
| > The Episerver acquisition is indeed a bad exit, and I think I
| will lose >$100k in stock I exercised
|
| Based on what information? So far, all that's been publicly
| confirmed is that the sale price was below $600M, which
| presumably leaves opportunity for your shares to be worth
| something.
| triceratops wrote:
| GP probably got information about the share price offered
| from current employees and did the math. Once the acquisition
| is finalized, they'll receive more details since they are a
| shareholder.
| triceratops wrote:
| Wow. I interviewed there in 2015 and got turned down. Wasn't a
| great interview experience either. Bullet dodged, I supposed.
| deedub wrote:
| I'm kinda curious about your >$100k loss on your stock. Your
| strike price from pre series A options was more than the gains
| on a near $600 million sale price? Maybe I am misunderstanding,
| but how is that possible?
| richardFINEman wrote:
| If the OP is telling the truth, there is no way he lost money
| on the stock he bought. The early shares are all up.
| redshirtrob wrote:
| For the record, I think op is probably speculating a bit.
| That said, I'm not sure how you can be so sure op's not
| losing money unless you have intimate knowledge of the cap
| table and the deal.
| redshirtrob wrote:
| Probably the op spent $100k to exercise the options. It's
| likely this deal will wipe out all common shareholders and
| only the VCs will get anything. That's a $100k loss. The op
| will be spending the next decade writing this loss off
| against capital gains and earned income.
|
| I've been there.
| gkop wrote:
| Can you write off just the exercise price or the fair
| market value at time of exercise?
| zls wrote:
| I recently asked a tax advisor a similar question: if I
| do a cashless exercise sale for $5 when the FMV is $6 and
| my strike price is $2, can I pay income tax only on the
| $5 sale price? The answer was no: I would owe income at
| the $6 price and then immediately accrue capital losses
| on the $1 spread between sale and FMV.
|
| I guess that's a longwinded way of saying "I doubt it".
| Tax law around employee options is brutal. :/
| redshirtrob wrote:
| That's a really good question. I'm not certain of the
| answer.
|
| When I had this happen to me the FMV was slightly higher
| than my exercise price, but not enough to trigger AMT. I
| know I only wrote off the actual cash I lost, and I used
| a CPA to help me make sure I did it correctly.
| [deleted]
| [deleted]
| jameslk wrote:
| I wonder how Google Optimize factors into this. Provided its a
| free service, it seems like Optimizely may have had trouble
| offering something unique to the self-serve market over
| something that is completely free. Similar to how it seems
| Dropbox has less to differentiate itself from Google Drive and
| other similar services these days.
| pbreit wrote:
| I think Google is less of a threat than many believe because
| Google products have to address a Google-sized market which
| leaves tremendous room for competitors. If you're going to go
| straight up against Google then, sure, you're going to get
| clobbered.
| RobertoG wrote:
| I initially misread the title as "optimized to be acquired
| [..]"
|
| Maybe my serendipitous reading explain your observations of
| what happened to the company.
| [deleted]
| sharkweek wrote:
| Funny - I worked for two SaaS businesses that at one point used
| Optimizely and loved (and I mean LOVED) it.
|
| But I distinctly remember at the second job, that incredibly
| rough transition to that vague enterprise pricing structure
| along with the software getting clunkier and clunkier, which
| led us to abandon them and never look back.
|
| I think at one point they were trying to get us to go from
| paying $99 a month (!!!) to like $3,000 a month for virtually
| the same service??
| [deleted]
| pmiller2 wrote:
| Surely you're joking, Mr. Feynman. (Sorry, I've kind of always
| wanted to be able to say that in casual conversation and not
| have it be a total _non sequitor_.)
|
| But, seriously, your description does sound exactly like a
| company on the decline. I couldn't blame you for bailing. What
| do you think the first signs that things were terminal there?
| dataminded wrote:
| That's the phrase I was looking for. Their sales process is
| impossible.
| Silhouette wrote:
| They appear to have become a great example of why the small
| businesses I run typically just walk away from any service we
| were potentially interested in using if we see a pricing page
| containing the word "call" but no actual pricing. If you're
| going to aim for high-touch enterprise sales, that's your
| choice, it's your business. However, the chances that you
| will then provide either acceptable quality of service or
| good value to anyone on the smaller end of the scale tends to
| zero IME, so it saves everyone time if we look elsewhere
| immediately. The problems start if it turns out that these
| companies aren't actually generating enough value to justify
| the enterprise-level costs either.
|
| For example, say you're running a tool that allows people to
| quickly experiment with multiple versions of their web site,
| measure some quantifiable success rate for each version, and
| perform some basic statistical analysis to guide future
| changes and improve conversion rates. A basic but useful
| version of this tool can be implemented in a few days by one
| competent developer and one competent statistician; I suspect
| quite a few people reading this discussion have done exactly
| that. Polishing the tool might take longer and improve its
| utility somewhat, but it's not as though it's using some
| secret technique that no normal business can implement for
| themselves in-house.
|
| At the mostly-self-service end of the spectrum, it might
| still be worth customers spending a bit of money on the pre-
| existing tool you make to do that job for them, because
| you're really competing on immediacy and convenience as much
| as technical capabilities. At the enterprise level, your
| competition could instead be some in-house team or some
| freelancer or agency being brought in from outside just to
| develop a tool directly for your customer. If they're
| potentially doing that at a cost less than just the first
| year of annual fees you're demanding up-front, and according
| to the customer's exact requirements, both of which seem
| quite plausible in a case like Optimizely's based on
| information in other comments here, what exactly is your
| sales pitch?
| jakemcgraw wrote:
| Just kicked the tires on Optimizely for a site with less than a
| million MAU. They wanted $50K upfront for one year. No monthly or
| quarterly billing available. Went with Google Optimize instead,
| works fine for free. In the face of that, very surprised
| Optimizely doesn't do month to month to get folks started.
| cosmie wrote:
| Optimizely used to, but their sales strategy changed to
| deliberately reposition themselves in the market.
|
| They've priced out self-service and smaller users, and
| repositioned their sales model for larger companies with
| immature internal capabilities. They lock you in with that
| annual pricing, and include enough margin to throw a massive
| amount of support resources at you to ensure you get everything
| fully off the ground and deeply embedded into your internal
| workflows.
|
| As an early self-service user, it was really irritating when I
| tried to bring them into a new company I started at and
| realized they made that change. But after working for a major
| marketing agency for a while, I've realized that it makes sense
| for them (even if it sucks for my purposes). In the world of
| large scale brand marketing companies (such as CPG companies),
| even a rudimentary informational/branding/brochure-ware website
| tends to be a $500k+ abomination, involving a super complex
| IAT[1] consisting of 3-6 external agencies and internal teams.
| In that world, the single greatest cost for anything is the
| man-hours required for account management, since even the
| tiniest of thing involves so much coordination (both
| logistically and politically). Optimizely's absurd looking
| price bakes in the cost of providing that level of account
| management support as well as initial implementation/usage
| technical support. Without those, it's entirely likely that the
| brand could purchase Optimizely and it'll sit unused because
| the agency scopes don't account for it and no one is willing to
| eat the unscoped hours required to implement/support/use it.
|
| [1] https://isl.co/2018/10/agile-iat-four-principles-for-
| better-...
| jrs235 wrote:
| I have been thinking about how Saas has been the golden
| product but how as some smaller Saas companies grow they no
| longer appear to be selling Software as a service but rather
| Service via software.
| roasm wrote:
| They used to, but they ended it a few years ago. They
| consciously moved higher market, higher touch, higher cost.
|
| Ultimately, i believe they got squeezed between smaller
| companies using free or cheaper offerings and larger companies
| probably building it themselves.
| joecasson wrote:
| I worked there for 5 years. This is the correct take.
| gingerlime wrote:
| It's worse. They essentially kicked-out their existing self-
| serve customers in the process. We were on the (at the time)
| silver plan, but when we were ready to upgrade to gold, there
| was no gold, no silver, nothing... Just some super-expensive
| and vague enterprise plan.
|
| But there's a silver lining: we created and open-sourced
| Alephbet[0] - a simple A/B testing platform together with a
| couple of backend options with AWS Lambda/redis[1] and couldn't
| be happier :)
|
| [0] https://github.com/alephbet/alephbet
|
| [1] https://github.com/Alephbet/lamed
| js4ever wrote:
| Thanks for this, also I love the name :p
| myth_drannon wrote:
| Actually it's a great idea to name your projects with
| Hebrew letters. "Shinbet" sounds cool ;)
| andrewingram wrote:
| The problem I had with Optimizely when it was the go-to solution,
| was that it had a truly problematic impact on front-end
| performance due to the blocking way its script was loaded and
| page variants introduced. In some cases page loads were blocked
| by up around 5 seconds.
|
| For obvious reasons it was tricky to run an A/B test just for
| testing the impact of Optimizely's script itself. But the key
| issue is that all the similar tools at the time (Optimizely not
| being the only culprit here) were determined to not required
| developer effort, which led to poor overall performance.
|
| Then React et al came along and took ownership of the DOM, which
| meant adding tools which also manipulated the DOM became even
| more problematic.
|
| Fortunately tools like Launch Darkly and Split solve this problem
| in a better way (high performance full-stack feature flags), even
| if it does mean developer effort to add tests. Optimizely did
| eventually launch their own version of this, but never really won
| back the developer mindshare.
|
| Ultimately, it seems Optimizely enjoyed a few years of success,
| but a combination of developers getting more concerned with
| performance and the front-end world moving on to different
| architectures, seemed to lead to its decline.
| chundicus wrote:
| As someone not too familiar with the ins and outs of acquisitions
| or IPOs... is it unusual to get acquired after laying off a big
| chunk of your staff? Is that an indicator that they probably
| accepted a lower valuation than they would have before that
| layoff?
| andrewingram wrote:
| I worked for a startup that basically let 90% of its
| engineering team quit due to low morale over the course of a
| year without making any effort to (a) stop the exodus, or (b)
| replace them. When they exited about 6 months later, it became
| pretty clear that it was intentional.
| chundicus wrote:
| Sorry for my daftness, but what is the incentive behind
| intentionally losing a bunch of staff before 'exiting'? Just
| to reduce your cash burn?
| namenotrequired wrote:
| Mostly to get better profitability numbers to show to
| potential acquirers
| whoisjuan wrote:
| Not a rule of thumb but undisclosed acquisition prices are many
| times an indication of a poor exit.
| billyhoffman wrote:
| It can depend. Valuation is based on SaaS business metrics like
| Cost to Acquire Customer, Average Contract Size, Average
| Lifetime, and Margin.
|
| Reducing headcount or doing a hiring freeze is a way to improve
| your metrics ahead before you go shopping yourself for an
| acquisition.
| martingoodson wrote:
| In 2014 I wrote an article on why Optimizely's approach to AB
| testing was statistically flawed [1]. I was working at a
| competitor so I needed to be a bit circumspect.
|
| It was discussed here:
| https://news.ycombinator.com/item?id=7287665
|
| I always wondered how they got away with it for so long.
|
| [1]
| http://www.datascienceassn.org/sites/default/files/Most%20Wi...
| dr_dshiv wrote:
| Have you ever given thought to generalizability in A/B tests?
| I'm surprised there isn't more of a developing science of
| constructs that generally work...
| richardFINEman wrote:
| Optimizely switched to a Frequentist statistics model in 2015,
| which changed how pretty much all testing companies do stats.
| Your article was valid, for a full year.
| dr_dshiv wrote:
| UpGrade [1] is an open-source A/B testing platform for education
| software. We want to make it easy for education software
| companies to pilot new materials and measure efficacy. We hope
| this can help optimize student outcomes and help advance the
| science of learning. Would love any feedback -- we just launched!
|
| [1] https://upgrade-platform.org/
| setgree wrote:
| I count 18 sentences of fluff/framing before they say who is
| acquiring them. Talk about burying the lede!
|
| 18 seems like an outlier, but for press releases I've read in the
| "we've been acquired" category, I'd guess that the median is >
| 10. Does anyone have first-hand knowledge about why these
| statements are released in this teasing way?
| pmiller2 wrote:
| I'd say it's just a PR tactic to make such things seem like
| "big news," when, in fact, such acquisitions are a fairly
| normal thing in the tech world. It's hard to even buy that kind
| of publicity, so one has to take advantage of it when one can.
| driverdan wrote:
| Sounds like they're having financial trouble and needed to sell.
| I'm hearing this will likely result in nothing for employees.
| suhail wrote:
| Congrats, Dan! :)
| dennisvdheijden wrote:
| Congrats Optimizely from you friends at Convert.com (A/B testing
| tool that keeps the prices online)
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