The Strategy That Turned a Dying $1.3B Company Into a $100M AI Agent | Intercom, Eoghan McCabe

Intro

00:00I would wake up some days in 2020 and I couldn't see. I think I'm dying. I don't know why. That was about when revenue started to slow too. Startups are so hard, so unlikely to work. Particularly now with AI, there's never a point where you could stop reinventing and stop reacting to the market.

00:18If you get comfortable and complacent, someone else will catch up and eat your lunch. It only works when the CEO was willing to risk at all to make giant changes. I acted very unilaterally. I did not look for much input. I ignored a lot of advice.

00:37We'd actually like switch off revenue for parts of the business. Very few people and boards and stakeholders are willing to do that. Very few people. So that's the secret. You must be willing to work like a startup founder. Startup founder doesn't have anything to lose.

00:53So they act like they've got nothing to lose. I'm only the CEO and founder of Intercom. Well, we're a 14-year-old company. Did very well in the SAS game. Our big big big bet and push right now is on Finn. Finn is a service agent turning into a customer agent.

01:10Really the goal of Finn is to own the entire customer life cycle. We're one of the largest private software companies in the world.

An Irish founder’s American dream

01:24I was a dreamer. I watched TV shows about inventors and scientists. There was two shows I watched. One was called Beyond 2000 and one was called Tomorrow's World. And in the early '9s, the future was still very bright. There was so much excitement and optimism for what technology would bring to the world.

01:43And everyone was just, yeah, really eager for what may come. So these shows were about flying cars, about a future where we may get all our nutrition from eating little tablets. It was like fantastical kind of things and that really just inspired me and just fed my imagination.

01:59And so yeah, I knew I wanted to be in technology. I wanted to be an inventor. What was most exciting about the internet was abilities that afforded people to connect with others across the world. I grew up in Ireland in a small little part of Ireland.

02:14Like a lot of Irish people and a lot of people around the world longed for America because all of our culture, all of our movies was American. And the internet was a little way for me to connect with America, American people. My future, I wanted it to be about creating technology, somehow playing a part and being useful.

02:32And there was something about the internet that really drew me in, offered me an opportunity to connect with people in the wider world and get outside of my little part of Ireland. The story of

The record-breaking rise of Intercom

02:43Intercom was one of many challenges, many dark days, a lot of anxiety and fear over whether or not the thing we're building is valid. Will it all work out? We're the fastest to go from 1 to 50 million air or since Salesforce. We did it in two and a half years.

03:01These days that's nothing. You know, in the AI days, there's people hitting up 100 million in a year in some crazy crazy cases. But back in the good old SAS days, one of 150 million or in 2 and 1/2 years was pretty damn good. But in some ways, this crazy growth that happens to you can leave you a little complacent.

03:27That's something that the current crop of founders need to watch out for, which is that they shouldn't take their revenue growth for granted. They should learn to understand where it's coming from. This hot brilliant start certainly did wonders for my ego and insecurities.

03:41The one of 50 million or in 2 and 1/2 years or whatever it was, faster than every other company but Salesforce, I felt great. But when revenue growth started to slow, I made some mistakes with our pricing. I felt the opposite of great. That was a real reality check for me.

03:57The only way I knew how to deal with

Waking Up to a Dark Blur

04:00it was embrace the darkness a little. I didn't know I was following this wisdom, but I was starting to believe like, oh, maybe I'm not so great. Maybe I am a failure. Maybe all this hubus and confidence was actually. And thankfully after really going to that darker place, I found my ego softened and my identity as this perfect entrepreneur and CEO faded and what was left was a far more realistic person who was comfortable with his mistakes.

04:34It gave me the confidence to lead with without worrying about what might come next. then learning to love my imperfections and then moving forward and embracing the imperfections, finding that I'm just so much happier and better at what I do now that I'm happy and perfect.

04:56I left as CEO in 2020 when I was sick and during the couple years that I was gone, there really was no strategy. We raised in early 2017 finally at a $ 1.25 $5 billion valuation. And then I got sick in June 2018. So it was about 18 months later.

05:13I found out much later that I got bitten by a tech. I would wake up some days in 2020 and I couldn't see. It was kind of like a dark blur and that was not ideal for like the emails that I would have to answer, the documents I have to work on.

05:28And eventually I was just like screw this. Enough was going wrong. I think I'm dying. I don't know why. Oh no. That was about when revenue started to slow too. Revenue growth was decelerating dramatically. The company was in a really dangerous place internally.

05:45There was a lot of focus on cultural issues, societal issues, political issues, a lot of infighting, a lot of judgment. When you're in the middle of it, in the middle of that storm, doesn't feel good, but you can't really put your finger on what's going on.

06:02But from the outside, from a bit of a distance, I could see that we can do better. Going back to basics will be very fruitful and important for the company.

Killing $60M revenue to survive

06:15Our only mission is to make incredible products, make a ton of money, make us and our shareholders very, very happy, make our customers happy, too. It's not that hard. I then created a new performance management structure. We quarterly would grade every employee based not just on their work against their goals, but also their behavior against these new values.

06:37And people who were exemplary against these values, we'd pay them a ton of money, equity, bonuses, promotions. We would celebrate and prop up these people. These are the people you want to keep. And the people that didn't fit, we'd politely, graciously thank them, send them on their way with a generous uh servants payment.

06:57And you do that quarter after quarter, all the good people rise to the top. All the people who are a bad fit are gone. You very quickly end up with a very aligned, strong organization. Despite that aggression, 18 months after I instituted the new values and the new performance man management structure, we ran a anonymous employee engagement survey where all the company were allowed to rate uh the leaders including me, our values, our policies, product strategy, how much did they agree with it, how much did they disagree?

07:31For each question, there was only one or two% of the entire population of the company, about 1,200 people who disagreed with any single point. And that is a result that I haven't heard from another company, but we never even achieved at this company in the past.

07:47creating a company designed for greatness and for great people to focus and do brilliant work and allow them to make a bunch of money and accepting no distractions or makes for a very happy aligned culture. If people don't like the system, there's so many other great companies out there, including companies like Google.

08:08They're over there. We're just the one that isn't. Maybe they were not going to choose to leave this month, but they would have left eventually. And so big picture, not only are we helping ourselves, but we're setting them on their path to find something they're better aligned with.

08:20Everyone's happier when you start to be authentic and you share more about who you are and what you stand for. And that's not the typical playbook of a CEO, but the inauthenticity eventually seeps out and people start to question you and not trust you.

08:34Truth, honesty, authenticity um is the way forward. Some of the great

How legacy companies avoid getting left behind

08:42software brands of the previous generation now have kind of lost their way, their focus. Some of them are in negative growth territory. The painful reality for technology companies, for people who would start them, is that particularly now with AI, there's never a point where you can stop reinventing and stop reacting to the market.

08:59If you get comfortable and complacent, someone else will catch up and eat your lunch. And so part of our secret for how we've dramatically reacelerated now is that we brought back that focus and that ruthlessness and it really paid off. It only works when the CEO is willing to risk it all.

09:17When they have full moral authority from all their stakeholders and their board to make giant changes, dramatic, aggressive, violent changes. Because if they instead are trying to optimize for not rocking the boat, not damaging old revenue, they will just stay on the trajectory that they had been on.

09:38I actually decided that many tens of millions, I think something like 60 million ore, we'd actually give away over a number of years. We'd actually like switch off revenue for parts of the business so that we could focus on other ones. We focused on some specific parts of the business and then introduced this AI element which brought epic revenue growth there.

10:00There was other parts of the business where revenue growth was negative for a while. Very few people and boards and stakeholders are willing to do that. Very few people particularly professional CEOs who are hired to not break things. So that's the secret.

10:16The process of reinvention and rebirth is highly destructive as well as constructive. You have to be willing to crack a lot of eggs. For younger

Eoghan’s ultimate advice for founders

10:27founders, I think what's important is to test your instinct. Don't be unafraid to just go with your gut and try it out cuz you won't calibrate against it or learn about it until you're unless you're trying it. And if you find yourself entirely unable to make decisions on your own, you're not a founder.

10:42Cuz the thing that typifies founders is that they are willing to bet on themselves. When AI came and we started to build Finn, which is our AI agent, we realized that because the agent does the work that the humans do, that the humans are not going to need the software they use to do the work.

10:59That these agents were highly disruptive to our existing business. We saw as a threat and an opportunity. We really didn't have any choice. Now, we had the benefit of the fact that our business was not doing so well. So, we needed an opportunity.

11:16The worst positioned CEOs and companies were those who were unfocused, but they were doing kind of okay. If you're doing kind of okay, there's less room to get crazy and take big risks. But if you're kind of not doing so well, everyone's like, "All right, you've got a plan.

11:33We need a plan. Go for it." So, we jumped on this and spent as much money as we could because of the opportunity, the risk, and we really needed a new a new direction. It was actually controversial when we said, "We're going to bet a million dollars of our own money on pivoting to AI."

11:48It was controversial back then, but I think that the couple years since then have proven us right. The future really is humans plus AI. I don't want to be polyianish or just imagine this bright, glistening, perfect world. There will be change and some of the change will be hard.

12:06But we've always continued to flourish. Even while technology has put people out of work, the work it's taken has been the most repetitive, demeaning, dangerous work, technology has always complemented humanity and made us uh better. Yeah. Within my little little world of customer experience, I want to make sure we do that, too.

12:28Startups are so hard, so unlikely to work. If you're working to solve a problem that can't be solved in an incredibly new way with a brilliant product, you need a new idea and a new approach. People can understand a problem but not have the ingenuity required to build an excellent product or have that taste.

12:49where people can have brilliant tastes and be expert crafts people, build incredibly elegant interfaces, but not actually understand deeply a giant problem that needs to be solved. Great founders can marry those two things together. And that's actually really rare.

13:08It's far more rare than the number of startups that are out there being funded right now. Life is short. People want to be around and inspired by people who are themselves inspired. Think about periods in your life, even when you've not considered working for someone.

13:24When someone themselves is excited, it's infectious. But when they're happy, it's infectious. And people want to feel that passion and an ability to share that authentically is the secret to great leadership in my opinion. There's no great founder that hasn't gone through these struggles.

13:40I have had moments of severe darkness, embarrassment, regret, selfhate, and now I look back at them and I'm like, I mean, it was at the time, but it's part of my story now. And so, yeah, I just think that a lot of these difficulties are just part of the adventure and will eventually stand to you one way or another.

14:00But I'd say believe in yourself more. Follow your gut. You've got good instinct. Maybe you're wrong one in five or 10 times, but the other times are really light, right? Listen to yourself. Stop overthinking. Stop overrationalizing. Stop trying to come up with the right solution as verified by every stakeholder and everyone on your team and everyone on your board.

14:21Go with your gut. Do what you think is right. Have the bravery to bet on yourself.