00:00hi this is Scott why is some a General
00:01Partner here at Andreessen Horowitz and
00:03I'm here today with Dan soccer the CEO
00:06of Optimizely I'm also here with Tom
00:09Reichert another partner here at
00:11Andreessen Horowitz who is our
00:12enterprise sass expert so we're gathered
00:16here today to talk a little bit about
00:18Optimizely we just completed a fifty
00:20seven million dollar round and since I
00:22have the founder here I've always I've
00:24always wondered when companies have such
00:27a founder market fit where this this
00:30idea for Optimizely came from him and
00:32his co-founder Pete while they were at
00:35Google I'd like to just go back and
00:36capture that moment at Google when did
00:39you know that you had to make a company
00:41out of the testing and optimization that
00:43you guys are doing as product managers
00:45there at Google well the seed was first
00:47planted after I graduated I was a 23
00:50year old kid straight out of school at
00:52Google and I was working with a bunch of
00:54engineers who are twice my age it's
00:56significantly smarter than me and one
00:59Friday afternoon I found myself going in
01:02to have to pitch a controversial product
01:05idea to the founders of Google Larry and
01:07Sergey and before I went in I asked one
01:09of my mentors for advice about how I
01:11should pitch this controversial product
01:13idea and he he he gave me some advice
01:16that sticks with me to this day and was
01:17actually the first seed that we planted
01:19to start Optimizely and his advice was
01:21to go in and tell them we just want to
01:24run an experiment just run an experiment
01:26and those magic words transform the
01:29conversation with the founders of Google
01:30from a controversial idea to a
01:33data-driven idea says let's run an
01:35experiment let's see what the data shows
01:37and if it's a good idea it'll prove it
01:39out and to this day who could say no to
01:41let's run an experiment that's right and
01:43and actually then you know that seed
01:45actually really grew into a blossom when
01:48I left Google to go to the Obama
01:50campaign and that's where I saw
01:51firsthand the distinction between a
01:53organization that's a data-driven
01:55meritocracy of ideas and an organization
01:58like a political campaign which believe
02:00it or not there's politics and politics
02:01and even as much as the Obama campaign
02:04was trying to buck the trend of a lot of
02:06the political things that go into
02:07campaigns the decisions were often made
02:09based off of the hippo the highest paid
02:11person's opinion and so you know David
02:14and David Plouffe they would have smart
02:15ideas but one of the things that I was
02:17able to introduce into the campaign was
02:19this idea of experimentation and really
02:22that's where this initial seed that was
02:24planted Google grew into this much
02:25bigger opportunity of a bee testing and
02:27website optimization but how did you
02:29know you wanted to build a whole company
02:30about around it like I think it was a
02:32great idea and then you took it to the
02:33Obama campaign but what was the we've
02:35got to make this accessible for
02:37everybody how did that come about well
02:38it was really actually a narrow focus on
02:41just building the product I wanted and
02:42in fact I never started the company
02:44thinking this is a ubiquitous problem in
02:46fact I got more lucky than good they're
02:48realizing that the problem we face in
02:49the campaign of wanting to do a/b
02:51testing enabling non-technical people to
02:54do a/b testing was actually a problem
02:55that many organizations face even the
02:58biggest organizations you know companies
02:59like Starbucks a fortune 500 company
03:01that wasn't doing a/b testing before
03:03they came to Optimizely
03:04fundamentally can do this because it now
03:06enables non-technical business users to
03:08do a/b testing so Tom I wanted to hit
03:11you with this one because when he just
03:13talked about bringing a pap testing to
03:16non-technical people you know as you've
03:18looked at at Enterprise SAS companies
03:21this whole notion of disruption by you
03:24know just something that is used usable
03:26by non-techies not needing an engineer
03:29to implement these experiments we've
03:31seen this across a number of companies
03:33and it's really accentuated here with it
03:35with Optimizely yeah I think there's
03:37been a few interesting trends which have
03:39really helped to make this revolution
03:42happen for one this enterprise
03:44software's gotten so much easier to use
03:45right like in the old days enterprise
03:48grade was like better but I think today
03:50consumer grade that consumer grade user
03:52experiences are actually the superior
03:53experience and that's what companies are
03:56starting to build so even the most
03:57technical tools whether it be for data
03:59analysis or a B testing are things that
04:02are more familiar to someone who might
04:05be you know someone coming out of a
04:07university program who's never coded but
04:10they've used Facebook they've used Gmail
04:12to use these different applications
04:14which have to train them to become
04:16expert enterprise users I think that
04:18something it's really exciting and but
04:20it takes a real focused effort from
04:22companies it takes a lot of discipline
04:24to build really good user experience
04:27in fact you know a be testing you could
04:29even do that with your own product even
04:31if it's an enterprise product so it kind
04:33of comes full circle to what Optimizely
04:34is focused on to add to that and you
04:36know one of the things that I've seen
04:38over the last four years is you know
04:40there's two things happening our
04:42customers are getting less patient and
04:44their expectations are going up and that
04:47combination of things means that they
04:48expect to just work there used to you
04:51know consumer products that actually
04:53just work they don't need to have a
04:55training manual they don't need to go
04:56through an onboarding they can just go
04:58in and extend it from the very beginning
05:00understand exactly what the product does
05:02and and are delighted in that experience
05:04and we focused on building a product
05:06that just works and it happens to be a
05:08product that businesses use but the
05:09expectations and our standards are those
05:11that we would hope to be ubiquitous for
05:13all kinds of products you know one of my
05:15favorite engineering expressions is RTFM
05:18which means read the manual and
05:21it's always sent to the newbie when they
05:24ask a stupid question of another
05:26engineer they just get one a one-line
05:28sentence it says RTFM I agree with you
05:31what you just said if it needs a manual
05:33it's probably not a mod doesn't have a
05:35modern UI it probably doesn't have it's
05:38not a consumerization of IT product and
05:41this notion of of designing for you know
05:45kind of an average person I remember
05:46like the old days of enterprise software
05:48that tom was just talking about you know
05:50specialists had to enter just enter
05:52simple things then you just think of
05:53what like a old reservation agent used
05:55to do to test it it sit on the other end
05:58of the line and enter your your data in
06:00that now we enter in an expedia with
06:02drop-down boxes and I think the whole
06:04world is headed towards that way if you
06:06look at the new applications like box
06:07like Evernote you know a lot of these
06:09new applications are built for mobile
06:11they're they're built for kind of a HTML
06:14user interface and they're intuitive in
06:17the way that tom was talking about like
06:18Facebook is it's it's so everybody can
06:21enter in their own data we don't need
06:23this specialist in the middle and and we
06:25can get more things done so I want to
06:28switch gears a little bit one of the
06:29things that that that has really excited
06:32me about this investment is this new
06:35wave of enterprise companies like I I
06:37honestly don't think that the old old
06:40make this shift make this change and one
06:43of the reasons I contend is they can't
06:45hire the design talent you know if you
06:47think about the designers that are
06:48necessary to come in and make an
06:50interface that's at that easy to use
06:52they come from consumer land and by and
06:55large they're the hardest ones to hire
06:56across our portfolio now you walk into
06:58Optimizely the culture the look and feel
07:01is is reminiscent of a consumer company
07:04in fact it feels like Google it's got
07:06ping-pong tables and you know open
07:09seating like you walk into IBM or Oracle
07:11or any of those old companies like I
07:13don't I think a designer walks in there
07:15and gets hives so like what are you what
07:18is your prediction yeah I I actually
07:20believe that there's gonna be new
07:21franchises that are made on top of these
07:23franchises and when even the Oracles
07:25come knocking like the cultures are
07:27gonna be so different and distinguished
07:29like the I don't think they're gonna
07:30take the buyout offer so it's just like
07:32what am I gonna be no what sentence am I
07:34am I putting myself to to go work for
07:36this company how fun is that
07:37yeah and I think that's a that's a great
07:39point and I think it it's a trend that
07:42we've seen and it affects the entire
07:45process of of the consumption of our
07:48product and I think one way to frame
07:50that is you know today the best products
07:52are bought they're not sold
07:54people come to Optimizely and they try
07:56our product and they convince themselves
07:57of the product before they even talk to
07:59a sales person on our team and you know
08:01we do things like you know in our ads we
08:03actually put a little form field that
08:06you can enter a URL directly into our ad
08:08click test it out and and what we sell
08:10you on is the product it's the product
08:12experience and world-class designers
08:14want to build products that that are
08:15that are bought not sold and I think we
08:18have a huge opportunity to transform the
08:20mentality of what an enterprise software
08:21product looks like and feels like to be
08:23able to be just as delightful as a
08:25consumer product it's one of the things
08:27I loved about Optimizely is the time to
08:29actually do something interesting
08:31Optimizely it's about two seconds if you
08:33go to optimize leave calm and you can
08:34type in a URL and instantly you're
08:36editing a page and being able to run an
08:38experiment so like the old days getting
08:41up to speed on an enterprise application
08:42was if not a manual at least a training
08:44class or a tutorial or watching a video
08:46but Optimizely I mean it's literally a
08:48click and in it's immediate
08:50gratification to see the changes and
08:51actually put them alive to start to see
08:54data coming in and in and that's
08:56something that is magical I remember
08:58implementing Oracle financial and I had
08:59EDS at IronPort for like three months
09:02training everybody how to use it and it
09:04was just training the finance staff it
09:06wasn't like anybody else could possibly
09:07use it and so I think this wave is going
09:10to help everybody kind of really
09:12understand and get benefit out of
09:14enterprise software hey there's
09:15something that that I brought up a
09:17minute ago that I'd like to touch on and
09:18that's the culture at Optimizely
09:20from the minute you walk in the door to
09:23you know every interaction I have with
09:24anybody on the staff you can tell that
09:26you've got happy employees there and and
09:29I just like what it what are some of the
09:30secrets I know there's a lot of
09:31entrepreneurs out there that are
09:33thinking about culture but just don't
09:35know the underpinnings how to how to
09:38what were some of the things that you
09:39and Pete did early on to make sure this
09:42is going to be an enduring place well
09:44it's something that first of all we
09:46really thought about I think that's a
09:47that's a very important step to take to
09:49say that we are going to be purposeful
09:51about our culture it's not just going to
09:52be the organic outgrowth of a bunch of
09:55people but there's going to be somebody
09:56in this case it was me and my co-founder
09:57really thinking about the kind of
09:59culture we wanted to build and one of
10:02the litmus tests I used was is
10:03Optimizely the kind of place I would
10:05want to work at as an employee and as a
10:07very entrepreneurial person that's a
10:08very high bar and the biggest part of
10:10our culture that I think resolves or
10:13solves that is our culture of ownership
10:14you know we we really focus on
10:17empowering people to own their successes
10:19and failures and and do that to do that
10:21for their team as well and you know it
10:23starts I think with with me and Pete we
10:25view our our role as as working for our
10:28team and they view their roles working
10:29for their team in fact you know we do we
10:31we codify that in some of the symbols
10:33one of the things we do is we action
10:35every org chart at Optimizely the
10:37managers at the bottom of the org chart
10:38not at the top of the org chart and
10:39that's a reminder that not only do we
10:41actually work for our teams and we we do
10:43what we can to make them successful we
10:45also have a hiring philosophy of hiring
10:47above the mean we want to hire better
10:48than the average of the other people
10:50that Optimizely and you know those are
10:52small symbols that can that get
10:53translated over and over again in in the
10:56actual culture that materializes we've
10:58thought long and hard we have a cultural
10:59acronym that we use internally called op
11:01defy stands for the cultural values we
11:03care about its ownership passion trust
11:07fearlessness and transparency with a why
11:09and and those are all things that you
11:12know we and I think the culture is only
11:14as effective as as your ability to
11:17actually live up to that culture and you
11:18know Pete and I both when we communicate
11:20with a company will say not only what we
11:22think we should do or what our decision
11:24is but more importantly why we think
11:25it's important and and that we'll say
11:27you know I think the reason why our you
11:29know our travel expense policy should be
11:32X is because we have a culture of
11:34ownership and of trust and those are
11:36things that we've codified and then we
11:37live up to in interactions and deeds I
11:40want to talk a little bit about
11:41transparency because it's something that
11:43I've always held dear you know I would
11:46go over the the board slides with the
11:48whole company and I think one of the
11:50things about being transparent is to not
11:52be afraid to admit where you're wrong in
11:54fact I think when the leadership stands
11:56up and says hey I we really screwed this
11:58up it it you know kind of enables and
12:01encourages everybody else to be very
12:04open about what the problems are and
12:05that was one of the things that really
12:06stood out when when I first got to
12:09Optimizely and I started talking to each
12:10one of the executives everyone was
12:13completely consistent about where the
12:15weak areas were as well as where the
12:16strengths were and these are some
12:18executives that had only been on for a
12:19couple of weeks so it must be a lot of
12:21you and Pete just kind of going open
12:24kimono about what's really going on at
12:26the company and you get more brains on
12:27the table that way yeah and you know I
12:28think you know that's partly just our
12:31nature you know Pete and I both will be
12:32the first to admit that we don't know
12:34what we don't know and we also are
12:36really willing to say and be honest
12:38about the mistakes we make and you know
12:40we we have a couple of small things we
12:42do that I think translate really well
12:44into that effort one is every meeting at
12:47optimize the notes from that meeting
12:48including the board meeting we had last
12:50week get sent to the entire company you
12:52know we have a separate mailing list for
12:53that so you're not spammed with notes
12:55but that small symbol of every meeting
12:57within the company being transparently
12:59sent and the notes getting sent and
13:00everybody knowing that really has a lot
13:02of great unintended consequences you
13:04know one is that anytime there is a
13:06meeting everybody in that room knows hey
13:07let's not talk about building a kingdom
13:09or politics we know the notes from this
13:11meeting regardless of what I want to or
13:12not are gonna get sent to the rest of
13:13the company so you get that cross
13:16cross-pollination and serendipity of
13:18communication but you also you know
13:21the is the best disinfectant and I think
13:23that that focus on not just the good but
13:26the bad that's really when transparency
13:27is tested is if are we willing to talk
13:29about the biggest and worst problems we
13:30have so I want to switch gears a little
13:32bit and I want to talk about the future
13:34of Optimizely one of the things that got
13:38us really excited when we're evaluating
13:39the company was the demo that you had
13:42for the iOS and mobile because you know
13:44as Tom talks about a lot internally
13:46Mobile is is becoming the the kind of
13:49the most important part of enterprise
13:51and I don't think many enterprise
13:52customers have really optimized for
13:55mobile if you look at most of the
13:56enterprise even the enterprise SAS
13:58companies their mobile products are crap
13:59and and so I we saw what you guys were
14:03doing with optimize Lee's iOS product it
14:06was beautiful it was easy to use and and
14:09I want I want you to I want to hear it
14:11from you like what was important about
14:12moving to mobile and and where do you
14:14see the opportunity well it starts with
14:17our vision and our vision is to enable
14:18the world to turn data into action and
14:20we think that's a long journey the first
14:22step was website optimization and
14:24enabling you to take the data you have
14:26about your customers and your visitors
14:28on your website and turning that into
14:29action through a/b testing Mobile is is
14:32the natural next step on that journey
14:33and we see that not only because that's
14:35where the people are but because there's
14:37such an opportunity with limited screen
14:39real estate to make the right choices
14:41about what you shown you don't show in a
14:42mobile app and I think that's that's
14:44really an opportunity where a/b testing
14:46can play a huge role because you know in
14:48a you know on a website you can put a
14:50bunch of stuff and some of it may be
14:51effective some of it not when a mobile
14:53device when people have limited amount
14:54of time limited attention and unlimited
14:56screen real estate you're able to
14:58actually those hard choices can become
14:59much clearer through optimization and I
15:02think related to that the stakes of your
15:04mobile application succeeding it is it's
15:06a higher stakes game and that if you
15:07don't have a good response in the first
15:10few days you know your app falls below
15:12the fold and then you may never make up
15:14that traction so getting it right the
15:15first time be able to test be able to
15:18make changes on the fly you know as you
15:20enable once the apps even out in the
15:22market like that's essential especially
15:24in that first critical week or two of
15:26the launch yeah and you know on mobile
15:28and an iOS in particular a couple of
15:30things that we built into our product
15:31that I think are much much
15:33bigger solutions and pains that people
15:35have our the ability to slowly roll out
15:37new functionality that's another if
15:39something on the web you can quickly add
15:40something quickly move things when a
15:42mobile app you know you break your app
15:44you're gonna get a bunch of one-star
15:45reviews and people are gonna you know
15:46really give you a hard time
15:48so that's slow rollout slow deploy I
15:50think is a key feature on our mobile iOS
15:53optimization product and also the
15:55ability to actually make changes without
15:56going through the app review process and
15:59that the ability to send different
16:01configuration data through optimize the
16:02tweak and change things directly in our
16:04interface and those go live immediately
16:05in your app I think are two huge
16:08solutions to problems people have had in
16:09mobile development I don't think that
16:12that most people that are winning in
16:15mobile if I think about all the gaming
16:17all of the applications like Evernote
16:19and Dropbox and box they've all gone
16:21freemium and freemium just by its nature
16:24is I'm presented with a you know do I
16:26pull out my credit card here or there it
16:29just stands to reason that this is going
16:31to be such a big business on mobile as
16:34companies try to figure out you know how
16:36do i turn my 1 to 5 percent of buyers
16:40out of my 90 ish percent of users and
16:44moving that by a point or two points is
16:47very material and I I think that feels
16:50like a big promise for Optimizely on
16:51mobile yeah I agree completely I you
16:54know as a firm we've looked at at so
16:56many different enterprise companies and
16:58we see like these this whole new cast of
17:02of companies that were were born from
17:04the internet and I'm thinking of
17:07companies like Zendesk like aptio
17:11they're companies that are SAS companies
17:13that are performing a completely
17:15different function oftentimes these
17:17functions are born of new technology
17:19Optimizely feels like one of these new
17:22franchises and I you know I
17:24it hasn't shaken out yet like I believe
17:26that you know somebody asked me the
17:28other day hey what's going to happen
17:31with the old incumbents you know isn't
17:33there a little isn't there seem like a
17:34lot of SAS companies out there and I
17:37think there's gonna be consolidation
17:38like I think the same conduct
17:39consolidation that happened where IBM
17:41and Oracle and even Salesforce and
17:44others were buying these companies
17:46and then to be and becoming these you
17:48know hundreds of billions of dollars or
17:50tens of billions of dollar behemoths I
17:51think that consolidation is going to
17:54but you know if you think about like be
17:56EI and and PeopleSoft and all of those
17:59acquisitions that happen those were
18:01standalone independent franchises they
18:03were bought from multi-billion dollars
18:04in in stock by these other companies I
18:08think the enterprise wants one throat to
18:11choke in one sense but they also with
18:13the departmentalization of IT maybe each
18:16department wants to have you know three
18:17or four companies there won't be as much
18:19consolidation just to wanted to get your
18:21guys thoughts on on you know how do you
18:23see these new let's say there's 50 new
18:25franchises I'm certain that Optimizely
18:28how do you see it consolidating do you
18:30see it kind of staying the course and
18:31you know because of departmentalization
18:33like each department will have five or
18:35six vendors and that'll be cool well you
18:38know the way we think about it is we
18:39want to be Best of Breed at what we do
18:41and so we've been initially very
18:44narrowly focused on website a/b testing
18:45now that we've become the number one
18:47most adopted solution in that field
18:48we've moved to mobile optimization and
18:50we will go beyond that and are the
18:53reason why we think that approach will
18:55work is because we also foster an
18:57ecosystem we know that it's not just a
18:58standalone product and that's not all
19:00it's gonna take to make somebody
19:01successful we really need a product that
19:03integrates seamlessly with every other
19:05product you use and and the way I see
19:07the you know the next few years playing
19:09out is that in in markets where there is
19:12a Best of Breed product that is a
19:13delightful product that practitioners
19:15and departments will decide to use and
19:17evangelize for as long as those products
19:19integrate seamlessly with the Zen desks
19:21with the other products that they're
19:22using then it's it's it's inevitable
19:25you'll find a best-of reproject in many
19:27of these categories they work well
19:28together and I think that that's a
19:30choice of business is going to bet on
19:31versus a franken suite of products that
19:34have been glued together through
19:35acquisition that don't really work well
19:36together so it's kind of like if you
19:40think about the the SAS world because of
19:43the preponderance of AP is that make
19:45this data sharing very simple between
19:47applications there may not be a need to
19:49have that same salesperson sell a bag of
19:53tricks like they had in the past yeah
19:55and I think frankly if you look at what
19:57an Oracle salesperson or IBM sales
20:00to keep in their in their head like all
20:02these different products and in ways of
20:04bringing together the professional
20:05services usually to integrate them it's
20:08going to be much simpler if you have
20:09some best and breed companies who come
20:11in they do one thing really well but as
20:13we're talking about they have an open
20:14platform and I'm also excited because I
20:17see increasingly a way of gluing in a
20:19good way these different point solutions
20:21together in a way that even non
20:23programmers can do it
20:24so zapier or if this then that our two
20:29companies were there allowing
20:30non-programmers to plug the output of
20:32one company or system into the input of
20:35another and so ultimately I think a lot
20:37of what used to be kind of expensive
20:39long term system integration work now
20:42that can be done by a non programmers
20:43just the way non programmers are using
20:45tools like Optimizely
20:46well this has been a great conversation
20:48I want to thank Dan and Tom for joining
20:50me really looking forward to building
20:53Optimizely and another one of these
20:54giant enterprise software franchises
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