Identifying the ICP with the greatest need with Aircall's Jonathan Anguelov
Identifying the ICP with the greatest need with Aircall's Jonathan Anguelov
Jonathan Anguelov:
Focus on your product. Don't forget your vision, your initial vision and your product. Focus on what you believe and just execute, execute, execute. Of course, that doesn't mean to not listen to your peers or your friends or whatever that gives you advice, but what's important is to stick to your vision.
Peep Laja:
I'm Peep Laja. I don't do fluff, I don't do filler, I don't do emojis. What I do is study winners in B2B SaaS because I want to know how much is strategy, how much is luck, and how do they win? This week, Jonathan Anguelov, co-founder at Aircall, a cloud-based call center and phone system. Since its founding in 2014, Aircall has raised over 226 million in funding and now sits at over 100 million ARR with over 700 global employees.
In this episode, we discuss the massive opportunity Aircall saw in the market, how they get an early leg up on the competition by being specific about their ICP, and why innovation remains a core part of their strategy. Let's get into it.
Jonathan Anguelov:
What was incredible back in the time is that we all had mobiles, we all had mobile phone, we all had even smartphones. And so making a call through internet was something pretty normal. We all knew Skype, we all knew different video conferencing tools. It was existing, but the phone systems were always the same. It was always this black box in front of you on your desk and people picking up and hanging up the phone and that's it. It was very one way.
We thought, okay, we need to digitalize that. There is tons of apps like WhatsApp or whatever, Skype, what existed already, but for the professional side, it was very limited. So the idea started from there where we ask ourself, what if your phone system now is on your computer and it's just going to be easy? The opportunity was there at that moment where we realized, okay, people are looking for simplicity. People are looking for a phone system that you can set up in minutes anywhere in the world.
So we started from that concept. And then we realized of course, that the one that makes most of the phone calls in a company are always the same, either sales team, either customer support departments. So we build the software, we build Aircall around those teams to bring them productivity. And to bring them productivity, we had to connect to all the tools they're already using, CRMs, help desks, et cetera, to make sure that when they do a call they can do it fast, they can do it efficiently, they can know who they are on the phone with, they can have the history of the calls, they can listen back to the calls, et cetera.
Peep Laja:
At the time when you started, what was the competitive landscape like in terms of the new digital players? Today, this place is pretty crowded. What was it like back then?
Jonathan Anguelov:
They already existed. Let's say our big American competitors already existed, and they still exist today, but by the time they were way less digitalized, very old school, very complex to set it up. I think the market in eight years didn't move so much. I mean yes, there is some small players coming in, there is copycats, there is a long tail of new type of competitors, but the big competition is still there.
Actually, it is a very nice competition because they help us also evangelize this market because we started as a pure software, they started as hardwares, and they are all moving to softwares. It's a good way also for us to justify what we are doing because we get more and more customers also thanks to them. And by the time you just start your business, you see some big guys and you see that you will provide the same type of service but not at all the same product and with added value that has nothing comparable.
So we went straight in it a little bit like crazy, let's say, because we didn't have much experience in the telco nor as a startup founders, but I think we were super lucky to choose our go-to-market and to choose the product we sold as it is such a huge and a deep market that by doing things approximately by the time things work out and the product was really attractive in terms of functionalities and also in terms of value added for the customers. We kind of grew consistently at a very fast pace over the past eight years that brought us in 2022 actually over a hundred million ARR.
Peep Laja:
If you're the only one doing what you're doing, you're either a true innovator or it might be a sign that nobody wants what you're selling. If there's no market for your product, you will spend endless time and resources trying to convince people they should buy it. And that's a tough life.
Your other option is to enter a market with lots of preexisting demand and take control of the narrative. If you do that, your competitors might even become evangelists for the problem you're solving. That's how ABM platform Terminus is winning, as their co-founder Sangram Vajre explained in a previous episode of How to Win.
Sangram Vajre:
I've always said there is no such thing as category of one. If you hear anybody say, "We really don't have any competitors," if that's the case, then you probably shouldn't be in the business. That just means that nobody really wants it. Having competitors is great. Our strategy was we wanted to build a category, we wanted to be part of building a category.
So we invited 6Sense, Engagio, Demandbase. All of our competitors have sponsored all of our conferences. What's exciting about that was all of these companies had to invest in building the category of ABM and we loved that. We even gave them all the stage and have them talk because we owned the narrative and we wanted to bring all of them alongside on creating this big category because we just knew that as long as the category is big enough, then everybody will have a larger stake. There's enough to go around. Each one of us brings something different to the table, so that's great.
Peep Laja:
Tell me more about that initial go-to-market strategy. How did you choose which segments to go after? What kind of bets did not pay off? How did you find your rhythm?
Jonathan Anguelov:
What we thought is to be able to price a phone system with value and not just provide a commodity because a phone system at the end is a commodity. We all have mobiles. If it's not a smartphone, it's a commodity. And why do you accept to pay $1,000 for a smartphone? Because it's not anymore a commodity. What was a commodity is the ex mobile phones where you make phone calls and that's it.
We thought, okay, we need to bring value to bring value, we need people that don't use the phone as a commodity, so people that use it intensively. Who is using more intensively the phone than sales or customer support department? No one. So we focused on that segment for the first six years I would say, on how sales will be able to do intensive calling with Aircall.
So being able to have automations in calling, push the calls directly in the CRM, push the recording, the transcripts for customer service departments, trigger automatically the CRM when a customer calls, show all the history of the call inside Aircall, trigger the right page, the right information when they need it to improve their productivity, because what is more frustrating than you calling a customer service of your favorite eCommerce and the first question you always get is the same is, "Hello sir, can you give me your phone number or your customer number?" And you're calling with that number. So why do they ask you that? Or actually when they ask you your customer number, who knows is customer number?
It's very frustrating. You lose time. You have to tell your name. If your name is a little bit complex like mine, you have to repeat 10 times because ANG, no it's not G, it's J. It's a mess. But the most important was to bring the value, so increase the number of calls reps can do, help managers understand how their teammates are working, and make sure that you deliver diverse service.
When you call someone that is using Aircall, he's going to welcome you. He's going to say, "Hey, how are you Jonathan? How you are been doing? I've seen that you've made a purchase with us recently. Are you calling about that purchase?" The point is improving that service.
Peep Laja:
Your product supports multiple jobs to be done, and you could go in many different directions with it. How do you choose what to focus on in your messaging? A good place to start is to identify the major pain points of your customers. Here's Raechel Lambert, co-founder of Olivine Marketing, with her thoughts on choosing the right job to be done.
Raechel Lambert:
You have to prioritize the job to be done. Quick example, customer support space for intercom. We were initially speaking about the job to be done of making it really easy for the customers to get help, but that wasn't what directors of support really cared about. What they were being asked by the board of directors is, hey, revenue and customer accounts going to double next year, but you don't get to double your head count.
So, the job to be done was scaling the support team by being able to handle more requests without doubling head count. There's going to be many jobs to be done for each product, but you have to figure out which one is most important to your buyer.
Peep Laja:
Today there are a lot of players in this space, and a lot of companies did not succeed. You and many other players jumped that opportunity at the same time more or less. You are now at a hundred million ARR, many others are struggling or already went under. Why did you guys succeed? What did you do differently or better?
Jonathan Anguelov:
I would say we focused very much on our ICP, so ideal customer profile. We thought, okay, we know that we need to target companies that have the right need. We were very focused on that segment of sales team and customer service team. That was the beginning of Aircall.
Today we are providing the phone system of entire companies, but that's another story. When you start, it's important to focus on the right team at the right moment. Second, the tech. We took a lot of risk with trying to make everything live. You start Aircall, you can five minute later, even three minute, I think our first catch phrase on the website was, set up your phone system and call center software in less than three minutes.
This was a big risk because we thought what people need is in instant now. They need instantly things. And being able to provide a phone system, a cloud-based phone system with numbers anywhere in the world, no matter where you are sitting yourself, that was incredible back then. And I think this choice was the riskier we took, but at the same time, the one that met us probably be where we are today. Even though there is still a lot to do and we still want to do a lot, but this is one of the reasons.
The second reason is probably the most important is that very early we understood the fact that companies love to have products that communicate with each other. And seven years ago when you talk about integrating the phone system to the CRM or to the help desk or to any other tool, people were like, "Oh that's interesting," et cetera.
But for operational managers, for the VP sales, for the VP customer support, it was incredible. They were like, "Seriously? I will be able to know when I called this customer last time or I will be able to listen back to the call? I'm going to be able to listen live to the call of one of my reps?" That was pretty awesome by the time. And it really made our go-to-market easier. This is what we've been known for for the past years is it's easy to set up, easy to use, and easy to manage. This made a kind of a difference.
Peep Laja:
Aircall nailed its go-to-market strategy, but what even is a go-to-market strategy? Here's Asia Matos, founder of DemandMaven, explaining it.
Asia Matos:
Go-to-market strategy, it is basically the full deep dive plan into how it is that you plan to take your product, we're assuming SaaS in this case, how do you plan on launching your SaaS to the world? All of these things are 100% dependent on what it is that you ultimately want to accomplish. I think that that is probably why go-to-market sounds really terrifying for a lot of founders.
You see so much more content about inbound and content marketing and demand generation and lead generation, and it's really hard to consolidate and figure out how all of those pieces fit together. But go-to-market encapsulates literally everything. It is the complete total package of how you plan to operate this business and make it revenue generating and of course just offer the product to the world. It always makes me sad when more people don't talk about it, but I would say it's step number one before you ever even think about conversion optimization or running ads or what have you. It's always the first step.
Peep Laja:
How were you acquiring customers early in the company lifetime and how has that changed over time?
Jonathan Anguelov:
Honestly, the way we acquire customer didn't evolve so much. We were very early, very focused on outbound, so a very large Salesforce going after our prospect and making sure that we cover the market as much as possible. Of course, a very good inbound engine as well with a lot of content being produced with a lot of very precise webinars or partnerships with different actors that fit in the same type of ICP we had. It helped us a lot.
And of course, one of the best go-to-market we had until now is the fact that as we integrate with 100 plus softwares, 85% of those integrations were not done by us, were built by the software vendors themselves, so by a CRM, a local CRM in France, a local CRM in UK, a local help desk in Australia, whatever. These help us grow because those companies are building something on top of us and then they say, "Hey, our software will sell it, but we also have Aircall that is connected to it, so now you're going to be more productive with my software but also with Aircall. It's incredible. We mix both."
This helped us a lot from a go-to-market perspective because we are not the only one that sell our product anymore. We have partners that help us and that they are not actually incentivized financial wise by us, but they're incentivized to sell the best product possible, which is hopefully their product. Their product associated to ours brings more value or logically more values than the competition.
Peep Laja:
You guys raised over 200 million over the years. How did you allocate the money strategically to drive growth? How much went into product R&D? How much went into sales and marketing, et cetera?
Jonathan Anguelov:
Top of mind, I don't really exactly have the numbers, but what we target always is sales and marketing. About 50% of the OPEX and another 50% mixed between G&A and of course, R&D, which is probably around 40% of our spending. It's for us, very important to have a strong tech team, but as well as a strong marketing team.
Now the world is changing, and you know have to go towards profitability. At Aircall, we launched recently really restructuring of our way of working and making sure we go towards profitability fast. That's very interesting because it changes the way we work and it pushes us to challenge ourselves. We call it efficient growth. It says everything on its own, but it's how do we grow in a more efficient manner with burning less and still growing at a high velocity pace?
Peep Laja:
How are you going to do that? Does that mean you're going to lay off people or-
Jonathan Anguelov:
No, no, no. We keep recruiting actually. By the end of the year, we're still recruiting about 50 people. Next year, a few hundred. So no, no, no, we're still recruiting a lot. We are actually just expecting more from the teams. We are trying to find more profitabilities, we are trying to hire less. And if we hire, we hire more senior, more experience. So we avoid what every startup goes through is one project, one person. We try to have if there is a new project, okay, let's see how we can do it on our own.
Peep Laja:
Hiring people with deep expertise is worth the money, better decisions at a much faster pace. A senior person with a ton of expertise costs more but allows you to move much faster and focus better. Deep expertise shapes your mental model for analyzing a picture. You will start to see patterns and how one thing affects another, things novices miss in a blink of an eye.
Training fast cognition will take time and practice to reprogram your mind, to quickly recognize system effects. It's what years of experience does. Situations will look different to someone with deep expertise. It's the same thing Malcolm Gladwell writes about when describing the 10,000 hour rule. To be truly great at what you do, you need experience.
Malcolm Gladwell:
Almost without exception, it appears to be impossible to achieve a level of excellence in any cognitively complex task without first putting in 10,000 hours of practice. When we look at chess players, grand masters, there's only been one grand master in history who achieved the level of grand master without playing 10 years of chess. 10,000 hours in 10 years are roughly the same.
Almost impossible to find a classic composer who composed a truly great work without first composing for 10 years. Even Mozart, who we think of as the poster child for precosity, he doesn't do his first really great work until he is 22 or 23, I mean really transcendent stuff. At which point he's been composing for 12 or 13 years, he is actually technically a late bloomer.
Peep Laja:
Looking into the future five years, 10 years from now, in tech over time, all competitors become very similar in terms of their features, capabilities, and companies start differentiating more on brand. What is your take on your long-term moats and competitive advantages?
Jonathan Anguelov:
I would say the one that we want to make sure we always stay on top of it is innovation. We want to be innovative. Our goal is to be innovative always and not just build the product is build the future product the companies will use. Innovation is that the hearth of our DNA. Actually, we are preparing the launch of a new product pretty soon that is not the type of product usual phone system have, and we want to make sure that we keep innovating.
Of course on the brand side, there is a lot of things. First, we value a lot diversity and not necessarily experience only like a lot of companies, even though experience is important. What we love is having people from different backgrounds with different experience. All this makes it incredible to succeed. It worked until now, and we keep doing that, having people who are from all over the world that work on one product with different experiences.
Peep Laja:
You've been now running this company for eight years, eight years and going, what are some three pieces of advice you would have for fellow B2B SaaS founders? Now looking back, lessons learned.
Jonathan Anguelov:
Focus on your product. Don't forget your vision, your initial vision and your product. A lot of founders tend to panic when they see competition, tend to panic when people are telling them, "Ah, you shouldn't do that" or whatever.
Focus on what you believe and just execute, execute, execute. Of course, that doesn't mean to not listen to your peers or your friends or whatever that gives you advice, but what's important is to stick to your vision. I've seen so many companies just changing their vision just because they hear there is a new competitor going.
I even see it often. I do a lot of business engine, and I love doing that. I get founders contacting me very often say, "Hey, we've just seen that new competitor. They announced a $1 million investment in their company. It's tough." Come on, seriously. Are you seriously looking at a company that raised $1 million? Who cares? We don't care. Let's go. It means actually your product has a future, so let's go. Don't focus on the problem. Focus on the execution. Execution one of the most important.
Then second is succeeding in business doesn't necessarily mean raising money. I know Aircall is a bad example of that. Of course, we raised 220 million, but a lot of companies succeed without having the need to raise. So don't take the assumption that if you don't raise, you cannot be successful. That's wrong. That's wrong. Some of the best companies in this world have done it without raising a dime. So it is possible.
And third, hire your first employees like founders. They have to have this founder spirit, they have to be a little bit entrepreneurs. Don't look right away for the most experienced person with the most advanced skills, et cetera. Find people that are hungry. Find people that are entrepreneurs to be.
Actually, funny enough, all my first employees, and seriously all of them that stayed with us at least three to four years are today entrepreneurs. They were born like that. They had this little sparkle inside their eyes that made us feel, my co-founder and I when we recruited them, they are the right guy. And we are extremely proud of the choices we made because at the beginning I believe a company, it's easy. It's a lot of execution. Then it becomes more complicated from 10 million ARR on. You have to bring leadership, you have to bring experience, you have to bring people that have done it already.
But early stage, focus on your team. Your team at the beginning are seriously the most important people for your company in general. Rely on them and give them this little sparkle that you have as a founder because every founder has a flame inside himself. You have to make sure they get that flame too. And if they get it, you've done 50% of the time because when you have the right team, anything is possible.
Peep Laja:
What three strategies saw Aircall soar to 100 million in ARR? One, they entered a massive market with lots of opportunity.
Jonathan Anguelov:
I think we were super lucky to choose our go-to-market and to choose the product we sold as it is such a huge and a deep market that by doing things approximately by the time things work out.
Peep Laja:
Two, they focused on a specific ICP that had the biggest need.
Jonathan Anguelov:
We thought, okay, we know that we need to target companies that have the right need. We were very focused on that segment of sales team and customer service team.
Peep Laja:
Three, to keep ahead of the competition by continually prioritizing R&D.
Jonathan Anguelov:
Our goal is to be innovative always and not just build the product, is build the future product the companies will use. And so innovation is that the hearth of our DNA.
Peep Laja:
One last takeaway from Jonathan.
Jonathan Anguelov:
What we thought is to be able to price a phone system with value and not just provide a commodity because a phone system at the end is a commodity. If it's not a smartphone, it's a commodity. And why do you accept to pay $1,000 for a smartphone? Because it's not anymore a commodity. We thought, okay, we need to bring value.
Peep Laja:
And that's how you win. I'm Peep Laja. For more tips on how to win, follow me on LinkedIn or Twitter. Thanks for listening.
