Algolia: Your search ends here
The go-to-market strategies that scaled Algolia to $100M+ in ARR!
L'arbre cache souvent la forêt.
The tree often hides the forest. It is easy to get lost in the details and miss the big picture.
There are 5 billion people on the internet today, browsing 1.9 billion websites. A whopping 63,000 searches on Google every second, and more and more through search boxes on e-commerce, media, and other websites.
People are looking for things in this forest all the time. But are they finding them? 🤷🏻♂️
A perfectly justified urge to look up that necktie that you saw someone wear at the coffee shop on an e-commerce site is likely to end with a "no results found" page and you throwing your hands in the air in frustration. Especially if you didn’t know that the accessory was called a cravat, and instead searched for “neck covering cloth.”
Search can be frustrating on most websites and often needs you to type in the exact listing to get any results at all. And when it does work, it tends to be slow, inaccurate, and is ultimately horrible at matching you with fully available ready-to-ship products and content. Very often, you never find what you were looking for.
Search can be frustrating on most websites. If your search for “neck covering cloth” on an e-commerce website instead returned not just cravats, but a whole range of 17th-century fashion accessories from bow-ties and ascots to neckties and neckerchiefs, chances are that this website’s search was powered by Algolia.
Algolia is the second largest search engine in the world, behind only Google, and handles 16% of all searches online. At its core, it is a hosted search engine accessible via an API powering consumer-grade search for websites and apps.
As opposed to a search engine that crawls the web at large, Algolia's API only indexes their customers' sites, massively simplifying the search task leading to blazing-fast search results ⚡️
Sometimes, you want the tree to hide the forest 🌲
🔍 From mobile-first to search as a service
Nicolas Dessaigne and Julien Lemoine were both former technical officers at semantic search company Exalead before they founded Algolia in 2012, out of Paris. At the time, they offered a SaaS search API for developers who look for a turnkey solution to deliver real-time, typo-tolerant, and location-aware search in apps and websites.
The original product was designed with a mobile-first approach, which meant that the founders had to reinvent search to work with the constraints of a mobile device. Algolia search was simply faster, more relevant and what’s more, it gave developers the ability to set their own rules to define the relevance of results.
Their “Aha!” moment, and what was key to their self-discovery was when Nicolas and Julien realized that the search API they built for mobile devices was a perfect fit for user-facing consumer-grade search. They quickly pivoted Algolia to “Search-as-a-service”, where they found their PMF and quickly sought to accelerate through their first round of funding.
Fast forward to today and Algolia has raised a total of $334 million in funding from Accel, Lone Pine Capital, Salesforce ventures among others. On the back of their $150 million Series D funding in July 2021, Algolia is valued at $2.25 billion at an ARR that grew 180% in the last year alone. Algolia’s cutting-edge search API is now used by more than 10,000 customers, including Stripe, Slack, Under Armour, Lacoste, Birchbox, Medium, and Zendesk.
The company’s hypergrowth is fuelled by demand for “building block” API software that increases developer productivity, growth in e-commerce, and digital transformation. With ARR in the $100M zip code, this rocketship is well past the threshold of escape velocity 🚀
⏰ Milliseconds matter
“We want to change the way people interact with information. We don’t want people to “search” in the traditional type-keyword/hit-enter/wait-for-results/repeat-until-found-or-abandon way; we want them to intuitively access data.” - Nicolas Dessaigne, former CEO
In November 2013 Algolia made its first non-technical hire: Gaëtan Gachet joined the team as Employee #4 taking on the role of VP, Business Development. They went to YCombinator W14 right after and it was here that the Algolia culture started taking shape. The one word that kept ringing in the corridors of their Paris and San Francisco offices was “Growth.” The team set an aggressive target of $0-1M in a year, and the growth mentality forced them into making decisions very quickly, but logically, figuring out what worked and what didn’t in the process. “Failing fast.”
There were a few crucial questions that they answered during their time at YC:
💰 What is our value proposition? The early messaging for Algolia’s API was very technical, and not for everybody. “Milliseconds matter” had to be translated to a message that resonated with a wider audience. The team tested a lot of stories to link the product with what people on the other side of the table really cared about: conversion rates and customer loyalty. Some of these messaging drafts worked, and many actually did not. Here’s one that, needless to say, did not work: “You know when you go on Amazon, and you feel this friction? Basically, we solve that.”
🏢 Enterprise or SMB? Algolia hadn’t tested the limits of their product and its price point yet. Closing two deals above 70k in the first year gave them the sense that they were solving a five-figure problem and maybe had a shot at going upmarket.
📍 Focussing on a specific vertical? The team didn’t want to limit themselves to particular verticals, and let the community find them organically. The adoption by e-commerce and media industries came early.
🌎 Local or international? Algolia wanted to go after the big logos, and none were more valuable (and visible) than US logos. The “perceived distance” from Paris to San Francisco was bridged by working on PST hours, a lot of miles, and some quirky hacks that included using Aircall to set up phone numbers with the San Francisco (415) area code.
By the end of 2014, Algolia hit $1.2M in ARR with 400 customers in 60 countries, then raced to $10M by 2016, doubled to $20M in 2017, then again to $50M by the end of 2019. In 2020, they reported 180% growth with 9,700 customers and keeping in line with one of the core values at the company, immediately looked to step outside their comfort zone and propel to the next target: >100% growth.
🚀 Shooting for $100M ARR
Closing big deals early on with the hottest companies (like ProductHunt 🔥) generated significant word of mouth from the very beginning. All along the way, they've continued to engage with and empower their long tail of developers not just with their slick API, but also with unmatched technical support, very often from their own developers doing customer service.
"A huge part of our success has, and will continue to be, our relentless focus on developers with our PLG strategy – enabling them to build search into their websites and apps, so they create the most relevant and dynamic digital experiences.” - Bernadette Nixon, current CEO
Today, the growth engine is firing on all cylinders:
Through the developer hub and Algolia academy, they continue to engage the developer community with the latest in search technology, documentation plus code examples, forums, and certifications. Developer heaven.
One of Algolia’s early wins was an earnest long-form piece comparing themselves to their biggest competitor: Elastic Search, an open-source product. Being truly honest about their strengths and flaws has been a winning strategy that has continued to this day through customer stories and detailed “How to” posts.
The inspiration library and templates demonstrate Algolia's magic working in real-time with industry-specific use cases and documentation. Great place to get started, if you're building search functionality for your website.
The search grader and search audit are offered for free and help companies evaluate areas where their current search is lacking and why they should switch to Algolia. CTOs love this kind of thing.
A flexible pricing plan makes it easy to buy and try Algolia for as little as $1 a month, with no long-term commitments and advanced features offered not just to enterprise clients.
👩🏻💼 Scaling sales teams
The first Algolia Sales team was set up in early 2015 based out of Paris. Soon, many more joined both in Paris and in the US.
Until the end of 2016, all leads were inbound and being qualified by a 13 member strong sales team.
Hitting $10M ARR was a point of transformation for the company. They had a strong PMF and there was very little doubt that they were going to be successful. The question was how successful and how fast. The sales teams were now segmented into three tiers based on the number of employees at the companies they were going after - (1) SMBs, (2) Mid-market, and (3) Enterprise sales.
Algolia put in place and hired aggressively around a model that defined pipeline sources for these sales teams and boosted top-of-funnel.
Outbound, which only featured in enterprise previously brought to mid-market.
A team of SDRs to prospect and qualify leads.
A customer success team to not only increase the size of deals with existing customers with new product features and higher adoption but also minimize churn.
Identifying partners with co-selling and ISV programs.
🔮 The future is API-first
After Algolia's series C funding in the fall of 2019, Nicolas Dessaigne decided to step down as CEO and transition to a non-operational role. The new replacement was announced in early 2020, through a tongue-in-cheek post on the company blog:
"After an extensive search, I am excited to introduce Algolia’s new CEO, Bernadette Nixon." - Nicolas Dessaigne
Nicolas says that someone with more experience could lead Algolia to faster growth and give them a better chance to realize their potential in the $8.9 billion (estimated 2024 revenue) enterprise search market. They've also added six other experienced leaders to the executive suite over the last year and a half to navigate the next wave of growth.
Algolia @algoliaBusinesses are built on experiences. And experiences are about connecting with content via search, navigation, and recommendations. With recently launched Algolia Recommend, developers can build differentiated digital commerce experiences. Find out more: https://t.co/QbCd2OFl64
The company has been at the cutting edge of intuitive search, adding a catalog of new features and offerings including "Algolia Recommend", an AI-powered product recommendations engine, Voice-enabled search, and intent-based search and navigation. The future is API-first and Algolia has a head start 🏃🏻♀️
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