New AI-powered sales automation startup 11x is under the microscope. Critics are accusing the company of misleadingly counting customers it doesn’t really have. Coast was founded by Hasan Sukkar in 2022. In July of this year, it moved its headquarters from London to Silicon Valley at the same time it was experiencing triple-digit growth and celebrating exciting funding milestones. In September 2023, 11x officially emerged from stealth mode with the announcement of a $24 million Series A funding round led by Benchmark, underscoring its ambitious trajectory.
The company was on track for an astounding annualized recurring revenue (ARR) run rate of almost $10 million only 2 years after their founding. It now finds itself under fire for allegedly misrepresenting its customer demographic. Reports suggest that 11x has illegally used the logos of companies including ZoomInfo. This has activated legal threats and raised grave concerns over the company’s surreptitious business practices.
Growth and Funding
In its short time since founding, 11x has already established itself as a leading force in the burgeoning and highly competitive sales automation space. The firm hit a sparkling notable ARR of about $10 million just a few months after their Series A funding news. This accomplishment is all the more remarkable considering its short time in operation.
In the two or three months prior to the funding announcement, 11x ramped up hiring—ballot measure be damned. It grew its full-time staff to 50, fueled by the need to expand its operations and increased customer demand. Even as the startup has soared, issues have followed the ornery upstart.
Per 11x, the firm reports 79% retention. However, internal reports indicate that the worst churn rates have been seen among earlier customer cohorts, with the worst being in late 2023. This begs the question—not only about the sustainability of its high-cost business model—but whether it keeps its customers happy.
“We were losing 70-80% of customers that came through the door,” – employee
This retention problem might have been exacerbated by turnover as the company dealt with management shakeup after moving to its new digs in San Francisco. Employees pointed out that this change affected the flow of their operations and led to uneven customer experiences across the board.
Customer Claims Under Fire
The most immediate and significant contention centers around ZoomInfo’s allegations, which claim that 11x has misrepresented it as a customer. In fact, according to a spokesperson from ZoomInfo,
“Since November, 11x has been claiming us as a customer in a multitude of channels: in sales calls, on its website, and now even on its AI dialer.”
ZoomInfo makes moves against 11x. The company is suing them to keep them from using their logo and misrepresenting their relationship. The spokesperson continued to stress that,
“We did not give them permission to use our logo in any manner, and we are not a customer.”
ZoomInfo’s legal team is currently pursuing a variety of possible legal action against 11x. These include lawsuits for claims of unfair and misleading trade practices and trademark dilution.
In a recent pilot program with 11x, ZoomInfo found that the startup’s product seriously underperformed. Better than AI by a long shot were human Sales Development Representatives (SDRs). After this terrible performance, ZoomInfo dropped out of any further work.
“During the pilot, 11x’s product performed significantly worse than our SDR employees, and we did not move forward afterward,” – ZoomInfo spokesperson
These claims are troubling enough, but the behavior that undergirds them poses deep questions about the honesty of 11x’s marketing and sales practices.
Internal Concerns and Challenges
Even internal sources at 11x suggested that metrics were likely being inflated or misreported and customers weren’t happy. A current employee commented on the company's approach to data presentation:
“There’s a lot more under the hood.”
Moreover, whistleblowers have claimed their internal data on growth and churn was sometimes inflated or misrepresented. As one former employee put it,
“They absolutely massaged the numbers internally when it came to growth and churn.”
Complaints from potential clients shed further light on the alarming reality of 11x’s mercenary business model and questionable practices. These prospective clients reported a tendency from 11x to push back on trial agreements or tests of their full product suite.
“They were resistant to signing any sort of trial or letting us experiment,” – prospective customer
These behaviors indicate gaps in customer outreach and product validation approaches.
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