Optimizely (Episerver) Acquired by Insight Venture Partners

September 12, 2018
Brian Beaupied

Episerver EVP of Strategy James Norwood discusses the platform's acquisition by Insight Venture Partners and what it means for current customers (with audio).

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Last week, Optimizely (formerly Episerver) announced a definitive agreement to be acquired by Insight Venture Partners at a valuation of $1.16 billion. The transaction will effectively transfer ownership of the content, commerce, and digital marketing platform from one private equity firm, Accel-KKR, to another. The acquisition is expected to be finalized in the coming weeks.

We believe this to be good news for the Optimizely community. Insight Venture Partners has deep experience helping technology companies like Optimizely mature into category leaders. This will ultimately give Optimizely, a regular in popular analyst reports the last two years, the resources it needs as it continues to gain traction and brand awareness in North America.

If you missed the announcement, you can read news on the announcement from Optimizely, the Wall Street Journal, and CMS Wire.

But what does the announcement mean for customers? What does the acquisition allow Optimizely to do? Optimizely Executive Vice President of Strategy James Norwood discussed the news with C2 managing partner Michael Kunzler this week. You can listen to full audio of the interview or read the complete transcript below:

Michael Kunzler: Thanks for joining us today, James. It sounds like really exciting times there at Episerver. Congratulations on the news!

James Norwood: Yeah, thanks Michael. Thanks for having me on and super exciting news for us. Definitely something for us to look ahead with. Clearly, Episerver is being highly valued by what will be our new owners, Insight Venture Partners, and I think that says a lot to the marketplace on what Episerver has been doing and what we can potentially do. The future is bright, absolutely.

Kunzler: On the topic of Insight Partners and the new ownership, as you’re looking at the marketplace or the product itself, what does this acquisition allow Episerver to do that it could not do previously?

Norwood: That’s a great question. One thing I do want to make clear here is that this is an acquisition from a company that’s seeing in Episerver a company that’s growing fast already and is growing profitably, that they believe is doing all the right things and they want to be part of the next phase of the company’s journey. Insight Venture Partners really do specialize in taking businesses the size that Episerver is now at and helping them scale to the next level. So, the first thing I would say is we’re not planning to do anything that is majorly different. What we are planning to do, backed by Insight, is to turn the dial on what we’ve already been doing.

So, what does it allow us to do that we couldn’t do previously? It’s going to allow us to build our brand and our market presence in a way that we were doing gradually, but it will now be accelerated. So, more feet on the street, more marketing, more spend on brand awareness. That’s exciting, because the only thing I think that’s ever held Episerver back, and not much does, is that we’re not introduced in as many opportunities as perhaps some our nearest competitors. With Insight behind us, we expect that to change.

Kunzler: You mentioned how Insight Venture Partners has a certain size company it is interested in, in terms of helping it grow, get to a certain level. What else makes Episerver a good fit for their portfolio?

Norwood: This is why we like Insight, you know, as a partner for Episerver. They are a private equity firm, so, in many ways you could just look at this as a transition from one private equity owner to another, but there’s more to it than that. There is a reason they have “Venture Partners” in the name. Their background is really more in the venture capital space. They specialize in high growth, profitable growth. It’s the top line that’s important to them. I think where we’ve reached at this point in our trajectory, what we really need to do is focus on the top line. That’s what they’re good at. So, I think with their support we will be able to take what we’ve done already and really move it into the next level. That’s why they’re a good partner for us. They only do software. They only do cloud companies. They look at how to fuel the next stage of growth once a company has become big enough that they can move on. So, they’re a perfect partner for the next stage.

Kunzler: So, if we framed some of this for current Episerver license holders, current Episerver customers, you already talked a bit about there’s no big change here, but what would it mean for a current license holder? Is there any change on the horizon they should look for? What does it mean for current Epi clients?

Norwood: For our customers, I think it’s a reason to feel good as well. Clearly, again, we’ve been valued at a very high level, which says that this is a strong business, a growing business, a profitable business. If you’re a customer, you want to be sure the bets you’re making are on a very strong, growing, viable company and that’s what we are. Clearly, our brand is going to get stronger because of this, because part of the acquisition is helping Episerver get to the next level through sales, through marketing, through brand awareness. That’s only going to help our customers, because they’re going to feel part of a more vibrant community, a strong community, that’s only going to get stronger. At the same time, they’re not coming in saying, you know, here’s a bunch of things you have to go do differently. They’re coming in saying they want to back the management that is there, we want to back the plans and the strategy that you have in place, we just want to help you accelerate that.

So, again, the customers that have come to us and are with us today are because of what we’ve been doing. They can feel confident in the same management, the same structure, everything we’ve been doing is going to continue, but we’re just going to be bigger and better known. That’s going to give any organization who is a customer a feeling of being in a more secure environment. Not that it wasn’t (secure) already, but you want to hear that Episerver is a household name and that’s what we’re able to be.

Kunzler: I identify with that completely. I think that a lot of what you’re stating there is dead on. A lot of what our customers have, I think, really come to appreciate about Episerver is the diversity of work that’s gone into the overall platform. So, there’s content management, there’s commerce, there’s personalization, there’s search, and all these different aspects. As we’re looking to the new ownership team with Insight Venture Partners, is the product roadmap in focus here, too? Are we adding things strategically? Sharpening what’s already there?

Norwood: I think you hit the nail on the head with the last part there. You know, this is not just about sales and marketing and brand awareness, though clearly that’s a big part of what we’ll benefit from with our association with Insight. It gives us a little more dry powder to accelerate in other areas. Again, if you’ve look at our product, and you know it very well yourselves, but we’ve over doubled the size of our portfolio in the last 18 months. We’ve brought out a lot of product. Episerver has always prided itself on delivering high-quality products as well. We need to be cognizant that we have broadened the platform a fair bit, and we’ve already got a roadmap for continuous enhancement of that existing platform, which we’re going to be able to accelerate. That’s good for customers, it’s good for partners because the newer products we’ve brought out will mature faster, the existing products that we have that need to continue to innovate and stay ahead of the game will get their roadmaps developed faster. Again, it comes back to my point of sort of more of the same, but faster. So, the roadmap will be accelerated, and we’re excited about that. It means we’ll be able to invest in R&D as well.

What it doesn’t mean is we’re going to suddenly go off and start developing no end of other things that we weren’t in before. We’ve built the platform to where we feel it fits our customers’ needs. Now it’s about continuing to help them get more out of that and helping our partners to help our customers adopt more of that and making sure the newer products are developed at pace so that they continue to deliver value for those folks who have invested in them.

Kunzler: We’ve got a large team of developers here at C2, and I’d be remiss if I didn’t ask: Is there anything that you see—and I think you’ve answered this already—is there anything changing for support, or product support, or any of how the product development work is arranged?

Norwood: Not really. Not anything that we haven’t already put in place. At the beginning of this year, we introduced a whole new layer of what we call Customer Success Managers, which kind of sit between our sales account managers and our back-end support and operations folks. I think that was a really important introduction of just new people who can go out and engage with customers and help them get more value out of the product without any consideration for selling anything to them and making sure that they’re happy with their investments. And, ultimately, helping our partners engage further. That was a big investment we’ve already made, which helps on the support side, too. I don’t see any major changes here. Of course, as we innovate and iterate the product, we want to be sure that we have all the necessary enablement in place for our partners, so they can get up to speed with them as well. We’re progressing things like our move to microservices, our multi-tenant microservices architecture, we’re progressing our move to Microsoft .NET Core. So, a lot of those things have been going on in the background. As they start to accelerate, we’ll need to make sure we have the necessary support for partners and customers as those changes come through. That’s about doing more of what we’ve got and making sure we’ve got the right staff, the right number of staff. This year we’ve probably added over 100 people already, probably got another 30 or 40 to add before the end of the year. So, we’re growing our employee base as well, and that will continue, but it will continue with the plans that we already had in place. Now, again, hopefully we can accelerate.

Kunzler: I’ve got, I think, just one last question, and I think you did answer pieces of it just now thinking through .NET Core and some of the other initiatives that have been in motion for a while. I think as Epi’s platform has developed, you’ve made some strategic additions within the last year especially. Do you see any other additions on the horizon? Things that might be adjacent to the software that you might add to the platform? Or, perhaps anything that just looks like a likely companion for the existing work?

Norwood: Great question. One of the things we’ve always tried to balance here at Episerver is the right combination of what you build and what you buy. We try to build as much as we can, partner where we need to for technology partnerships. Microsoft with Azure is a great example of that, where we’re in the top 10 in the world for Azure consumption today. So, that’s a very important partnership for us. But occasionally, when we’ve perceived that our platform needs to really progress significantly to meet the needs of customers–and a prime example of that was our multi-year investment in artificial intelligence so that we can help personalize and individualize experiences more efficiently—it made sense for us eventually there to make an acquisition, which was several years ago now. But, off the back of that acquisition, not only have we integrated all that technology, delivered a series of products straight out of the gate, but since built brand new products off the back of that technology investment. That allowed us to really move, in our minds, 18 months to two years ahead of our competition in terms of what we were offering. We were definitely the first to do that. You’re starting to see others now do that as well versus through technology partnerships.

It’s always an option for us. It’s been a couple years since we made an acquisition. I don’t perceive that there is a gaping hole in our portfolio. I think the platform we set out to build around four years ago, the Digital Experience Cloud as it was envisioned then, is pretty much where it needs to be. There is a lot of new product, as I’ve said, that we have delivered to market. We need to continue to mature the capabilities of that platform so that they are consistently delivering to customers. We’re an agile delivery, as you know, so we’re pushing out releases pretty much every week. We want to make sure that we continue to do that to enhance what we’ve got.

But that’s not to say, to answer your question in a very roundabout way, we’ve got a lot of dry powder. We’ve got a great partner coming in from Insight that can help us evaluate, look at the market. And, if it makes sense at any time in the future for us to again get a head start or move ahead significantly in the market on behalf of customers through M&A as opposed to through internal organic development, we’re certainly not opposed to doing that. We track a lot of spaces, we look at a lot of things, we listen to what our partners are telling us, we listen to what our customers are asking for. But this current news, which is such an exciting thing for our company, is really about a new owner seeing the potential to take the execution we already have, and the strategy that we already have in place, and really turning the dial. That, for us, is what this is about. I think that’s good for partners and customers because in the short term it just means we’re going to do more of what we’re already doing, and that can’t be a bad thing.

Kunzler: James, I really appreciate your time, and that works through my last question. Thank you so much for joining us today. I look forward to staying in touch and paying very close attention to any new news from the Epi team.

Norwood: Thanks for having me Michael and thanks for your business and your partnership. It’s much appreciated.