Eoghan McCabe, CEO @Intercom: Freedom of Speech, Censorship and Government Control | E1213

Intro (0s)

• Most venture capital money is currently supporting excitement around AI, but this investment may not yield better returns than the S&P 500. (0s)
• Building one's own AI agent platforms is considered a bad idea, comparable to building one's own SaaS workflow tools in the past. (7s)
• There is a strong belief in individual liberty and peace, which are being threatened in the current time. (15s)
• Certain individuals, such as Trump and Farage, are seen as promoters of personal liberties and freedoms. (23s)
• It is considered deeply problematic for governments to decide what can or cannot be spoken about, as this can lead to an abuse of power. (28s)
• The current time is marked by significant developments in AI, with many people believing that customer service will be heavily impacted and potentially replaced. (1m12s)
• Despite the potential impact of AI, Intercom's position is not threatened, as the company's focus is on delivering softer experiences that will continue to be relevant in the future. (1m22s)
• The development of increasingly powerful and abstract AI will eventually do away with the need for current work processes, but this is not expected to happen in the near future. (1m45s)
• The CEO of Intercom believes that the company has a decade or two before it needs to worry about being replaced by AI. (2m5s)

AI in Customer Support: Intercom's Role in the Emerging Landscape (2m9s)

• The conventional wisdom in AI circles is that customer service and support will be significantly impacted by AI in the next year or two, but this adoption may take longer than expected due to the time it takes for new technology to be widely adopted (2m9s).
• Intercom has developed an AI agent that can have actual conversations with customers and close tickets, with the highest performing AI customer service bot on the market, resolving tickets at a rate approaching 50% (2m48s).
• The AI agent's efficiency is driven by leveraging existing data sources, including historical conversations between human representatives and customers, as well as open AI and alternative models (3m1s).
• Building domain-specific AI systems requires a significant amount of work on top of large language models (LLMs), including over 100 unique experiments and patented components in Intercom's AI agent (3m44s).
• The development of Intercom's AI agent has involved intricate connections between seven different LLMs, homegrown AI, and detailed prompt engineering, resulting in a significant increase in resolution rates from the high 20s to approaching 50% (4m11s).
• The success of AI application companies, such as Intercom, is expected to continue in the next 5-10 years, as they build domain-specific functionality on top of LLMs, making them more effective at specific tasks (4m43s).
• The development of AGI (Artificial General Intelligence) may eventually disrupt the software industry, but this is expected to take a long time, and AI application companies will continue to thrive in the short term (5m8s).
• The key to success in the technology industry is timing, riding successive growth cycles, and reinventing oneself to stay ahead of the trends (5m27s).

Overestimating AI (5m59s)

• The rate at which AI is going to change the world is overhyped, and the raw technologies will be built long before they have real impact (6m17s).
• Despite this, AI already has value, with 100-500 companies globally building AI-first products that are successful, and these companies are reaching significant revenue milestones in less than two years (6m52s).
• AI application companies are currently delivering a lot of value, but it can be challenging to determine whether their revenues are sustainable or just driven by excitement (7m24s).
• The quality of revenue from AI companies is often lower, with many being proof-of-concepts or pilots, making it challenging for investors to spot the signal from the noise (7m43s).
• Most VC money will support AI companies that do not perform better than the S&P 500, but there are AI companies delivering tangible value, which can be spotted by looking at usage and retention (8m7s).
• The early days of AI are comparable to the early days of the internet, with only 1% of Internet Enterprise Value created in the two years following the founding of Netscape, indicating that AI is still in its early days (8m21s).
• There will be AI companies that flame out, but there are also AI businesses with customers who have changed the way they work, are expanding on the product, and are not going anywhere (8m55s).

SaaS Future: Companies Building Their Own Tools? (9m7s)

• Companies stopping partnerships or customer contracts with services like Salesforce led to the idea that the future involves companies building their own SaaS tools (9m8s).
• Building one's own AI agent platforms is considered a terrible idea, similar to the previous generation building their own SaaS workflow tools, as these systems are complex and deep (9m30s).
• The development of a highly performant and rich AI agent, such as Intercom's AI agent Finn, is the product of over 100 different experiments, many patented parts, and a large team of engineers (9m54s).
• It is unlikely that companies can build a highly performant AI agent on the side, and any attempts to do so may only yield short-term excitement before moving to a professional purpose-built system (10m11s).
• The idea that every company will build their own individual tools is considered one of the most ridiculous misnomers in the valley, as it is unrealistic and impractical (10m32s).

AI Costs: Rising Prices or Falling Expenses? (10m35s)

• There are two possible worlds in the future of AI products: one where costs remain high and prices increase significantly, and another where costs decrease and pricing remains relatively stable due to technological advancements, with the latter being more likely as technology is deflationary and gets cheaper over time (10m35s).
• AI agents will become cheaper than humans while also being better, leading to people augmenting their budgets to spend on as much AI as they can, potentially resulting in overserving customers (11m3s).
• Companies may generate better sales through AI assistance, but when AI becomes a commodity, it will get cheaper over time, and companies will spend more money on it (11m59s).
• The reductive nature of AI on team size is a reality, as automation requires less humans, and valuable businesses have gotten smaller with technology, such as Google and Facebook (12m28s).
• AI agents will first do low-level and simpler work, and humans will do higher-level work, with AI eventually doing more and more tasks through attrition, resulting in smaller teams with fewer humans (13m9s).
• Firing customer service employees to replace them with AI agents may be a capitalist approach, but it's not suitable for all businesses, especially those with a wide distribution of question types, and some companies may not be able to create custom AI experiences to cover most of their inbound questions (13m33s).
• Foundation model companies, such as OpenAI, Anthropic, and others, may subsume the core application layer companies, including customer service and language translation, if they manage to become closer to Artificial General Intelligence (AGI) (14m25s).
• Storytellers and Visionaries are different from Builders and business people, as they have different disciplines and mindsets, and often do not realize that businesses and consumers have practical problems that need solving, which can take a long time to adopt new technologies (14m50s).
• In the next 10 years, a significant rise of Robotics is expected in various areas, potentially replacing a lot of blue-collar work, but this is not a new phenomenon as technology has always replaced human work that is dangerous and demeaning (15m30s).
• While technology has put humans out of work in certain areas, it has also led to an increase in the world population, GDP, and longevity, suggesting that this trend is likely to continue (15m49s).
• The replacement of human work with technology is not a cause for concern, as it has historically led to improvements in humanity, and people have always learned new skills to adapt to changing circumstances (16m12s).
• The impact of AI on certain professions, such as photography, is acknowledged, but it is also recognized that people will learn new skills and adapt to these changes, just as they have in the past with the rise of new technologies and tools (16m33s).
• The disruption of certain industries, such as web design, by new tools and technologies, such as Wix, Squarespace, and Shopify, is cited as an example of how people have adapted to change and learned new skills (17m2s).

AI Startups: True Innovation or Just Thin Layers on Models (17m19s)

• The demand for specialized skills and services has led to the creation of new companies that cater to these needs, and this trend is expected to continue (17m20s).
• Many AI startups, including those in the latest YC batch, are building relatively thin layers on top of existing models, such as Open AI, and combining different foundation models (17m36s).
• This raises questions about the defensibility of these companies, as they may not have a unique value proposition or competitive advantage (17m54s).
• However, the people involved in these companies can be a key factor in their success, as talented teams can build great things even with relatively simple ideas (18m10s).
• The concept of defensibility in startups is often debated, with some arguing that it is not a major concern, as technology is a cat-and-mouse game where companies must constantly innovate to stay ahead (18m44s).
• Even large companies like Apple have struggled to maintain defensibility, as seen in their patent disputes with Samsung (18m50s).
• While some technology companies may eventually build networks or ecosystems that become defensible, software companies often rely on their ability to build better and faster than others (19m30s).
• Speed is an important factor in the success of startups, but it is not the only factor, and hard work and dedication are also essential (19m39s).
• The concept of "Founder mode," popularized by Paul Graham's essay, is seen as a cute and fun branding for a mindset that many founders have already adopted, which emphasizes trusting one's gut and instinct (19m57s).
• Starting a business is a creative endeavor that requires a high degree of agency and intuition, and trying to find a lowest common denominator can stifle innovation (20m28s).
• Intercom, a private software company, generates hundreds of millions of dollars in revenue and is one of the larger private software companies (20m53s).

Why Intercom Doesn’t Go Public (21m2s)

• Venture capitalists like Gurley and Brad often encourage companies to go public when they reach a certain valuation range, as VCs need liquidity, but founders with different missions and longer time horizons may have different priorities (21m3s).
• The goal is to build a highly impactful technology company, and it doesn't matter whether the stock is traded on the public or private market, as the focus is on having a ton of customers, revenue, and influence on technology (21m31s).
• Regulatory compliance can get in the way of achieving these goals, and taking public companies private allows them to make big swings and bets without the rigors of being public (22m8s).
• Intercom nearly went public in 2022, but the markets collapsed, and the company is grateful that it did not go public, as it would have limited its ability to make big changes and accelerate revenue growth (22m30s).
• Investors get excited about liquidity, but in moments of great change, the best value is created behind closed doors, and big swings and changes are often made in private companies (23m1s).
• As an investor, liquidity and M&A are needed, but the current IPO process can be challenging, and private markets and M&A may provide alternative options for liquidity (23m23s).
• The current private window may be extended, but there will be IPOs, liquidity on private markets, and M&A activity, although the VC model is being questioned, and companies like Intercom, which is 13 years old, are taking longer to provide liquidity to investors (23m55s).

Does the VC Model Still Work? (24m16s)

• The amount of capital available at an early stage suggests that the early-stage venture capital (VC) market has become a commodity, making it challenging for VCs to generate returns (24m21s).
• Revenue growth plateaued due to forcing more customers to interact with sales, which increased average contract values (ACVs) but reduced growth in small and medium-sized businesses (SMBs) (24m51s).
• The SMBs were crucial for sales customers as they needed time to grow, and the shift in strategy was a significant mistake that led to a decline in the total customer count (25m1s).
• The company's customer count has started growing rapidly again after implementing changes, but it initially began to shrink (25m15s).
• Another mistake was pricing, where the company became greedy and wanted customers to sign large contracts upfront instead of allowing them to expand into them, which went against their intuition and resulted in poor commercialization (25m21s).
• The company's customer base consists of a large portion of SMBs, but they are increasingly moving into the mid-market, with a smaller focus on Enterprise (25m35s).

Shifting from SMB to Mid-Market (25m43s)

• The shift from small to mid-market required significant internal changes at Intercom, including a restart of the startup culture (25m43s).
• The company's values needed to be totally changed, with a focus on hard work, resilience, and a focus on the mission being key (25m57s).
• A decision was made to focus on a specific area, customer service, rather than trying to do everything that big companies do (26m14s).
• Permission was given to employees to act quickly, scrappily, and in a messy way to achieve goals (26m18s).
• A project called Project 52 was initiated, with a goal to reinvent the company within 52 weeks (26m26s).
• The CEO was heavily involved in the project, speaking to the company every week and creating a high degree of intensity (26m32s).
• New performance management processes were rolled out, with employees who didn't fit with the new values being respectfully let go (26m39s).

Hard Work vs. Work-Life Balance (26m48s)

• Hard work and resilience are considered important values, with the idea that one should be willing to cancel personal plans to continue working on a project, but some people disagree with this approach and prioritize work-life balance (26m57s).
• The idea that no one is against hard work and resilience is disputed, as many employees may not be willing to put in the effort required for truly challenging tasks (27m30s).
• A meme from 10 years ago promoted the idea of "work smart, not hard," which led to a focus on work-life balance, but this approach may not be suitable for achieving extremely difficult goals (28m2s).
• Some people believe that there are smarter ways to work, such as a 4-day workweek, but this approach is not considered effective for achieving greatness (28m32s).
• The importance of hard work is emphasized, with the idea that it cannot be beat, and that people who disagree with this approach may not be a good fit for the company (28m46s).
• The top-down approach to management, where the CEO dictates values and policies, is considered more effective than a consensus-based approach, which can lead to mediocrity (29m5s).
• A mandate of two days a week in the office is considered a good approach, but if starting again, a 5-day workweek would be preferred, as it is considered more enjoyable and effective (29m56s).

Why Eoghan Expresses His Political Views Publicly? (30m10s)

• The decision to express political views publicly stems from the importance of individual liberty and peace, which are being threatened by Western establishments and governments impinging upon individual liberties, such as freedom of speech, and starting wars between nuclear powers (30m28s).
• Despite disliking politics and politicians, the current time is different, and it's crucial to support those who promote freedom and personal liberties, which is why there's support for Trump and Farage (31m32s).
• The support for Trump is not about being part of a team or tribe but rather about promoting freedom and personal liberties, as Trump and Farage are not trying to shut down speech, crypto, or AI, and want to end wars (31m46s).
• Many people in the technology industry are voting for Trump, but few admit it publicly due to fear of being judged or criticized (32m24s).
• It's essential to speak publicly about important issues, even if it's a topic people are afraid to discuss, as not doing so can make things worse, and it's crucial to respect people's choices, especially when they're designed to protect humanity and peace (32m54s).
• The idea that politics should not have a place in the workspace is seen as a practical solution, and this approach is also taken at Intercom, where politics are not discussed, and employees are not told what to do in their personal lives or what they can or cannot say (33m16s).
• As CEO, it's essential to demonstrate alignment with these policies, defend employees who are attacked for their political positions, and exercise authenticity, which is a key aspect of great leadership (33m58s).
• Being open and honest about one's beliefs and values allows people to opt-in or opt-out accordingly, and this approach has helped curate a resilient team at Intercom, with only one person leaving due to disagreements (34m30s).
• Staying close to the moral high ground, communicating reasons for actions, and not apologizing or flinching in the face of criticism can lead to support from the masses, and there have been no significant problems with customers, the board, or investors (35m14s).

Reflecting on Leadership (35m32s)

• Authentic leadership involves being true to oneself, and this was a challenge during the DEI (Diversity, Equity, and Inclusion) days when promoting DEI was seen as the right thing to do, even if one didn't agree with it (35m33s).
• The speaker never promoted DEI and thought it was a bad idea to discriminate against people based on their race, gender, or other characteristics (35m40s).
• In the Bay Area, minority candidates were often treated as commodities, with recruiters focusing on their minority status rather than their qualifications or achievements (35m55s).
• This practice has largely stopped in the Bay Area, but it may still occur in other conventional industries and cultures, such as in London and New York (36m25s).
• One issue that still persists is the attempt to censor people, which is seen as evil and a hallmark of totalitarianism (36m44s).
• Institutions and big tech companies are still censoring people, and this is a deeply concerning trend (36m51s).
• The speaker believes that companies are different from the wider world and public forums, but it's still wrong to decide what can or cannot be spoken about (37m25s).
• The attempt to control speech is a sign of worse things to come and is a characteristic of totalitarian regimes (37m39s).

Freedom of Speech vs. Fake News (37m43s)

• Freedom of speech is essential, and no one should decide what is or isn't fake news, as this can lead to censorship and government control (37m44s).
• Jokes are protected by freedom of speech, and even if they contain false information, they should not be censored, as this can lead to a slippery slope where governments decide what is or isn't acceptable (37m57s).
• However, there are limits to freedom of speech, such as yelling in a crowded theater or causing harm to others, and these limits should be respected (39m24s).
• The idea that a higher power should dictate what opinions individuals can or cannot have is problematic, as it can lead to governments becoming too powerful and citizens losing their freedom (40m2s).
• While some argue that freedom of speech should be absolute, others believe that there should be rules in place to prevent harm to others, and this is a complex issue that requires careful consideration (40m21s).
• The example of a staged beating being presented as a joke and inciting hatred is given as a situation where freedom of speech should not be absolute, and individuals should be shamed and criticized for such actions (40m41s).
• Ultimately, freedom comes with risks, but it is essential for individuals to live their lives, create, and love who they want, and governments should not take away this freedom (41m11s).
• The relationship between governments and citizens is that governments work for citizens, and their job is to protect them, not shut down their freedom (41m44s).
• The concept of freedom can feel alien to those who have never experienced it, such as those living in the UK with a monarch, and this can affect how people perceive and value freedom (41m53s).
• The people who came to the United States were seeking freedom and separated themselves from the institutions and cultures that restricted it, and this has shaped the American perspective on freedom (42m15s).
• The current state of institutions, culture, and big tech can restrict freedom of speech, and this is a problem that needs to be addressed (42m36s).
• The issue of freedom of speech is relevant today, and it would be made worse if governments were allowed to shut down things like jokes, and this is a problem that needs to be spoken to (42m42s).

How Eoghan Has Changed as CEO (43m11s)

• Eoghan McCabe has significantly changed as a CEO, having gone through a process that made him more authentic, after being physically, spiritually, and psychologically crushed due to health issues, slowing revenue, and being attacked in the press (43m13s).
• During this difficult time, he questioned himself and his abilities, feeling like a loser and wondering if he had messed up, which led to the evisceration of his ego and the destruction of his perfect self-image (43m42s).
• However, after surviving this process, he emerged as a more authentic person, no longer beholden to ideas of perfection, and was able to speak his mind, be authentic, and create a culture and environment that he believed would be successful (44m6s).
• Eoghan has a trait that he is slightly ashamed of, which is his need to prove himself, stemming from being bullied in school and seeking love and validation, but he believes this trait gives him an edge and has learned to love and accept it (44m34s).
• He thinks that this need to prove oneself is common among founders, who often have chips on their shoulders and are driven to succeed, and that learning to love and accept this trait is key to success (45m17s).

Launching San Francisco Freedom Club (45m33s)

• San Francisco is considered a great place to be productive and balance one's nervous system, but it can be boring and lacks sensuality, sexuality, excitement, and connection, which motivated the creation of the San Francisco Freedom Club (45m57s).
• The club's mission is to promote freedom, individual liberties, merit, capitalism, growth, and humanity, which are American and Western values that are under threat, but supported by the majority of people (46m31s).
• Many people are afraid to publicly express their support for these values due to fear of being judged or ostracized, which the club aims to change by making these values seem sexy, popular, and fun (46m50s).
• The San Francisco Freedom Club hosts epic parties four times a year for people who love freedom and these values, with 3,700 people on the waitlist and 500 attendees at the first event (47m18s).
• The club's first event was successful, with 500 people attending out of 600 invited, indicating that the majority of people want fun and freedom (47m30s).
• The next event is scheduled for December, and the club's creator is enthusiastic about the response and hopes to continue promoting freedom and individual liberties through the club (47m44s).

Quick-Fire Round (47m48s)

• The possibility of a nuclear holocaust is considered super possible due to the thousands of nuclear warheads the United States and Russia have pointed at each other, and the ongoing proxy war between the two countries, which could easily escalate into a nuclear war that could kill five billion people (47m55s).
• The Middle East's potential to erupt into a conflict is uncertain, with no clear prediction (48m32s).
• A book written before 1965 that is highly recommended is George Orwell's "1984" (48m39s).
• There is no specific favorite blog post written after the 2000s, but rather a preference for listening to conversations with smart people (48m47s).
• Eric Prince, the former CEO of Blackwater, is considered a fascinating person to listen to, especially when discussing national security (49m2s).
• The initial belief that Large Language Models (LLMs) would replace software has been changed, and it is now thought that this will not happen anytime soon (49m10s).
• If starting a new company, Ilia Fushman at Kleiner Perkins would be a preferred venture capitalist to take the first chat from, due to his good intuition and natural demeanor (49m28s).
• Mimon, who works with Ilia Fushman, is also highly regarded and has a history of investing in successful companies (49m45s).
• A question that is not often asked but should be is "what is great leadership," with the answer being that great leadership is about being truly oneself and authentic (49m56s).