Q+A With Jason Lemkin + CMO of Algolia: "Top Mistakes In The Early Days"

Hello and welcome to the SAS Expert Series hosted by Algolia. I'm Ashley Stirrup. I'm the Chief Marketing Officer for Algolia, and I'm excited to have Jason M. Lemkin, the founder and CEO of SaaStr with us today. The format—

Thanks for having me, Ashley.

Yes, thank you, thank you. The format we're going to have today is about 15 minutes worth of questions between me and Jason, and then we're going to open it up to all of you. So why don't we encourage you to go into the Q&A section and put in your questions and upvote questions that other people are making that you think are going to be interesting. A little bit about Algolia, for those of you who don't know, we're a search and discovery platform developed for product builders like you. And so you can embed our search into your products just like Stripe, Slack, Zendesk, and others are doing. Jason, just to kick things off here, we have a little tradition at Algolia where we like to get to know people better by finding out a fun fact. Do you have a fun fact you can share with us?

No, I'm not that fun, but I'll share a sort of an unexpected fact. I guess I've done, you know, I've spent almost all of my career doing internet software of various forms, but the first The first startup I founded made implantable batteries that go inside of your body from nanomaterials. Whoa. Yes. Little crazy.

Ambitious.

Pretty ambitious. Yes.

How'd that go for you?

Well, during the— I'm not even sure if we're in a downturn today. It depends how you look at it. In terms of like the world, it's awful. In terms of cloud and SaaS, these are the best of times. But during the last-ish downturn, or the two downturns ago, I had no job. So we bought this technology that no one thought had any value of and built this startup to build these implantable batteries. I knew nothing, but I did recruit the best people in the world that knew how to do it. And we sold it for $50 million after 12 and a half months. So that was my first journey. And then the meta lesson is it's all about the team. 'Cause I knew nothing about the space. I'm exaggerating a little bit, but yeah, that's my, I guess it's not fun, but unexpected fact. For someone that spends all his time talking about SaaS, I did something that was at the extreme edge of hard science and material science, and it was very hard. And my co-founder then, her intern at her company before that was Elon Musk.

Oh, wow.

So he was very into the space. So you think of him, and how does Elon Musk do like PayPal? And like SpaceX and SolarCity and Tesla and all these things, right? But he started off studying supercapacitors and energy science, and that's why he knows about batteries, and that's why he knows about SpaceX, and that's why he knows about SolarCity. So yeah, my long-winded, long fun fact.

The lesson learned: go find your Elon Musk and start a company with them.

Find people— no, the lesson is find people better than you. Yeah, you can never lose as a founder. Always find people, never shy away from it. Never hire people worse than you, always hire people better than you, and then you can do the If not the impossible, you can do the unlikely.

That's great. So, uh, first question. So, you know, obviously for a lot of startups, they're thinking about both product market fit and then building the right go-to-market. Maybe we start with the product market fit. And as a board member and advisor, how would you define product market fit? How do you work with teams on that?

Yeah, I will, I will tell you how I define it and then I'll share a fun story from Algolia. The, you know, I thought about this for a long time. I didn't really know what I thought product-market fit was for sure in cloud and B2D and SaaS until recently. But then I realized what it is. And product-market fit, at least in the early days, is when you grow faster than you know why. So as anybody, especially as founders, you obsess every day about every detail. Like in the early days, you don't have that many customers, you don't have that much data. You can instrument everything, like you have no tools or anything, but you know, like you can literally watch each user in the early days. I don't know how many like billions of searches Algolia does today, but in the early days, the team could probably literally watch each new signup. So you have this fluency of information and then a moment in time comes for some reason. And so because of that, you know, you know where every user comes from, not just every customer, you know where every signup comes. Oh, that's from a TechCrunch article. That's from, an event I did. And then a moment in time comes where, whoa, it's like a lot faster than I know why. Like, I don't know why. And that could be because your brand starts to take off in some little niche, right? It could be because some feature you launched was far more important than you thought. But net-net, a moment— if you're going to build a unicorn, there'll be a moment in time in the early days when all of a sudden, holy cow, we're growing faster than, than we ever expected. And, you know, example from Algolia, I invested in Algolia in 2014 when Algolia was doing $12,000 a month in revenue, right? Algolia is coming up on 9 figures in revenue now. But that was in 2014, and at the time, $12K a month, and then it was $15K a month by the time the check cleared. $15K a month in MRR doesn't sound like a lot compared to where Algolia was today, but the company was growing 20-30% every month, and the founders didn't exactly know why. Okay, so that's product market fit. Like, okay, Julian, Nicholas, why are you— why— well, we think it might be outbound, we think, but I don't know. But, but interestingly, the first product at Algolia never achieved product market fit. So before Algolia was a search as a service product, an API, it was a mobile SDK, and the team was very early to mobile, and they wanted a very lightweight search product that will work inherently on mobile in 2012, right, when phones were much less powerful today. And they built this incredible search service that worked in a very low-powered, low-CPU environment, and everyone loved this mobile search product, just no one would pay for it. So they took that core of that technology, which they spent 2 years of their lives and a token amount of pre-seed capital and, you know, ramen money, paying themselves nothing, and they just didn't work for 2 years, and they took that same technology and repackaged it as an API, and that became the Algolia we knew today, and then boom, right? It took off. So Different expression of the technology, right? Different use case as an API for a web rather than a mobile thing. But ultimately that was product market fit versus the early 2 years as a mobile SDK, just nothing, right? People loved it, but they wouldn't pay for it. And it just, it wasn't a big enough problem on mobile that you could build a business around it. And if you don't feel that— now later, Algolia today, just as a case study, because we're Algolia, Algolia obviously has product market fit. How many customers does Algoia have today, Ashley?

Over 9,000.

Okay, 9,000. How many, how many? Okay, so 9,000 paying, and then there's a long tail. So there's, there's tens of thousands of developers and others using Algoia, maybe hundreds of thousands. Okay, so whether Algoia has a great June or an okay June or whatever, Algoia has product market fit. Um, but in those early days, if, if it isn't, if you don't have at least a month or two where it's much faster than you expected, challenge yourself because you don't have it. Don't pat yourself on the back. Right. Don't beat the team up, but go figure it out and figure out what you need to do so that you can have that moment where you sort of go from mobile to, to B2D for Algolia, and then wow, the sort of the world changes.

Yeah. So what if you haven't achieved that yet? So, you know, maybe you've signed a few customers, but it's just not coming together like you thought.

Yeah. You know, I learned this lesson as a founder, but as an investor, it took me a little while to figure it out as I started investing a little bit in companies that were a little earlier than— earlier seed, right? Folks that were pre-product market fit. When I invested in Algolia, the folks I used to work with thought it was crazy. I was crazy to invest in this company. But hey, if it's doing $12K a month, but it's growing 20% a month, it has something, something good there. But I've now done investments that were earlier than that, like pre-that lift, even that tiny lift. And I've certainly done an as a founder. And I think what I've learned is if you're not hitting that growth rate, there's a first question you have to ask yourself, which is, but you have customers, so you have a handful, you have 10, 20, 30, 40 customers, whatever it is, 10K MRR in your example. You have to first find out, are the customers you do have happy? Like, do they, and are they sticking with you? Is your churn low or ideally net negative on a revenue basis, right? Are they buying more from you? And is your MPS high? So say your net revenue retention is 120%. And your MPS is 60. Okay, that's, that's just as good as— that's close to Twilio. That's just as good as PagerDuty or Okta. But you're in the zone. Your customers love you and the net churn is positive, so they're buying more from you, but you're growing slowly. So like, what's wrong? Well, I can tell you almost empirically that 95 times out of 100, certainly 9 times out of 10, the problem there is your product just doesn't do enough. You don't have product market fit. You are able through chutzpah, through hard work to— you've identified a problem, right? Like that mobile SDK before Algolia became a web API that you've identified the problem so you can lure people into your product, which is hard because there's so many cloud products today. There's thousands and thousands and thousands of cloud products. So you've done something incredible, which is you've gotten the attention of bona fide customers and they've put you into production. They've used you. But if you honestly ask your customers, if you're not growing fast enough, what more would you like from us? What more would you like from our vendor? They'll usually tell you a bunch of things that you know you should be building, but you haven't gotten there yet. Ask them, go ask your happy customers, what— you're paying me $500 a month, what could I build for you for you to pay me $1,000 a month? What could I build for you to pay me $2,000 a month? If your customers love you, they will want to buy more from you, right? They want to buy more from their trusted investors. From their trusted vendors. So go ask them and you'll usually find the problem is you just, you've identified the problem. It's close to product market fit because they're finding you, but you do not have a rich enough feature set. You don't truly have a 1.0 feature set and you can fix that. You can fix that if you have happy customers because you have time. If they're unhappy, I worry, right? If I, if you're happy, you're, you're, you're, you're a release or two away from product market fit with a good team. If they're unhappy, you may have nothing. It may— that 10K may be an illusion. You may have tricked customers into using you.

Got it. So I just want to encourage people to go to the Q&A panel and, and go ahead and post your, your questions. Excited to be fielding those as well. Uh, one more for you though, Jason. So, okay, you really thought about the product side of it. Now you're trying to think about the go-to-market side, particularly in the early days. You know, how do you go about doing that?

How do you find product market fit? Is that the question? Sorry.

No, more like, okay, I've got a product I feel good about. Now how do I go grow it? How do I go acquire more customers? You know, what should my, my model be? Should I be doing webinars? Should I be doing a freemium model? You know, all those kinds of things.

Well, first let me tell you what the answer isn't. The answer isn't spending all the little money you have to hire a sales magician. There is— that person does not exist. Now, they exist a little bit, you know, in the early days of Algolia, Gaten certainly in some ways was a sales magician. But what I mean is what does not work is a set of founders, especially either that are technical or product-oriented or just have never done sales, thinking, hey, my product rocks, like this is the best product the world's seen. But if I just hired the perfect salesperson, We can actually sell the product. The problem is I don't have a great salesperson. That, like, never works. And, you know, it took us a while to figure out that in the early days, like, you just— the founders just have to find a way to sell. But it's so true. One way or another, you have to find a way to sell. Even if you're Nicholas and Julian in the early days, and then with Gaetan, you have to find a way. It does not mean that you have to be the best salesperson, because here's the trick with founder-led sales. That I think all of us, if we've been founders, we don't totally believe this, but it's true. Customers and prospects love to talk to the CEO. They love it, right? Ashley, if you can get Bernadette on a call with a prospect, will they take that meeting?

Oh, absolutely.

In 60 seconds, right? So forget about Algolia Sage, it turns out prospects love to talk to the CEO even of a 4-person company. right? Your average mid-level manager at a big company, how often do they get to talk to a CEO? Never. Yes, okay, you may feel insecure, you may be like, it's just 4 of us working from home and my Zoom background's gross in my apartment, like, why would a Global 2000 company want to talk to me? But have the confidence and realize that if you can solve— now it's not that people just want to talk with startups all day long, But if you can solve a customer prospect's problem and you are the CEO, leverage that, right? So you don't have to be the world's best salesperson to sell as a founder. You just have to try to sell and say, I'm the CEO, right? I'm the CEO of Algolia. You know, I don't know, go back, go back 6 years. We're built, we have a search as a service company. I've run the company. This is who we are here. We have the following logos. It looks like you have this problem. Search on your website's a disaster. We could solve it in an hour. Do you have time to talk? It will increase your conversions 50% on your e-commerce site. Like, you know what, if that's from the CEO, you probably, you send 50 of those emails and they're tailored. They're not spam, right? Each one is perfectly tailored. Ashley, I researched you. You know, I know you're, I'm a big admirer of your company. Remind me, where'd you work before Augolia?

Talend.

Okay, Talend, Talend. You know, Ashley, you know, Talend, you know, you just have the perfect email and it's from the CEO. You're going to, I'm gonna get those meetings. So anyhow, the sales magician is you. That's my learning in the early days. And then when you have enough of an engine going, then you can bring in the sales magician, right? The sales magician takes something that you've made work and then builds processes and a team on top of it. So that's what doesn't work to get it. What does work, so then how do you get it going in the early days? What does work, and again, this is a and not doing this is a classic mistake, is you just, you just have to try everything and figure out what you're not terrible at. What are you not terrible at? So in the early days of Algolia, the team, you know, we're all terrible. I'm still terrible personally in a lot of things, but the team was good at two things that I could see, actually three things. One is the founders were good. Nicholas was good at getting on stage. Now getting on stage is obviously a little bit harder during COVID-19, but there's still a virtual version, right? But every event that you could go to where developers were at, Nicholas was there, right? Whether he had to man some crappy $2,000 booth himself, whether he got on stage, whether it was an audience of 4 people, for whatever reason, he was willing to hustle. He would get on the plane, get on the TGV, get on whatever. He probably did 50, 80, 100 events a year, okay? And in the early days, let's imagine like no one heard of Algolia, and they're like, what is an algol? And what is— where does this come from? And what old computer language is this even talking about? But imagine you go and you just meet 2 prospects and one of them pays you $10,000 a year. Like, that's enough in the early days, right? It's enough to do a 50%. So that's what they were good at. Gaten was good at connecting with people. And then back in the early days, Algolia did another thing that some founders are good at, but, but others aren't, which is content marketing. And Algolia wrote a few pieces, and probably Julian wrote them in the early days, and they were great. We should find them. And they compared Algolia to Elastic, which is a competitor. And it was an incredibly honest— and they wrote a bunch of these, but I think Julian wrote this incredibly honest piece. And he was like, let me— here's all the data. We've run a billion searches through our systems. Here's where Algolia is no better than Elastic. Okay, if you have large object search, if you're doing massive tech search, like, you should stick with Elastic. It's better. In fact, here's where it does well. Now let's talk about certain types of small object search and certain types of smaller search for e-commerce. Here's a piece where we are 50 times faster. Okay, and it was very honest and it was data and it showed, here's an example that hey, if in this use case you deploy Algolia, you can increase say conversions on your e-commerce site 5x. Okay, and that piece of content marketing, thousands of prospects over time found, right? But it was great and we could dig up that post together and share it with the team. I bet that post took 40 hours to write, right? And probably probably hours and hours and hours of data generation. This was a data-rich, heavy article, not something that was outsourced to someone on a cheap website, right? Not genero content, right? So that probably took a lot of work, but that worked for Algolia, that generated leads. So they were good at that. They were good at what, you know, we didn't even call it content marketing in 2014. So find your superpower, find the thing that you're good at. Some folks are great at outbound, some folks are great at hustling, right? Some folks are great at working the network, and then what will happen is you'll find something, that'll be my last sort of long answer to your question, but what'll happen in the early days is you'll find something and it will work, but it won't work a lot. Like you'll go to, you'll do the blog article, you'll do the event, virtual now, real life soon enough, you'll do the partner program, and you'll get like 2 customers. You'll be dejected, you'll be like, You know, I've done all this work, I only got 2 customers, but you have to realize if you got 2 and you didn't know, you could probably get 2 from the next one, and then you'll get better at it. You'll probably get 4, and then 8, and then 16. And so instead of like being bummed you only got 2, and doing 8,000 other things to get you nothing, double down on whatever works, even if it works too slowly, because everything compounds, right? Everything compounds. It took us a while to figure that out in SaaS for recurring revenue, but everything compounds. Marketing compounds, marketing efforts compound, product development compounds. And so just figure out whatever works at all and do more of it and give yourself 24 months and watch what compounds. Watch what compounds if you're really good at it and don't do 20 crummy things because they won't, they won't get you any leads.

Great. That's great advice. Just one thing I'll add on your point on the founders going out and doing the selling. When I was the CEO of a small startup, I found that initially I just wasn't learning enough and I had to change the questions and the way I was talking to customers so we learn more. And then that unlocked a whole series of new things that we did to really help the business grow. So first question here is from Dilip. He's saying that they have one salesperson that's doing great, but they're having a hard time duplicating that with the other hires they've made. How have you addressed this?

Well, first of all, I would say that's probably only true of 92% of startups. Yeah. Yeah. What typically happens is we— well, first of all, let me step back. Here's the— so he's got 1 rep that works and then 2 or 10 that don't work. What the real answer to this problem is, ultimately it will be solved. It will be solved when you hire a good VP of sales because she will know how to train people. She will know how to— she'll be more patient, she will have more time, she will coach them, she will be in deals with them together. All the things that you're not good at and you have time. This first sales magician that folks end up having, um, is usually someone that is smarter than average, really understands your product, like way more product savvy than reps 3 through 300 will ever be. Often from a quirky background, I find. Often, because the hottest rep out of Algolia today may not want to be the first rep in another startup. Like, they're probably making pretty good money, they've got a pretty good life, and like, they might join something else, but the last thing they're going to do is join a 4-person startup that no one's— not the number 1 AE at Algolia today, it's just not going to happen. So they have to have some sort of quirky background, and they usually have 10 or 15 more IQ points than your average. They're usually mid-pack as an AE, mid-pack as a sales rep. But really love your product. And so later you're going to need a— you're going to need all different types of reps, and your VP of sales will help you. But here's the hack, and when I tell this to people, it solves the problem going forward, is never ever ever as a CEO, founder CEO, hire a sales rep you would not buy your own product from. When I ask what's the difference between rep, that one that worked, and 2 through 9, there'll be a diversity of stories and backgrounds, but I'll always ask, Okay, rep number 1, Ash, you know, rep Ashley, would you buy your product from Ashley? Yeah, I know when I met, when I met her or him, I, by the end of the first meeting, I knew I would buy Algolia from him or her, right? What's rep number 2 like? Well, rep number 2, he was a great rep at Twilio, he was awesome at SendGrid, he crushed it at Talend. Okay, like all the, his boss said he was terrific, but would you buy your product from him? A product that no one's heard of? No, I'm not sure I would. Don't hire that person. Better to hire the quirky person, the person that was in a different industry, probably has to be at a similar deal size because, you know, certain deal sizes have certain ways of communicating with customers, but that's the key. And I always ask about these other reps, would you have bought from Michelle or Michael? And they're always like, no, I would not have bought. That's the mistake you made. Even if you're a crummy salesperson, as a founder, CEO, you have sold your product. You know what the questions are, just like when you were CEO, Ashley. You know, and if you, if you flip it around and it's not sell me, it's your own, it's the 2.0 version of sell me this pen. You don't have to play the game of sell me my product, but you have to say, after spending 2 to 3 hours with this hire, would I buy my— would I trust this lead to them? And you know the answer was no. And so force yourself to find another one like the first one that you would just buy your product from, and you will get 2. And then when you have 2, you can hire a manager, a salesperson A head of sales, director of sales, they can get you from 3 to 300. That's the mistake they've always made when I ask the question. They always go for logo or smooth talking or something over, and they failed. I wouldn't buy it from them.

Yeah, I'm actually working with an early-stage company right now that has this exact problem, and we interviewed their, their first rep has been with the company for years, and you know, he started off being happy to sell one seat, and now he's like, 100 seats, that's too small a deal, I'll move on.

Yeah.

But when you interviewed him, you're like, oh my God, this guy is a ninja. Nobody else in the world could be like this guy. And so then really the question is like, how do you boil that down into like the key things that you can make replicable for other, other salespeople?

That first, that magical sales rep you're talking about, I've asked Jeff Lawson about it on stage. I've asked Lou Cerny, I've asked so many, every, every Every leader in cloud had that person. Everyone has the same story.

Yeah.

The answer is not— and their knowledge compounds over time, right? Their knowledge compounds over time. And you can't reproduce that. You can't. And that— if they're really great, in some ways, that's what Gaten did at Algolia. He became an iconic font of knowledge that could never even— I mean, Gaten will say there's other people at Algolia that are much better at sales and business development than everyone. But the amount of the corpus of knowledge that he's had being there from, you know, he will have with a break, he will have been there from like 1K in MRR to 1,000, whatever, 100,000. And I'm getting the math wrong. You will never reproduce that ninja element, but you don't have to. You just need to have another person you would buy from, and then your VP of sales will be very different. Everyone, you have to graduate out of that rather than try to reproduce it. That's the learning, right?

Yeah, that's great. So next question is from Karen. And so they've built a new platform and they're taking on some incumbents that, you know, are built on legacy stacks. Trouble is the legacy stacks are more feature rich. And so they're struggling to get— Yeah, they're struggling to get people to buy their new platform because they'd have to take a step back on the features. So any advice for him?

Well, first of all, that's either not true or it's good news. The good news is if you're competing against a big incumbent and you're talking to great prospects and they're truly telling you, I would buy if only you close these gaps, then that's where we've all been since the dawn of time. So what you do is each quarter you close more of the gaps. And instead of closing, then when you close 5% of those leads next quarter, you'll close 7, and then you'll close 10, and then 12, and then 15. That's, that is the way it's been since dawn eternal, right? Is you compete with an incumbent and you ideally, you have a 10x feature or they wouldn't pick you. There has to be something that you do that is 10x better what they do. And now Goli in the early days competing with Elastic, it didn't do what it did today. But for, for small, for a certain type of small object search, your jaw dropped at the speed. So there would be customers that say, listen, I want to put search on my website today in an hour that literally is faster than Google, that is at the speed of light. Not because it's cool, right? But because I have such a massive store of objects that I need to find in seconds, right? Even we're not even the core use case, but if you go to saster.com, we have hundreds of thousands of pieces of content over 7 years and you can find them in literally in a nanosecond using Algolia, right? Not that we're the perfect customer, you got bigger customers, but that's something we couldn't get anywhere, right? That's a 10x feature. So on the one hand, that story is like, we're losing to the big guys because we're feature poor. Like, if it's true, but you're closing some, that's good news. Now you have a roadmap. Now you have a roadmap for the next 3 years. Okay, we're losing 98% of the deals, but we're closing 2. That's great. Just listen. Really catalog and force rank and listen. Now you know what to build for the next 24 months when you didn't even know what to build last week, right? But if you don't have a 10x reason, like if even 2% aren't buying you, if it's zero, then that's not true. It's not really, it's just an excuse. It's just a way you're getting off the hook. So be honest with you, what's your 10x feature, right? And everyone that took on an incumbent had a feature-poor product, often had a bug-ridden product, had a product with many issues. But it had a 10x piece. And it was— the 10x piece has to be monetizable, right? Not every part of every industry can be monetized, right? There are pieces that are easier or harder to monetize, and typically parts that are close to the money are easier to monetize, right? Right.

Yeah. Yeah, it's interesting because this reminds me a little bit of when I was at Talend, we were competing with Informatica. And we were cheaper and we were faster. And so we tried to just go get customers to rip out Informatica and replace us with Talend, and they wouldn't do that. But when they suddenly wanted to move from doing what they were doing on-prem to the cloud, and it's like, okay, I can use Talend and move to the cloud, then suddenly phase transition, that made sense. And so just because you've got like a newer, more modern platform usually isn't enough. You've got to give them something new, which is kind of back to your 10x.

Yeah.

So another question is, if you're a company that's, you know, in a difficult industry like travel and transportation, you know, you're probably not going to be selling a ton today. What advice would you give them so they can make the best use out of this time so that when things get better they can emerge even stronger?

I'll give advice. It might, it might be challenged. It might even be seen as a little bit mean. Um, but even I— there's 3 types of— there's 3— everything's changed since March, right? And there's 3 types of startups. There's ones I call the COVID beneficiaries, like rapid gain. Some of them, there are a handful that even in March were COVID beneficiaries, like Zoom. Like the next day we needed Zoom. There are a bunch where like the world slowed down in March and then in April we saw boosts, right? That's like Shopify, okay? Shopify actually said in March, we're not even giving guidance, we don't even know if we're gonna grow anymore because SMBs are going out of business everywhere. But then April came along and they're like, whoa, the whole world's going to e-commerce. So Shopify like, so, but those are the COVID beneficiaries. There's what I call the COVID impacted where it's a mix, right? Some of your areas are getting a boost, and some, some are really struggling. Like, imagine you have a broad business, but you sell a lot into travel and events and hospitality, right? But you also sell to cloud leaders, right? You're gonna, you're gonna have a mix. And then there's folks that are just the COVID crushed, right, which we're talking about. And so my advice, although the flavor is different, my advice both to the COVID crushed and the COVID impacted is quit your whining. It's June. And friggin segment your customers. Enough bitching and whining and complaining. Which segment? Now if you're impacted but you have parts that are growing and aren't, stop complaining and put a lot more impact into selling to the businesses that are doing fine. They're on fire. They're on fire. And the ones that are benefiting can actually outweigh the ones that are harmed. Look at SaaS stocks, look at cloud stocks, look at the Bessemer Cloud Index. It's at an all-time high because the benefits that Zoom, Slack, Mongo, Twilio, everyone is getting outweighs the Eventbrites and the others that are crushed. It's not that they're not getting crushed, but like the sky is the limit in cloud. The sky is the limit. So stop focusing so much on the downside and put all of your efforts into the segments that are, that are winning. And that works in that, that works best in that middle category, right? Where you, where some of your business is doing better and some of it's doing worse. The bottom category, everything seems to be on fire. I mean, even there, it turns out it's true. Now, your, your revenue may be deeply troubled for longer than I care to admit, right? But there are always segments that are booming, right? I can tell you, for example, event space is surprisingly large, right? Events are— depends how you calculate it, but events are over a $100 billion business in the US, trade shows and events. For most B2B companies, the average B2B company gets 20-40% of its leads from physical events. You might not like them, they may, you might not like the format, they may seem like a ripoff, but they do work, right? But anyone in the events world, look at Eventbrite, there's no business, there's no business. But even there, and we produce events at Saastr, we produce events with tens and tens of thousands of people a year, and and what I've observed from the vendors we work with, the cloud vendors we work with, is the best ones have already tilted. The best ones have already— yes, Saastr as a company is not producing physical events this year, like we're done. Our Saastr, I know, gets 15,000 folks from all across the world. Ain't gonna happen this year, right? But our digital events since just since March have already had over 30,000 people come since March.

That's great.

And the best vendors we work with already have a product for that. They already have an offering. Now, do we pay them as much? Do we pay them the same way? No, but the best vendors— so I'm not saying that some of those vendors aren't going to have a bleak 24 months ahead of them, right? But they have evolved, and they have evolved paid offerings that, that find that piece of their business that still works. Travel still exists. Travel still exists. Now, if your trip actions, it sucks. It sucks because people don't need run-of-the-mill travel for their teams, right? But travel has rebounded from its low points. What can you do to improve the travel experience for the folks that are traveling? What do they need? And TripActions has done a bunch of this, right? How can you travel safer? Would you as Algolia, would you pay for your employees to travel safer? Of course you would. Of course you would. You would pay, you would, like maybe your travel at Algolia is 5% of what it used to be, went to 0.5, right? Well, would you pay even 3 times as much for that travel so that you know they don't get COVID-19? Of course you would pay 3 times as much. Of course you would do it. So build the software, like even in the most impacted industries, events and travel, there is a piece that you can lean in and get a COVID boost. Will you have the same revenue you had in Q1? Probably not, in the worst, I mean, no way, look at Eventbrite, right? But lean in where it works and guide the team there. The team will rally around this. You can say to the team, look, 80% of our business, we're dead for this year for 80% of the business. But this 20%, we can do a mitzvah, we can crush it in this 20%. And so you segment your business and you go COVID-impacted, right? COVID beneficiary. And then even if the COVID beneficiary piece is small, you as a team can pat yourself on the back and say, here's our Q3 goal. Our Q3 goal is for this segment of the business, and it's small, we want to quadruple it. And everyone on the team will feel good. We want to feel good about going to work each day. We need to feel like we're winners. And it's enough to know that half of our work week is we're winning. Like the, the charts are going up. Like even if the axes have changed. Yeah, it's enough. That's why we do startups, is to be a part of a winner, right? To be a part of a great thing. And we can roll with change, but we need new goals that we can feel good about, right? Enough with the cuts, enough with the Debbie Downers, enough with the complaints, enough with the— even if you had to do layoffs, enough. Like move on, right? It's time to find growth goals, even if they're different growth goals.

Yeah, I think that is such an important point that it's amazing how goals can affect how you perceive how you're doing every day. And so, you know, setting goals that are achievable and teams can feel like they're winning is just so critical.

Yeah, and, and, and today the other thing I learned is like, I'm sure you felt it too, is like there's been so much change in the world since March, right? You can't change them every week anymore. Yeah, like you gotta pick. If you, if you've changed your goals 3 times since March Now you gotta pick some goals for the rest of the year. You gotta stick with them and they have to be achievable and they have to be goals people will feel good about. We've, we've, it's time to stick with a plan.

Yeah. Yeah. We haven't changed our goals that much, but I swear it feels like every 2 weeks there's like some new tidal wave that comes along and you just gotta restack everything.

Yeah. But the team, your team, the, your, the founders can take a lot of change, right? The management team can take a bunch of change, but not as much as the founders. And then the rest of the team, they like, maybe once a quarter is all the change the rest of the team really can. It's too much.

Yeah.

I need to know what code I'm shipping this quarter. I need to know what the goals are. I need to know what my sales goal, I need to know my target customers this quarter. I need to know what my MQL goal is this quarter. Like, and you have to be careful as founders in this dynamic world. Like you, as founders, you can talk about change every day. Right? Every day. Like even in our little team Saastr, Amelia and I talk every single day now during shelter at about 5, and we talk about the change in the world today.

Right?

And it's fun as, as like founders to talk about all that change in the world. It's, it's cathartic, right? Oh my God, did you see that like Disneyland's reopening? Web Summit, this happened at this company, this happened there. But you can't, if you share that all with the team, they'll implode in this world, right? We need to all go back to whatever the new normal is for the rest of the— as much as possible with your team. They need to just hit their— hit goals they feel good about.

Yeah, yeah, I totally agree. So, uh, last question, um, for let's say you've hired your first CRO, uh, so you're still very early stage, uh, how should you think about the mix that should be coming from existing customers versus new customers?

Well, first of all, you've already made a terrible hire. Because you hired a CRO early. Now I'm being a little facetious, but not really. Nothing wrong with a little title inflation these days. I've come full circle on that. I could share stories. Nothing wrong with a little title inflation. Nothing wrong with self-confidence and a little bit of hubris, right? But I will tell you that you only need so many C's before we have VPs. A CRO is a great title when you have like 2 VPs of sales. But I gotta tell you, the problem with someone too early that wants to be a CRO or a CMO, like in the early days, is they want to own too much. I, I'm terrified when a company below $5 or $10 million wants a CRO, because you know what that really usually means? They don't want to be a VP of sales anymore. This is an important flag. Even, you know, when I, when I, even 5, 6 years ago, there weren't that many SaaS veterans available. When I met the Algolia team in the early days, I introduced them to every up-and-coming VP of sales and marketing I knew, right? But there weren't that many. Like, you need, you need 4 to 5 years minimum of leadership experience to be that next person. But another 5 years have gone by and there are hundreds and hundreds and hundreds of SaaS veterans out there. right? There are hundreds of folks that have been VPs of sales and marketing and customer success and product in really good companies, and they're available. And some of them are tired. Some of them don't want to do demand gen anymore. Some of them don't want to own a product roadmap and issue story points anymore. Some of them don't want to do code commits anymore. All right. And some folks don't want to do sales anymore because sales is hard. Does it, does it get any easier, Ashley, each quarter when the, when the, when the when the bookings go back to zero on July 1st, or whatever. Maybe you're a January 31st guy, but it never gets any easier, does it?

No.

And what I'm finding now is so many sales leaders— I can tell you what happens in marketing too, it's interesting— but so many sales leaders, deep down, the ones you'll fall in love with because they did it, and not only do they do it, but they're empathetic, they talk the talk, they're charismatic, deep down they don't want to do it again. They're burnt, they're burnt. And so I know this isn't the— and I will answer the exact question asked, but CRO is a flag early, as is CMO, okay? Because usually CRO means, well, you know what, I'll hire— I'm gonna do sales and customer success. Ah, flag. Or I'm gonna do sales, customer success, and marketing. Ah, like, we're not big enough. Like, I need you to put points on the board, right? I need you to hire reps 3 through 30, not like be a strategist. Right, not be a revenue strategist, you're not ready. Same thing that happens is great marketers will come in and they'll be like, you know what, I don't want to be the head of demand gen and the head of content marketing and the head of field anymore. I don't want to be firing up Marketo myself or wiring HubSpot into Salesforce. So I want 7 people on my team, and I meet so many folks that are up-and-coming marketers that immediately need 6 or 7 people on their team at like $2 or $3 million in revenue. Right, and some of it's ambition, but some of it's being burnt out. So be careful. Title inflation is okay, but be careful that they're willing to do the job. And CRO at CMO too early, I'm not going to say I've never seen it work out, but I am going to say I've never seen it work out too early, right? Algolia needs a CMO, Algolia needs a CRO, Algolia needs a CCO, and all this, it needs like 11 C's, but Okay, and then how much should be for new and recurring customers? Um, probably the wrong way to think about the question, although it's the right question. The, the better way to think about it is, um, a simpler way to think about it is just, um, take a look at what your net retention rate has been historically. Is it 100, 120, 130, 140? Um, and ideally try to drive it up. That's the North Star metric. And then your CRO or VP of Sales or whatever, it's their job to figure out what's easier. Is it easier to get more money from the base, which usually it is, right? Of course, because you've already closed the company. But sometimes it's not true. Sometimes you have so— you're so good at selling the deal that you actually want to put more effort into new leads, right? And sometimes the new leads are very hot, and sometimes— and some products, it could take a very long time for upsell. Some products, like, might naturally grow, like in Algolia. If you have a usage-based contract, it might naturally like SaaS actually grow, or Twilio, but others might take 2 years before you're ready to buy more, right? So my point is your CRO should figure this out. Give her a North Star metric, which is, okay, last quarter we had 120% net revenue retention. That's, that's expansion net of churn. We had 120. Our goal as a team this quarter is 125, 130, 135, and that's ambitious, right? If you think through some of the math, but trust your team to figure out the ratio. They'll figure it out. Or you have the wrong people.

Great. Well, I really want to thank you so much for taking the time with us today, Jason. You shared a lot of terrific advice, so really appreciate it. Okay, thanks everyone for joining.

All right, thanks everyone. Thanks, Ashley, and everyone at Algolia. Appreciate it.

Thanks. Bye-bye, everyone.