The Unconventional Road to 20K Customers

Good afternoon, everybody. My name is David Apple. I'm the head of the software and SaaS vertical at Intact, the world's largest independent pure-play for cloud ERP. This is our 6th and final session of the tactical stage. I've seen some of you in earlier sessions. It's great to have you back. This is going to be a fantastic discussion.

Two great speakers.

What we want you to get out of this session is to understand the trends that are happening in the consumerization of the enterprise. We've got two speakers. Ilya Fushman is a general partner at Index Ventures. He's got a lot of experience in this space. He spent previously for Index for four years was the head of products at Dropbox, including building Dropbox for Business. So he's got a lot of insights here. Then we got Owen McCabe, who's the co-founder and CEO of Intercom. What Intercom is is a— oh, let's see if I can nail the pitch line on it, Owen. A communications platform for sales, marketing, and product to all be interconnected in one platform for working around the customer. They've got their kind of core message is 20,000 customers have gone with them. But they're not just 20,000 customers. They're 20,000 fans based upon what they've been able been able to build with the product. So allow me to please introduce Ilya and Owen.

Thank you. How close was I?

Eh, close-ish. Thank you, David. Hi, everyone. Excited to be here and interview Owen, whom I've known for about a year and am an investor—excited investor in—but I feel like I've known him for 5 because we spend a lot of time talking about product and go-to-market and different things. Um, I had the pleasure of meeting Owen about a year ago. I was stalking him, uh, for I don't even know how long, uh, and I was drawn to Intercom and their approach because customer communication is really fundamental to how businesses are operating today and are built. Uh, and Intercom has taken a really unique approach in pretty much everything that they've done. Including the fundraising process, it felt like I was meeting him for coffee, you know, 3 or 4 times, and then I just wrote a check. And I don't even think there was even a real pitch in there somewhere. So you'll hear more about that. But, you know, Intercom has been on a tear, getting to 20,000 customers pretty soon here. And I think, Owen, first it'd be great to hear from you on kind of how— how did last year go? What did you guys achieve?

Yeah, so last year I think was our 5th year. It was a pretty big year for us. It was a year where we kind of like moved to a new kind of scale. We finished the year at 306 employees, I think. And we started the year at 180-something. So that's quite an amount of change in the organization. You know, a new moment of scale. A new scale that we had to work with. There was also a new degree of scale with our customers, the amount of customers that we had. And we took on some really big projects. We shipped a whole brand new product. And that's one of the things that you and I have talked about, that it's kind of been a kind of crazy slash silly slash idiotic approach that we've taken where we've built so many damn products. And then we also fundamentally kind of like reinvented a core part of what we do. We have this little messenger that you can install in your site or your app. And we totally reinvented that. We experienced some pretty crazy revenue growth, finished the year at a number we thought we— I mean, we never knew we could reach. And the growth curve puts us amongst some of our heroes, some of the people we look up to. We're growing as fast as they did, if not faster, at our stage. So it's a pretty special year, and it sets us up for another interesting one this year, I think.

That's great. I mean, I see the Intercom logo and smiley face pretty much every website these days. That's a lot of serious stuff. Did you get any fun stuff to do last year?

Um, nope. No, I mean, the one thing— I think the thing that we joked about is that probably the biggest milestone was a 3-second— well, 2.5-second feature on HBO's Silicon Valley. That was nice. It was like Intercom was in the background of Erlang's famous speech in the very last episode of the last season. So that was a big deal. Probably more important than all the other stuff.

Right, there you go. That's real validation. So obviously great, great results, but I think the most interesting thing for folks here is, you know, how did you get there? Because it's really been, as you said, fairly silly and unconventional in some ways. You're a multi-product company. You started on multiple continents from day one. Big founding team. So talk a little bit about product, marketing, the business, the people. What have you guys done differently and why did you do it differently from what you'd expect from the norm?

I think there's a couple of things behind our approach and I wouldn't say it was necessarily super well considered or planned, very well coordinated. It's been very much an organic thing that has unfolded. One of the things that makes us a little different is that myself and my co-founders, we had worked together for nearly 4 or 5 years before Intercom. So we came into the company with already a kind of a set of values or a shared set of understanding. We made all of our biggest mistakes before Intercom. So I feel like on day zero we had had a ton of practice, like a ton of practice, and we had had enough opportunities to kind of teach us that, you know, some of our initial intuition and our core principles and values were probably pretty useful and that, you know, the rest of the world was probably just about as dumb as we were and that, you know, maybe we should go it alone and stick to our guns. So we did that at every single turn. You know, I think that there have been over the years so many pieces of, you know, smart, very smart, specific advice that we've received that for whatever reason didn't land, we didn't take on board, and we went the opposite route. I guess it kind of worked out. So sticking to our principles, and in particular the principles and values that we kind of developed before we even started the company, I think has been a big deal for us.

So talk a little bit about the decision to go from one product monolith to four, now five, maybe back to four, maybe six.

Maybe back to four, yeah. So again, it's been pretty organic. A lot of the way in which we've operated is that we've never kind of held anything too dear for too long. And if you look at any type of artist, say recording artist, that is successful over a long period of time, they will manage to reinvent themselves, constantly questioning their previously held beliefs. You know, we've done that when it comes to our packaging, our pricing, or the way we've presented our products the whole way through. Far from got it right. Um, still so much to fix. But we started out by building Intercom as this kind of blob of a thing, a set of functionality that was designed to solve a very broad range of problems. That worked well for a range of smaller companies, but as these companies grew and added some sort of structure and sophistication to the way that they worked, we repackaged these things, put them in different products, and presented them to the world in a way that we felt they would understand. And I think that that's something that, you know, we would speak about pretty abstractly pretty often, that you need to, you know, in as much as you need to kind of like show the world what the future may look like, you need to come to the world too. Things that are sufficiently out there or forward thinking or ahead of their time in some senses, can be confusing and crazy enough that they just won't land. And so always a lot of these changes have been to try and reshape our general vision and set of ideas into a thing that the world would understand. Early on, we even struggled to tell everyone what the hell Intercom was. All of us. Still today, you know, he made a good shot, but You know, even today we struggle to tell the world what we are. And you know, you will find that with any company or product that tries to do something fundamentally and fully new. You know, we can talk about this if you want, but you know, when you start out, you can very much pick a category that you think there remains an opportunity in. And reinvent that and change that. And that's where these X for Y companies come from. You know, we could pick help desk and say, "Let's build a better help desk." Or you could take a fundamentally new and orthogonal approach and do something very, very new. And there's a kind of a cliché where people talk about the biggest opportunities coming from those who invent their own categories, and I think that that's fundamentally true. The trade-off is that the X for Y type approach where you reinvent an existing category. It's far more linear, easier to understand, it's safer. But it has a limited upside because there exists a lot of products there already. The blue sky, crazy, we don't know what this is, maybe it's a new category approach is really unlikely to work. But if it does, the payoff is pretty big because you're on your own there and you can kind of ride that trend that you create. I think the thing that's important to know about that approach is that anyone who says that that was their strategy is wholly and completely full of shit. You cannot plan that. You cannot architect that. There's no strategy. You fall into that. It's that organic process. And that's why, you know, all the way along we've been allergic to these paint-by-numbers approaches to business because it never felt right. And we were excited about this thing and we continue to do this thing. So I think, you know, another way to look at it is to say that we've just been super, super lucky that this silly thing that we got excited about happened to be valuable. That's great.

So, I mean, a lot of creativity goes into doing that. Talk a little bit about kind of how do you foster that creativity in your team? I mean, to me, when I look at the Intercom product, it's playful, it's easy to use, it's delightful. How do you guys actually make sure that that happens? Is that Is that calculated? Is that just organic?

A lot of that comes from the values that we hold dear in the company and our own motivations for doing this. We would all quit tomorrow if we had to follow any kind of playbook or do anything that you might describe as typical for a software company, a SaaS company, or an enterprise software company. We're in this for pretty creative, maybe dorky, geeky, nerdy endeavors. You know, we want to build cool stuff. And that, like, desire for an opportunity to invent and kind of put a new thing into people's hands and see what they do with it is actually the motivation. Everything else comes after. Of course, we need to create revenue to sustain that. If we want a company where we get to experiment and play and do all these silly things, we have to create revenue to be able to get money from Ilya, to be able to to pay the bills, to do silly things yet again. But really the core motivator is to create and make. And so that's kind of where it comes from. It's that fervor to do cool shit. And you can see it when someone creates a new thing or takes a risk and it works out. You can see the twinkle in people's eye there. That moment of invention and when it lands and it works out is— is what we live for. To do that well, of course, you need to create a culture where it's safe to fail, and we have a ton of room to improve there too. You know, we're trying to like be playful and innovative while at the same time we have this crazy high bar, and I will notice every single mistake, and I have to sometimes hold my breath and say well done before I say you missed a full stop. But what is really, really important if you want to have a a company and a culture where play and invention and innovation is the thing, you need to give people room to make mistakes, and you need to tell people that it's okay when they fail, if not kind of celebrate that failure. You know, failure is on the other side of risk and play and endeavor, and I would say that in some senses, when you're really experimenting and doing crazy new things, you'll fail more often than not, but when that thing lands and really works out, it can pay off for all the failure many times over.

What's been the most, if you can talk about it, the most painful failure? What have you killed that you didn't really want to kill?

Uh, uh, um, there's a whole— no, I mean, we totally can. I don't know how interesting it might be. I mean, the, you know, I mean, there's so much. We've just, you know, we failed and fucked up left and right. We've built a bunch of stuff we never should have built. We like packaged and presented products to the world that never should have been products. You know, landing pages that were all wrong. Experiments that like trashed a whole couple quarters of revenue results. You know, hires and mis-hires. You know, right people in wrong roles, wrong roles with the right people. I mean, everything. Like all of it. All of it. So there's actually no interesting one cool— I mean, If you gave me heads up, I'd give you like a cool little sexy story, but it's not it. The background to anything that any of us in this room would be excited to do is just a long list of fucking mundane failures. A lot of failure. There you go.

So switching gears a little bit, I think marketing is something you guys think about very differently. What's up with the cartoon characters? Talk a bit about the Intercom marketing way you guys publish books.

Thought leadership, like how does that work? Yeah, so I guess there's two pieces there. One is like the way we present ourselves, all the silly stuff, and then the other is like the amount we put into kind of branding work. Again, I think that, you know, us in the tech world in general take ourselves too seriously. Us in the software world definitely take ourselves too seriously. When we started Intercom, we looked at and we were familiar with, you know, what enterprise software looked like. And it was a lot of stock photography and high-fives in boardrooms and other boring shit. And as creatives and people who are excited to build cool things and have them used and hear what our customers think, our mission and motivation was always kind of more emotional than that, and it was less about business and it was more about people. Our stated mission at the start of the— when we started Intercom was to make business personal. We looked at how business online was run and we saw it to be really impersonal. For example, the default response to a support inquiry typically would be, "Dear valued customer, thanks for your inquiry. Your ticket number 53. Have you read our FAQ? This ticket will automatically close in 10 days." Like robotic, impersonal, transactional, spammy, and shit. So we set out to kind of kind of fight that in some senses. And so there's a lot of heart in that message. Hey, we want to bring humans back into the equation. And so there was that story to tell. We kind of also wanted to— and continue to want to— not take ourselves too seriously, disarm any cynicism. We ourselves can end up being so cynical about a lot of our own shit, corporate stuff, business stuff. So we're trying in every angle and in every direction to make it fun. Friendly, approachable, simple, different. And because content has always been a big part of our brand and who we are and how we work, and I'll talk about that in just a second, we, we set about trying to tell our product stories and our company story as stories. And we looked at a lot of, you know, children's storybooks, etc. So a lot of the branding that you see there is intended to tell the story in an emotive way, in a way that doesn't take us too seriously. As opposed to trying to convey some sort of corporate branding, blah, blah, blah, blah, blah. I think that makes sense. Hopefully. And then the branding piece is, you know, the content stuff. We were product people from the get-go. We knew nothing about sales and marketing. We're trying to catch up still. All we knew was a passion for the craft and the things that we did and building product and working with customers and getting feedback. A lot of these things were intellectually interesting to us. And so almost automatically, without having a strategy, we started to blog a lot. When I say we, it was really my co-founder Des. I've written very little on the blog. And, and, and, and, and over time what we saw was not that the content created these acquisition opportunities. I mean, I think it's pretty close-minded and overly left-brained to see content marketing as a way to acquire customers. But what we saw was that our content was an opportunity for us to communicate broadly to the world that like, we're here, we care, we might not be idiots, and these are the kind of topics in which you should consider our brand relevant for. So we saw it as this long-lead branding opportunity. All of our content you'll see is never Timely. We never comment on news. It's not clickbaity. It's not intended to generate, you know, clicks and conversions. It's intended to get the message out there, be shared for years. And if you look at how like our traffic is broken down from all our content, it's from the hundreds of posts created over the years, building up really slowly. We then started to create books because that's just another format that people could learn from us with. We now have a podcast. We've published over 50 podcasts. We have a world tour, which is an opportunity to get in front of people. But all of these endeavors are branding opportunities. And that's something that we and I have seen, I think, companies do too little of. We're all so focused on growth and conversions and users in the next quarter or the end of the year. And we don't give ourselves an opportunity to think longer term, which in some senses can be easier. It's actually really incredibly hard to build a machine that acquires a fixed amount of users in a certain time. However, not that hard is to put your soul and your heart and your passion and your brand and everything you care about into genuine authentic content and see what would happen with that. And what often will happen with that is a communication of the market that tells them who you are. That's been massive for us.

It's a little contrary to common thinking though, because you kind of want to keep some things for yourself. So how do you think about what you communicate out versus what you keep private?

Yep. I think that the irony is that advice and words are so cheap. All the advice I've heard over the years, most of it probably didn't land because I wasn't ready for it. You need to be ready to hear these things. We could spell out our whole product strategy and pricing strategy and everything we've learned, but until people were ready to use it, I don't think it would be particularly useful. But regardless, I think it's well worth us risking that one or two people who might be competitive with Intercom might somehow improve their thinking in return for literally millions of people knowing our brand. It's a trade-off we'll make all day long.

Cool. Let's talk a little bit about business and fundraising specifically. I bet there are a lot of companies here thinking about fundraising. You know, conventional advice says run a process, talk to a bunch of VCs, line them up, rank them, create a forcing function. How have you approached it? I mean, I certainly gave you a lot of money without that process. Thank you. How did you do that?

I'll tell you the kind of like brave, maverick, awesome story in a second that makes me look really good. But the truth is that I would be shit at running a process. Like the whole process thing, you have to like maintain all these relationships, then you kind of like pitch all people at the same time, very strategic messaging, line them all up in a week, set this deadline where you're supposed to have term— I mean, I've heard what you're supposed to do. I'm not organized enough for that or have enough patience. And so what has happened, and again, the whole organic thing, like, it's not— I mean, if you look at, you know, pick the companies you look up to the most, you'll see that the greatest things that they have achieved have happened to them by virtue of them existing in the world and maintaining some certain principles. So we got this organic thing, this natural thing, is you'll see it everywhere. But what ended up happening was that We continued to focus on building amazing product, the best we could do. So we tried our very best with product. And we spread our message far and wide through our content. Any channel we could find, we tried to just put it out there. Then customers came to us and investors came to us. And the net effect is that the people who came to us to say, you know, "We love your product. We want to invest," were the people who were most excited and who naturally understood what the hell we were doing. You know, if you go and like brute force this process on people, you're gonna get a bunch of investors excited maybe for the wrong reasons. But if someone like Ilya can read between the lines and say, "Oh, that little messaging in that content, we discovered that at Dropbox too. That's interesting that they think in that way." and I've seen this product around, and actually the people who use the product are the people I look up to. You start joining the dots, you know, the people who will join those dots are exactly the type of people I would want to work with, you know. So anyone who came to me was most interested, they were good to go, and they were the people who got it. So that's one piece. But then the other piece that needs to be acknowledged, because it's too easy to sit to You know, we've raised $116 million— well, we've raised $115.75 million. But we easily could have raised well over $200, perhaps $300, all the way along. There's still time. OK, good. Let's talk about that. But what I was going to say— oh, yeah. The— shit, it's totally gone. Don't make a joke when I'm so close to that fucking perfect thing. Could have raised more. I know, I got it, I got it, got it. The point is that— The thing that needs to be acknowledged is that some companies are just like super investable. Like Intercom exists in this echo chamber world where all of our customers are the portfolio companies of every other investor and we have our damn logo on people's websites. So like we cheat. We totally cheat. If we were building plumber workflow applications, you never would have heard of it. So, and I think that the thing that's really important to recognize there is that For folks who are not operating like Intercom in this, in this echo chamber-y world, you know, making tech for tech people, raising money is going to be harder. So don't be hard on yourself when you see the echo chamber companies boast about how much hundreds of millions of dollars that you raised. That's just real, and I think people need to recognize that. That's true.

You've also put the money to use, I think, in good ways. So you've invested a lot in customer support. Yeah. And people. Talk a bit about that. Kind of why is customer support so important to you first, and then how do you think about building a team, especially trade-off between kind of talent and, you know, people who don't know as much but can grow really quickly?

Yeah. So on the first piece, I mean, so with customer support, so, you know, again, our mission was to make internet business personal. And we wanted to be always very personal with our customers, so we never could kind of like sidestep that. Or not have good support, if not great support. But we always saw it as an opportunity for like very real value add. You know, we never saw it as kind of a cost center, but rather as an opportunity to generate profit. We always would say early on, perhaps a little idealistically, but we continue to talk about this, that any conversation that our customer is willing to have with us is a privilege, you know, that they, would give us their precious time and they would listen to us and connect with us and build a relationship with us, even if they're complaining. I mean, a lot of times when you come across shit software and it upsets you, like, you might be sufficiently upset or not care such that you're just not gonna even bother to talk to the support folks. So we appreciate it when they do. So that's the first thing where we said, like, anytime we get to talk to people, it's a privilege and a pleasure. Let's use that opportunity. Let's invest in them. And let's, let's see that very much as a profit or revenue-generating activity and never try and outsource it or like shortchange that whole process and function. But the other thing that we do is that we very much use customer support and the people in the support team as part of our natural processes. So as part of your— part of doing your job as a support person is categorizing all of the conversations that we have. And we do a lot of this categorization in Intercom, we've built little side tools that help us too. And the support team are responsible for communicating to the rest of the company what our customers care about. We produce this thing called a customer voice report and it comes via the support team. So the support team represent the customers in Intercom in a big way. And so that's a way where very tangibly we get a lot of value from them. Rather than them just costing us money and damaging our margin, which I think too many people think that that's what they do. Yeah. I forgot you had a second part of that question.

Yeah. Quickly, talent before we get to the future, but talent, how do you think about—

Yes. So different ways to think about this, but we as a company always, I guess, we're excited about, ambitious folks, people early in their career, people who wanted to learn and develop. We always found that there was a unique kind of energy that you would get from someone who was still developing and learning and growing. Everyone, no human ever stops growing and learning and developing. It's an innate part of who we are. Babies want to learn, the oldest people want to learn and grow. But we always, we always love people who wanted to grow and learn fast because in that process you get this natural enthusiasm and energy and positivity and creativity and the naivety that has people try new things. So as a company, we continue to bet on folks early in their career, give them shots that maybe other people might not give them. And the same is true in the support team. And so, you know, there's a ton of folks who early in their career have not yet picked a lane. They don't know maybe where they want to work, but they're excited about technology and they're prospects for IT in the world, and they want to get their way in, they want to get their start. And so we have also used the support team as an opportunity to bring on very smart, ambitious folks who are able to empathize with and connect with our customers and help them, give them an opportunity to step into the technology world. And we educate them, and we, over a period of time, if they ever want to try something else, try and give them those opportunities. That's the way we think about that. Great. Yeah.

[Speaker:JASON M. LEMKIN] All right, so awesome progress. What's in the future? 5, 10 years out, where do you want to be?

[Speaker:CHRIS MESSINA] Big questions. We should talk about this at the next board meeting. So again, our mission is to make business personal. And when we look at business online, we see it's often not personal. It's spammy. It's transactional. People treat customers like records in a database. And data and statistics, and we hate that. So we have a lot more businesses to help. In general, we would love for every business online to use Intercom to talk to their customers. That's like the general broad goal. But if you look at it in a more sober, if not frankly boring fashion, what Intercom potentially has an opportunity to do— maybe it's a 1 in 1,000 opportunity or far less— is to kind of be that next generation of a customer platform. You know, if you look at what Salesforce is, Salesforce was invented some 16 years ago perhaps, and it was invented kind of almost for pre-internet businesses. It was built or shipped online in some senses, but the people they sell to weren't digital businesses with users and apps and all that stuff. And so Intercom is for this new generation that wants to deal with customers and users at scale and in a new and a personal way, have every team on the same page, and use more modern channels. You know, we look at email, we see email is pretty damn broken. People don't read it. Gmail's getting really good at putting everything in the promoted tab. I mean, email is just fundamentally a broken channel, we believe, and most of these communication products still rely on it. So that's why we use our Messenger and other messaging channels. So we want to bring that to the world, but we think that there's maybe a 1 in 1,000 chance give or take, that over time we could be that next customer platform for all internet businesses. That's the modest and humble goal. We have a small little set of simple products, so we need to kind of mature them to help companies who are adding layers of sophistication, if not complexity, work with our product too. That's really, really important. And we're investing in our platform. We want other people to build on it. We want people to abuse it and use it and take all the data out of it and put more data in it too. I think overall we want to let people have fun with their businesses. Like, there's a fine line here when I kind of touch on this piece. I'm very specifically— I'm not trying to say that we're trying to help make the world a better place. But if people who work in these internet businesses got to know their customers and have fun with them and be real with them, And if customers got to know the people behind the businesses too and appreciate them, we can't help but feel that things get better. So that's the general and the broad goal. Thank you. Thank you. That was great. Thanks.