20VC Fundraising Is Also Business Development with Nicolas Dessaigne, CoFounder & CEO @ Algolia

In the final SAS week episode of "20 minutes VC," host Harry Stebbings discusses with Nicholas Desayin, CEO of Algolia, the company's evolution from an offline mobile search engine to a web and mobile intuitive search-as-you-type experience provider, highlighting their successful pivot and growth, including a recent $18.3 million funding round. They delve into the importance of establishing a strong company culture early on, ensuring it's agile enough to pivot and adapt, a strategy that Algolia used to empower their team and encourage ownership. Nicholas shares insights into the fundraising process, emphasizing the significance of Y Combinator in driving company pace and growth. They also touch on the role of culture in attracting investors and the challenges of scaling it with rapid company growth. Nicholas envisions changing the way people search online, aiming to lead the market shift from on-premise to SaaS search solutions over the next five years.

• Harry Stebbings hosts the final episode of SAS week on the 20 minutes VC podcast.
• The SAS week celebrates the release of the official Saster podcast with Jason Lemkin.
• Nicolas Dessaigne, founder and CEO of Algolia, is the guest for this episode.
• Algolia is highlighted as a successful pivot case, transitioning from an offline search engine for mobile to a web and mobile intuitive search-as-you-type experience.
• Algolia was part of Y Combinator's winter 2014 batch and raised $18.3 million in funding.
• Algolia powers Harry's favorite site, Product Hunt.
• The episode also includes a promotion for Lisa mattresses.

"Welcome to the final episode of this very special SAS week on the 20 minutes VC with your host Harry Stebbings." "And I'm thrilled be joined by Nicholas Desayin, founder and CEO at Algolia." "Now Algolia have to be the perfect use case that successful pivots can happen." "Having started life as an offline search engine for mobile, they transitioned to helping companies deliver an intuitive search as you type experience on the web and mobile." "And they were part of YC's winter 2014 batch and recently raised 18.3 million in May 2015 with investors including the likes of Excel Partners, Zero nine, Capital Storm Ventures, all of whom, I hasten to add, we have had on the show and many other investors."

These quotes introduce the podcast episode, the guest Nicolas Dessaigne, and Algolia's business and funding achievements.

• Nicolas Dessaigne was passionate about entrepreneurship and wanted to create a company with his co-founder Julian.
• Algolia was conceived based on the need for an easy-to-embed search engine identified through Stack Overflow questions.
• Developers were struggling to embed Lucene, an open-source search engine, into their apps, which inspired the creation of Algolia.

"Algolia in itself came to being because of questions on stack overflow." "We saw many questions, unanswered questions about app developers wanting to embed Lucine, which is a search engine, an open source library, wanting to embed Lucine inside their own apps, and struggling with that." "We had the experience, the previous experience, to build that, and so we just did."

This quote explains the inspiration behind Algolia's creation and the gap in the market that Algolia aimed to fill.

• Nicolas believed the best way to find a partner is to find someone complementary.
• Both Nicolas and Julian were technical but shared core agreements critical to Algolia's success.
• Previous work experiences with Julian convinced Nicolas that they shared a similar approach to problem-solving.
• Aligning on core company values is essential, even if complementary skills are traditionally advisable.

"I wouldn't say we were such complementary partners in our case, because we were both technical, like the way we wanted to build the team, the important things for a company, all of that things were like, the core things we agreed upon were kind of critical and also critical in our later success." "I saw him, how he solved, how he was attacking problems and so on, and that was exactly the same approach I would want to take."

These quotes highlight the importance of shared values and approaches over complementary skills when choosing a co-founder.

• Before starting Algolia, Nicolas and Julian discussed the culture they wanted to build.
• They anticipated the need to pivot and believed having the right culture was essential for agility and adaptability.
• Both founders had experience in large corporations, influencing their desire for a startup culture that could constantly reinvent itself.

"For us, it was more important to make sure the culture was the right one, to be able to constantly reinvent yourself, to adapt to events well, to basically be agile and always adapt to circumstances."

This quote underscores the foresight and importance of establishing a company culture that supports adaptability and growth from the outset.

• Agile culture is not about development methodology but a general concept of team empowerment.
• Team members should feel like owners, taking initiative and trying new things.
• Encourages people to step out of their comfort zone and continuously learn.
• Empowerment leads to pivoting and successes initiated by team members.
• A story about the VP of Dev at La Camping in Paris showed how convincing and engaged employees can be mistaken for founders, exemplifying the desired empowerment.

"It's really about a general concept of having a team that is empowered, that is feeling like owners of what they are doing, so that they can actually take initiatives, try things."

The quote emphasizes the importance of cultivating a sense of ownership and proactive behavior in team members as the cornerstone of an agile culture.

• Scaling empowerment and maintaining a sense of ownership is challenging as the company grows.
• New hires might not initially grasp the company culture.
• Formalizing culture and company values is essential for consistency.
• Values such as grit, trust, care, candor, and humility were identified and formalized.
• Accountability to these values is crucial for daily decision-making.
• Repetition is key to ingraining culture in a fast-growing company.

"We had to formalize it. And we did that about two years ago, the first version. Then we continued to scale, and we saw that it was failing again. And so we did that again."

The quote explains the need for formalizing culture to ensure that it scales effectively with the company and remains a guiding force for all employees.

• Fast scaling leads to a significant number of new hires who are unfamiliar with the company culture.
• Without formalization, new employees struggle to understand the culture just by observation.
• Writing down the culture and making leadership accountable is necessary.
• Consistency and repetition are crucial for cultural integration.
• Mentorship models can help with onboarding by pairing new employees with existing ones.

"You need to formalize, you need to write it down. You need to make yourself accountable. You need to be consistent."

The quote highlights the importance of establishing a clear and tangible company culture that can be communicated and upheld as the company scales.

• Investors may find it challenging to gauge a company's culture accurately.
• The culture is often a reflection of the founders' values and priorities.
• Investors should ensure founders value culture and its role in scaling the company.
• Meeting with team members can provide investors insights into how the culture is manifested within the company.

"The company has the culture of the founders, as long as the founders consider the culture important."

This quote suggests that the sustainability and strength of a company's culture can be evaluated by understanding the founders' commitment to it.

• The fundraising process varied across different rounds.
• Initial funding was based on the potential of the technology without a product in production.
• The company went through two seed rounds and a Series A with Accel.
• Having investors who have appeared on the same show indicates a shared network.

"So we actually did two seed rounds and then our size a with Accel. The first time we had the beta, but we didn't really have any product in production yet."

The quote describes the early stages of fundraising, where the focus was on the promise of the technology rather than an existing product.

• Investors saw potential in the product and were willing to take a small risk during the seed round.
• The company joined Y Combinator after the first seed round, which is considered out of the usual order.
• Y Combinator participation led to significant inbound interest from investors due to product traction.
• Despite investor interest post-Y Combinator, the company chose not to raise a Series A immediately due to sufficient funds and potentially unfavorable terms.
• A strategic decision was made to raise a smaller round to onboard valuable investors like Jason Lemkin.

"It was still a seed just for the chance to be in the adventure later on. We actually joined Y Combinator after that first seed round, kind of like the wrong order, but, well, no regret." This quote highlights the unconventional path the company took by joining Y Combinator after securing initial seed funding and indicates no regrets about the decision.

"When we joined Y Combinator, we were already delivering the product, selling the product, and so we did have quite a good traction during Y Combinator that generated interest at that time." The quote emphasizes the company's strong position during Y Combinator, with an already developed product and sales, which attracted investor attention.

• The second seed round was an opportunistic move for the company, given their financial stability from the first round.
• The decision for a second seed was aligned with long-term company benefits rather than immediate necessity.
• The evolution of funding rounds over time is noted, with more investor money available for seed rounds compared to the past.
• The company completed its third round, a Series A, after experiencing significant growth and strong product performance.

"For us, it was really opportunistic. It was not an Acct. We still had so much, most of the first round money in the bank." This quote clarifies that the second seed round was not out of desperation but a strategic choice due to remaining funds from the first round.

"Like ten years ago, what we call seed round may was it was a series A at that time." This quote reflects on the shifting definitions and amounts associated with different funding rounds over time.

• The Series A round was prompted by exceptional growth metrics, with a 30% month-over-month increase in 2014.
• The product's strength was validated through reference calls with customers, particularly larger ones.
• Many investors were convinced of the market potential, leading to successful Series A funding with Accel.

"Like the metrics, we were out of like incredible 2014 on the Verge at that time, we did 30% growth month over months." This quote demonstrates the impressive growth that was key to securing Series A funding.

"The product was extremely strong, like all investors did a lot of ref calls from customers." The quote indicates the product's market validation and the due diligence performed by investors through customer feedback.

• The speaker reflects on the learning curve of fundraising, with improved ability in later rounds.
• Fundraising was also seen as a business development opportunity, as potential investors' portfolio companies could become customers.
• The speaker suggests that being a second-time founder in the future would make fundraising easier due to experience and investor trust.

"We didn't do such a great job in the first one. We didn't have any experience for doing that." This quote acknowledges the initial lack of fundraising expertise and the progress made since then.

"Investors love second timers. It's much easier for them to raise." This quote highlights the advantage of experience when fundraising, as investors tend to trust founders with a track record.

• Y Combinator was instrumental in teaching valuable skills for fundraising.
• The intense pace and focus during the Y Combinator program were beneficial.
• Relocating the entire team to Silicon Valley for Y Combinator was considered the best decision, fostering a highly dedicated work environment.

"Maybe getting into YC before would have helped a lot. It would have enabled us to learn so much useful skills for fundraising." This quote suggests that earlier participation in Y Combinator could have provided valuable fundraising skills sooner.

"YC was, in a way, an excuse to work completely crazy on the company." The quote conveys the intense work ethic and focus encouraged by the Y Combinator experience.

• Acceleration programs provide motivation and inspiration, crucial for driving progress.
• A consistent release of new features and willingness to pivot as necessary is key to achieving traction.
• The pace set by these programs can influence the subsequent months and years of a startup's growth.

The motivation, the inspiration that it provide helped us so much. Drive a place, and every day we were releasing new things, trying new stuff. If it didn't work, we would try something else. If it did work, we would double down.

This quote emphasizes the importance of motivation and inspiration from acceleration programs in driving a startup's progress and willingness to experiment and iterate rapidly.

• Nicolas Dessaigne values learning about sales and marketing for SaaS businesses.
• He recognizes his background is not in sales and marketing, which is why he finds resources like Sastor beneficial.

Very useful for me because I'm not a sales marketing guy from my experience. And so that's exactly what Sastor is doing for me. It's teaching me the important things in sales and marketing for SaaS businesses.

Nicolas Dessaigne acknowledges the significance of learning from external resources to compensate for his lack of experience in sales and marketing.

• Nicolas Dessaigne considers Slack and email as essential tools for his daily operations.
• Stripe's API is highlighted as a crucial product for solving significant problems without needing to focus on them.

Probably slack, but I guess it's a common answer. I would even go to mention email. Most of my day is still spent into email and thinking more about product in the sense of maybe APIs. We use stripe.

Nicolas Dessaigne underlines the importance of communication tools like Slack and email in his daily routine and appreciates the value of Stripe's API for handling specific business operations efficiently.

• Nicolas Dessaigne is working on becoming a better leader, focusing on improving his charisma.
• He believes in authenticity and playing to one's strengths rather than imitating others.

I'd love to be a better leader in the sense of probably charisma. That's probably something I'd love to improve, to be able to convey even better the vision of the company to everyone.

Nicolas Dessaigne expresses his desire to enhance his leadership skills, particularly in conveying the company's vision more effectively.

You need to play your strengths. And my strengths are not like into the I'm not Steve Jobs or these kind of leaders kind of leader could I be? And I think everyone should ask themselves the question and not try to imitate someone, but really to play their strengths.

This quote highlights Nicolas Dessaigne's belief in the importance of being authentic and leveraging one's unique strengths in leadership rather than attempting to emulate others.

• Nicolas Dessaigne appreciates books that illustrate the transformative power of culture, such as "Creativity, Inc." by Ed Catmull, president of Pixar.
• He also mentions other books like "Hard Things" as impactful.

I loved how culture was transformative for Pixar and the way he described that.

This quote reflects Nicolas Dessaigne's admiration for books that explore the impact of organizational culture on a company's success.

• Algolia aims to revolutionize how people search on the web by guiding users interactively to their results.
• Nicolas Dessaigne sees the shift from on-premise to SaaS in search technology and wants Algolia to lead in the SaaS market.
• Algolia has strategically chosen not to offer on-premise solutions to maintain focus on being the best SaaS player in the future.

We want to change the way people search, like everywhere on the web kind of know. We don't want people really to search for things. We want to guide them to their results with a very interactive experience.

Nicolas Dessaigne shares Algolia's ambition to innovate the search experience on the web, aiming for a more interactive and intuitive approach.

And so I believe that in five years, SaaS will be actually much stronger than on premise. And we want to lead that market.

This quote reveals Nicolas Dessaigne's prediction for the future of the search market, where he anticipates SaaS solutions will surpass on-premise options, and his intention for Algolia to be at the forefront of this shift.

• The conversation teases a follow-up episode on the Sasta podcast, which will cover customer acquisition, success, retention, churn, and more.
• Harry Stebbings encourages listeners to follow him on Snapchat and sign up for the newsletter for updates.

And as you heard, the fun does not stop there with Algolia and Nicholas and head over to Sapster on iTunes.

Harry Stebbings promotes the next part of the podcast series, inviting listeners to continue following the discussions about Algolia and its strategies.

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