The AI SDR era? - Kyle Poyar’s Growth Unhinged

👋 Hi, it’s Kyle Poyar and welcome to Growth Unhinged, my weekly newsletter exploring the hidden playbooks behind the fastest-growing startups.

Today we’re going to unpack the rise of the AI SDR and explore startup 11x.ai’s path from $0 to $2 million ARR in only six months. This is the eighth story in my Zero to One series featuring the rise of startups like Attio, Jam, Pinecone and Rewind.

If you’ve been following this newsletter for a while, you’ve noticed my fascination with the somewhat controversial topic of outbound automation, aka scaling outbound acquisition without hiring BDRs or SDRs.

Yes, it might sound like a fad or like unnecessary spam. But improvements in data, automation and AI mean that – theoretically – technology should be able to perform as well as a new hire and at a fraction of the cost. This could translate into more efficient pipeline all while freeing people up to do what they’re great at: building personal relationships. Of course, the biggest beneficiaries would be early adopters willing to take a chance on a new approach.

Last year I profiled how seed-funded Thena.ai generates the output of 5-10 sales reps without hiring BDRs or SDRs – just automated outbound. It’s an impressive story, but honestly Thena’s DIY approach is hard to replicate. There’s significant operational work required to gather data, stitch together tools, acquire mailboxes, warm up domains and run tests at scale.

The DIY approach is phenomenal for folks who are ready for it. But the added complexity has limited its adoption. Recent data from the Product-Led Sales Benchmarks shows that while 18% of software companies are testing automated or AI-driven outbound, only 4% say it’s a top three source of their pipeline.

What if companies could instead hire a digital, AI-powered SDR? That SDR would be quick to deploy, work 24x7 and get smarter over time as it learned from past interactions.

Well, that’s the idea behind AI startup 11x.ai. The London-based company raised a $2M pre-seed round in August 2023 led by Project A Ventures. Since then they’ve been on a tear. Founder and CEO Hasan Sukkar recently told me that they’ve gone from $0 to $2 million ARR in only six months – and are still growing 50% month-over-month.

I caught up with Hasan to get the inside scoop: exactly how 11x.ai reached $2 million ARR in six months and his learnings on how to scale an AI startup.

11x.ai started with a simple concept, Hasan told me. He believed in a future of digital workers.

“You can think of them as virtual employees that you can hire like you can hire humans. They work around the clock, 24x7. Instead of being productivity enhancers, they’re capable of filling a role end-to-end.”

This was the company’s founding premise. In the very early days, Hasan and team considered going after the freelancer market with an Upwork for virtual workers value proposition. The team then refined the focus to a specific vertical and came up with Alice, a virtual SDR.

Hasan’s inspiration came from his first job where he was responsible for moving data from spreadsheet A to spreadsheet B. He described the job as “super repetitive and monotonous” and since then he’s been passionate about automation.

Hasan had the idea for 11x.ai in Q3 of 2022. He refocused on the SDR vertical in Q1 of 2023. Then he and his team spent the first 7-8 months “going deep with early design partners and customers.” They would sit next to SDRs to observe a day-in-the-life firsthand. They’d analyze differences between a top 5% SDR and a middle-of-the-pack SDR to see what insights they could apply into a digital version.

Hasan chose to go extremely deep with a small number of design partners rather than going shallow-and-wide. The 11x.ai team was very lean at that time (six employees) with all product-minded folks. This allowed 11x.ai to cycle through many iterations of the product with what Hasan described as a “high risk” and “technically fearless” approach to building the product. (We’ll unpack that later.)

He also invested significant resources around branding and positioning. Hasan wanted to help folks get comfortable with the concept of a digital worker; he gave it a name (Alice), a face and a specific job. This extended even to how he approached pricing, which is based on tasks completed rather than credits consumed – all to humanize the experience.

Hasan and team publicly launched in August 2023 with a story in TechCrunch. In the six months since then, 11x.ai surpassed $2 million ARR with one primary growth channel (spoiler: it’s Alice, their own digital SDR).

The 11x.ai team trained Alice to automate outbound prospecting, specifically outbound emails and LinkedIn messages. The product scans for anyone hiring SDRs around the world. Alice then reaches out as AI with a message that boils down to I’m AI and I do this job (see example below).

The specific messages then get personalized based on factors like recent company events (“congrats on the series A!!”) and how long the job postings have been live for (“I know… the postings have been live for some time. So hear me out.”).

The virtual SDR only targets prospects with intent, i.e. where it’s clear they are willing to spend money to hire an SDR team. “Reaching out with intent with the right triggers at the right time is extremely effective,” Hasan said.

This motion is clearly working; Alice generates 70-80 qualified meetings per week for 11x.ai. In the early days, Hasan fielded most of those meetings himself through founder-led sales. He did that until 11x.ai grew past $700,000 in ARR.

More recently, he’s onboarded the company’s first two AEs (this happened in early February). They’ve already sold more than $200,000 in ARR in their first month due in part to the pent up demand generated by Alice.

An AI-powered SDR could generate lots of demand through a high volume, spray-and-pray approach. Hasan wanted to emphasize that he doesn’t think this is the best path for the industry. “The age of high volume, templated outreach is much less effective than it ever was,” he emphasized. Google and Yahoo!, for example, are making this harder to do.

He believes that the future will be lower volume and higher quality. “You need to personalize and have relevance in a scalable way, which is becoming increasingly easy. Instead of having someone spend 20 minutes researching the person and the content they wrote, AI can do that very effectively,” Hasan noted.

In full transparency, the company also saw more than 1,000 inbound demo requests after the launch in August. Hasan noted that the product was striking a nerve, which he attributes to (a) customers are trying to grow more efficiently and (b) 11x.ai having an intriguing value proposition.

This pipeline would be meaningless if it didn’t translate into closed won customers and real revenue. Hasan believes they’ve been able to achieve this because they’re “solving a real problem for our customers in an end-to-end, integrated, autopilot first manner.”

He said this approach drives “concrete ROI” in terms of both revenue generation and cost efficiency. This isn’t a “we’ll save you time” value proposition (which I’ve ranted about previously). It’s a hard ROI value proposition with multiple pillars:

11x.ai goes after a hard ROI value proposition tied to both cost and revenue

This end-to-end approach unlocks a fundamentally new pricing model as well. Rather than charging for the software, 11x.ai can charge for the work done by the software.

It’s worth noting that incumbent software vendors monetize based on seats. Hasan thinks that there will be fewer SDR seats in the future as Alice gets better at doing the job. He positioned this in the context of the gradual shift in pricing from seat-based subscriptions to consumption-based pricing and now to newer models like outcome-based pricing.

Right now 11x.ai’s pricing is primarily task-based. The company breaks down the different tasks that an SDR completes like (1) identifying accounts, (2) researching those accounts, (3) preparing outreach across email and LinkedIn, (4) scheduling meetings when the prospects respond. Customers can scale up or down their volume of tasks along with the exact tasks outsourced to Alice.

While 90% of 11x.ai’s customers are in this task-based model, Hasan has been testing outcome-based pricing for select customers. For reference, you might think about Intercom’s AI chatbot pricing which is based on successful resolutions.

The success metric for 11x.ai is really clear (i.e. qualified opportunities or SQLs) and customers are accustomed to this outcome being quite expensive when it’s done just by humans (often upwards of $1,000 per opportunity). We’ll need to circle back with Hasan to learn more about how the new pricing model is received in the market.

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11x.ai’s end-to-end approach has a downside, too – a big product scope.

Hasan wanted 11x.ai to have a technical edge at their core, which he believed would enable them to deliver more value than legacy incumbents. A traditional SaaS product would consist of elements like forms, tables, interfaces and logic. 11x.ai was built a different way under the assumption that the primary value would not come from end-users logging in every day. It’s a combination of agents that specialize in different items like collecting information or writing personalized content. The idea is that it would create a loop that would ultimately make Alice smarter and smarter over time.

For example, 11x.ai built agents to browse the web and find information even though this data might be readily available via third-party providers. This first-party approach allows the company to be more flexible in terms of how they target buying intent relative to what’s available off-the-shelf. Ultimately, this approach sets up the company to eventually pursue Hasan’s long-term vision of going beyond the SDR use case.

Hasan attributed 11x.ai’s early success to embracing velocity in their DNA as a company. “This compounds,” he emphasized. “We like to operate at five or 10 times the speed most people think is normal.”

A core internal principle for the company is setting the pace. The company screens for this when they hire and constantly reinforces it internally. It applies everywhere from the speed of shipping to how quickly they hire candidates to how fast they onboard new customers.

Related: Inside Ramp's intense velocity

So, what’s next for 11x.ai?

The underlying thesis is a bet on automation. “We want to enable a future of a three person unicorn,” said Hasan.

He believes that the amount of people needed per $1M in ARR is coming down and that this trend will continue. In the process, 11x.ai wants to “enable people to achieve so much more with their time and focus on things that are human-based, relationship-based, creative and strategic.” (And I thought my goals were lofty 😰)

I asked Hasan what advice he has for aspiring founders. It came down to the basics:

With Hasan’s velocity and ambition, I’ll be watching where he takes 11x.ai next.

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