In a world of Uber financings and 800 percent revenue growth curves, one startup founder won’t talk sales numbers, company valuations, or IPOs.
He says his market opportunity is a billion-plus, not $10 billion. He takes $13 million from investors, not $100 million. And that’s after being self-funded and profitable for a decade, building a Web marketing and optimization software company that employs about 90 people.
His name is Eric Hansen, and he’s one of the most successful Boston tech CEOs you’ve never heard of. His company, SiteSpect, just raised its first round of outside funding since it got started in 2004. The investor, NewSpring Capital, was one of several groups that expressed interest over the years, Hansen says.
“A lot of it does come down to chemistry,” Hansen says. “They had experience in our sector, they bought into our vision, they could add value beyond the dollars. Not least of all, we just liked the guys.” The money will mostly go toward “amping up sales and marketing,” he says.
As Hansen puts it, SiteSpect has succeeded so far because of its technology, product design, and word of mouth. Its customers include retailers, banks, and other big companies, which are all trying to boost their Web and mobile profiles—and sales—in a sea of noise.
In the past year, the company was granted two patents for its core technology, which involves testing variations of Web content and improving the rate that visitors respond to content. SiteSpect also opened up its product to more users by releasing application programming interfaces (APIs) that automate more of the testing process and connect to other parts of customers’ businesses.
Website marketing and analytics have evolved a lot in recent years—roughly speaking, from measuring to testing to optimizing—in parallel with the rise of mobile interfaces. SiteSpect’s competitors now include big companies like Adobe, as well as smaller but significant efforts such as Optimizely, Monetate, and Maxymiser.
How did SiteSpect’s founder learn to think about where Web software is headed, and the best way to position his company?
Hansen, 44, is a family man who grew up in Lexington, MA. His dad worked for Raytheon doing corporate development. Growing up in the ’70s and ’80s, Hansen got hooked on computers when the Commodore 64 came out. He’d use a clunky modem to connect to a mainframe and write programs that printed out results on a dot-matrix printer.
“I was never interested in being a gamer,” he says. “I was much more interested in writing the software and hacking. I wanted to make a living doing it.” By the time he was a teenager, he had written code and licensed it to local software companies.
At the University of Rochester, Hansen started out studying computer science. But he quickly found most classes were exercises in applied math, which he didn’t enjoy that much. So he switched to cognitive science and psychology—where he got to write computer programs, design experiments, and do statistical analysis.
That stuff would come into play in the early days of SiteSpect, which Hansen founded after running a Web development firm in the ’90s. In 2004, testing how people interacted with websites was hardly scientific. SiteSpect was able to get in on the ground floor and build software based on sophisticated experimental designs—and an understanding of how to quantify the effects of one website feature versus another, a process known as A/B testing.
One key to building the business: “We’ve never given anything away,” Hansen says. “Specifically, we sell a premium product to mid- to large-size customers, which they either already need or quickly discover they can’t live without.” For enterprise customers, he adds, “nobody’s looking to be given anything. They’re given budgets.” (The one blustery thing he says is that his company is “the Mercedes of the space.”)
Hansen notes that it can be difficult to scale up a software-as-a-service business. “You’re getting little bites every month. It’s hand to mouth,” he says. “We’ve been able to do it with high gross margins and good, sticky products. But it wouldn’t necessarily work for everybody.”
SiteSpect has satellite offices in London, Munich, Amsterdam, and soon, the San Francisco Bay Area. A lot is in the works for 2015, which is shaping up to be quite a competitive year in digital marketing and optimization.
“The way we see our customers and prospects,” Hansen says, “testing is really the hub for everything they could possibly want to change, or analyze, or iteratively optimize, across anything that touches the customer.” That means improving the user experience on desktops, mobile Web, apps, kiosks, you name it—and tying the experience more tightly to companies’ bottom lines. Look for SiteSpect to expand in all those areas, Hansen says.
So, what’s SiteSpect’s main lesson for entrepreneurs? There’s more than one way to build a software company. And while markets and technologies change, mastering the fundamentals never gets old.