Winning Against Heavily-Funded Competitors: Al Lalani, CEO of Social Annex (Part 4)

Al Lalani: The next phase of growth was primarily to scale some of the traditional SaaS channels. We hired an outbound marketing team to scale the people I hired from college and Craigslist. We created an inbound marketing team to do a lot of content marketing. If you look at our site, we’ve got really good at content marketing and explaining to people its benefits. We focused on inbound marketing and outbound through traditional sales.

Sramana Mitra: What did you encounter in terms of competition in the market?

Al Lalani: Pretty soon, a lot of companies started coming out. It was very different for us. For me, it was always the aspect of loyalty and advocacy. I never looked at it and said, “There should be something here for Facebook as a solution. There should be something here for Instagram as a solution.” Time will tell if this is the right strategy in the long run but we focused on creating this flat platform.

We’ve built an engine for what we call visual commerce, which is focused on visual and social networks around Instagram, Pinterest, and Snapchat. What happened along the way was companies took one piece of that idea and grew that entire piece. We started seeing competition, but only in our part of the product. Because we focused on mid-market to enterprise companies and not SMB’s, we couldn’t go in and say, “That company focuses on one piece but we focus on the platform.”

We had to be as good or better than the company that focused on that one vertical. A couple of years ago, there was a heavy focus on solidifying and going deep into the product. Now if you take one of our product suites and say, “Are you as good as this company that just focuses on that?” We can say that, not only are we good, we are better. That story, while it’s easy to say, takes a lot of time to implement. It took us about a couple of years to really build that type of products and make that happen.

Sramana Mitra: Talk about ramp. You started in 2010?

Al Lalani: 2010 was me thinking of the idea in my garage. The first employee was hired in 2012, which is when we effectively started.

Sramana Mitra: You said you got to about $100,000 ARR with pure hustle. Which year was that?

Al Lalani: 2012.

Sramana Mitra: Then what’s next?

Al Lalani: From then on, 2013 was more focused around figuring out the product-market fit. What products should we introduce? What is this platform going to look like? Let’s go out and get a few more customers. That’s when we got to $1 million ARR. That was the decision point of raising another $5 million to $10 million round or continue growing like we are.

We stayed on the other side. We didn’t want to raise too much because there was still a lot of muddiness in the market. Out came 20 to 30 different competitors who did one piece of what we did in different angles. There were 10 referral companies, 10 visual commerce companies, and 10 loyalty companies. That sprung out of nowhere. One of the things that I remember from one of my mentors from my first company saying, “Before there’s a top three of any vertical, there’s 83 that try to take the market. It’s going to be too many before it narrows down again.”

Sramana Mitra: What happens during that phase is there’s a lot of venture money that gets thrown at the sector and it becomes very expensive. Customer acquisition becomes expensive and competing in that marketing becomes very expensive. If you can sit out that phase without being in that time bomb venture game, then often what happens is a lot of these heavily venture-funded companies fall off the radar. The people who can stick to fundamentals emerge as the winner.

Al Lalani: That’s exactly the pattern that we saw in our scene essentially. Our choice was to join the game and try to hit it out of the park in two to three years, or grow steadily. If you look at some of the other companies in our space, we’ve gotten to equal or double the revenue and they’re raised $30 million to $40 million. They weren’t able to spur growth by raising $40 million because of how they were structured. They were trying to grow too fast ahead of the market or too fast ahead of the other aspects.

This segment is part 4 in the series : Winning Against Heavily-Funded Competitors: Al Lalani, CEO of Social Annex
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