In one particularly interesting portion of Pete’s interview, he talked about how A/B testing platform Optimizely was actually the third startup idea that he and his co-founder Dan Siroker pursued once they decided to dive into entrepreneurship together back in 2009. Their first two projects, an education startup called CarrotSticks and an enterprise customer acquisition platform, failed to generate enough traction to keep going.
Pete described how those experiences showed them that they were really onto something special with Optimizely:
Pete: I’m sure there are plenty of sayings about good ideas, and how
sometimes, it’s the most obvious one right in front of your nose that
ended up being the best… But it wasn’t
until we’d realized that, A., we really weren’t as great as we thought
we were, and B., that the stuff was really tough, that we went searching
around for a problem that we could really prove to ourselves that
someone would pay for. So that was really big.
With CarrotSticks, it took us about six months to earn our first dollar.
With our second idea, it took a month and a half. And with Optimizely,
we were able to earn revenue on day one before we’d written any other
code. And that illustrates how we changed our thinking to focus on
making sure we found something people wanted before we built it.
Aaron: …So Pete, the last thing that you just said was we needed to make
something people actually wanted, which is the model of Y Combinator.
It’s on all of our shirts. It just says, “Make something people want.” And I
think it’s a really tough idea for a lot of people to actually
internalize, because they can find things that maybe they want. “I want a
puppy.” But that might not be a startup.
I think you gave me the answer. The way that you actually figure out
something that people want, that’s actually a business. It’s that they
are willing to pay for.
Pete: That was our proxy. Because we need up building a business that
sold things to people for actual money, I think, unlike a lot of tech
startups, we had an easy proxy there for demand. It was just trying to
get someone to pay for it.
Aaron: How long did it take for you to get someone to pay for it?
Pete: It was a single day, actually, with Optimizely.
Aaron: One day?
Pete: Dan called a couple of agencies that he’d worked with on the Obama
campaign and just described, “This is what we are working on. Will you
pay us $1,000 a month for access to early versions of it?” And sure
enough, two of them signed up. And we earned more revenue that one day
than we had the entire preceding year with our two startups.
Aaron: Wow! Did you have the software yet?
Pete: We had nothing.
Aaron: You had nothing?
Pete: We had nothing.
Aaron: So you sold a promise of future software?
Pete: We sold a promise of future software.