Dan Siroker has a habit of looking at the future and imagining something very different from the present. Back in 2007, when George W. Bush was still president, he left his plum product-manager job at Google to work for a junior Illinois senator named Barack Obama, as director of analytics for the candidate’s presidential campaign. We all know how that turned out. Today, Siroker is looking at the Web and imagining a future where every page a consumer visits, not just the home page at Amazon or Netflix, has been thoroughly personalized to fit the viewer’s interests or demographic profile. And he thinks he knows how to make it happen.
Optimizely, the company Siroker started with co-founder Pete Koomen, is known today for its automated A/B and multivariate testing tools, which allow companies to show different versions of a web page to different visitors and see which ones work best. But Siroker says some customers are beginning to adapt the technology for general use, rather than just occasional testing. Just as important, he says Optimizely is building up a trove of data about what works and what doesn’t work on the Web—information that future customers will be able to exploit to make their sites stickier and more profitable.
The end result could be a world of fully customized publishing, where every visitor to every site sees a page optimized for them. “A hundred years from now I expect people to look back and be shocked at how impersonal and generic and one-to-many the Web was,” Siroker says. “We have built a very easy-to-use A/B testing tool, but that’s the first step toward a much larger vision of helping businesses show exactly the right thing to the right user at the right time.”
To pursue that vision, Optimizely just closed a venture funding round involving Battery Ventures, Google Ventures, and Interwest Partners. Siroker isn’t talking about the size of the round—he calls valuations and venture financings “vanity metrics” that are bandied about to “make people feel good at startup cocktail parties but in the end don’t create value.” But he is saying that the 16-employee company is “solidly profitable,” and that revenues have increased by a factor of 12 over the past year. And after just two years on the market, the startup has already signed up more users than Google Website Optimizer, Siroker says.
That’s quite an accomplishment, considering that the search giant’s A/B testing tool is free, whereas Optimizely’s most popular plan costs $79 per month. “Most startups are fearful that Google will get into their market and kill them,” Siroker says. “We did the opposite.”
With huge names like Disney, Starbucks, Crate & Barrel, and eBay on its customer rolls, the startup is now going after what Siroker calls the “800 pound gorilla” in the website optimization market: Adobe Test & Target, the A/B testing tool Adobe acquired when it bought Omniture in 2009 for $1.8 billion. Optimizely is on pace to surpass the Adobe product later this year, Siroker says. “The thing we feel really excited about is the David versus Goliath story—that we can not only take market share from Google but also go after this $1.8 billion company,” he says.
The longer you talk with Siroker, however, the clearer it becomes that what he’s really excited about isn’t A/B testing at all; it’s the idea of helping e-retailers, publishers, and other companies personalize the whole Web. “Companies like Amazon, Pandora, and Netflix are based on this idea of making the Web a one-to-one experience,” he says. “We want to democratize that. A/B testing was a great first product, and we are clearly the fastest growing solution in that space. But now that we have a foot in the door we have a huge opportunity to transform the way the Web works.”
To understand how that’s possible, you need to know something about how Optimizely’s current A/B testing technology functions. A company using Optimizely starts by inserting a short snippet of JavaScript code at the top of the Web page it wants to test. Then the company’s marketing experts can use Optimizely’s editing interface to specify exactly which elements of the page they want to experiment on.
Say you’re with Starbucks and you want to test whether customers are more likely to buy a $50 gift card if you offer them a 10 percent discount on their next purchase. As the gift card page is loading, the JavaScript snippet will run, randomly showing the special offer to half of your visitors (Group A) and the original page to the other half (Group B). By leaving a cookie on each user’s computer, Optimizely can track visitors’ behavior afterward and determine whether the offer affected purchasing behavior.
The key to all this is jQuery, a collection of JavaScript programs that makes it easy to alter the content of a Web page as it’s loading. Optimizely’s system is “very much built on top of jQuery,” which didn’t even exist when Google Website Optimizer or Omniture Test & Target were first written, Siroker says. “We can fundamentally transform a page on the fly, which was not possible even three or four years ago.”
Now imagine that rather than slotting users into Group A or Group B based on random chance, you decide to tell Optimizely to show visitors special content based on what you know about them—say, their location, which is easy to determine from their IP address. All of a sudden,
