The AI Growth Flywheel: How We're Scaling 11x Fast with Our Own AI SDR
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Notorious Startup of the Week: 11x
11x is a trailblazing startup that is growing very fast! It is pioneering a new category of AI-powered applications that is selling outcome-based work. 11x is building an AI-powered SDR (sales development rep). GTM teams can augment their SDR teams with Alice, 11x’s AI rep. Alice will research potential target accounts, draft personalized and targeted emails, and then engage in back-and-forth Q&A with the objective of scheduling a qualified meeting for a sales rep. Alice is outperforming humans in many cases. There is infinite demand for more qualified meetings. We have a special edition today as 11x CEO and Founder Hasan Sukkar takes us behind the scenes of how they are building a powerful growth flywheel. Stay tuned for some big announcements from 11x in the near term! Enjoy:
11x’s Powerful Growth Flywheel
When we founded 11x, we had a simple yet audacious dream. We didn’t want to just create a tool that would enhance productivity. We envisaged a world of digital workers, capable of filling roles end-to-end and delivering work outcomes. Fast forward to today, and we're witnessing the fruits of that vision. We're growing at an improbable pace – nearly 50% month-over-month since the beginning of the year. But here's the kicker: the engine behind this growth isn't a massive sales team or a huge marketing budget. It's Alice, our own AI-powered Sales Development Representative (SDR).
This story isn't just about growth in numbers. It's about the emergence of a powerful AI growth flywheel that's redefining how B2B companies can scale. We're using our product to grow, our product helps customers grow, and we grow as our customers grow. It's a virtuous cycle that's propelling us forward at an unprecedented rate.
But, before we dive into the mechanics of this flywheel, let's rewind a bit and set the stage.
Alice is an AI Sales Rep. She automates the BDR/SDR process in an end-to-end, autonomous, and scalable way. Imagine having an AI sales rep who works 24/7, learns from all interactions, and never sleeps. The exciting thing about this product is that we can use it to grow with no real human-labor bottlenecks. Alice is relentless.
There are some key principles that helped us grow - and some key learnings:
Work vs software: Alice is a Digital Worker, meant to operate on autopilot and at scale, in a self improving way. This principle underpins how we build product, how our customers buy product, and how we service our customers. One of our big early learnings - people don’t want to buy tools for reps, they want to buy an actual AI rep that does the work and delivers outcomes.
Growth flywheel: Relying on our product for growth forces us to be incredibly product focused. As Alice gets smarter, we grow faster:
We use Alice to generate leads and meetings for 11x.
This usage provides us with real-world data and insights to improve Alice.
As Alice improves, she generates better results for us and our customers.
Better results lead to faster growth and more customers.
More customers mean more data and use cases to further refine Alice.
Getting creative: One of the challenges of automation is maintaining creativity – a crucial element in sales. We've tackled this head-on by baking creative playbooks into Alice's repertoire. Our most successful experiment? The meme strategy.
We began by testing typical follow-up formats: sharing case studies, additional research, confirming interest, and offering freebies. These worked well, but we wanted to push the envelope. So, we tasked Alice with being more creative than traditional SDRs, leading to experiments with images and GIFs in follow-up emails.
The results were staggering. Not only did this strategy deliver higher response rates in our outbound sequences, but it also led to a 35% response rate when used to re-engage cold pipeline prospects. Here's an example of a meme Alice might use:
This approach breaks through the noise of typical sales outreach, catching prospects off guard (in a good way) and sparking genuine conversations.
Lessons:
1. Focusing on ideal customers in such a massive TAM:
We started with a focus on SMB customers, and had a self-serve motion. We quickly learned that our best and most successful customers are sophisticated sales organisations with clear PMF and ability to benefit from scale, automation, and complex workflows/use cases. Since then, we’ve been focused on mid market and enterprise customers which are benefitting tremendously from Alice.
2. AI reliability:
Operating an autonomous employee comes with challenges. How do you make sure Alice is constrained, verticalized, and trained on best practices? We invested a lot of time in building guardrails that govern how Alice operates autonomously at scale.
3. Scaling at the right pace:
We received ten thousand inbound demo requests in the last 10 months, since launching Alice. The market demand is extremely high. That said, we are obsessed with delivering exceptional experiences for our customers. We are still strongly gating growth, despite being one of the world’s fastest growing companies in 2024.
Going ahead:
We are big believers in the Compound startup model, publicized by Rippling - we plan to launch a variety of adjacent Digital Workers before the end of the year, enabling autonomous GTM functions - across channels, modalities, and use cases. Our goal is to create the AI GTM team.
We will be launching an AI Voice product that automates outbound and inbound SDR calling capabilities and can handle 10-15 minute conversations with SOTA latency by the mid of August - alongside a big exciting announcement.
Reflections on the Future of AI in Sales
As we continue to push the boundaries of what's possible with AI in sales, we're constantly amazed by the potential. The AI growth flywheel we've created with Alice is just the beginning. We're not just building a product; we're pioneering a new way of thinking about work, sales, and business growth.
The future of sales isn't about replacing humans with robots. It's about creating crucial and complimentary relationships between human creativity and AI efficiency. It's about freeing up human talent to focus on high-value, strategic activities while AI handles the repetitive, time-consuming tasks that have traditionally bogged down sales teams.
As we look ahead, we're excited about the possibilities. We're committed to continuing our "technically fearless" approach, pushing the boundaries of what AI can do in the world of sales and beyond.
For other founders and teams working on AI startups, my advice is this: don't be afraid to use your own product in creative ways. The insights you'll gain are invaluable, and the alignment it creates between your team and your customers is powerful.
The future of work is being written right now, and AI is holding the pen. At 11x, we're thrilled to be part of this story, and we can't wait to see what the next chapter holds.
Thanks for reading. By way of background, I am an early-stage investor at Wing and a former founder. Please reach out to me on X @zacharydewitt or at zach@wing.vc. Some of the early-stage PLG + AI companies that I have the privilege to work with and learn from are: AirOps, Copy.ai, Deepgram, Hireguide, Slang.ai, Tango and Tome.
Operating Benchmarks (from PLG Startups):
I will continue to update these metrics and add new metrics. Let me know what metrics you want me to add (zach@wing.vc)
Organic Traffic (as % of all website traffic):
Great: 70%
Good: 50%
Conversion rate (website → free user):
Great: 10%
Good: 5%
Activation rate (free user → activated user):
Great: 50%
Good: 30%
Paid conversion rate (free user → paid user):
Great: 10%
Good: 5%
Enterprise conversion rate (free user → enterprise plan):
Great: 4%
Good: 2%
3-month user retention (% of all users still using product after 3 months):
Great: 30%
Good: 15%
Conversion from waitlist to free user:
<1 month on waitlist: ~50%
>3 months on waitlist: 20%
For more detail on acqusition rates by channel (Organic, SEM, Social etc), please refer to this prior Notorious episode.
Financial Benchmarks (from PLG Public Companies):
Financial data as of previous business day market close.
Best-in-Class Benchmarking:
15 Highest EV/ NTM Revenue Multiples:
15 Biggest Stock Gainers (1 month):
Complete Dataset (click to zoom):
Note: TTM = Trailing Twelve Months; NTM = Next Twelve Months. Rule of 40 = TTM Revenue Growth % + FCF Margin %. GM-Adjusted CAC Payback = Change in Quarterly Revenue / (Gross Margin % * Prior Quarter Sales & Marketing Expense) * 12. Recent IPOs will have temporary “N/A”s as Wall Street Research has to wait to initiate converge.
Recent PLG + AI Financings:
Seed:
EdgeRunner AI, a generative AI platform designed to run on edge devices, has raised $5.5M. The round was led by Four Rivers Group, with participation from Madrona Venture Group.
Fibr, an AI personalization platform, has raised $2M. The round was led by Accel, with participation from Sprint VC and 2 a.m. Ventures.
Lemonado, a no-code platform intended to help non-developers create custom business applications, has raised $1.4M. The round was led by Node Ventures.
Early Stage:
World Labs, an AI company started by Stanford University’s artificial intelligence leader Fei-Fei Li, has raised ~$100M at a $1B valuation. Andreessen Horowitz and Radical Ventures participated in the round.
Series A:
Adaptive, a provider of workflow automation for construction financial management, has raised $19M at a $70M valuation. Emergence Capital led the round, and was joined by a16z, Definition, Exponent, 3kvc and Box Group.
Anysphere, an applied research lab building productive human-AI systems, has raised $60M at a $400M valuation. The round was funded by Andreessen Horowitz.
Arcee.ai, a domain-adapted language model system designed to enhance the AI landscape for businesses, has raised $24M. The round was led by Emergence, with participation from Centre Street Partners, Long Journey Ventures, Flybridge Capital Partners and Arcadia Capital.
Exa, an AI-powered search engine designed to perform web searches at a large scale, has raised $17M. The round was led by Lightspeed Venture Partners, with participation from WndrCo, NVentures and Y Combinator.
Leya, an AI-powered workspace designed for law firms and legal professionals, has raised $25M. The round was led by Redpoint Ventures, with participation from Benchmark Capital, Wayfinder Ventures, Alt Capital and Y Combinator.
Shaped, an AI recommendation and search platform for marketplaces, e-commerce, and content companies, has raised $8M. The round was led by Madrona Venture Group, with participation from Y Combinator.
Thoughtful, an AI operating system for healthcare RCM teams, has raised $20M. The round was led by Drive Capital, with participation from TriplePoint Capital.
Series B:
Hercules, a startup that develops AI software for law firms and large enterprises, has raised $26.1M at a $56.1M valuation. The round was led by Streamlined Ventures, with participation from Thomson Reuters Ventures, PROOF, Davidovs Venture Collective, Decart Ventures, Network VC, Evolution VC, Alumni Ventures, Vision Capital Group and Hybridge Capital Management.
Series D:
Groq, an AI interface technology designed to address the industry's demands of computing speed, quality, and energy efficiency, has raised $300M at a $2.5B valuation. The round was led by BlackRock, with participation from IronArc Ventures.
Kanji, a company that is helping IT manage the growing list of Apple devices inside an organization in a modern and streamlined way, has raised $100M at an $850M valuation. General Catalyst funded the round.