Nicolas Dessaigne - Co-Founder & Board Member, Algolia
Algolia was founded in 2012 in Paris by Nicolas Dessaigne and Julien Lemoine with the mission to allow developers and business teams to build and optimize delightful Search and Discovery experiences that increase online engagement, conversion rates and revenue. More than 10,000 companies including Under Armour, Lacoste, Birchbox, Stripe, Slack, Medium, and Zendesk rely on Algolia to manage over 1.5 trillion search queries per year. Algolia has raised more than 334mio in capital as of today and is valued at over 2.25bn.
On personas and Champions:
We optimize the product for three groups: 1) the user, who is the developer who’s going to implement our product, 2) the end user, who is actually the consumer who is using the search, and 3) the business user, who is someone who’s going to optimize the search for impact on conversion. This means we can sell through development teams but also through business and marketing teams. And we have found that we have the best win rate when developers are involved. Why? Because they are the ones implementing the product. Even when they are not the buyers, they have a strong say in the choice of technology. They are our true champions.
But sometimes, we also have developers against us. These are the ones who want to build what we offer themselves.
On the sales process:
We have a self-serve segment, which is low-touch to no-touch: people just buy our product with their credit card. That’s about 10-20% of our business. And the segments where we have sales touch, a classic B2B sales approach with SDRs and AEs in SMB, Mid-market and Enterprise segments. But because we use the self-serve customers as leads, a lot of our revenue where we have sales touch actually started no-touch.
A lot of our sales to big companies initially happened bottom-up, from the product. Their people found us somewhere, and signed up for fifty bucks a month just to test our solution. Their development team implemented it, and it was working exactly the way they needed it to. So they ended up like, “Why bother if they’re a small startup, if it works?”
One of the things I wouldn’t do again is hire very late-stage people who know exactly where we should be 10 years from now--but don’t know how to get there from here. I would only hire people who have seen what our current stage looked like.
Our sales organization grew through five stages:
Pre-revenue phase when we were building the first product.
Zero-$1 million, that really started with Y Combinator and where we were figuring out what worked and what didn't. It was mostly founder sales and the early team, all people who were figuring out things together.
$1-5 million, where you start building a sales organization, basically hiring people that are smart.
$5-20 million, where you start to put some structure in place, you have managers, teams focused on different segments, a career model.
$20-100 million, the scaling or growth phase, is where everything is breaking. It’s when you need to onboard people with more experience. You can get only so far by learning as you go, and this is where we made most of our mistakes.
We were super lucky with our first hire. He’s been incredible. But at the same time, he was learning with us. And at some point, we asked too much of him. He was great at beating sales. But then we asked him to own pre-sales and customer service organizations too, and he was not ready for that yet. We should have hired good leaders for customer success and service engineering. Because at some point, you cannot rely only on your existing team. You have to get people with experience onboard.
Selling seats doesn’t make sense for us. Our pricing has always been tied to usage. In our case, that’s search volume. Everything else, data volume, number of API calls, is summarized in that.
Our pricing is now purely pay-as-you-go. You can start with $1 if your search volume is small. As your search volume grows, you pay more, but less per unit, so there’s economies of scale. And you can also commit to some usage a year in advance to get an additional discount.
On customer success:
In the beginning, we didn’t have any customer support team, simply because we wanted everyone to do support. This was our way to make sure that everyone was customer-facing. And we still expect every developer in our team to do two days of support per month because we want them to work with customers--that’s part of the deal. But when we were about 150 people or so, the model started to fail. The gap between organic customer care and professional customer care had become too wide. Actually, the fact that customer care was part of our DNA had become a disadvantage, because it had made us complacent. Our customers had always loved us, but now we found that some people hated us. It impacted our numbers, retention went down. It was a big learning experience. Now we have a Chief Customer Officer who’s doing an incredible job, and we make sure we are taking good care of our customers.
We wanted to make sure our new pay-as-you-go pricing was encouraging expansion. With our old pricing, you had to pay at least $50,000 a year to have access to certain features. And expansion was starting to stagnate because our pricing wasn’t the right model. Now you can start with $1 dollar. When expansions happen automatically, the entire sales process changes. Today, our customers start at a smaller base, but they expand faster.