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

1. 0:00 – 1:24

   Intro

   1. EMEoghan McCabe0:00

      I would wake up some days in 2020, and I couldn't see. I think I'm dying. I don't know why. And 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. If you get comfortable and complacent, someone else will catch up and eat your lunch. It only works when the CEO is willing to risk it all to make giant changes. I acted very unilaterally. I did not look for much input. I ignored a lot of advice. We'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, so they act like they've got nothing to lose. I'm Eoghan McCabe. I'm the CEO and founder of Intercom. Well, we're a 14-year-old company. Did very well in the SaaS game. Our big, big, big bet and push right now is on Fin. Fin is a service agent turning into a customer agent. Really, the goal of Fin is to own the entire customer life cycle. We're one of the largest private software companies in the world. [gentle music]

2. 1:24 – 2:42

   An Irish founder’s American dream

   1. EMEoghan McCabe1:24

      I 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 '90s, the future was still very bright. There was so much excitement and optimism for what technology would bring to the world, and everyone was just, you know, 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, and was, like, fantastical kinda things. And that really just i- inspired me and just fed my imagination. And 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. Like 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 in being useful, and 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.

3. 2:42 – 4:00

   The record-breaking rise of Intercom

   1. EMEoghan McCabe2:43

      The story of Intercom 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 ARR since Salesforce. We did it in two and a half years. These days, that's nothing. You know, in the AI days, there's people hitting 100 million in a year in some crazy, crazy cases. But back in the good old SaaS days, 1 to 50 million in ARR in two and a half years was pretty damn good. But in some ways, this crazy growth that happens to you can leave you a little complacent. That'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. The 1 to 50 million in ARR in two and a half 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. The only way I knew how to

4. 4:00 – 6:14

   Waking Up to a Dark Blur

   1. EMEoghan McCabe4:00

      deal with it 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 hubris and confidence was bullshit, 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. It gave me the confidence to lead 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 happily imperfect. I 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 billion valuation, and then I got sick in June 2018, so it was about 18 months later. I found out much later that I got bitten by a tick. I would wake up some days in 2020, and I couldn't see. It was kinda like a dark blur, and that was not ideal for, like, the emails that I would have to answer, the documents I'd have to work on. And eventually, I was just like, "Screw this. Enough was going wrong. I think I'm dying. I don't know why. I'm out." That was about when revenue started to slow, too. Revenue growth was decelerating dramatically. The company was in a really dangerous place internally. There 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. But 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.

5. 6:14 – 8:41

   Killing $60M revenue to survive

   1. EMEoghan McCabe6:15

      Our only mission is to make incredible products, make a shit 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. And 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 wanna keep. And the people that didn't fit, we'd politely, graciously thank them, send them on their way with a generous, uh, severance payment. And 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? For each question, there was only 1 or 2% 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. Creating 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 bullshit 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. They're, they're over there. We're just the one that isn't. Maybe they were not gonna choose to leave this month, but they would've 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. Everyone'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 e- eventually seeps out, and people start to question you and not trust you. Truth, honesty, authenticity, um, is the way forward.

6. 8:41 – 10:27

   How legacy companies avoid getting left behind

   1. EMEoghan McCabe8:41

      Some of the great software 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 s- stop reinventing and stop reacting to the market. If 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 re-accelerated 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, when 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. I actually decided that many tens of millions, I think something like $60M ARR, 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. There 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. The process of reinvention and rebirth is highly destructive as well as constructive. You have to be willing to crack a lot of eggs. For

7. 10:27 – 14:57

   Eoghan’s ultimate advice for founders

   1. EMEoghan McCabe10:27

      younger founders, I think what's important is to test your instinct. Don't be unafraid to just go with your gut and try it out 'cause 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. 'Cause the thing that typifies founders is that they are willing to bet on themselves. When AI came and we started to build Fin, which is our AI agent, we realized that because the agent does the work that the humans do, that the humans are not gonna need the software they use to do the work, that 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. The worst positioned CEOs and companies were those who were unfocused, but they were doing kinda okay. If you're doing kinda okay, there's less room to get crazy and take big risks. But if you're kinda not doing so well, everyone's like, "All right. You got a plan? We 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 gonna bet a million dollars of our own money on pivoting to AI. It 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 wanna be Pollyannish or just imagine this bright, glistening, perfect world. There will be change, and some of the change will be hard. But 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 wanna make sure we do that too. Startups 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. Or people can have brilliant taste and be expert craftspeople, 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. It's far more rarer than the number of startups that are out there being funded right now. Life is short. People wanna 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. When someone themselves is excited, it's infectious. But when they're happy, it's infectious, and people wanna 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. I have had moments of severe darkness, embarrassment, regret, self-hate. Now I look back on them, I'm like, I mean, it was shit 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, or another. But 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 you're really li- right. Listen to yourself. Stop overthinking. Stop over-rationalizing. Stop trying to come up with the right solution as verified by every stakeholder, and everyone on your team, and everyone on your board. Go with your gut. Do what you think is right. Have the bravery to bet on yourself. [upbeat music]

Episode duration: 14:58