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Adrian Bridgwater interviewed Algolia CEO Bernadette Nixon on the subject of the recently announced Series D funding. Adrian , a technology journalist with a specialism in software, data and cloud has been writing about the tech industry for over three decades.
Adrian Bridgwater: Can you give us a little insight into your background?
Bernadette Nixon: Absolutely! I really am one of those people who understands hard work and have made my way up through the ranks with compassion and determination. I love to build businesses, but I do so from a core appreciation of the fact that that means building teams first.
I spent part of my early career working in commerce in the UK and Switzerland for the United Nations (UN), but a skiing accident drove me to switch my life plans around and I headed to the United States to work in commercial enterprises in the tech space. Through working in both the public and private sector, I think I’ve seen both sides of life. This reality drives me to build what I like to call a ‘blended executive team’ that puts diversity, ability and inclusivity first.
I have a GSD (get stuff done) attitude to operational excellence. I also realize that team make-up and composition naturally changes over time, but my one constant is that there is a requirement not just for IQ, but most importantly also EQ (emotional quotient) so that people are self-aware, socially competent and, above all, human.
Adrian Bridgwater: You are known (from your appointment profile analysis in TechCrunch) as a go-to-market strategist and champion, how does this process manifest itself for you at Algolia and what are your medium to longer-term customer-centric goals for the company?
Bernadette Nixon: Well yes, you could definitely describe me as customer-obsessed, it’s what I do and how I am. Understanding (and meeting) the nuanced needs of each customer is what matters most and that’s the mission that forms the lion’s share of what I do every day.
But in that regard – and thinking about the medium to longer-term as per your question – I insist upon an outside-in approach to make sure that we don’t just operate as vendors just pushing a product out to market. Too many firms become insular and blinded to the real issues emerging in the market and Algolia will never be that sort of company.
I look at the business through the lens of the customer and the market at large and that means putting customer problems at the heart of our own product strategy. This forces us to look objectively at our own product development and design it to solve not only the problems of today but tomorrow too, in a way that’s differentiated from the competition
Adrian Bridgwater: How do you define Algolia and explain the company’s core technology proposition when you only have an ‘elevator sell’ window of opportunity?
Bernadette Nixon: Algolia is an API-first search and discovery platform. Everyone can relate to the ‘search’ part of that and picture a search box on a website or in an app in their head. But we also power ‘discovery’… and that function delivers the navigation on a website or in an app, presenting the user (and possibly, intelligent machines in the future) with recommendations based upon a capability to predict intent in real-time. The consequence and result is search and discovery that provides a personalized and highly relevant real time dynamic experience. We do this for three types of companies: eCommerce, SaaS, and major enterprises. I think that was about six elevator floors, plus the lobby, right?
Adrian Bridgwater: Tell us about the current investment activity in Algolia and the current valuation of the company which now sits at $2.25 billion.
Bernadette Nixon: We closed $150 million in series D funding led by Lone Pine Capital. Additional investors included Fidelity Management & Research Company LLC, STEADFAST Capital Ventures, Glynn Capital, Twilio, and existing investors, Accel, Salesforce Ventures, DAG, Owl Rock and World Innovation Lab.
Adrian Bridgwater: Were you looking for new funding at this time?
Bernadette Nixon: No, not directly at all, but we were getting a lot of inbound interest from investors and so even though we were well-capitalized and didn’t need the money, that’s exactly when you should do your fundraising. But before we could put a funding round together it was preempted and we received a number of term sheets, which resulted in us concluding our Series D round of funding recently, at a $2.25 billion post money valuation
Adrian Bridgwater: Given this significant investment (which was not directly or initially sought by Algolia itself) what is it you are doing so right – and why are these companies investing so much money in you – and what are you going to do with the funding?
Bernadette Nixon: It comes down to three things the first being growth, which is the result of having a killer API-first product and an experienced executive team leading the company. When you look at growth, the market looks at this in terms of your Year-on-Year revenue growth and also your Net Dollar Retention (NDR) rate, which is a measure of how well you’re retaining and growing your customers.
Investors told us we were best-in-class on these fronts, so you can’t really argue with the facts when they come to you externally like that right?
Adrian Bridgwater: When is there likely to be an Algolia IPO/public offering?
Bernadette Nixon: An IPO could be in our future and some would say that we have the scale, scope and breadth to execute that process now. Our perspective on an IPO is that it’s a milestone on our total journey as a company on our continuing journey to maintain operational excellence, not a be-all and end-all goal. You could say that we are working towards being ‘IPO worthy’, but very much taking that milestone in our stride
Algolia press: What are Algolia’s unique differentiators in your view?
We are the only company in our field that offers an API-first platform at scale and that makes us a clear leader. Deployed via a SaaS delivery model from day one, we have inherent cloud-native DNA that again gives us a special position for the modern development stacks of today. Plus also, where most other search technology companies rely on the Apache Lucene algorithm, we have developed our own proprietary technology; being in control of your own intelligence engine makes a difference in speed, relevance and flexibility that our customers benefit from.
We’re also pretty special in another way… although our roots are in Product Led Growth (PLG) with a self-service model (which is one of the reasons I decided to join Algolia last year), we also cracked the top down sales led growth early on. We learned through discussions with investors, as part of the funding round, that this is quite unusual and many companies that come from PLG roots often struggle to crack the enterprise sale. For example, we recently closed a $3.5M+ ARR deal with a major enterprise customer recently, which we’re very honored by, and are focused on making that customer outrageously successful. So we’re winning at the top and the bottom which we believe gives us an unfair advantage in the market.
And finally, we are also differentiated by our heritage given that we were founded in France and came over to the States with Y Combinator at the outset, so we’ve been global since day one. This has allowed us to develop a level of market reach and diversity that spans some 120 countries.
Adrian Bridgwater: How closely do you work with your product engineering teams on roadmap development?
Bernadette Nixon: Since joining Algolia last May, I have worked extremely closely with Julien Lemoine, our co-founder, and CTO. I led the work on the new vision for the company that took us from being a single product company focused purely on search, to us being a multi-product company with Algolia Predict, Search and Recommend. This was a collaborative process with Julien and other members of the exec team. Up until last month, Julien was both our CTO and CPO, but last month we hired Bharat Guruprakesh as our CPO, so our dynamic duo has now become a triumvirate!
Adrian Bridgwater: To what degree do you want to hold onto the core values and original vision of Algolia’s co-founders Nicolas Dessaigne & Julien Lemoine as you now further scale and expand the company?
Bernadette Nixon: I really love the core values that Nico (as I call him) and Julien founded the company on: grit, humility, care, candor and trust. They’re just such a strong set of principles and I have not changed any of those core values.
The only thing I’ve expanded upon is one aspect of the trust cornerstone. We used to talk about ‘trust being earned’ and I changed that to ‘trust is given, not earned, but a break in trust is a BIG deal’ because I think it expresses the true dynamic nature of modern business.
My ‘Weekly Values’ session with our new hires is one of the highlights of my week. But I’m also a pragmatist and I realize that although our values remain the same, how we function as a company has to evolve as we scale. We’re experiencing very high growth rates and this creates situations and environments where what worked yesterday, may no longer work today. What all this means is that we will evolve as a company, whilst staying true to our core values.
Adrian Bridgwater: What kind of ‘shape’ is your partner strategy in and how would you define great partner experiences … and when and where do they occur?
Bernadette Nixon: Our partner strategy is a key element of our mission to solve customer problems. Our work with our partners is an opportunity to further expand our efforts with companies large and small as they build upon our products to suit their ever-evolving needs and requirements. Working with other software companies (some of which are now investors as well) we can further augment our own platform for the future, to the benefit of our customers. And system integrator relationships are another area of focus for us.
Adrian Bridgwater: We’re deliberately not going to ask you about women in technology issues to reinforce the point that we should be past the discussion – but what is your personal approach to equality, inclusivity and meritocracy?
Bernadette Nixon: I’m a strong believer in diversity, inclusion, meritocracy and most importantly belonging. Conversely, I am not a fan of systems of hierarchy or privilege. We are some two decades past the millennium, and we should be further along than we are.
The reason I put the emphasis on belonging is because it’s not possible to have a sense of belonging if we’re in an environment we don’t identify with, and if we’re in such an environment there’s no way we will do our best work. I work with all new hire groups directly (usually within a couple of weeks of their joining Algolia) to make sure people know they can ask, say, question, challenge and perhaps even shout when needed. It might have been a virtual door throughout the pandemic, but my office is always open.
When I worked at the UN, we operated within systems based upon quotas. Whilst I have a love/hate relationship with quota systems, they do play a role in the short-term to combat groupthink, but they should not typify or characterize the way contemporary organizations should function in any sector or in any industry long-term.
Adrian Bridgwater: In our modern world of sustainability-aware management, we must ensure that growth happens for the right reasons – and not just for growth and expansion’s sake – right?
Bernadette Nixon: I like the idea that an organization can be a business not just for the shareholders, but also for the stakeholders at every level from employees to partners to customers, onward to the people who aren’t your customers (yet, or who may never be) and the rest of humanity. I like the way the Business Roundtable talks about stakeholder management. We’ve grown a lot as a planet, so business growth for growth’s sake should not be wholly justified unless there is a wider mission to help other people in some form or function, which is why our vision is in service of others, not to make Algolia #1 in the market – that’s a byproduct of the vision, not the vision itself.
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