A or B? For website testing firm Optimizely, it’s a multimillion-dollar question
FORTUNE — There isn’t anything inherently glamorous about website testing, but minor differences can mean a difference of millions of dollars in revenue.
That’s why former Google (GOOG) product managers Dan Siroker and Pete Koomen founded Optimizely four years ago, not long after Siroker led the analytics effort for Barack Obama’s 2008 presidential campaign. The young company completed the Y Combinator program in 2010, started picking up clients like Starbucks (SBUX) and Salesforce.com (CRM), and proclaimed that it was “on pace to grow faster than any other SaaS company in history” — a rather bold statement.
It’s not as far-fetched as you might think.
The company announced this morning that it has seen triple-digit growth, year over year, in annual revenue since its 2010 launch. To celebrate, it also announced that it had raised $57 million in a Series B funding round from Andreessen Horowitz, Benchmark Capital, and Bain Capital Ventures. Andreessen’s Scott Weiss will join its board of directors. (The company’s previous round included Benchmark and Bain alongside Battery Ventures, InterWest Partners, Lowercase Capital, and Google Ventures.) That brings the company’s total funding to a sizable $90 million, suggesting either that Siroker and Koomen are on to something or that Silicon Valley valuations are, well, optimistic.
“Is website testing this big [of an opportunity]? The answer is yes,” Siroker told Fortune. “It’s a shift that’s been happening as companies make decisions less around the “hippo” — highest-paid person’s opinion — and more around data.”
Optimizely competes with Adobe (ADBE) Target, Google Website Optimizer, Visual Website Optimizer, Monetate, and others. Keeping the company at the front of the peloton is its large base of customers — more than 7,000 in 101 countries to date, all in search of data to help them design their websites in a more efficient (and lucrative) way. “It’s not just incremental changes but generating a hypothesis,” Siroker said. The company’s approach taps into a trend in which business leaders take it upon themselves, rather than look to their technology organization, to perform technical tasks like running website tests.
“The vast majority of websites are still not doing this,” Siroker said. “The value that optimization and A/B testing creates is much much greater than the amount of money we’re raising or the cost of our products. We’re seeing huge increases in top-line revenue of their business. [The shift to data-based product decisions] is going to happen, whether we’re the chosen product or not.”
The company says it plans to use the additional funds to develop its iOS application, its Optiverse community message board, and its developer platform. “I strongly believe this idea of the man-machine merger,” Siroker said. “Optimizely is only as successful as the person using it. We teach our customers how to fish.” But Siroker clearly has bigger plans.
“We want to enable the world to turn data into action,” he said, adding that he wants to build a company that lasts “maybe 100 years.” Websites and mobile applications, then, are just the beginning.
Clarification, May 5 2014: An earlier version of this story understated the number of countries in which Optimizely has customers. It is 101, not 53. Additionally, the company calculates its total raised capital to be $90 million, not $88 million.