6 Learnings from Algolia On the Way To $100,000,000 ARR

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:

 

Published on November 13, 2020

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