Optimizely makes software for testing different web site layouts against one another in real time to see which performs best - called A/B testing. It's received $146 million in venture funding, including a $58 million round $4. In a $4 CEO Dan Siroker says it's now the most-used web site optimization platform in the world.
But Siroker also delivered a tough dose of reality in his email to employees about the layoffs.
He wrote (emphasis ours):
In August 2015, we began our journey to Control Our Own Destiny, which means controlling the path we are on as a company without having to depend on anyone but ourselves. In order to do that we must build a business that makes more money than it spends. We set a goal of getting to cash flow breakeven and we have made tremendous progress toward this goal.
Later:
I'm incredibly thankful we embraced this journey in August because on February 5th, our entire industry got a wake up call. On that day, public cloud companies collectively lost $28B in market value on a single day. Some of the market value has recovered since then, but the market has clearly shifted.
February 5 was a brutal day on the markets in which public tech companies $4 (which helps companies analyze business data) and $4 both lost about half their value after disappointing earnings report.
This doesn't mean that every venture-backed startup will have trouble raising more money at higher valuations - just yesterday, it came out that real estate leasing company WeWork is raising more than $400 million and is now worth $16 billion, the $4.
But WeWork, like Uber, is exceptional. For most tech startups, the time has come to prove that they can build a sustainable business now, rather than depending on the idea that there will be endless rounds of venture funding to help sustain them.