 Thank you. Good afternoon. I appreciate you all skipping your lunch to hear me talk about reigniting growth so We shall get into it Slides not having So the reason I want to talk about reigniting growth is purely because I think we all need to do it in some way As we know 2021 was the best of times if you had a startup in 2021 everything was amazing, right you? In 2021 we saw VC investment double We saw more unicorns believe it or not done ever before in 2021 We saw more mega rounds these like 100 million dollar rounds done ever before and We saw more like more basically everything than every ever before in the tech industry in short I would say 2021 was a hell of a drug and We saw some mad shit happen in our industry. We saw secondaries being done at the seed stage We saw founders starting their own funds operating costs went up people started moving to Miami for some reason like a celebrity investors It was like 500 X multiples and rounds and all those are the sort of mad shit and What could possibly go wrong? Well, it turns out a lot of shit So 2022 2023 has not been great. All right the deals as we can see are disappearing As you can see there's been a precipitous drop here the unicorns are fading away Maybe they were mythical creatures after all the mega rounds are disappearing We're not seeing them anymore and IPOs are disappearing. We're not seeing them anymore. So in short, this is fine Right, it's a tough time to be in tech. No a phrase I often come back to is the stockdale paradox You should not confuse the fate that you will prevail which you can never afford to lose with the discipline of Confronting the brutal reality that we're in in tech, right? It is not a great time So founders everywhere are worried about all of these key metrics whether it's your burn rate your LTV Cat your gross revenue retention your runway your churn. We're worried about all of these things and What I hope to present to you today is five points on how we're gonna get out get the hell out of this, right? The first thing we have to do when we're facing this horrible reality is work out What bit of my company actually is working? So what does this mean? Well during the good times you tend to be quite Explorative you tend to try a lot of new shit, right? You you're very am you're interested in like New projects new ambitions new teams new expenses and during the harder times You need to peel all that shit away and the big question you have to ask yourself is What revenue that I have is healthy and what revenue is not healthy? And I think for a lot of startups I've invested in for a lot of startups. I've worked with or advised They had a healthy business they add a lot of shit to it and now they have an unhealthy business But at the very core of the startup is still a good idea that people really want to use it's just surrounded by a lot of junk and The reality is if you add shit to a business you get a shit business, right? It's there's no way to avoid that unfortunately So you need to find out who your best customers are and base and you need to optimize the business for them Your best customers are ones that you can sustainably acquire ones who use your product deeply and ones who get Differentiated value so you have to be able to afford to get them They have to use your product a lot and they have to use it for something that they just can't get anywhere else, okay? and To get there you have to analyze your revenue by first of all what we call cac cost of acquisition Secondly the depth of the channel so you might have a great way to acquire our customer But if you can't acquire thousands to that channel, it's not a good channel Next is usage. Are we a critical product or are we a nice to have and lastly is differentiation? Are we a commodity or are we something unique to this person? You need four yeses for each of these questions to actually know do you have a healthy business? That's the first piece you have to do Secondly we need to cut a lot of junk out of businesses a lot of complexity, right? The single biggest thing that hurts a healthy business is adding complexity Getting this idea that you're a bigger company than you were trying to transform too quickly into being enterprise when you're not even 100 people or something like that and this shows up everywhere Complex ads where you're trying to say too many things complex landing pages pitches sign-up flows Complex UI a complex org chart your complex processes. You had a simple with business and you really junked it up so No one ever says hey des I've got an idea. How about we make this business really really complex? Right, that's not what happens. What they say is there's a second use case. We could consider there's a second buyer Or how about users don't do this? How can we persuade them or how about we take this simple thing and make it slightly hard, right? So what happens is you get lured into complexity and what it looks like if you take a really simple process Let's say this is your sign-up follow, right? Hey people go to the home page and they click a link somebody eventually says I think we could catch an extra bit of options here and Or an extra bit of usage or revenue and what they usually face you it is a question like this Should we attract more customers or? Not and of course you like yeah, of course we should attract more customers, right? So you you can see the point. Oh and to make it worse the These people would usually bring along evidence like this right these people have all the charts and you know Spreadsheets and forecasts that say this is gonna be brilliant and over here. You're just like I don't know this kind of feels like it could be shit So you're having this horrible bottle of like data versus intuition and you're gonna lose So you lose and losing looks like this and you say right. Let's do another use case. Let's do another buyer Let's do another route to market and then you say, okay Let's do a few more and let's do a few more and a few more and before you know it You actually have this complexity right you get lured into it You raised a big round at a big valuation you need to justify it So you have this big wide-eyed ambition and you get end up with this and what it looks like is shit like this Like this is honestly a lot of silent startups have this as their road mapping process or have this as their sign-up flows and People massively underestimate the cost of complexity friction Putting nonsense into your business Aaron Levy is the founder of box and he had a series of tree tweets that I thought were brilliant on this exact topic The first point he says is every single thing that creates friction costs you adoption costs you customers The second point is complexity kills productivity It just kills its down dead always and the third one is like if you can just simplify things Everything will always get better and what was more interesting out of this conversation was really influential smart people like Steve Sinovsky Like Mark pink is from Zynga had other ideas that the fell out of this one was my rule of tomb is that for every choice You put on a user you lose half your audience and if you act on that rule You'll actually make good decisions a second point is usability goes down and the last point from Spencer here I love which is that friction is not linear with adoption. It is actually exponential right what we think we're doing often Sorry for the arrows Well, we think we're doing often when we say hey Well, we get out a bit of friction by adding some choices and we think we're doing this in a Sort of simple every extra choice is a little bit more complicated, right? And that's okay because the ROI justifies it, but in practice it actually looks more like this every extra choice makes your business Horrendously more difficult to do right every little bit of knit or grit will slow things down in a way That you don't realize and you can't forecast So the next time you're faced with a decision of should we attract more customers or not? The actual better question to ask yourself is should we attract more customers or? Should we improve our funnel the way it is should we perfect our current business? Should we get a market dominant position for who we are today? And that is actually a better question to ask and you you also have to win the argument You have to price in this downside. We're going to make our UX really really sucky if we continue to add complexity here So I really implore you all to consider Simplifying the hell out of your healthy business when you've done that you can then optimize a healthy business So to optimize healthy business recall a healthy business. You have to know certain things about your customers You know things like what vertical are they in what team are they? How do they use your product? What types of customers you name it right? There's a lot of stuff you need to know about your customers to know if they are healthy so Generally speaking I encourage every startup what I invested them advised them or even intercom ourselves We always ask these questions to understand where is our healthy usage? Where's the strong part of the business and from there we can build a lot out right and Sorry one more here's a real-world example, right? So this is a product management startup project management startup that I invested in where I got them to ask the answer These questions and once you actually get to these answers you start to realize okay This is something we can actually work with right. We now know a lot about our businesses We now know a lot about where we can invest we know what we need to get right and what we can perfect, etc And from this we were able to say if this is exactly who we need to perfect their business for Let us that's have everyone delete all their roadmaps and their plans And let's only do shit that maximizes the quality of the product for this exact customer And that means asking hard questions like what are the most important things that we have to do To maximize throughput if you like to make this so easy to adopt and It's really important to say not what's important or by what means is the work you're doing important But it's you forget all that you say what is the most important thing and then you have to then ensure that you're doing all Of the most important things and you're doing nothing else Nothing comes for free in business right and the worst the thing that every startup does is this bottom line They post rationalize they say given that I was gonna run that campaign. Anyway, we may as well finish it right wrong Everything you do has to be the most important thing The phrase people often say is you have the main thing is to keep the main thing the main thing, right? It's so important to obsess about the actual thing you're doing So what does that look like well the things you must do is one Ensure every function basically has blank sheeted everything so they're not inheriting any complexity that they added two years ago change your funnel around the business customers you're trying to win and Ensure that like all your metrics and dashboards track Dissuccessful business and they ignore the unhealthy piece that didn't work Unless they kill all the activities that don't support the strategy and the things you definitely don't do one Don't post rationalize anything make it illegal to justify activities based on what came before Secondly don't keep giving away exceptions for this or exceptions for that You're just gonna end up getting dragged right back to where you were and lastly don't celebrate success that had nothing to do with the plan You might have won a great customer last week for the old use case. It's not good news today We're only caring about what we're doing today And don't continue with any decisions or meetings or anything that supports the old business now What's interesting is when you do this is you might see going back to our earlier example Here's the healthy revenue and what we're our job is to grow the healthy revenue We have to be tolerant of the fact that the own healthy revenue might shrink because it is not the priority Which means you might see this right? This is a growing business that looks like a shrinking business and that's okay Because you'll invest in this business people will work for this business and you need to talk about this business Whereas this if that's your narrative, it doesn't sound good and it's just important that people know the difference and Then when you've done these things, this is when we actually get to have the conversation of okay We found our customers. We've simplified. We now have a healthy business. How do we grow that business and? That it for me is like there are four choices you have Right, so if you start off with a current healthy business The obvious one the most people do is you can go up market, right? That means you're selling to larger companies selling to larger companies the same product But you have to adapt it for larger customers Another option is you can sell more stuff to the current buyer So hey, I know I'm currently selling you like social media software Would you also like to have a listening or brand management software or we're selling your customer support? Would you like a phone solution? We just launched a phone solution yesterday Another option is to sell to a different buyer in the same company Which is means ultimately launching a new product line But you you have to believe that the fact that you have the customer already will help you get there And then lastly you can tailor your business for a new vertical So in this world will be like we're gonna do intercom but for airlines or intercom but for hotels or whatever, right? It'd be like tailoring it that way To go through them quickly Firstly take your current product of market. What's good here is that you get more money You get less churned customers don't die like startups do they generally tend to use you longer. They They'll sign longer contracts. What's hard is you have to build a lot of new stuff That's just the reality going off mark You have to build a lot of OAuth permissions security all that sort of shit marketing changes Self-serve sign up is no longer the thing now. You're into like outbound and you're into bigger sales teams, etc And your sales cycles are longer You know just because somebody is expressed his interest today you might land them in a year But like that's just tricky, right? And support gets more complicated. They're more demanding Or you can do more product for your current buyers What's good here again is more money to increase your share of wallet as they say you can improve your product posture So you can basically be a more complete platform And you've been existing trusting buyer what the hard part is you need to build a whole new product And that's a whole new team and that's new expense and that's spending more money, etc You have to market a now a more abstract concept because you're now two different tools together And you have to have a brand that covers both of that Sales is more complicated to enable your sales team to sell more than one thing and then supports more complicated Because you've a larger product footprint If you're trying to sell to new buyers within the current customers, you'll get more money out of your current customers They can help you go wall to wall so you can be like the dominant tool You get compound benefits. So like if you're selling like let's say a sales tool on the support tool They have the same customer record. That's usually useful What's hard here is that it's a brand new buyer on potentially you might have to deal with like more How to say more people in every single purchase. It's just more complicated Again, you have the brand challenge of now selling more things you have to sales challenge, etc and Ultimately now you have two different support orcs because you have to support two different products entirely and Verticalization is usually a good route because you just you often just get new lines of revenue for a little additional product work Maybe a reskin of your product to make it look perfect and there's often lower competition when you go into niche areas There are less people doing like, you know, project management for coal mines They're under our doing project management. So you can usually do pretty well at a going vertical vertical What's hard is oftentimes you might have to like reskin your product a little bit You definitely have a new marketing challenge, right? Which is like how do I reach dentists or how do I reach like hotels or hospitals? Sales has needs new domain expertise all of their existing contacts and their Rolodex won't work here Now as you weigh up these choices, it's worth Remind, it's worth me reminding you the mistakes we made in 2021 to 2021 friction is exponential It is not linear every time you add something something suffers Secondly, everything for somebody is more important than being something for everybody, right? That is the only way you build a healthy business is by being everything to somebody so that that buyer loves you as opposed to having a foot in the door forever and but no one really cares And ultimately you want as much cash as possible for as little code as possible and The last point I'd say in this is just beware the asymmetry of mediocrity, right? So if you add a piece of if you add a shit product to a healthy product line, you lose your product brand, right? People taught you to be great great software company. You add one bad product to it Everyone's like oh, I thought those guys were good, right? And that is a real challenge. You see a lot of people suffer from I often liken this to the idea that if you put say a Cockroach in a bowl of strawberries. That's disgusting if you put a strawberry in a bowl of cockroaches That's also disgusting, right? There isn't asymmetry at play here, right? And so if you add a shit product to a business it makes it a shit business if you add a good product to a shit product business It's still a shit product business. It's just we're remembering now There's one other way we can grow our businesses going forward and it's a very important one. Oh, yeah It's a I so this will be my my sort of last point to talk about AI is a game changer. Let me just start with that, right? I'll say more on this but generally speaking tools can be Disruptive if it's just to defend a new way to sell or they can be technology breakthroughs like the segue or Google Glass Whatever we're like. Yeah, that was cool tech, but ultimately the market didn't give a shit, right? But a game changer is when the market wants it and the tech is there as well and the tech is breakthrough We are looking at a game changer This is the least as big as the first circuit board the first PC the first good PC the first operating system the internet phones To me and to the folks in intercom. We believe that AI is basically a meteor strike coming for the software industry, right? There is not a single business that will not be affected AI will have will change Everything in some ways and it will change some things in every way and if you're not on board with that you're really gonna struggle over the next few years and Just to explain this a little bit better once my meteor graphic has finished playing so Oftentimes VCs like to do these landscape maps where they try and explain what businesses are where and I've spent the majority of my entire life on that little logo there that is the sum total of deaths his entire career right and That actually sits in an even bigger world, right, which is all of this shit, right now AI is going to destroy all of those businesses unless they survive and then thrive and I really do mean survive So how do you survive well Darwin's origin of the species tells us this It is not the species that's biggest or strongest It is the one who is most able to adapt and that is the thing. I'll encourage you to do most adapt We have seen how tech does this before this is the famous evolution of the desk video You've probably seen it right We have seen how this whole world plays out before the entire office changed around us One by one and that's where we ended up right and it's curious to see this three devices left glasses and a laptop and a phone That's where I think we are going to be over the next year when vision pro launches now What will AI do to software well? Well, I think could do the software something like this Here's all the icons we know and love But I think I can replace so many of these things and they could all get absorbed into some central intelligence Right where you just say hey Siri order me a taxi and Siri doesn't give a shit If it's bolt or uber or free now or anything that it's just orders you right easy And similarly you could say order me a pizza and all of the complexity of the software is hidden away You know take a reminder remind me to do this set an appointment all of the calendaring shit Don't bother me with that everything gets hidden behind this so It's worth asking what has actually what is AI done so far. We are really good at text We are really good at conversation We are really good at generating imagery and generate generating voice and video and we are really good at deductive logic, right? and we've seen all these cute demos before and Like for example, you've seen dolly and all that sort of shit where it is Oh, do go give me a children's storybook or something like that and it's pretty impressive stuff. I Think I often get pushed back from folks saying well, what's the business application of any of this shit and I'll show you right. There's like just some real obvious business application I have a friend who works in an email startup and he said AI's got nothing to do with him And I said really most your users aren't good designers already. No, okay Look what happens when you ask AI to design me an email newsletter for a French restaurant Now PS most people who own French restaurants aren't good designers of like fucking the email software, right? So you have you know, can this do it kind of also writes you the email It'll actually help you write the email and a little structure at all And what you get is actually far better than most of us could possibly do now There are probably 50 designers in the crowd in front of me here who are going to say does I could do way better And that's not my point my point is there are 950 people in front of me who definitely can't do better And that's what's changed here Similarly In the intercom we built a product that does customer support called Finn and Finn literally sits in front of your support team and answers all of the Undifferentiated heavy lifting that support teams get how do I reset my password? How do I get a new API key? How do I get a refund? How do I do this? How do I do that? All of the shit that's very very simple to do we launched Finn in July It's already answered about 2 million questions. It's views by a thousand customers Some people see resolution rates in 50 60 70 percent of their total support volume gone And that's just crazy like the whole world is changing here And this is that meteor strike that I'm telling you if you're selling seats in traditional helpdesk software right now things are changing so Just a simple example This is not a Finn pitch But like you can ask Finn a question and it will answer because it goes and it reads the docs and a links up the Docs and it gives you the exact answer in this case I asked it how do I disable this setting it tell me exactly to do it, but people think right That's an easy question a symbol question. Sorry single question single answer There's also stuff like this where okay. Here's a five-part question. Bam. Here's a five-part answer This shit is freaking huge right our entire industry is changing in front of us So you should ask yourself what types of core workflows in your software is changing Given that AI can do all of these things easily right it can write summarize it can create success criteria It can optimize criteria can take actions It can it can find you the next thing to do etc everything changes I have a friend who runs an advertising startup where they take they let you find your best ads to run and he asked me Will AI affect his product? I said well, what's your product do people log in and do all this stuff, right? That's the typical workflow. It turns out I asked chat GPT Can you come up with five new ads give me five new ad visuals run the five new ads calculate the LTV It does it all without even blinking it does it all so now What what does the new product look like you just log in and AI does it shit? And you just approve the suggestions like let's pretend that we need we're needed to approve the suggestions We know where it's going with the AI is just going to do it all anyway So here's a point I really want to make slowly the algorithm You should apply to your software when you think about AI is for every step in your users workflows If it's irrelevant in the world of AI get rid of it if the AI can do it get the AI to do it If the AI can massively simplify it do that instead if the AI can make it a bit easier sure and otherwise don't worry about it yet Maybe The only good say is chat UI is coming as well. So chat UI being here's a big clunky tool called workday I Regularly have to log into workday and what I really really want to do is just say book me October 14th off Please I don't want to learn the UI at all Unfortunately, I have to right because they don't have this tool, but this is coming right It is we all know for example Microsoft Excel Okay, a typical thing people like to do an Excel is make some cells read if they're negative. It's really hard to do It's called conditional formatting right? Literally, it's changing now. Here's the instructions of how you do it in Microsoft Excel today You go through all these steps and I guarantee you we are like months away from a better world Where you're going to log in and you're just gonna say instead. Hey there I would like to make the negative cells read please return and that's going to happen right because that's the way the world's gonna Work, we're just gonna tell the software what we want and get what we want What that does is it means the people who know what they want to do are? Equal to the people who can use your product right? Before chat you have to have any friend who knew Excel After chat UI you everyone knows Excel right? We all just say the things we want to do So the questions to ask yourself is how can AI be used to apply new features that kill workflows is chat UI relevant How can it be applied to let people do things they couldn't do before whether it's design or creativity of any sort And the other thing you should ask yourself is are my customers ready for this? There's an adoption thing here if you're too early like say Google Glass or segue You're wrong and ten years later vision pro or like scooters come along and turns out they had the right timing So what does this mean for your strategy? Well, here's the way I think about it. Let's say my friend who's building an email startup He's now all in an email and he says right it's gonna be mailed on AI And we're gonna do AI to kill MailChimp and campaign monitoring clavio embrace and all that sounds great, dude So here's what his roadmap looks like He has those two black boxes there is all his fancy AI shit and he still has to build all this other stuff Okay, so when he compares his roadmap would say MailChimp's they have to build these two things And he has to build all of the above so Another way of saying it is he's probably not going to win if you're a startup the bad news Sorry, if you're a startup the good news is You're basically you have an opportunity Sorry, they go forward as like if you're if you're the incumbent the bad news is you're now in an AI arms race We are competitors and you're in a battle for survival But this is a massive opportunity to win the market the key question to ask yourself always is How can all this new AI shit make it quicker faster easier or more accessible for more people to use my product? That is how you will thrive in AI you will not try it by shutting it out You'll try it by asking these questions. This is a massive Tectonic shift in tech right we've been through loads of these We've this AI is just one of these it's of similar size in my opinion the nature of what's gonna happen to our industry in the next Well Even when in tech we've gone from the PC to the cloud era to the mobile era to the view or an a or era AI is the next era It's it will leave nothing unturned when it lands so I Said I try to explain how we really re-accelerate through this time of change. I believe all of this is valid find your healthy core Kill all your complexity optimize your business then you expand it and think very seriously potentially going all in on AI Now there's a quote I love that I reside all the time internally and folks are sick of hearing it which is in times of change Learners inherit the earth well the people who are perfectly learned it find themselves beautifully equipped to deal with a world that no longer exists a Lot of the tech that we look at when we look at AI used to be shit We talk about is one day it'll be possible for the machines to blah blah blah And what I say to you here is this is actually day one, so I wish you the best This is an awesome time to building tech. I hope this presentation has been useful. I'm death trader from intercom. Thanks very much