Eoghan McCabe: how Intercom 10x'd growth in 8 quarters by returning to basics and betting on AI

us the story of Intercom. How you doing? There he is. Doing good. I did just sprint three and a half blocks summer blocks. So, sorry. You can always text if you're running late. It's all good. We'll just do more ads. You know, the fans. Yeah. If you do more ads, does that mean ads for Intercom?

Are we officially pretty soon? Pretty soon. I think I think you're just breaking news. I think you're breaking the news. breaking the news. Damn it. No, it's good. You know the way it works with the pharma companies where they kind of own the news networks. Is that a similar That's the goal here for enterprise.

What favors do I get? Can you do a hip piece on Brett Taylor? Yeah. Shots fired. Shots fired. I'm just No, he's a he's a great guy. We just like some hit pieces on our competitors, please. Of course. Yeah. We're lucky to not be in the hit piece business. We're not. We're We'll we'll review.

We're sponsoring the wrong show. Yeah. Yeah. It's rough. Yeah. I think uh I think just buy like a 100,000 subscriptions to the information and then start putting pressure on them. Say, "Yeah, you might want to look into this company. " I I would be down to do a a hit priest about uh technological stagnation.

Yeah, I hate stagnation. And so I would I would want to take down that as a concept. Really slur that whole or or closed IPO windows. Be prepared for a terrible hit piece on closed or hit pieces on on just CEOs that take their foot off the gas. Totally.

You obviously, you know, have not the foot's been I've got two feet on the gas. I think that's possible. It's a bit irresponsible, but yeah. Yeah. Yeah. Walk us through the story of uh that that that you posted, how you rebooted 15year-old decelerating business.

I want to hear this uh from kind of set the table for us and then we'll walk through the story because I think it's fascinating. Yeah, sure. I mean, you know, it's a 15year-old business. It's a successful SAS business. We're in the service game. Um but at the end of our kind of first chapter, things slowed a little.

We were unfocused, bad commercial decisions. This happens to successful companies. They become a victim of their own success and comfort creeps in. Definitely 2020, 2021 were some comfortable culture times. and I got sick. I had to leave.

So, it's a it it's a it's a it's a big long story that ultimately comes down to the fact that we lost our way a little bit and we had like five quarters of decelerating revenue.

I came in midway the fifth and it was looking kind of uh gloomy and the two things we changed were we went to back to good oldfashioned SAS fundamentals pricing that people liked selling the product in the way that people liked.

They used to have to like talk to sales for everything and it just those simple things becoming super customer first um started to really accelerate the previous SAS business. In the last eight quarters the growth rate of the SAS business has increased by 10x which is really remarkable.

Um but then of course we jumped on AI and we were kind of OG AI guys. We had dabbled not dabbled. We had developed, you know, real AI products before, but they were baby AI compared to what we all have today. Um, but as soon as GPT3.

5 came out, we all just jumped on that and we saw that there was opportunities for this whole new category where you could create what we call now customer agents doing all of the things, customer success and service and sales and marketing that, you know, humans used to do and hate.

Um, and that just propelled the business even further. Um, Finn, our customer agent, is now, you know, the best performing in that category in our benchmarks. We win every bake off against our our chief our primary competitors. We have the most customers, most AR or so.

So, we're kind of this very weird story that I don't know any comparisons to where we're previous generation SAS that's actually winning in the category in AI. It, you know, I think it's hard. It's really really difficult for the previous generation, the slower older cultures that work in the age of AI.

It requires a lot of agility and dynamism. I often mess up that word, but it really does. Talk to me about like the the different break points for growing a company. I feel like mentally I think about it as like just the founders, maybe the first 10.

Then we were talking to previous guests about this breakpoint at like 50 people like there's something about there's a magic of a 50 person team. Everyone knows their everyone knows each other's name. Then maybe there's other intercom AI group has 47 senior engineers and and researchers.

So right in that that 50 person sweet spot. But but I feel like I feel like there are like with in the story of startups, we often map them to funding rounds, seed round, series A, series B.

And sometimes the headcount grows in line with those, but some but I feel like headcount growth might be more of a factor in like cultural drift.

And I want to go through some of the key moments where you feel like um like you know it was only one foot on the gas or the or the foot came off the gas or what what are the upstream drivers of that? What are the things culturally that you think startups need to get right at various scales as they grow?

because I feel like there's always these these different moments when you're when you're scaling up and you have a whole bunch of decisions to set the culture and you have a pretty limited time and you're focused on product and revenue and growth and all these other things, but culturally there's some very they're very important decisions that get made at every I don't know if it's every order of magnitude, but there's these key milestones and what tell me the story of of the the milestones in your mind.

Maybe it's shifting offices or fundraising or or headcount milestones. Um but but what changes and what advice would you have for founders at every stage? That was a fivem minute question. Outstanding. Um sorry I've given you a hard time.

Um I um look there's a kind of an intellectual set of answers to this that you can kind of break down and break it into tips.

there's a kind of a more abstract thing which is both you know in in good instances self a grandandizing for someone in my position but then also bad news in other instances and the answer is that it it all comes from the top and the early days the founder typically certainly founders that you know have any degree of success at the start in the early days the founders bring a phenomenal amount of energy conviction whether it's founded or not um you know just just just belief obsession, uh, intellectual curiosity, excitement, passion, you know, a lot of intangible things and that really drives great people.

All of us want to make great money in this industry and that's that's awesome and I and I really think it should be celebrated.

People are too shy to talk about that, but they also want to be part of something meaningful and exciting and they want to work with people that inspire them and make them want to push themselves. And so the reason a lot of these older generation companies lose a lot of steam.

Is that just for very obvious human reasons? The person on top is not pushing in that same way. When you have 15 years of SAS, how exciting is every day going to remain? Like honestly, like the first year you're like, "Cool, SAS, churn. Huh? Wow. Okay, I get the math.

" And then in year two, you're like, "Okay, churn, get it. Cool. Raise some money. " Year three, road mapaps. year 15 of SAS, you're done. You're not bouncing to the office every day. And and people will pick up on that all around you. Of course that they will. And then you don't push yourself in the same way.

You don't really pitch the opportunity to new employees. You settle a little bit cuz life is hard. You've got other priorities. Maybe you've drifted a little bit. You've got side projects. Some people end up with families, girlfriends, ex-girlfriends.

Like life gets way more complicated than it is for a 26-y old kid who just moved to San Francisco and one has one of those buzz cuts and the curly hair on top. Like life just gets more complicated and that's that's what happens. And so part of our secret is that AI reinvigorated us. Yeah.

Like I would not still be doing this if we were just doing SAS. SAS is not only kind of easy but super boring to me now. That's okay. Hopefully AI and whatnot will get boring too and there'll be something new.

And so again, we could break it down and get all mechanical and try and pull out some like tips and tricks and advice here, but really it just comes down to energy. And so so for anyone who would want to reinvigorate their company, it's the question is how how can you reinvigorate yourself?

And I see a lot of founders of latestage companies, many of them public. You kind of haven't heard from them for years.

their stock price has gone sideways for five maybe seven eight years and I'm like what are they still doing and I wonder are they able to admit to themselves that like they don't want to do this anymore and if you don't want to do it anymore make a change like kind of move on um and so I think a lot of people just they struggle with that moving on and making that decision because their whole identity and sense of purpose and validity in the world comes from I'm CEO of whatever so it's like this deeply human squishy spiritual challenge rather than an NBA type challenge.

What about uh bringing in young people to kind of keep that reinvigoration process going? I'm just thinking about uh you know Zuck is paying so much to bring in Alexander Wong from Scale AI.

At the same time, you know, like the level of energy that Alex is going to bring to that organization is potentially worth a lot, you know. Yeah. But at the same time, Zuck is super high energy. Yeah. Right. But but but there's another world where you low energy people hire low energy people. Yeah.

But I I guess what I'm getting into the trap of is like you can be the high energy founder as your business becomes more serious.

People keep telling you like bring in the seasoned executives, bring in the bring in the gray hairs, the people who will will keep the you know steady hand on the tiller and and that can be lead to a less dynamic less lower dynamism in your organization.

Is there is there a hack to just hiring crazy young people and empowering them to be in the seauite whether or not they really like deserve it by traditional u standards? Yeah, like the challenge is super obvious, which is these young, crazy, energetic, optimistic, wideeyed people are super messy, super sloppy.

They get in fights, they get upset, they hung over late, like they don't know how to do larger company professional things. Sure.

And so part of the problem is that larger companies to scale and get more efficient and become global organizations across many offices and time zones is that they like introduce a lot of like uh uh uh regularity and they like iron out the chaos. So part of it is you have to be willing to entertain chaos.

You have to be willing to put younger people in positions of influence and let the chips fall where they may. It's possible to give them roles where they don't have to engage with the entire organization. Like we've definitely got roles in intercom where you can have to collaborate across two time zones.

Sorry, across eight time zones in two different teams. But then we've got other positions where you've got one super smart guy. He's 30, which is 10 plus years older than the execs. But you give him like one thing he can do on his own and he'll crush it. Mhm.

So part of it is knowing how to like work with these people, but also like this is a special type of X-factor young person who knows what they don't know. And yeah, the degree to which this is a talent game and that people are not funible is not recognized at all.

People imagine like, oh, you lost one person, you get a back fill. Entire organizations just flip and change completely when you change out the individuals involved. So yeah, it's not easy.

Do you think venture should take uh there should take almost like turnarounds more seriously like in some ways you were your own turnaround CEO but one of the I think the issues of the venture industry is let's say a company becomes a unicorn has$und00 million plus of ARR and then the sort of growth starts slowing maybe the CEO like gets bored or whatever they start partying or they go start going to Europe um and the VCs kind of write it off and they're like I made my return or at least I'll get my money back.

But but at the same time, I mean, private equity is built like you know, there's been empire has been built around like the turnaround. And in some ways, think about, you know, a talented founder, maybe they took their first company through YC and had a nice exit.

A lot of those people could go to a company that has like a hundred million of revenue and like a big customer base and like actually make more money and start on you know second or third base and take you know you you can make quite a lot of money taking a business from a 100 million to hundreds of millions of revenue and that that can sometimes be easier than taking it from 0 to 10.

Totally. Yeah. What do you think? I think theoretically I think you know VCs are best are pattern matchers and turnarounds don't fit the pattern. Mhm. You know think of all of the most successful and exciting zeros of technology over the last 20 years. They invented a thing something something something.

It's worth 10 billion. Like it's kind of that. It's like yes sometimes it takes a little bit longer. there's a slightly circuitous route, but it's not the company was totally failing and they had to reinvent themselves and then they became the biggest thing ever.

So, you know, for VC, I just think it's really really hard that it's it's just hard for them to get like the underlying narrative and the underlying story. This is where PE comes into play, but PE has all of its own problems, too.

And these guys want deals and they won't be exciting to uh a lot of people who started ventureback companies. It's it's straight up difficult.

And to my point previously, the idea that, you know, talent isn't that funible, you know, you take any given company, if you replace the founder with even another highly competent founder, they're probably not the chance that they're right for that opportunity and idea.

Like, look, there's so many people, you know, so much more accomplished than I am, but I'm pretty accomplished. I know how to run and build and reacelerate businesses, but I'd be a probably a shitty CEO for 99% of other companies just because, you know, that's not what I do and I don't have any experience there, etc.

, etc. I don't even know the people there. So, I think people should be bearish on turnarounds. Yeah. You know, the turnarounds don't really work. Yeah. They're like generally like a it's a failed thing. Yeah. Somebody will figure out. Maybe it's Jeremy Gon. Maybe he'll do it. Yeah.

Well, well, that's even a different strategy. But but yeah, I think this idea of like you need to kind of they like the idea of bringing in like a crack founder into a company that's it's a crack founder wants to do their own thing. They want to start from scratch. They want all the equity themselves.

Like the recap alone that it would take just won't be palatable to existing investors. Failed companies are just generally doomed to fail. And when there are so many opportunities out there as an investor, you know, you got to just like not try anything novel. Yeah. Yeah.

And in your case, it's like a little bit of luck, the timing of like you're going back in GPT35, you know, seeing the opportunity for a new product, all this stuff. Uh, but you also had to make the choice to risk your own ego to go back in.

And if revenue had decelerated for another five quarters, you'd be sitting there being like, "Yeah, maybe I'm not as good as I thought I was. " You know, and you have to It's only true. But I got to cheat a little bit because when I was out, I was like sick. I had been beaten up in the press.

I was like just my confidence was pretty low and I didn't really have a lot to lose and I felt like I was without purpose. I always wanted to be independently wealthy and free and I finally got it. It was in many ways magical and then completely boring.

And so when I had this opportunity to go back have purpose and I had nothing to lose, I took it. So, like it's easy now to tell this maverick story. You're so brave. Look what you did. You took a big risk. No. And you have nothing to lose. You'll just go for it.

And and I think part of the secret is if people can separate themselves from their egos um a little or work on their egos or learn to love their egos and not be run by their egos, great things are possible. Most bad decisions are made just out of fear.

And the fear is driven by just fear of public failure and embarrassing yourself. I found myself unafraid to embarrass myself. Look at how I'm speaking to you now. Amazing. I love it. Like it's not fully true. The ego is still there in present. Totally.

But the the the smaller and weaker it gets, the more freedom you have. It's fantastic. Well, thank you so much for stopping by. Always a pleasure. We could yap like this for hours. I feel like I feel like people are going to listen to this as like a little founder therapy. 100%. I was like this.

We can do a little therapy corner. It's amazing. Yeah. Once a month you come on. Pump up speech. Pump up speech. It's great. This is great. Diet of meditation if you're interested. That'll be the next one. Thank you, J. Hey, this is cheesy. I want to give a shout out to my friend Stewart. That's it. I promise I'd do it.

Amazing. Shout out to Stuart. Word for Stewart. Do Do we need to ring the gong for Stewart? What's Stewart do? We got to ring the gong for Steuart. Okay, ring the gong. He's had a big year. He's had he's had a big year. Congratulations to Stewart. Stewart, let's go Stewart. Congratulations. We will see you soon.

Have a great rest of your day, guys. Talk to you soon. Peace. Up next, we're staying in in the Irish hour. We're going over to Stripe. Stripe. Luck of the Irish hit intercom. We'll check in