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Eoghan McCabe

Episode #93

Co-founder and CEO

Intercom

👥Team & Culture🎯Product Strategy

📝Full Transcript

14,022 words
Eoghan McCabe (00:00:00): You don't have a choice. AI is going to disrupt in the most aggressive violent ways. If you're not in it, you're about to get kicked out of all of it. Lenny Rachitsky (00:00:08): You have very successfully shifted late stage SaaS business to an AI-first agent-based business. Eoghan McCabe (00:00:15): Fin is our AI agent who will pass 100 million ARR with Fin in less than three quarters. Lenny Rachitsky (00:00:20): Let's talk about how you made this actually happen. Eoghan McCabe (00:00:22): We were about to hit $0 net new ARR, which means we would've been in negative growth territory. Lenny Rachitsky (00:00:28): So, ChatGPT launches. Was it just like this is it, we got to go all in on this thing? Eoghan McCabe (00:00:33): I said, we need to become a wartime company. If we don't fight for this, we are dead. I jumped hard on AI, but I also restarted the culture. I rewrote the values designed to be a sharp knife to cut out the parts of the company that I just knew wouldn't be effective. Lenny Rachitsky (00:00:48): If you're trying to make the shift and it's just not moving, you may need to go hardcore founder mode. Eoghan McCabe (00:00:52): The way that greatness is created is that you find a CEO who's willing to make brave hard decisions and own the results. Lenny Rachitsky (00:00:59): What percentage of the employees kind of turned over during this period? Eoghan McCabe (00:01:02): Ultimately like 40%. Lenny Rachitsky (00:01:04): You said there was a soft coup. Is there more you could share about that? (00:01:09): Today my guest is Eoghan McCabe. This is the first in a series of conversations that I'm having with founders who have successfully transformed their established SaaS or marketplace businesses into an AI first company that is growing like crazy and overtaking their decade plus old business. So, many companies and product teams and founders are trying to navigate this very tricky time where every industry is being disrup...

💡 Key Takeaways

  • 1To pivot a late-stage company to AI, you must be willing to dismantle existing revenue streams and cultural norms; incrementalism fails against existential disruption.
  • 2Pricing for AI agents should be outcome-based (e.g., per resolution) rather than seat-based, aligning 100% with the value delivered to the customer.
  • 3Cultural values should act as a 'sharp knife' designed to cut people out who don't fit, rather than generic statements of inclusion.
  • 4In times of crisis or massive pivot, seek 'Founder Mode' (unilateral, brave decision-making) over consensus or democratic management.
  • 5The future of organizations is a hybrid of humans and agents, where humans will likely move into 'manager' roles overseeing agentic outputs.
  • 6Efficiency is not the only value metric; humans will continue to pay a premium for connection, story, and craft even as agents commoditize execution.
  • 7Deeply question 'best practices' from the previous SaaS era; young AI companies are winning by ignoring them and working with extreme intensity.

📚Methodologies (3)

👥 Team & Culture

A framework for rewriting company values and performance management to aggressively filter the workforce for specific traits required for a wartime pivot, rather than broad inclusivity.

Core Principles

  • 1.Rewrite values to be exclusionary: Design values that specifically define who *should not* be there (e.g., 'Resilience' and 'Shareholder Value' over comfort).
  • 2.Hard-coded Performance Formula: Implement a review system where the score is a hard calculation of Goal Achievement + Behavioral Adherence to Values.
  • 3.Remove the Manager's Discretion: The CEO or leadership sets the formula so that low scores automatically trigger exit discussions, removing emotional hesitation from middle management.
  • +1 more...

"I rewrote the values designed to be a sharp knife to cut out the parts of the company that I just knew wouldn't be effective."

#'sharp#knife'#cultural
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🎯 Product Strategy

A pricing strategy that shifts from paying for access (seats) or usage (messages) to paying strictly for successful outcomes, de-risking the adoption for the buyer.

Core Principles

  • 1.Price on Outcome, Not Access: Charge only when the specific unit of work is successfully completed (e.g., a resolved ticket).
  • 2.Define the 'Kill Threshold': Determine the minimum price per outcome needed for a viable business (Intercom set $0.99/resolution). If customers won't pay that, the business model doesn't exist.
  • 3.Decouple Price from Cost: Do not use cost-plus pricing. The cost of AI inference is volatile and dropping; price based on the value relative to the human alternative (e.g., $0.99 vs $20 human cost).
  • +1 more...

"We wanted our revenue to be 100% aligned with the value that they attained... If someone is not prepared to pay 99 cent for us to rapidly and elegantly solve their customer's problem, we need to wrap this up."

#resolution-based#pricing#strategy
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🎯 Product Strategy

A rigorous intellectual framework used to strip every initiative down to its fundamental truth before execution, ensuring high strategic coherence.

Core Principles

  • 1.Identify the Ultimate Goal: Before discussing the 'what' (e.g., an event), define the 'why' (e.g., brand affinity vs. lead gen).
  • 2.Analyze the Mechanism: Determine exactly *how* the proposed solution achieves the goal (the causal link).
  • 3.Deconstruct the Value Definition: Map how the end-user defines value in this context, not how the business defines it.
  • +1 more...

"We would create frameworks for everything... What is the ultimate goal of the event? What's the mechanism by which events work? What other mechanisms that can achieve that same goal?"

#first-principles#decomposition#strategy
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