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Nov 3, 2019 · 16m · top-founders

1562 Why $40m ARR Algolia CEO Believe Developers Should Do 1 Day of Support Per Month

Nicolas Dessaigne · 8m spoken Nathan Latka · 5m spoken
0:00 / 0:00

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Algolia co-founder and CEO Nicolas Dessaigne sits down with Nathan Latka to discuss scaling the search API platform from $20 million to over $40 million in ARR. He outlines Algolia's bifurcated go-to-market model, net revenue retention mechanics, and why software engineers are required to do regular customer support.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 40.4% of the talking time here. How this is scored →

Nathan as informed peer 6.7 Guest teaching 2.1 Guest disagreement 1.7 Nathan pushing back 3.6
05100:0010:000:00–2:01 · Nathan as informed peer 6/10 Executive Summary of Algolia's Growth and Key Metrics Latka opens with a metric-heavy pre-recorded breakdown before introducing Dessaigne. The guest gives standard high-level explanations of Algolia's product and self-serve versus enterprise pricing tier.2:01–4:17 · Nathan as informed peer 7/10 Enterprise Customer Concentration and Sales Organization Architecture Latka pushes for an average customer price, which Dessaigne dismisses as meaningless due to the heavy enterprise skew. Latka quickly pivots to drill into enterprise ACVs and SDR-to-AE sales team structuring.4:17–6:28 · Nathan as informed peer 7/10 Global Headcount, Multi-Office Footprint, and Scaling to $40M ARR Latka backs into monthly run rates and checks milestones against the $40M ARR doubling pace. Dessaigne elaborates on commission structure and end-of-quarter closing pressure.6:28–9:14 · Nathan as informed peer 7/10 Fundraising History and Involving Software Engineers in Customer Support Latka challenges Dessaigne's support policy by role-playing as an unwilling $180k senior software engineer. Dessaigne pushes back against the role-play framing and defends the cultural value of engineers spending two half-days a month on customer support.9:14–12:17 · Nathan as informed peer 8/10 Net Retention Dynamics, Expansion Drivers, and Pricing Axes When Dessaigne declines to give gross churn, Latka immediately bridges to net expansion dynamics and deduces the gross churn rate from the 120-125% net retention and 30% expansion numbers.12:17–14:56 · Nathan as informed peer 7/10 Customer Acquisition Cost Payback and Capital Raising Strategy Latka pushes for specific payback windows and future fundraising amounts. Dessaigne explains why enterprise versus self-serve CAC varies and explains his philosophy on timing capital raises.14:56–16:38 · Nathan as informed peer 5/10 The Famous Five Rapid-Fire Questions Latka executes the rapid-fire Famous Five round smoothly and summarizes Algolia's core operating metrics in the outro.0:00–2:01 · Guest teaching 1/10 Executive Summary of Algolia's Growth and Key Metrics Latka opens with a metric-heavy pre-recorded breakdown before introducing Dessaigne. The guest gives standard high-level explanations of Algolia's product and self-serve versus enterprise pricing tier.2:01–4:17 · Guest teaching 3/10 Enterprise Customer Concentration and Sales Organization Architecture Latka pushes for an average customer price, which Dessaigne dismisses as meaningless due to the heavy enterprise skew. Latka quickly pivots to drill into enterprise ACVs and SDR-to-AE sales team structuring.4:17–6:28 · Guest teaching 2/10 Global Headcount, Multi-Office Footprint, and Scaling to $40M ARR Latka backs into monthly run rates and checks milestones against the $40M ARR doubling pace. Dessaigne elaborates on commission structure and end-of-quarter closing pressure.6:28–9:14 · Guest teaching 4/10 Fundraising History and Involving Software Engineers in Customer Support Latka challenges Dessaigne's support policy by role-playing as an unwilling $180k senior software engineer. Dessaigne pushes back against the role-play framing and defends the cultural value of engineers spending two half-days a month on customer support.9:14–12:17 · Guest teaching 3/10 Net Retention Dynamics, Expansion Drivers, and Pricing Axes When Dessaigne declines to give gross churn, Latka immediately bridges to net expansion dynamics and deduces the gross churn rate from the 120-125% net retention and 30% expansion numbers.12:17–14:56 · Guest teaching 2/10 Customer Acquisition Cost Payback and Capital Raising Strategy Latka pushes for specific payback windows and future fundraising amounts. Dessaigne explains why enterprise versus self-serve CAC varies and explains his philosophy on timing capital raises.14:56–16:38 · Guest teaching 0/10 The Famous Five Rapid-Fire Questions Latka executes the rapid-fire Famous Five round smoothly and summarizes Algolia's core operating metrics in the outro.0:00–2:01 · Guest disagreement 1/10 Executive Summary of Algolia's Growth and Key Metrics Latka opens with a metric-heavy pre-recorded breakdown before introducing Dessaigne. The guest gives standard high-level explanations of Algolia's product and self-serve versus enterprise pricing tier.2:01–4:17 · Guest disagreement 2/10 Enterprise Customer Concentration and Sales Organization Architecture Latka pushes for an average customer price, which Dessaigne dismisses as meaningless due to the heavy enterprise skew. Latka quickly pivots to drill into enterprise ACVs and SDR-to-AE sales team structuring.4:17–6:28 · Guest disagreement 1/10 Global Headcount, Multi-Office Footprint, and Scaling to $40M ARR Latka backs into monthly run rates and checks milestones against the $40M ARR doubling pace. Dessaigne elaborates on commission structure and end-of-quarter closing pressure.6:28–9:14 · Guest disagreement 4/10 Fundraising History and Involving Software Engineers in Customer Support Latka challenges Dessaigne's support policy by role-playing as an unwilling $180k senior software engineer. Dessaigne pushes back against the role-play framing and defends the cultural value of engineers spending two half-days a month on customer support.9:14–12:17 · Guest disagreement 2/10 Net Retention Dynamics, Expansion Drivers, and Pricing Axes When Dessaigne declines to give gross churn, Latka immediately bridges to net expansion dynamics and deduces the gross churn rate from the 120-125% net retention and 30% expansion numbers.12:17–14:56 · Guest disagreement 2/10 Customer Acquisition Cost Payback and Capital Raising Strategy Latka pushes for specific payback windows and future fundraising amounts. Dessaigne explains why enterprise versus self-serve CAC varies and explains his philosophy on timing capital raises.14:56–16:38 · Guest disagreement 0/10 The Famous Five Rapid-Fire Questions Latka executes the rapid-fire Famous Five round smoothly and summarizes Algolia's core operating metrics in the outro.0:00–2:01 · Nathan pushing back 2/10 Executive Summary of Algolia's Growth and Key Metrics Latka opens with a metric-heavy pre-recorded breakdown before introducing Dessaigne. The guest gives standard high-level explanations of Algolia's product and self-serve versus enterprise pricing tier.2:01–4:17 · Nathan pushing back 5/10 Enterprise Customer Concentration and Sales Organization Architecture Latka pushes for an average customer price, which Dessaigne dismisses as meaningless due to the heavy enterprise skew. Latka quickly pivots to drill into enterprise ACVs and SDR-to-AE sales team structuring.4:17–6:28 · Nathan pushing back 3/10 Global Headcount, Multi-Office Footprint, and Scaling to $40M ARR Latka backs into monthly run rates and checks milestones against the $40M ARR doubling pace. Dessaigne elaborates on commission structure and end-of-quarter closing pressure.6:28–9:14 · Nathan pushing back 6/10 Fundraising History and Involving Software Engineers in Customer Support Latka challenges Dessaigne's support policy by role-playing as an unwilling $180k senior software engineer. Dessaigne pushes back against the role-play framing and defends the cultural value of engineers spending two half-days a month on customer support.9:14–12:17 · Nathan pushing back 4/10 Net Retention Dynamics, Expansion Drivers, and Pricing Axes When Dessaigne declines to give gross churn, Latka immediately bridges to net expansion dynamics and deduces the gross churn rate from the 120-125% net retention and 30% expansion numbers.12:17–14:56 · Nathan pushing back 4/10 Customer Acquisition Cost Payback and Capital Raising Strategy Latka pushes for specific payback windows and future fundraising amounts. Dessaigne explains why enterprise versus self-serve CAC varies and explains his philosophy on timing capital raises.14:56–16:38 · Nathan pushing back 1/10 The Famous Five Rapid-Fire Questions Latka executes the rapid-fire Famous Five round smoothly and summarizes Algolia's core operating metrics in the outro.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 62% · guest 38%0:00 · Nathan 62% · guest 38%3:00 · Nathan 36.5% · guest 63.5%3:00 · Nathan 36.5% · guest 63.5%6:00 · Nathan 22.3% · guest 77.7%6:00 · Nathan 22.3% · guest 77.7%9:00 · Nathan 37.4% · guest 62.6%9:00 · Nathan 37.4% · guest 62.6%12:00 · Nathan 28.2% · guest 71.8%12:00 · Nathan 28.2% · guest 71.8%15:00 · Nathan 70.4% · guest 29.6%15:00 · Nathan 70.4% · guest 29.6%
Sharpest disagreement ▶ 8:11 Dessaigne rejects role-play and defends engineer support duties

Dessaigne outright rejects Latka's mock role-play of an engineer refusing to answer support tickets, firmly asserting that high-paid engineers must stay close to customer problems.

 Hardest push from Nathan ▶ 8:00 Latka role-plays to challenge engineer support requirement

Latka directly confronts Dessaigne's policy by role-playing an expensive San Francisco engineer who resents answering helpdesk tickets.

 Biggest teaching moment ▶ 2:01 Dessaigne explains why overall ARPU is a misleading SaaS metric

Dessaigne dismisses Latka's inquiry about an overall average revenue per customer, schooling him on why enterprise customer skew makes blended averages unhelpful.

 Nathan holds their own ▶ 12:03 Latka reverse-engineers gross churn from expansion metrics

After Dessaigne declines to disclose gross churn, Latka demonstrates SaaS financial mastery by calculating the implied single-digit gross churn directly from net retention and expansion rates.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Executive Summary of Algolia's Growth and Key Metrics 6112 Latka opens with a metric-heavy pre-recorded breakdown before introducing Dessaigne. The guest gives standard high-level explanations of Algolia's product and self-serve versus enterprise pricing tier.
Enterprise Customer Concentration and Sales Organization Architecture 7325 Latka pushes for an average customer price, which Dessaigne dismisses as meaningless due to the heavy enterprise skew. Latka quickly pivots to drill into enterprise ACVs and SDR-to-AE sales team structuring.
Global Headcount, Multi-Office Footprint, and Scaling to $40M ARR 7213 Latka backs into monthly run rates and checks milestones against the $40M ARR doubling pace. Dessaigne elaborates on commission structure and end-of-quarter closing pressure.
Fundraising History and Involving Software Engineers in Customer Support 7446 Latka challenges Dessaigne's support policy by role-playing as an unwilling $180k senior software engineer. Dessaigne pushes back against the role-play framing and defends the cultural value of engineers spending two half-days a month on customer support.
Net Retention Dynamics, Expansion Drivers, and Pricing Axes 8324 When Dessaigne declines to give gross churn, Latka immediately bridges to net expansion dynamics and deduces the gross churn rate from the 120-125% net retention and 30% expansion numbers.
Customer Acquisition Cost Payback and Capital Raising Strategy 7224 Latka pushes for specific payback windows and future fundraising amounts. Dessaigne explains why enterprise versus self-serve CAC varies and explains his philosophy on timing capital raises.
The Famous Five Rapid-Fire Questions 5001 Latka executes the rapid-fire Famous Five round smoothly and summarizes Algolia's core operating metrics in the outro.

Statements from this episode (14)

Disclosure
Dessaigne: Algolia powers search for Medium, Twitch, and Under Armour
“We basically help developers of website apps like Medium, Twitch, Under Armour, and many users, and power their internal search. So if you search on any of these companies you basically, you are basically using us behind the scene.”
Nicolas Dessaigne Nov 3, 2019 ▶ 1:16
Disclosure
Dessaigne: Algolia pricing scales from $35/month to upper six-figure annual contracts
“Pure play SaaS. It's only in the cloud. So it's only subscription based. We are going to have customers from Like long tail of developers that are going to self-serve on the service. We start at 35 dollars a month, and we're going also to have up to bigger ent…”
Nicolas Dessaigne Nov 3, 2019 ▶ 1:37
Assertion Not checkable as stated
Dessaigne: 5% of Algolia customers generate 80% of revenue
“Enterprise is 80% of our business today. Let's say that five percent of our customers are going to bring about 80% of their revenue.”
Nicolas Dessaigne Nov 3, 2019 ▶ 2:23
Assertion Not checkable as stated
Dessaigne: Algolia enterprise ACV ranges from $80K to $100K
“We're close to six figures in the range, like 80 to 100 K.”
Nicolas Dessaigne Nov 3, 2019 ▶ 2:41
Assertion Not checkable as stated
Dessaigne: Algolia maintains a 1:1 to 1:2 SDR-to-AE ratio
“It's about if I group SDRs and BDR together, we're speaking about one between one and one for one for two.”
Nicolas Dessaigne Nov 3, 2019 ▶ 3:27
Assertion Not checkable as stated
Dessaigne: All of Algolia's engineering is based in Paris
“All our engineering is is there.”
Nicolas Dessaigne Nov 3, 2019 ▶ 4:37
Assertion Not checkable as stated
Dessaigne: Algolia has roughly 6,000 customers
“We're about 6000 customers right now.”
Nicolas Dessaigne Nov 3, 2019 ▶ 4:52
Prediction Not checkable as stated
Dessaigne: Algolia expects to surpass $40M in ARR this year
“We crossed the, so we crossed the twenty million ARR milestone last year and pretty like we're going to close, close to double this year. So we're going to be over forty million this year.”
Nicolas Dessaigne Nov 3, 2019 ▶ 5:39
Disclosure
Dessaigne: Algolia forced early software engineers to handle all customer support
“And so we decided very early not to have any support team, for example. Because we wanted to make sure everyone in the company was user facing and really felt the need and the pain of the customers. So support was done by engineers.”
Nicolas Dessaigne Nov 3, 2019 ▶ 7:30
Disclosure
Dessaigne: Algolia is creating a 24/7 support team but keeping engineers involved
“And as we speak, we're actually creating a support team now, dedicated support team mostly to be able to do 24 seven support and have a higher quality of support and response time. That's great. But we still ask our engineers to participate to that.”
Nicolas Dessaigne Nov 3, 2019 ▶ 8:56
Assertion Not checkable as stated
Dessaigne: Algolia expects roughly 30% annual customer contract expansion
“So it's going to depend about the segment industry and so on, but basically you can expect them to pay about 30% more the next year.”
Nicolas Dessaigne Nov 3, 2019 ▶ 10:16
Assertion Not checkable as stated
Dessaigne: Algolia's net retention lands between 120% and 125%
“Yeah, we're above a hundred percent. Okay. Largely above 100% retention. It's between like I mean, the return is going to end up between one 21 25, depending of like depending of the year, depending of the segment, but that's basically it.”
Nicolas Dessaigne Nov 3, 2019 ▶ 11:45
Assertion Not checkable as stated
Dessaigne: Algolia's CAC payback period is close to one year
“No, no, no, we're close at one year.”
Nicolas Dessaigne Nov 3, 2019 ▶ 13:20
Disclosure
Dessaigne: Algolia plans to raise a new funding round in 2020
“Yeah, it's going to be like probably next year. Sometime next year will raise a new run.”
Nicolas Dessaigne Nov 3, 2019 ▶ 13:43
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