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A startup in Paris is scaling up unusually fast

A startup in Paris is scaling up unusually fast

IT WAS not the sort of do-it-yourself activity that Castorama, a French home-improvement chain, usually promoted. The search engine on the firm’s website started offering customers puerile responses to their inquiries. Its auto-complete text function suggested such intriguing products as a “bollock hammer” or “cock sander”. It also returned offensive anti-Semitic phrases. The firm blamed manipulation by unnamed actors and had to briefly scrap its search function.

That incident, two years ago, was a reminder that much online search occurs within websites. Internet giants such as Google excel at bringing users to sites but once there customers often rely on websites’ own search functions to find products or services. Some firms build their own engines; others use open-source software, such as Elasticsearch, to supply them. The results can sometimes be painfully slow and undiscerning.

As e-commerce grows, so does demand for search systems that are fast, accurate and resilient to typos or tampering. A firm that saw an opportunity in this is Algolia, a French startup founded in 2012. It has a search application that hunts the client’s website and swiftly offers consumers relevant results.

Algolia is growing unusually fast for a European startup. It has some 200 engineers and other staff, up from 60 in 2016, most of them based in penthouse floors at its new headquarters behind Paris-Saint-Lazare station (its legal headquarters and a marketing office are still in San Francisco). The firm says it has over 4,500 clients, more than double the tally of two years ago, mostly in America. Its platform is processing 41bn search requests a month, as of March, again more than double the equivalent figure two years ago.

One client, Twitch, a live-streaming video platform owned by Amazon, sees nearly 1bn visits to its site each month, leading to lots of searches. Other customers include Stripe, a cloud-based payments firm; Medium, a publisher; Crunchbase, a database for techies; and various Fortune 500 and CAC 40 firms.

Its figures sound impressive, but there is no ad spending attached to its searches since users are already on company websites. Algolia’s model is to charge clients for its bespoke service, rather than selling ads and scooping up data about users. Its revenues reached $1m in 2014, two years after founding, rose to $10m in 2016 and doubled to $20m last year.

Julien Lemoine, Algolia’s co-founder, sees opportunity among midsized European firms, which are belatedly aware that they must expand their digital offerings. He has plans for operations in Germany and Japan, after opening in Australia this year. Engineers are focused on “natural-language processing” to improve search in tricky tongues like Arabic and Japanese.

A perennial complaint about young tech firms in France is that—despite their gifted engineers and smart ideas—few know how to scale up fast enough to interest big investors. Cedric Sellin, a Paris-based business angel, reckons that locals are too scared of venturing abroad early. “Too many startups try to nail it here, before they think of going elsewhere,” he says. Algolia, in contrast, uses English in all its offices and sought clients in America from the start. The founders’ experience at Y Combinator, a revered school for startups in California, helped them become unusually comfortable, for a French outfit, about taking risks.

Raising serious amounts of capital early also helped. France may have plenty of seed funds for the smallest startups, but ambitious firms usually have to relocate across the Atlantic in search of big investments. But Algolia drew in $74m from investors led by Accel, a venture-capital firm in London, that were attracted by the firm’s global ambitions. Turning l’Hexagone into a “startup nation” means looking beyond France’s borders.

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