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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 b

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.

richardfeynman 6y ago
First off, love the username :-). You argue that pivoting from self-serve to enterprise was one of the company's best decisions. If that were true, Optimizely would be considerably more valuable now than it was four years ago, which is manifestly not the case. Moreover, if the self serve model was indeed fatally flawed, then it would not be possible for anyone to build a profitable business serving this segment. However, a competitor, VWO, showed that it is possible to build a large, profitable business using this model. Finally, let's say my prior two arguments are wrong, and the unit economics of the self serve business were fundamentally flawed--an assertion I challenge--the self serve business would still have been useful as a source for attracting future enterprise customers. When Optimizely cut the self serve plans, it also killed its largest source of enterprise deals.
- conductrics 6y ago
  Are you suggesting that revenues fell after bailing on SMB. That is hard to imagine, but I guess possible. Given that the core of the industry is about asking counterfactual questions, I would think the appropriate question would be 'would they be more valuable now if they had not gone to the enterprise - would they even have the deal they did wind up getting?'rather than are they more valuable now then they were 4 years ago. Hard to know, but my guess is that they wouldn't. A simple web editor with a random number generator isn't going to be of interest to anyone looking to buy. The larger problem is that statistical inference is hard - it just is. And, unlike analytics, where you are just placing sensors into an existing system, here you need to also place actuators, so implementation is much more complicated. That means that at any scale, both the marketing team, and the dev/IT teams need to be involved for anyone to get value and not wind up breaking systems all the time. Software like theirs, and ours, isn't magic, and without good editorial and hard work by the client, the entire exercise is more statistical theater than science. And that material fact was always in conflict with the rhetoric that they make AB Testing easy for everyone. It lends itself to a particular type of solutionism that VCs and the larger industry are prone to be seduced by. Self service to SMB clients might be a profitable biz, but perhaps not enough to service such a large amount of venture funding. FWIW VWO also tries compete at the enterprise.
- jimbojones79 6y ago
  I think your argument that VWO is a profitable business, is unknown. VWO is also still private. It could be going through the same issues. Additionally, I'd say that valuations are inherently made up. Optimizely was perceived as having more value previously, it doesn't mean it actually was. When it was serving the SMB space, it had a massive churn in that space.
  - hnthrowavay 6y ago
    >I think your argument that VWO is a profitable business, is unknown VWO has been profitable since its first month of inception (throwaway account + I am a VWO employee)
- richardFINEman 6y ago
mrnobody_67 6y ago
The big missed opportunity was to build a bounty-based marketplace to serve the SMBs... charge for results vs. the product.
- cutenewt 6y ago
  Would the bounties be large enough to cover the work involved? I'm doubtful.

richardfeynman 6y ago

First off, love the username :-). You argue that pivoting from self-serve to enterprise was one of the company's best decisions. If that were true, Optimizely would be considerably more valuable now than it was four years ago, which is manifestly not the case. Moreover, if the self serve model was indeed fatally flawed, then it would not be possible for anyone to build a profitable business serving this segment. However, a competitor, VWO, showed that it is possible to build a large, profitable business using this model. Finally, let's say my prior two arguments are wrong, and the unit economics of the self serve business were fundamentally flawed--an assertion I challenge--the self serve business would still have been useful as a source for attracting future enterprise customers. When Optimizely cut the self serve plans, it also killed its largest source of enterprise deals.

conductrics 6y ago
Are you suggesting that revenues fell after bailing on SMB. That is hard to imagine, but I guess possible. Given that the core of the industry is about asking counterfactual questions, I would think the appropriate question would be 'would they be more valuable now if they had not gone to the enterprise - would they even have the deal they did wind up getting?'rather than are they more valuable now then they were 4 years ago. Hard to know, but my guess is that they wouldn't. A simple web editor with a random number generator isn't going to be of interest to anyone looking to buy. The larger problem is that statistical inference is hard - it just is. And, unlike analytics, where you are just placing sensors into an existing system, here you need to also place actuators, so implementation is much more complicated. That means that at any scale, both the marketing team, and the dev/IT teams need to be involved for anyone to get value and not wind up breaking systems all the time. Software like theirs, and ours, isn't magic, and without good editorial and hard work by the client, the entire exercise is more statistical theater than science. And that material fact was always in conflict with the rhetoric that they make AB Testing easy for everyone. It lends itself to a particular type of solutionism that VCs and the larger industry are prone to be seduced by. Self service to SMB clients might be a profitable biz, but perhaps not enough to service such a large amount of venture funding. FWIW VWO also tries compete at the enterprise.
jimbojones79 6y ago
I think your argument that VWO is a profitable business, is unknown. VWO is also still private. It could be going through the same issues. Additionally, I'd say that valuations are inherently made up. Optimizely was perceived as having more value previously, it doesn't mean it actually was. When it was serving the SMB space, it had a massive churn in that space.
- hnthrowavay 6y ago
  >I think your argument that VWO is a profitable business, is unknown VWO has been profitable since its first month of inception (throwaway account + I am a VWO employee)
richardFINEman 6y ago

mrnobody_67 6y ago

The big missed opportunity was to build a bounty-based marketplace to serve the SMBs... charge for results vs. the product.

cutenewt 6y ago
Would the bounties be large enough to cover the work involved? I'm doubtful.