Killing Side Projects For Strategic Focus

Owen McCabe's transformation of Intercom into an AI-first company offers a strategic playbook for navigating AI disruption in established businesses. His approach demonstrates how to pivot a late-stage SaaS company toward explosive growth through decisive leadership and strategic focus.

The Wartime CEO Approach to AI Transformation

• When facing stagnation or decline, a "wartime" leadership approach may be necessary

  • "We were about to hit like $0 net new ARR which means we would have been in negative growth territory"
  • "I said we need to become a wartime company if we don't fight for this we are dead"
  • Required making unpopular but necessary decisions to save the business

• Decisive strategic focus is critical for transformation

  • Eliminated distractions by cutting numerous side projects
  • Picked a single strategic lane: "We were all over the place and I said we're doing service"
  • Ignored objections about abandoning profitable business lines: "We still have $80,000,000 of ARR that we're getting from the other thing"
  • Stopped trying to "do all the things for all the people" with an unfocused strategy

• Speed of execution matters more than perfection

  • Had a working prototype of Fin just six weeks after ChatGPT 3.5 launched
  • Leveraged existing AI talent and capabilities within the company
  • Moved quickly despite initial economics being terrible: "We were losing money on every transaction... charging like a dollar cost you $120"

Cultural Transformation Requirements

• Rewrite company values to support the new direction

  • "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"
  • Created values focused on resilience, high standards, hard work, and shareholder value
  • Used values as a filtering mechanism for who should stay and who should go

• Accept significant employee turnover as necessary

  • "Ultimately like 40% [of employees turned over]"
  • "Often the culture is set by a very small number of people"
  • Implemented performance processes that scored people against both goals and values
  • Created a formula where people below certain thresholds would be let go

• Embrace founder-led decision making over consensus

  • "Great employees and great companies want and are constructed out of a very clear and strong hierarchy"
  • "The responsibility of the CEO [is] to make brave and hard decisions unilaterally"
  • "Greatness is created is that you find a CEO who's willing to make brave hard decisions and own the results"
  • Abandoned the "professional CEO approach" of gathering everyone's input for group decisions

AI Product Strategy Principles

• Align pricing with customer value, not your costs

  • Moved to outcome-based pricing: 99¢ per resolved customer ticket
  • "We wanted our revenue to be 100% aligned with the value that they attained"
  • Focused on value delivered rather than seats or usage metrics
  • Trusted that costs would decrease over time: "We just had this sense and intuition early on that this thing will get cheaper"

• Recognize that AI can deliver better experiences than humans

  • "Providing a customer with a highly engaged instantly available expert consistent fast charismatic funny friendly personal agent... is so much more personal than making them wait... for a crappy canned response"
  • AI can be superior at things we describe as "personal and human"
  • Focus on the customer outcome rather than the means of delivery

• Invest heavily in AI talent and capabilities

  • "We and I would be nothing if we didn't have actual AI scientists and leaders"
  • Empower and learn from younger AI-native talent
  • Recognize that AI companies are working at unprecedented intensity levels
  • "All these little AI companies run by kids in their twenties are literally working twelve hours a day literally three sixty five days a year"

The Existential Imperative of AI Adoption

• AI disruption is not optional

  • "You don't have a choice AI is gonna disrupt in the most aggressive violent ways"
  • "If you're not in it you're about to get kicked out of all of it"
  • AI is potentially bigger than previous tech waves like microprocessors, personal computers, the internet, and mobile

• Established companies must match the intensity of AI-native startups

  • "The only way you're gonna win right now is if you work your ass off"
  • Young AI companies are "literally working twelve hours a day literally three sixty five days a year"
  • These companies are using AI in their own operations in ways older companies aren't

• The future belongs to human-AI collaboration

  • Future organizations will have "agents everywhere"
  • The structure will be "a medley of humans and agents" rather than simply humans on top
  • Organizations will be "smaller" and "flatter" as a result