No PriorsNo Priors Ep. 132 | With Decagon CEO and Co-Founder Jesse Zhang
EVERY SPOKEN WORD
75 min read · 15,141 words- 0:00 – 0:30
Jesse Zhang Introduction
- EGElad Gil
(music plays) Today, we're lucky to have with us on No Priors Jesse Zhang. Jesse is the co-founder and CEO of Decagon, which provides customer service and other related AI for all sorts of different enterprises, including banks, telecom providers, airlines, and of course, many of the biggest and most important tech companies. Jesse prior started Loki, which was acquired by Niantic, and we're very excited to have him join us today on No Priors. Jesse, thanks for joining us today on No Priors.
- JZJesse Zhang
Thanks for having me.
- 0:30 – 1:11
Decagon’s Services
- JZJesse Zhang
- EGElad Gil
Can you tell us a little bit about Decagon and why you started the company, how you started it, how you all got going?
- JZJesse Zhang
Yeah, of course. So Decagon, for those who are not really familiar with us, we're an AI customer service agent. And so you can kind of think of us, you know, if we're working with a large bank or airline, or just people that have large contact volume, the AI's job is to, you know, have a very engaging and personalized conversation with the user and resolve it and, you know, s- save the- the company a bunch of money and, you know, ideally drive more revenue in the future 'cause folks are more engaged. And as we, as we've grown, it's kind of becoming more and more of a... You gotta think of like a conversational UI for the brand, where it's- it's how every user can interact with it. And we often use the term, like, concierge to describe this, but, um,
- 1:11 – 2:41
Decagon’s Customers and Growth
- JZJesse Zhang
that's what we do.
- EGElad Gil
And you're working right now with some big banks, or some of the world's biggest banks. You're working with airlines, telcos. Like, you've actually gotten to very big customers very quickly. How did- how did you go about doing that, or how did it happen?
- JZJesse Zhang
Yeah, so I mean, uh, as you know, we started out mostly with the, like, digital native companies. A lot of startups do that. And digital natives, of course, are much more willing to try out startups. They can move faster. They can get a lot of-
- EGElad Gil
So that'd be like late-stage tech companies and things like that, yeah.
- JZJesse Zhang
Yeah, like, uh, like Ripley and Notion, folks like them. They were, like, great partners, and they also just helped us iterate on the product a lot. So that's where we started. As we've gone on, I think just naturally, we were kind of pulled that market just 'cause of the demand. And as you might imagine, those- that's where most the large contact volumes are. So it just happened a lot faster than we thought, and I would say a lot of these enterprise also moved a lot faster than we would have expected. Um, so that's- that's why we ended up there.
- EGElad Gil
Mm-hmm. And that's one of the underappreciated things about AI traction, is a lot of companies are willing to try things in a way they weren't willing to before because it's such a big technology shift. And so all these markets are kinda open now that weren't before, or that would be much harder to do.
- JZJesse Zhang
Yeah, uh, I mean, another just specific dynamic is that at the enterprise, it's becoming a lot more of a top-down motion. So, you know, in the past, many of these technologies could have been just like one team trying to vet it or decide it. But now it's like a- it's a AI transformation and the C-suite, the board are all, like, very big on, how do we adopt AI? And, you know, customer service is often one of the biggest areas or probably the most low-hanging fruit. So, um, that's how these conversations
- 2:41 – 3:33
Productivity Gains with Decagon
- JZJesse Zhang
have progressed.
- EGElad Gil
Mm-hmm. And how much of an impact are you having in terms of some of these teams? So I know that you're giving a lot of leverage to these customer service orgs. Like, are you making people two times more productive? Or I'm just sort of curious, is there a way to measure the- the outcome here?
- JZJesse Zhang
Yeah, I mean, most of the large enterprises, they'll... The first thing they'll measure is just what is the, I guess, like, efficiency that you're-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... gaining them. So whatever they're spending on their contact center or their operation, how much can you cut that down by. And we've done case studies now where, you know, folks have been able to cut that down by, you know, 60, 70%.
- EGElad Gil
Oh, wow, yeah.
- JZJesse Zhang
That's like a great success case, right? 'Cause it's like a very clear business case you can show to- to everyone.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
Um, and then the- the- the sort of secondary thing, oftentimes, you know, folks will even, you know, put this at the same level, if not higher, is just the customer satisfaction. So you need-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... you need to measure that and make sure that your customers are, you know, having a good time and more engaged, if- if not just, like, more also just- just happy than- than
- 3:33 – 4:25
How Decagon Integrates in Customer Workflows
- JZJesse Zhang
previously.
- EGElad Gil
Mm-hmm. So you're basically providing these customer service AI agents/workflows that help, I guess, function 24/7 in multiple different languages o- out of the box and... Do- do you basically do, like, a lot of integrations into what they are already providing, or how do you tend to work with folks?
- JZJesse Zhang
Yeah, I think the way you should think about agents here are that, uh, it- it's more of a substitute for the mundane human labor. So whatever systems they're already using, generally an AI agent, at least when you first deploy, aren't- is not gonna disrupt the tooling you currently have. So whatever CRM they're using, whatever, you know, telephony stack, we will just integrate with that. And then it's just kind of doing all the tasks you would expect a human to do. And, uh, over time, that's just continued scaling. And so one of the benefits of AI agents is that they're always on, you know, either awake 24/7. They're... You don't have to train them, really. There's no churn. You- you can just, like, scale them out.
- 4:25 – 5:41
Jesse’s Second Time Founder Story
- JZJesse Zhang
- EGElad Gil
And then, uh, you co-founded this with Ashwin, and you are both second-time founders. Um, what made you decide to work on this problem in particular? 'Cause I feel like many people's first company, they really focus just on the product and the technology. And then on your second company, you're often more likely to also focus on the customer side, the commerciality. Was that your story, or were you always kind of more commercially focused in terms of how you thought about problems in the world to solve?
- JZJesse Zhang
Yeah, I mean, one of my, um, I guess theses is that there is a lot of untapped potential and just, like, really strong technical folks and making them a bit more commercial.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
'Cause the types of problems on the go-to-market side, they're, I would say, generally a little bit more hairy. And so a lot of folks don't like the messiness and... Especially a lot of technical folks enjoy the engineering product problems more. But they're still kind of very interesting problems, very rewarding.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And if you can do that well, that's how you get your company to grow a lot faster-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... 'cause you just do more sales and- and at the end of the day, it's- it's still problem-solving, so... Yeah, I mean, Ashwin and I were both technical backgrounds. We just got along very well.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
He's similar stages in life. We, yeah, both started a company before, as you said. And the first time is when you kind of lack a little bit of the commercial sense.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And you're- you're just generally just trying to figure things out. It's very hard to build the intuition of what is a good idea and what w- what isn't. And so, um-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... it is definitely easier the second time around.
- EGElad Gil
Mm-hmm.
- 5:41 – 9:13
Jesse’s Hiring Philosophy
- EGElad Gil
How do you think about, uh, how you hired or what sort of people you looked for for the team the first time around versus this time? Like, what are you optimizing for in the people that you bring on board in your- in your second company?
- JZJesse Zhang
Yeah, I mean, we're a little fortunate now. I think we've built a bit of a brand around our talents, and I think we have like a, you know, fairly interesting culture now.The way I would describe it is, yeah, we're generally just selecting for, uh, very smart people, first of all. I think we, we care more about that than, like-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... you know, direct experience and so on. I think early on, experience is still quite important. I think, um, I don't think we hired, uh, straight out of college, you know, for our first pretty large number of hires.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
But, um, of course now, now we are. So y- you want a little bit of that blend, but the first thing we select for is just, uh, you know, how smart you are.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And, uh, that, that, that's worked out well for us. Uh, we, we apply that philosophy basically across the org. I think obviously-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... engineering is, is, is very generally easy to test for, but even on sales and, and marketing.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
Um, so that, that's been a core part of our philosophy. And the other piece is just, you know, we're an office. There's, there's a lot of, I guess, like, fun news now (laughs) how, how companies work really hard and-
- EGElad Gil
Yeah, yeah, sure.
- JZJesse Zhang
... it's like the 996 culture and so on. I don't, I don't think we, we, like, over-rotate on, on stuff like that. I think we just, we're just looking for people where, um, you can tell when you meet them that they really see this as, like, ideally, like, like, a, like a... They want it to be like a highlight of their career basically.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
They wanna put in the time and they wanna be in a position where if they put in the time, they'll get stuff out of it.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And they get to, you know, accelerate their career. They get to, uh, work on, like, very, very interesting problems.
- EGElad Gil
So are you in-office every day, like, five days a week in terms of when people are supposed to be in or...
- JZJesse Zhang
Yeah. We're, uh, five days and then a lot of folks come in, um, on the weekends, but it's not, like, a requirement.
- EGElad Gil
Yeah. Makes sense. Yeah. I mean, it definitely feels like you have sort of this hardworking culture. People wanna put in the time 'cause, uh, you know, it's, it's interesting because if you look at professional athletes in training, they're always like, "Yeah, I train six, seven days a week. I work hard at my craft." And there was almost this period in Silicon Valley where people didn't wanna say that. And I feel like with this wave of AI, suddenly it, it's come back that it's good to do that, you know (laughs) ? That's how you build a winning company and a winning culture and-
- JZJesse Zhang
Yeah.
- EGElad Gil
Uh, so it seems like you all have kind of adopted that as, as what y- how you approach things as well.
- JZJesse Zhang
Yeah. Uh, I think pretty much all the AI companies that are doing well have, you know, pretty heavy in-office cultures. It's just you get way more done, especia- especially in the early stage. I think after a certain point of scale, like, yeah, you could definitely make the argument that it matters less. But as of right now, it matters a lot.
- EGElad Gil
Yeah. It also seems like there's certain roles that always have been remote, like throughout-
- JZJesse Zhang
Yeah.
- EGElad Gil
... all of history, you know? (laughs)
- JZJesse Zhang
(laughs)
- EGElad Gil
In terms of certain sales roles or, um, or the like. Well, well, then really you're supposed to be at the customer site is your office.
- JZJesse Zhang
Yeah.
- 9:13 – 11:19
Counter-intuitive Advice for Founders
- JZJesse Zhang
- EGElad Gil
Mm-hmm. I think that, um, if you were to give founders advice around one thing that they should do that is against their instinct the first time they've scaled a company, what is that thing? Or how would you think about a big takeaway that you've had as you've gone from, "Okay, we have this nimble team that's grinding on a new product," into, "Okay, we're scaling. Things are working really well. We have product market fit and we have to move as fast as possible." Like, what's that... Is there a big mental transition that happens? Is there a specific tactic you'd suggest?
- JZJesse Zhang
So I would say for us, we kind of hit our stride fairly early in this company. So i- it didn't feel like, uh, there was, there was a before and after.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
I would say when we were building... Well, one, we stayed really close to the customer, which-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... is always helpful. I think over time, the adjustment we are learning to make is, uh, thinking more, like, medium to long term versus-
- EGElad Gil
Mm-hmm. Mm-hmm.
- JZJesse Zhang
... uh, short term 'cause I, I think at the beginning you have to short, you have to think short term.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
You're just optimizing for closing the deal or-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... closing a couple customers. But once you have your legs under you, you both can think more long term and also you have obligation to because if you don't-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... then eventually you get to a point where s- things really start breaking and you feel like, uh, "Oh man, I should've, you know, scaled this better." And so on.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
So we're definitely in that journey right now and we're trying to be as mindful of it as possible. Yeah. Maybe one related thing is that we, um, do spend a good amount of time, like, studying, uh, sort of later stage teams that-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... have done this well. And there's obviously orgs that we admire where-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... we've-
- EGElad Gil
Who are some people you think have done it well?
- JZJesse Zhang
I mean, Ramp-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... comes to mind for sure. Databricks if you're thinking about a bit more o- o- like... There's just, like, companies that have just always executed well.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And-
- EGElad Gil
I think, I think Ali at Databricks is one of the most impressive CEOs.
- JZJesse Zhang
Yeah.
- EGElad Gil
Just in terms of, like, how he thinks about things and, uh, you know, depth of reflection on different topics. It's, like, really impressive.
- 11:19 – 14:12
How Decagon Thinks About Talent
- JZJesse Zhang
- EGElad Gil
Do you screen for commerciality in the people who join? And if so, how can you do that? So let's say you have an engineer. Do you try to find people who are more commercial-minded or you think that self-selects with the culture or...
- JZJesse Zhang
Oh, um, I, I, I don't think it's super important for every engineer in the company-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... to be commercial-minded, for example.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
I think it's, it's definitely very important for the founders.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And then maybe the, the folks immediately around the founders. That's why I think generally when I talk to engineers that wanna join startups, for example-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... and let's say they eventually wanna start their own company, which is a very common, uh, pro- profile. It's, in my opinion, it's, like, way more useful to join somewhere where they've already kind of got the commercials figured out and you can actually see-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... it in action and build that intuition-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... than to join something pre-PMF. And I think that's, like, a very common misconception 'cause it's like, "Oh, well-"
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
"... the smaller the team, like, the closer I, I am to, you know, learning how to be a founder." But if you join a pre-PMF team and you never actually get to see the commercials in action, you're not really learning much.
- EGElad Gil
Yeah.
- JZJesse Zhang
You're just kinda learning-... essentially what not to do.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And unfortunately, the reality is that most companies don't hit that point. (laughs) Our sort of, like, discussion we have with, with engineers these days is, hey, it's like, yeah, it's very important for you to join... You know, like, if you want to s- you know, start your own company eventually, like, you know, Decagon's like the golden age to do that 'cause we have a lot of the basics figured out, but there's still so much to s- that isn't figured out-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... and a lot of it is kind of very close to the commercials.
- EGElad Gil
Yeah, that makes sense. Yeah, I think a lot of the golden periods for many companies is between, say, 50 and 100 people up to, you know, 1,000, maybe 2,000 if the thing keeps going-
- JZJesse Zhang
Yeah.
- EGElad Gil
... in terms of growth because that's the era where I think you see the most change. Although, you know, also going from 2,000 to 15,000 at Google, which is roughly when I was there, was also sort of this magical period of, like, change.
- JZJesse Zhang
Mm-hmm. Yeah.
- EGElad Gil
And so I guess it depends on the size of the market and the way the team's run and everything else, so.
- JZJesse Zhang
Yeah. Yeah.
- EGElad Gil
Yeah, I guess, also, it seems like you can learn a lot more from success than from failure. And it sounds like, um, in the context of Decagon, it's a really great moment to join because, you know, things are working and so people can learn different areas. Are there areas in particular that, you know, you'd really l- like to attract people? Like, is it international? Is it somewhere else?
- 14:12 – 15:37
Areas for Longer Term Planning
- JZJesse Zhang
- EGElad Gil
When you talk about having to shift the way that you think about things more towards medium and long-term planning, is that org design? Is that internationalization? Is that product roadmaps? Is that... Like, what, what is that? Is that capitalization? Like, I'm sorta curious, like, what are the main components that you've had to start thinking longer term on?
- JZJesse Zhang
Mm... Yeah, it's probably, I'd say it's more org design and product roadmap.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
Org design in, in terms of how you allocate resources, 'cause, uh, there are a lot of types of work that don't yield immediate returns. Like, it's not gonna close a customer for you. But if you don't do it, you will, in six months, one, really regret it, and then two, you'll just be in a spot where it's, like, much harder to do that work than-
- EGElad Gil
What's an example of that?
- JZJesse Zhang
Uh, like, just, like, core product work, right?
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
Like, um, you know, there's a bunch of core product work that's, is important for-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... you know, closing customers in the future. It's not gonna close any customers now. We'll probably still be fine for now, uh, but you can definitely foresee that, okay, well, if you don't invest in this, then closing each incremental customer in the future will require the same level of work, if not more, because then you just have more overhead and you want that to go down over time. And so that's the classic type of thing where you have to shift your mindset a bit, 'cause I think in the early days you're just, it's, like, really good to have a greedy mindset and just like, okay, I just really need to optimize for this one thing, just get it over the line instead of just planning too long term 'cause if you do that, you could just end up burning a quarter in, like, not getting anywhere. And so I think over time, you had to make that
- 15:37 – 16:57
Decagon’s Path to Customer Service
- JZJesse Zhang
switch.
- EGElad Gil
Did you set off to do customer service when you started Decagon, or is that something that you all discovered early on as you were iterating on ideas or things like that?
- JZJesse Zhang
Oh, no, definitely did not come in with any preconceived notion. I had, like, a lot of empathy for the problem just from my first company. It was a consumer company, so we had a lot of users. But our general approach, kind of, you know, going back to the commercial side, was that I think we're just a lot better at being commercial about this in the early days. And so we just talked to a lot of customers and f- had a very disciplined process of evaluating ideas.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And yeah, it turns out that this has been one of the big use cases.
- EGElad Gil
Mm-hmm. What made you realize that this was the thing to do?
- JZJesse Zhang
The, the real answer is we just saw a lot of folks that were willing to pay us, like, you know, six-figure contracts, which at the time when you're at zero ARR, it's like, oh wow, that's huge.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And a lot of folks that were willing to, you know, do the same thing.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And it was the only idea we really explored that really had that property where people were like, "Hey, yeah, like, if you did this, I would literally pay you money because I can justify it." The sort of flip side of that at the time was more just, oh, well this is such an obvious idea, like, why do this 'cause, you know, people have thought of this be- before. But, uh, that- that's a whole 'nother thing. I think, like, once you start doing anything, once you get into it, you, you, you u- understand there's way more nuance-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... than the overall narratives. The sheer fact that people are willing to talk to us, like, you know, two people and willing to pay us money was signal enough that
- 16:57 – 19:40
Thoughts on Pushing Into the Application Layer
- JZJesse Zhang
it was worth doing.
- EGElad Gil
Mm-hmm. I guess when I look at sort of the history of technology, anytime there's a big platform shift, the providers of the platform start to forward integrate into the biggest applications on the platform. So an example would, of that would be, uh, after Microsoft launched its OS, it forward integrated in what became Office, right? Those were four separate companies doing PowerPoint and Excel and all this stuff, and then eventually they just subsumed the functionality of those things and cross-sold it as a bundle. And then that happened later with Google where they started adding vertical searches for the biggest categories of search. If you think of that in the context of the foundation model providers like OpenAI or Anthropic, Anthropic is already providing cloud code. You know, they're already kind of forward integrating in different verticals. They mentioned financials, uh, as another area that they're moving into. OpenAI famously tried to buy Windsurf and sort of enter-
- JZJesse Zhang
Hmm.
- EGElad Gil
... coding more directly.
- JZJesse Zhang
Yeah.
- EGElad Gil
Do you think about that at all in the context of what you're doing given just the size of the market and the, the velocity at which you're getting adoption?
- JZJesse Zhang
Yeah, I think it makes a lot of sense for the labs. Like, um, I think like OpenAI, for example, most of their revenue and most of their margin for sure is coming from ChatGPT in the application layer.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
'Cause you, you actually own the customer. You get, you're kind of indexing more on the problem you're solving rather than, you know, the costs of your model.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And the AVI business, for example, is-... they're probably not expecting even to make that much money from that long term, and they probably see them more as a wedge.
- EGElad Gil
Some of those work out well, right? Like, in other words, one could argue AWS and the cloud providers are good examples of what was perceived as a lower-margin business that has enormous scale and can throw off a ton of cash.
- JZJesse Zhang
Yeah.
- EGElad Gil
And so, you know, these, these API-driven businesses strike me as something similar. I'm just more curious, like, how do you think about defensibility relative to-
- JZJesse Zhang
Yeah.
- EGElad Gil
... things and, you know?
- JZJesse Zhang
Yeah. So I guess y- the point I'm trying to make is I think it makes a lot of sense for them to push into application layer, and I think they will. In terms of what applications, I mean, generally they'll probably start with applications where it's more consumer, prosumer-y because there's-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
It's just more self-contained. It's, like, easier to build the software on top. Um, long term, they may move into more enterprise-y things. I don't think it's, like, super useful for applications like us to, like, you know, spend a ton of time thinking about like, you know, what the, uh, AI labs will do. I do think the more enterprise you are, like, the more, the thicker the layer of software, it's, it's not even just like, it's not even stuff related to the models. It's like, okay, how do you have like observability and monitoring on all the conversations? How do you learn from the conversations? How do you really dissect the insights? How do you build like a testing, like simulation suite for the, for QA of, of the conversations? And there's just so much to build. That's what we're focused on right now. I think, yeah, it may, might make sense and yeah, who knows, maybe one day we'll collaborate with the labs. We have gr- great relationships with the larger ones, but I think before they tackle our space, there will probably be other spaces they have to tackle first.
- EGElad Gil
Yeah.
- JZJesse Zhang
And coding's probably one of them.
- EGElad Gil
I
- 19:40 – 22:05
What Decagon Does Uniquely
- EGElad Gil
guess on a related note, how do you think about differentiation? Like, what do you do uniquely or how do you think that you'll build them out over time?
- JZJesse Zhang
When we first started the company, it's this idea is, like, very easy to grok, right? (laughs) I mean, there's a lot of big platforms out there too. You know, like Salesforce or Agentforce and, and Google and some of the more AI native players. Uh, what's worked for us so far is, is a couple things. Um, I think one, we've, we kind of have a unique... We just have like a relatively young, intense team and that has lent itself to a couple things. I think the biggest one is just speed. So we're just able to move really fast and that shows itself in building the product and executing-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... on the go-to-market side. And specifically in the products, I, I, I would say we've kind of differentiated ourselves in taking this approach of like, hey, this should be a very productized space.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
You should have an AI agent that's really easy for non-technical f- people to work with and for them to build the agent, iterate on it, analyze it. And that's in pretty stark contrast to how the industry has always worked. If you think about, you know, the Salesforces of the world and just the classic SaaS, it is a very more like a technical endeavor. You have to bring someone in to do the configuration, you have to have technical resources. As you scale, you can build something quite powerful, but it just becomes very slow and, and expensive to maintain because you, you have to go, you, you as engineers who go through everything.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And with enterprise, there's so much complexity and nuance that you have to, you have to resolve that. So I think our view, uh, so far has been kind of different in that one of the things that LMs unlock is that you can really empower the non-technical business users. And that has, I would say, been pretty well received. I mean, I- different teams have different strategies of course, but for the folks that we're working with, and especially as you go more upmarket, I think people really like that strategy. There are definitely some teams out there that are more eng- engineering driven, which, um, like if the engineering team owns the entire-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... you know, customer service deployments, then, you know, maybe the, our current approach doesn't make as much sense. But I would say what we found is even when the engineering teams are very much involved, they don't necessarily want to be on the hook for every little change. And so in that case, we can work very well with them and you have them still owning how does the AI agent interact with the systems and connect to API and so on where... And then we allow them to offload sort of the logic building to the business users. So-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... that's probably what's made us different so far. Again, obviously we, we respect like the Salesforces of the world, they build amazing businesses, but we just don't think that's the right approach for the AI era.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And then on our end, yeah, I think we're just, we, we really want to differentiate on
- 22:05 – 24:46
Pricing Services in the AI Age
- JZJesse Zhang
execution.
- EGElad Gil
If you look at, um, the big shift that's happening right now in AI, because of the capability set, we're basically moving from software as a service to basically some form of like labor or cognition as a service, right? And so you see that sometimes in the pricing models where people instead of charging per seat will maybe have some baseline platform fee, but then they'll charge on utilization or other things because fundamentally it's almost like you're, um, helping augment an agent versus just having a piece of software that they're-
- JZJesse Zhang
Mm-hmm.
- EGElad Gil
... living in or using.
- JZJesse Zhang
Yeah.
- EGElad Gil
And I think that's a very big shift. How do you think about the long-term version of that relative to your business? Or what do you see sort of coming on the horizon?
- JZJesse Zhang
Yeah, I think those pricing models are pretty s- use case specific. So if you're using a coding agent for example, I think, you know, charging based on almost like the, like GPU usage or, or something like that-
- EGElad Gil
Yeah.
- JZJesse Zhang
... the number of cores you use could be interesting. For us it's actually quite different because you have like a very tangible output that you can measure the agent by, which is the, the conversation it's having. And when you talk to customers, that's generally how they think about it too. It's like, "Hey, we have a cost-"
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
"... per contact or a cost per conversation." And so when you kind of deploy an AI agent, it makes sense to use the same pricing model.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
Instead of pricing like a flat per seats, 'cause they're not really like a seats concept here, you also don't want to price per like, you know, minutes of the call e- either. Like, that, that's just kind of weird. Uh, and also incentivizes the AI agent to just like have really long calls. So you, you price basically the number of conversations that it can have. It can be any conversation or it can be a conversation that, you know, doesn't require humans, so maybe that makes it apples to apples. And then our customers generally come in and buy a sort of allotment of conversations for the term and then they burn it down. And we'll probably start seeing that more and more in the AI agent space where you, you generally price per like the output that it's doing.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
I think that that works. I think that's just very clearly the right pricing model for our space-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... and makes sense to buyers and makes sense to us-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... as well.
- EGElad Gil
Yeah, it also really changes how you think about the total addressable markets for some of these things because if you're charging per seat, you're lim- you're really limited by the number of-
- JZJesse Zhang
Yeah.
- EGElad Gil
... people working at the company.
- JZJesse Zhang
Yeah.
- EGElad Gil
If you're charging per conversation or per some aspect of code written or other things, then really the market equivalent is sort of the people working in that sector.
- JZJesse Zhang
Yeah.
- EGElad Gil
Right? It's not actually the seats, uh, for the, the company. So...
- JZJesse Zhang
Yeah.
- EGElad Gil
You know, you're talking about their salaries versus seats.
- JZJesse Zhang
Yeah.
- EGElad Gil
And so that's a pretty big shift in terms of how to think about TAM.
- 24:46 – 25:53
How Decagon Sees Customer Service
- JZJesse Zhang
there's a lot to build.
- EGElad Gil
How do you think about this relative to the overall customer journey? So, particularly for certain types of consumer companies, there's customer service, but customer service almost starts when somebody just shows up to the website for the first time to purchase something, right?
- JZJesse Zhang
Yeah.
- EGElad Gil
There's almost this whole, like, funnel.
- JZJesse Zhang
Exactly. Yeah.
- EGElad Gil
How does that impact what you build or how you work with your customers?
- JZJesse Zhang
That's why we use the term concierge.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And- and that's how we think about it. And it's kind of interesting actually, when we first started the company because, you know, of course, we're engineers, and we haven't, you know, worked in contact centers ourselves-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... we kind of assumed that that's how most customers would view it as well.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
It's like, "Hey, well, you're building a system that can have any conversation." It turns out that in most customers, all the different types of conversations are just owned by completely different teams, completely different budgets.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
So, you know, if- the reservations team at a hotel is probably gonna be different than, you know, the customer service team. Overall though, e- eventually, you want this to be a unified, you know, concierge experience, and that's what a lot of leaders are excited by. It's like, can you have just something intelligent that is just there for the end user? It's- it becomes like the go-to way that they interact. And eventually, if it's good enough, most consumers will just interact with the agent instead of even logging into the mobile app or the website, so...
- EGElad Gil
Mm-hmm.
- 25:53 – 27:41
Defining Long-Term Success for Decagon
- EGElad Gil
Uh, how do you define success for your company in the long run? So it's five years from now, 10 year- you're looking back.
- JZJesse Zhang
Yeah.
- EGElad Gil
What would make you feel like you've accomplished what you set out to do?
- JZJesse Zhang
Well, on one hand, there is, like, a specific goal for our company, right? We wanna grow. We wanna grow the scale of the business, and we wanna be, you know, uh, the winner in this- in this, like, exciting market.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
So how is that defined? I mean, in five years, we want to, of course, be working with the largest companies and have a s- just, like, all the- just powering sort of these conversations for all- all the major brands out there and essentially just reinvent the way that most consumers interact with, you know, products and- and have conversations. And the other metric is, yeah, we'd like to get there through just having a very sharp, you know, product and-
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
... just a good market execution, um, in the same way that I'm currently talking about, like, the Databricks and the Ramps of the world. Like, we wanna build s- you know, a business like that where we're just, like, doing everything, like, super sharp and, uh, very thoughtfully.
- EGElad Gil
I remember, um, reading once that somebody asked Larry Page, uh, in the early days of Google what he was hoping to accomplish, and he said, "I wanna have a billion-dollar company." And the person replied with, "Oh, you mean a billion-dollar market cap." He said, "No, a billion dollars of revenue."
- JZJesse Zhang
(laughs)
- EGElad Gil
At the time, that was, like, this insane goal.
- JZJesse Zhang
Yeah.
- EGElad Gil
Everybody was like mind blown. He's so ambitious. And- and then you look in hindsight, and I don't know if that's like the revenue they do in a day or, you know-
- JZJesse Zhang
(laughs)
- EGElad Gil
... I don't know what they come g- you know, some crazy-
- JZJesse Zhang
Yeah.
- EGElad Gil
... uh, overshoot on outcomes.
- JZJesse Zhang
Yeah.
- EGElad Gil
So I think that's a very tough question, but I was sort of curious how you thought about it.
- JZJesse Zhang
Uh, it's... (laughs)
- EGElad Gil
(laughs)
- JZJesse Zhang
Yeah, it's tough on this- uh, at this point. I mean-
- EGElad Gil
Yeah.
- JZJesse Zhang
... we have what the Databricks, our, like, single digits of billions of revenue, and they will probably say that they're still very early on, right?
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
So I, yeah, we- we don't think about things that far ahead. I just don't think that's useful. Obviously, we're, like, extremely ambitious, and so we- we want to build a company of that scale or more.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
But it's also one step at
- 27:41 – 31:22
Jesse’s Views on an Agentic Future
- JZJesse Zhang
a time.
- EGElad Gil
As we talk about thinking ahead much, um, longer time frames, five years, 10 years, whatever it may be, one could imagine that eventually, uh, customer support and customer service really becomes very agentic. And at the same time, people will probably have agents going and buying things for them or interacting on their behalf. How do you think about that future? When do you think that is? Like, are there any non-obvious things we should think about for that? Or, you know, how should we think about that future world or potential future world?
- JZJesse Zhang
Oh, I think that world is, uh, basically here. I mean, you have the, you know, all these consumer agents that are going out there, and they can order DoorDash for you and so on. And at some point, they'll, you know, maybe they'll call into an airline to reschedule your flight or something.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
And then maybe they'll talk to our agent, and then you'll have agents talking to each other. I think in the near term, they'll still communicate in natural language just 'cause, like, each agent also needs to be compatible with humans, right? So if they talk to a human agent, a human support agent, or if we talk to a human customer, of course, it has to be compatible.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
But as they become more prevalent, uh, they'll probably- you'll probably end up with slightly more efficient ways of communicating, and I think that'll be interesting. We'll just have two agents interacting, and they're just, like, spitting tokens at each other, and you can just get- get something done. But I- I think ultimately it'll still be rooted in natural language 'cause I- I don't think anytime soon we'll be in a world where 100% of interactions are done by that. So each agent still has to be compatible with natural language. Yeah, that's something we'll- we'll have to think about soon. It's not something we're seeing at scale now, where you have age- agents writing in for you. I mean, part of the vision we talked about before, right, is that right now a lot of the conversations are more reactive support.
- EGElad Gil
Mm-hmm.
- JZJesse Zhang
It's like, "Hey, I have an issue. Can you fix it?" But over time, it'll be more and more, uh, kind of broader, right, in terms of, like, being able to do purchasing decisions, being able to, uh, upsell folks, being able to be proactive and reach out when you detect an issue. And these types of conversations, I think, make a lot more sense for, you know, having these personal agents, and they're, like, someone doing your shopping for you and just goes and buys it, and they can talk to their agent to actually get it done. And m- the personal agent knows that- their personal preferences. They know what to give in on if there's, you know, not- this thing's out of stock and maybe go for a different choice. Yeah, it's- it's kind of, uh, it's kind of weird to think about that. (laughs) It's just, like, all these interactions happening outside of, like, humans, and still stuff's getting done. But I think it'll be here sooner than later.
- EGElad Gil
It's really interesting. It's almost like every person has a personal assistant, a personal shopper or whatever it may be. I remember one- one person I used to work with a lot, um, his view was that a lot of technology is basically looking at what the richest people in a society are doing and then saying that'll be available for everyone.
- JZJesse Zhang
(laughs)
- EGElad Gil
And so if you go back to Roman times-
- JZJesse Zhang
Yeah.
- EGElad Gil
... you had these, um, open sort of Roman baths, but if you were very wealthy, you'd have, like, a bath in your own home.
- JZJesse Zhang
Mm-hmm.
- EGElad Gil
And obviously we all have baths, right? (laughs)
- JZJesse Zhang
Yeah.
- EGElad Gil
At- at home. And I think we almost forget that that's, like, a technology innovation and evolution. And so it seems like a similar thing if you look at Bill Gates or whoever. He probably has a staff of people who buy clothes for him and go and do things for him and book flights for him. And so therefore, everybody will have this at some point, and it'll just be agents-
- JZJesse Zhang
Hmm.
- EGElad Gil
... it sounds like, interacting with each other.
- JZJesse Zhang
Yeah, I doubt they're booking flights. (laughs)
- EGElad Gil
Right? (laughs)
- JZJesse Zhang
But, uh, yeah, no, I agree.
- EGElad Gil
Yeah.
- JZJesse Zhang
Yeah, I mean, I- I think that- that is, I think, is an interesting framework. I mean, it makes you think like more of the other things that, uh, folks are doing. But, um, yeah, at least in our context, yeah, we definitely expect some more of these sort of AI assistants to be part of the ecosystem.
- EGElad Gil
Mm-hmm. Amazing.
- JZJesse Zhang
Yeah.
- EGElad Gil
Well, thanks so much for joining me today.
- JZJesse Zhang
Thanks for having me. (instrumental music)
- SGSarah Guo
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Episode duration: 31:22
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