Eoghan McCabe, CEO Intercom: An Epic Interview

Starting a company with someone is very much akin to getting married to someone. In fact, it’s perhaps a little more complex since you have very real rational...

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Starting a company with someone is very much akin to getting married to someone. In fact, it’s perhaps a little more complex since you have very real rational logical expectations of each other. There’s a lot of money on the line. There’s a lot of law involved. And it’s a deeply personal thing. It pertains to two people’s hopes and dreams in the world. It’s far more likely that a founder marriage will break than a romantic marriage. It’s just harder. It’s a harder type of relationship.

Eoghan McCabe is Co-Founder and CEO of Intercom, a tech company headquartered in San Francisco and named by SaaScribe as one of the Top 10 Most Disruptive SaaS Companies.

Eoghan has raised over $30 Million in 3 funding rounds, grown Intercom to over 100 employees in 3 years, added nearly 5000 paying customers largely through word of mouth, including Heroku, Hootsuite and New Relic amongst others and has established Intercom as a major contributor to internet innovation.

Eoghan spoke with SaaScribe for The SaaS Revolution Show Podcast, which you can listen to here. What follows below is the transcribed notes from when Eoghan met Alex.

Hi Eoghan, can you explain what Intercom does and how you help companies?

Yeah, sure. So we sell to internet businesses exclusively. We’re a software product and we solve or aim to solve everything related to customer communications. If you want to speak to your users about support issues, make product announcements, you want to onboard your customers, you want to sell to them. It helps in customer success use cases. The full range of customer communications is what Intercom really cares about. And we specifically sell packages for each of those teams.

The kind of goal with Intercom is that internet businesses and the teams within them can all be on the same page, have one view of the customer, and ultimately provide the customer a more personal, wholesome, holistic experience rather than the fragmented, shitty, robotic “Dear Valued Customer. Thanks for your inquiry,” or, “Take a number 5053,”-type responses we’re used to today.

Would you say that Intercom is part of the new wave of internet businesses or SaaS companies that are disrupting the incumbents that started off this movement?

That’s definitely how we think about it over a long period of time. The incumbents in this space, for example, there’s Zendesk, Marketo, even Salesforce etc., they were invented in and created for very much a previous generation. Each of these respective businesses has a bright future going up market selling to increasingly large companies, but the generation that came after them needs new solutions. This generation finds all of these solutions, these point solutions, too complex for the problems that they have.

So the thing that Intercom is trying to solve, not unlike a whole bunch of different SaaS companies of our generation, is exclusively new to this new generation. We want to provide simple and integrated solutions rather than big bloated complex solutions like the previous generation has.

Since all of these companies have started the market has actually grown below them. If you think about 5, 6, 7, 8 years ago when Zendesk actually started there were substantially less small to medium-sized internet businesses. The iPhone didn’t exist. The App Store definitely didn’t exist. There’s well over 1 million apps in the U.S. Apple App Store alone now.

We’re at the forefront also of a global growth in internet businesses. Only half of our customers are actually in the United States. The rest are in India, China, and all over Europe. Again, that’s brand new. Internet business was kind of exclusively the domain of the United States and specifically the Valley, and that’s just not the case anymore.

Do you foresee that every business will be someday an internet business, if they’re not already?

Yeah, sure. That’s definitely part of my shtick when I tell it to investors. How to think about what business is not an internet business? I define an internet business as one which communicates with their customers through the internet. If you think about any restaurant you can order from online, doctor’s offices that you can book appointments with online, so many little stores that use the likes of Square and are now on the Square Marketplace. There’s just a whole range of businesses that previously were brick and mortar businesses but now use the internet to connect to customers. So I call those internet businesses for sure.

One of your angel investors is Biz Stone, co-founder of Twitter. Can you tell us how he came to be an angel investor in Intercom?

Yeah, for sure. There’s a fun and kind of a sweet and cute story that actually has totally bitten me in the ass, but that’s okay. I’ll explain why in a second.

But basically I first came to San Francisco in I think 2007. Twitter was really only just getting started at that stage. It was still primarily, or at least in great part, based around text messages and the cell network. When I spoke to the Twitter guys for the first time, they did speak about their focus on doing deals with the telephone networks around the world. I mean, it’s a stupid story.

I was part of that group in Dublin that organised what was known as a tweetup. Sounds so terribly corny and embarrassing now. I’m already regretting saying this. But I was over here. I mailed Biz. Biz was kind of like the primary voice and name behind Twitter at that time. He would send out those emails to everybody.

I mailed Biz at Twitter.com and said, “Hey, there’s a bunch of Irish folks in town. We’re part of the Dublin tweetup group. Would you like a drink?” I mean, just a stupid kind of a… I didn’t really expect anything from it, but I think I got an answer in about 90 minutes. And a few hours after that we were having beers with the early Twitter team. They were super, super gracious to us.

I remember kind of stumbling after that night thinking, fuck, the Twitter thing is going to be amazing. We should totally build a Twitter app. And we did. We built a thing called Qwitter. Again, super embarrassing. These things it was a different time. It was when it was actually cool to have products with names like Qwitter.

What Qwitter did was it would email people when someone unfollowed you. Again, it wasn’t even a startup. It was a dumb thing that we built.

Anyway, this kind of like started a simple type relationship with the Twitter guys. When I came back to San Francisco, I just mailed Biz again. He was always very available, friendly. He really didn’t know me at all but he was just very generous with his time and ultimately his money when he invested in us.

The reason I say it’s bit me in the ass is that now folks who want to meet me mail me and ask me for beers citing the Biz story. And I can’t say no, of course. He was good to me so now I have to be good to other people too.

You’re one of four co-founders that all originate from Ireland. One of them, Des Traynor, he’s pretty well known within the industry. How did you guys meet? How does he complement you? And what’s the importance of having a co-founder or three co-founders with different skill sets?

The story of how I met the guys was pretty straightforward. Like a lot of product-driven software companies at the moment, I consulted at the start of my career. I know so many CEOs and founders of product-driven SaaS businesses who did exactly the same thing. It’s pretty fascinating.

The kind of side story there is the only reason they did that was that they were kind of unemployable, hated having people tell them what to do, basically traded in their talents for cash. It turns out, by the way, that as a consultant, you don’t have a boss. You have many bosses. So a lot of those people who didn’t really want a job ended up with many jobs and they hate consulting and so they try and get out of the consulting business and they built products like we did. Eventually we escaped. Des was one of the people I hired for my consulting company, Contrast. We soon became great partners. The way Des complemented me was always pretty clear. I was the risk-taking, envelope-pushing type guy. Des was the grownup, far more rational. I would have got in substantially more trouble early on my career if it wasn’t for Des. But we always had a wonderful ying and yang in that respect. I could help come up with some interesting ideas and Des could help shape them into something that was actually grander and potentially useful to the world. So a beautiful partnership.

The importance of having founders is crystal clear. My heart breaks for folks who are in search of a co-founder. There’s ideas like Founder Dating, etc., where people actually go to meet other people who want to start businesses. I’m quite sure that some wonderful businesses have been built that way.

But personally, starting a company with someone is very much akin to getting married to someone. In fact, it’s perhaps a little more complex since you have very real rational logical expectations of each other. There’s a lot of money on the line. There’s a lot of law involved. And it’s a deeply personal thing. It pertains to people’s hopes and dreams in the world. It’s far more likely that a founder marriage will break than a romantic marriage. It’s just harder, it’s a harder type of relationship.

So if you’re going to start a company with someone and enter into such a situation, you really want to know them. You want to know that they wonderfully complement your skills, that all the things that you’re bad at that they’re good at and vice versa, that you can actually work together, that you appreciate each other, that there’s mutual respect, that your lifestyle and life interests are aligned.

I know a lot of people who complement each other’s skills, but what if one person wants to build a game-changing monster of a business while someone else is far more interested in building what some people might call a lifestyle business? I’ve no problem with lifestyle businesses. Maybe that term is even unfair. But certainly not everyone is interested in building something that requires a 24/7 type commitment.

So it’s just so, so hard to make founder relationships work and it’s extra hard if you don’t know them. And so because we knew each other, me, Des, Ciaran, and David for a good four years or more before Intercom, and we had worked together in two previous businesses, made it substantially easier. Also the way in which we complemented each other’s skills are really, really clear. Together us four we comprise a tiny little full stack team that could actually make and market and sell and finance a SaaS business. So I don’t know. I can’t more strongly say you need great founders.

Are you happy now being a CEO and I’m guessing not having as much time to be a designer? Can you actually be both?

I have a simple answer and I have a smartass answer. I’ll give you the simple answer first.

The simple answer is no, I don’t design anymore. I’m very happy with what I do, do. The CEO role requires you to, in one part, be an extreme generalist and work across so many areas, not only from engineering and product and product strategy then marketing and sales and everything else in between and people operations. But things like finance and financing and the meaning of all sorts of different types of debt, I mean, just the breadth of things you have to like learn and understand and be good at is quite interesting and intimidating if you knew that upfront.

I think most people who end up being CEOs of any reasonably-sized company, we’re about I think 104 people today, I don’t think they have any clue what their job is going to look like when they begin it. I don’t think they have any clue whatsoever. I certainly didn’t.

But I think that the people who end up being successful are those who are intellectually curious, they like learning about many different types of things, they pride themselves in being able to adapt and I’ve definitely had to do that and I really enjoy that.

But anyway, here’s the smartass answer. I absolutely do design still but now I design companies and teams and organisational structures. I also help in product design. I do get involved deeply in the design of all fundamentally new components of our products. I also work closely with our head of brand design. So I definitely get to flex my design muscles. I’m just not stuck in Photoshop all day. You know what? I’m okay with that.

You’ve previously stated that the future will be owned by designers. Can you elaborate on why you believe that to be so?

Yeah, sure. So I’d restate that now since I’m not in a room full of designers. But when stated then, which is about 2-3 years ago, what I was really referring to is that generally speaking, the products that we’re making in software and the internet, they’re moving in some senses up the stack. Or the level of specificity or the technology level where we’re actually innovating is moving upwards.

What that means is that if you think about, and this is a gross, gross generalisation of how the Silicon Valley came to be, but the silicon in Silicon Valley referred to the material used in semiconductors and a big component of Silicon Valley, if not all of Silicon Valley, at the start was transistors and microchips. And over time then those transistors were made into microchips and made into chips and processors and then eventually made into larger components, like motherboards, and graphics cards and then shipped in different ways by different companies as whole computers and different computer technologies and servers.

Then over a period of time, a software industry appeared. A lot of the software was low-level infrastructure, a lot of databases. Over some longer period of time we built operating systems, we built business applications.

The internet arrived. We built internet applications.

As you move upwards and you build things on top of other things, you’re just innovating higher up the stack. Like if you think of all the big technology companies now, the multibillion dollar technology companies, the unicorns, the people we all talk about, they’re not semiconductor companies. They’re way higher up the stack. Compared to 5-10 years ago, we were more, we were closer to engineering than we were innovating around workflows and user experience and customer experience. So design has a very, very, very broad, grossly vague term for a lot of the things that sit on top of the raw engineer technology stuff we used to deliver earlier on.

If you compare it today, applications, be they on the web or mobile, with the software products we made say 10 years ago, today they look substantially more, and this is the gross use of that term, “designed” than the things that we used previously. If you’re looking at Salesforce from 10 years ago or Salesforce today, (that’s kind of a little jab at them,) Salesforce looks like a terminal to a database.

And again, I don’t use this term design broadly. Like this is the wrong way to talk about design but I’m just generalising for the purposes of this conversation. There’s significantly more design applied and used in the applications we build today and they’re not terminals to a database.

So when I said back then that the future will be owned by designers, apart from the fact that I was trying to achieve some sort of applause from a crowd of designers, which I definitely did, what I really was…

Probably trying to recruit them as well, right?

Correct. But what I was really referring to was that in the future a lot of the innovation will be in the user experience or customer experience. It will be things that designers can do more than engineers can do. And that has proved to be true and remains true.

And you just need to think about design in a more detailed manner. It’s not look and feel and style more than it is designing the actual new workflows and the way the products work and fit into our lives. Hope that makes some sense.

Tomasz Tunguz wrote about the innovator’s Solution for SaaS startups. He talked about the Flywheel Model where we’re looking at flipping the sales model for startups on its head where enterprise sales instead of becoming hunters, they’ve become the farmers and becoming exclusively inbound. Is this what you see within Intercom? Do you believe in this model for SaaS startups?

Yeah. I think that basically SaaS business models… And by the way SaaS, Software as a Service, I mean, I personally don’t know any software companies that don’t deliver their product as a service. So we’re really just talking about software in this respect.

Software business models are evolving very, very quickly. I think they perhaps would evolve even more quickly if it wasn’t for the fact that we all look at each other to try and draw inspiration and understand how to model our businesses. But you need these great outlets like the one that you’re building, this podcast and your blog, it’s required for all of us who are doing this relatively speaking for the first time to learn.

But they’re evolving so fast such that I don’t think we have the language and the terms and the kind of analogies and frameworks to actually describe what’s new about these things. But I think that Tomasz has definitely made a start.

Absolutely I see this in our business, I see this every new generation SaaS or software business. There’s a bunch of things going on here. None of these things change in isolation. There’s no way I’ll be able to think of all of the components but I’ll tell you a couple of things that are interrelated.

One is that like I said, we’re innovating higher up the stack now. We’re building product-driven companies. We’re building companies that very much consider the end user and customer in mind. I’m talking about workflows and customer experiences.

So therefore we’re building products that are actually appreciated and understood by the end user. They are purchased by the end user. The end user is now getting familiar with and comfortable with these types of models whereby they will pull out their own credit card or use their company credit card to sign up for a product, or sign up for a free trial without any credit card. They’re picking these things up directly.

They’re hearing about it on mediums like Twitter that didn’t previously exist, Product Hunt, that didn’t previously exist. People are discovering it themselves in new ways. They don’t go to conferences to learn about these things. They’re not reading trade magazines. They’re not hearing about software from cold calls that they’re getting by salespeople. They are really themselves discovering and learning about the software that they want to use and they’re buying that for themselves.

This fundamentally changes everything. They are coming to the software businesses and choosing the software that they want to buy, and they’re getting started all on their own.

In this respect, because they come to the product so easily, the business can then afford to charge substantially less because the business actually isn’t investing in a crazy amount of advertising and expensive salespeople to pull these people in. So the cost of acquisition now goes incredibly low so they can afford to charge a whole lot less. But of course because they’re delivering end-user software as opposed to big organisational level software or infrastructure or databases, it now needs to be cheaper.

So all of these things are interrelated such that the net effect is that these new generation of product-driven software companies that acquire customers at scale cheaply now have customers coming to them if they have the most interesting or valuable product on the market. And then humans can be employed to, at scale, better understand what certain customers need, specifically certain customers who have more complex requirements, who are going to be able to extract a lot more value from the product and therefore will fall out of the standardised price plans and therefore will need to and want to speak to a salesperson.

And that’s what we do at Intercom. I mean, we blog, we create a great product, we have many thousands of people who check us out every day. Some few hundred of them create accounts and sign up and a small amount of them are from large companies with more complex requirements that need extra help, extra time and attention, they need some demos, they need some legal considerations, they need some integrations etc. Then they talk to our salespeople.

And then our salespeople can help them, give them a fantastic experience and create a price that’s fair to them outside of our price plans.

So we’re very much now in an inbound world where salespeople are working on a consultative basis. Sales people are not the demand generation. They’re not pulling people in. They’re actually helping people buy the products. And today, salespeople have actually moved up the stack and therefore you need substantially smarter, more product-oriented salespeople rather than those who would want to simply turn through many, many, many, many cold calls and have only some tiny percentage of them work out.

So you’ve previously said that you’re obsessed with success. What is success for you with Intercom? Is it being a unicorn?

That’s a deep and a nuanced and a personal type of question.

Just a couple of things, and it’s no different from anyone who starts businesses like this. All of us who start something like a business or some sort of organisation or club or some sort of enterprise or people who create plays or start bands or make art of any shape or fashion, we’re doing it to affect people. We’re doing it to make some sort of impact, good or bad. We’re trying to touch and connect people.

I really see most business people are artists whether they know it or not. I mean, the purpose of art is to simply touch people and connect to people and elicit some sort of emotion, make them happy or sad, or a whole lot of other broad range of emotions.

I’m creating, I’m working really hard on this business to affect people too. I see how we could do better as folks who create internet businesses when it comes to actually connecting with our users and our customers. I am very envious of people who have real world businesses who can actually know the people who actually support their enterprise. I’m super, super jealous of people who run bars and cafes and restaurants who can literally walk into their business and see their customers and see their business happening.

Internet businesses don’t have that. And so I’m trying to create this thing that I think will be better for the world, will be cool, will be exciting, will be wonderful, will allow the artists who create businesses, who make things online to connect to the people that they want to touch and connect with. That’s really what I’m doing this for.

I’m human, I have an ego, I want externally to be seen as being successful. We end up going to the lowest common denominator with those things and that comes to money. And people say, hey, look at that company. They’re making so many hundreds of millions of dollars therefore they are successful. Hey, look at that company. They’re worth so many, many billions of dollars. They are successful. We do end up in this lowest common denominator.

We want to try and compare one SaaS business with another or a SaaS business with a consumer business or a SaaS business with a factory. Again, we go to this lowest common denominator. We use money to say one is successful and one is not.

And competitive people, people with chips in shoulder, people with something to prove, people like me, they use that. So in some sense that’s what success looks like.

The other part of that’s deeply, deeply personal is that I love making things. I love building businesses, I love working with brilliant people, I love giving great, great people, ambitious people like me, perhaps people slightly early in their career like me an opportunity to be fucking amazing, to be brilliant, and to prove themselves.

And personal ambition for me beyond the financial component, which simply is a kind of lowest common proof of success and beyond the change that we want to make in the world, we want to make it easier for internet businesses and their customers to simply connect and have relationships and know each other.

Beyond all those things, I’m desperately passionate about the people who work for Intercom having a wonderful and rich and fulfilling experience so that when they go on from Intercom they can start their own companies and learn from the things that we did.

So that’s the kind of thing that drives me. It sounds fluffy but I’m trying to be perfectly honest. It’s not different from anyone else that does these things.

Here is your one-word answer question and last question. Are you still aSilicon Valley outsider?

That’s not a one-word answer at all. Jesus.

Yes or no?

Yes. Yes. Yes, sure.

Eoghan McCabe was Interviewed by Alex Theuma. You Can listen to the interview on The SaaS Revolution Show Podcast on iTunes

 

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