The other day I checked in with Bernadette Nixon, the new CEO of search-as-service leader Algolia. Aloglia’s been a part of SaaStr content and events since the beginning, and I invested at $12k in MRR, and wrote about that here.
With Bernadette now joining to power the company to $1B ARR and beyond, I thought it would be great to check-in and see and learn what she’s seeing:
A few interesting learnings from the convo above:
1. SaaS passed media as their #2 customer category. From a niche to huge. We all know SaaS got big, but I didn’t realize it had become their #2 category, passing media. It’s also interesting because the #1 category is e-commerce (and always has been), as the ROI is very clear in most cases — more conversions. The ROI in SaaS is “simply” a 10x faster, instant-deploy search.
2. With customers S+M+L, picked a CRO with high-velocity sales experience AND enterprise, but not pure enterprise. Perhaps some trade-off not being 100% enterprise, but with 10,000+ customers, need focus on getting to 100,000. This was interesting, too. I often see CEOs at the $100m or so ARR phase picking a very enterprise CRO, if they have larger customers. But Algolia has large customers and tiny ones, so Bernadette picked a top CRO from Dropbox Enterprise. Someone that knew big deals, but also how to focus on high-velocity sales, too. It’s also what I would have done, picked the CRO that’s best at your largest category. Yet, I often see the opposite. A CRO chosen mainly to go even more upmarket.
3. Just starting to segment sales by vertical. I was surprised that with so many key verticals, the sales team was all selling to each category of customers. Bernadette agreed 🙂 and has just started to change that. I tend to always see this work.
4. When your HQs are in SF and Paris, you have to find a way to make the time difference an asset. E.g., like 24×7 coverage. This was a simple but obvious insight. I’ve seen so many European SaaS start-ups, in particular, struggle with time differences, and it’s hard. But Bernadette’s entire software career has been in multi-continent companies. So she learned to turn it into an asset.
5. Even today, developers often bring the deal into the product-line buyer, maybe even usually. And recommending the solution. So sales is still a team effort targeting both the developer + the marketer or product lead at the customer/prospect. This was perhaps the most interesting learning to me. Algolia started off as 100% developer focused, and sometime around say $40m ARR or so, focused much more on the line-of-service buyer (Marketing or Product). “We went too far there”, Bernadette noted, and they’ve swung it back to a joint approach, putting the developer first, but making sure they sell to both the developer and the line-of-business buyer.
6. The public markets are fine if your revenue is pay-as-you-use — as long as it is highly predictable. Algolia recently revamped pricing to make it more transactional / pay-as-you-go, not less. More developers preferred it vs. artificial tiers. The trade-off, at least in theory, is less of your revenue is truly recurring. Bernadette did a deep dive here and the net learning after the IPOs of so many API-focused leaders from Twilio to Sendgrid to Datadog and more is that if your revenue is highly predictable, that’s what matters. If it’s pay-per-use, that’s less important. If your net retention is say 140% like Twilio, the rest takes care of itself.
And a great look back at getting to $50m ARR here:
