Latest / AI for Founders with Ryan Estes / Outcome pricing vs Usage pricing vs Seats
Transcript
- 0:00Welcome back to AI for Founders. I'm Ryan Estes.
- 0:02Today we're diving into the future of revenue with Mark
- 0:05Walker, CEO of Nu dot IO, a company that's raised over 40
- 0:10million and is powering some of the biggest names in AI,
- 0:13including Open AI, Jasper and Glean.
- 0:16Nu has delivered 3X year over year growth and created an
- 0:19entirely new category called a revenue life cycle management.
- 0:23In this conversation, you'll learn how the fast growing AI
- 0:25companies are experimenting with pricing, why outcome based
- 0:29models matter, and how to avoid being trapped in outdated
- 0:32systems. If you're a founder, SAS leader,
- 0:35or anyone navigating price strategy in a hyper competitive
- 0:38market, this episode is for you. Get ready for high energy, big
- 0:42picture. Look at what's next.
- 0:43Quote to cash, hybrid models and protecting your margin in a
- 0:47world where the pace of change is accelerating every quarter.
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- 2:39turn into miss revenue. All right, good morning, Mark.
- 2:58How are you? Hey, Ryan, I'm great.
- 3:00How are you? I'm doing good.
- 3:02I really enjoyed digging into you and your company a little
- 3:04bit with the LLMS before we got going.
- 3:07So I'm really excited for this conversation.
- 3:09So let's just start with a quick introduction to new.
- 3:14Great. So news, you know really A next
- 3:17generation business system for recurring revenue and
- 3:20consumption companies, right? I didn't found it.
- 3:23I was introduced to it about 3 years ago and asked to become
- 3:26the CEO. Whole story about that we can
- 3:28get into later, but really what it what the thesis is is that at
- 3:33the pace of change that we work at today, you really can't be
- 3:36stringing together different systems, but you do want systems
- 3:39that have the same kind of power and integrity of the old
- 3:42systems, but they have to be much more adaptable.
- 3:44So you know, quoting, contracting, self-service
- 3:48billing consumption, whether directly or with our partnership
- 3:52with Metronome, really, really powerful.
- 3:55Absolutely. So you know, the whole pricing
- 3:57model now is kind of getting thrown on its head.
- 4:00You know, we had the golden era of SAS, you know, which now is
- 4:04being challenged from from different models.
- 4:06You know, it's kind of, and it's still in the air, right?
- 4:09Everything's changing and everyone's experimenting.
- 4:12So maybe you can talk about this shift to kind of a usage base to
- 4:17or from a subscription model, but also there's hybrids and
- 4:21kind of how new is like helping companies adjust to some of
- 4:24this. Yeah, it's a really good
- 4:26question and it's a really interesting question because we
- 4:32work with most of the major AI companies.
- 4:36You know, some of them are really well known, like you know
- 4:38what, they're all really well known, but that we're working
- 4:40with them as well known. So Open AI and Glean and Jasper,
- 4:44you know, people know about those and then there's a bunch
- 4:46of other ones. But together they compromise.
- 4:49They comprise like about 9899% of enterprise AI compute, right,
- 4:55our customers or about to go live with us.
- 4:58And the really interesting thing is none of them are running the
- 5:03same experiments because we have to see all the pricing models
- 5:06that they're using, right? And so there's all these
- 5:09different variants that are emerging.
- 5:11And then what we're also seeing is that this is in the same way
- 5:15that SAS radically changed how pricing works for all software.
- 5:20The emergence of SAS did that about, you know, 20 years ago.
- 5:24That's having the impact on everybody else because we're
- 5:27starting to see the same questions raised and you can see
- 5:30the reaction of Salesforce like reaction of Salesforce is kind
- 5:33of like that we're seeing as cascading impact on on business
- 5:36models. So it's really interesting we
- 5:40can get into it in more detail about what we're learning about
- 5:43what experiments people are trying.
- 5:45I think it's too early to know what the right answer is.
- 5:49So I think it's and also remember a lot of these parts
- 5:52already existed before. It's not like Snowflake wasn't
- 5:54running a token based consumption model like 15 years
- 5:58ago. They were right.
- 6:00It's it's really people are now optimizing and try to balance it
- 6:04out. Yeah, it's interesting.
- 6:06And if, if you are, you know, you, you have some of the
- 6:09biggest clients in AI in the world, you know, customers, you
- 6:13know, what are their challenges as they're thinking about
- 6:16pricing? And, and because it seems like
- 6:19the subscriptions for most, let's say, major LLMS, if you're
- 6:22talking about Gemini, you're talking about ChatGPT, you're
- 6:25talking about Anthropic, you're talking about all the big ones
- 6:27are all kind of competitive with each other.
- 6:29And it, they're all kind of vying for new products that they
- 6:33can add and where can they have kind of like upsells
- 6:37potentially. So what kind of challenges are
- 6:40they looking at right now as far as pricing goes?
- 6:43OK. So you don't get to play with
- 6:44those people talking about what they're actually doing, right?
- 6:47So, so I can only talk in generalities, but I think that I
- 6:51think here's a really interesting pricing problem that
- 6:55that I don't think has ever existed.
- 6:57Well, it kind of exists in computers.
- 6:59It's kind of like Moore's Law on steroids, right?
- 7:02So the cost of compute, meaning the cost of a token, is
- 7:06plummeting. So imagine that you're the, you
- 7:10know, this chief revenue officer of one of these companies, or
- 7:12even just an AE trying to contract with one of these
- 7:15companies. And you go, OK, so you're going
- 7:18to spend $1,000,000 with us. And that's going to be, I don't
- 7:20know, whatever number of tokens. Well, meanwhile, the cost of
- 7:24tokens is going down. Yeah.
- 7:27So people try to put together pricing contracts that are fair
- 7:31to the customer and fair to the provider while simultaneously in
- 7:36this vicious competition cycle driving down the cost of the
- 7:41thing you're selling. Imagine in the old world if you
- 7:45were selling seats and every, and you had comparable seats,
- 7:48because that's the other thing is some, some of these
- 7:50capabilities are quite comparable and the other company
- 7:53starts going, oh, our seats are now half the price.
- 7:55And by the way, we're going to honor that for existing
- 7:57customers. That is definitely not a problem
- 8:01we've dealt with before. So, so that's that's, that is I
- 8:04think the a very common problem that these companies are now for
- 8:09some companies. This is why outcome is so
- 8:11important. If you're an outcome based
- 8:13company, like I charge you $10 per resolution or $10 per
- 8:17document processed or $10.00 for whatever, this is great news
- 8:22because your input cost is plummeting, right?
- 8:25But if you are a token selling company and you're effectively
- 8:30selling compute and obviously very very value added compute,
- 8:34this is a a very interesting business model problem.
- 8:38Yeah, 100%. And this is kind of tip of the
- 8:40spear stuff too is like outcome as a service is here how I'm
- 8:44hearing it describe. We had kind of software as a
- 8:46service, then we have service as a software and now we're hearing
- 8:50outcome as a service. And I, I'm really interested in
- 8:53like kind of what that model is. So is this basically assuming
- 8:57kind of like agentic support that can then show attribution
- 9:00for the the system that's employing it?
- 9:03So if you have outcome based solution and your your outcome
- 9:07you're looking for is 1 widget sold, then essentially what the
- 9:12one of the outcomes of the agentic solution is going to be
- 9:15actually to show attribution for the outcome.
- 9:21Yeah, I mean, yes and no, right. So and first of all, one of the
- 9:27things I think we have to really anchor on is don't think of
- 9:32agentic or AI based solutions as being separate from the rest of
- 9:37the solution, the rest of the software milieu, you know, for
- 9:40two reasons, right. 1 is, you know, AI or or probabilistic.
- 9:47Probabilistic computing will never be as efficient or
- 9:50effective at doing some things that deterministic or
- 9:55programmatic solutions be able to do.
- 9:57So for example, the odds of you getting truly probabilistic
- 10:01accounting is probably very, very low.
- 10:05There's just no juice worth this, you know?
- 10:07There's no juice that justifies the squeeze.
- 10:11You will probably get probabilistic configuration of
- 10:15and data entry and a bunch of other things that lead to
- 10:18accounting, but maybe not the accounting itself.
- 10:20I mean, maybe maybe accounting because accounting is kind of
- 10:23made-up anyway, but those other things that you might not want
- 10:26to do that with. But my point is that that these
- 10:31pressures will affect all software, right?
- 10:34So the problem with outcome based models is that for some
- 10:39companies it's really straightforward and for other
- 10:41companies it's completely ridiculous, like hard to do.
- 10:44So give you a good example. If you are checker and you do
- 10:49background checks on people, they already do outcome based
- 10:52pricing like you buy and DocuSign.
- 10:55DocuSign is outcome based pricing.
- 10:57Did they sign it? That's the thing.
- 10:59That's what they're selling. They sold the you generate their
- 11:01document and they signed it and they sell it in envelopes.
- 11:05Outcome based pricing and checker, you know, background
- 11:08checks, right? It really simple.
- 11:10If you buy data enrichment from Apollo and or from Zoom info or
- 11:15name the other, you know all that it seamless and all those
- 11:18other people, same thing. You wanted an outcome and you
- 11:22got it. You got your data enriched.
- 11:24Now there's obviously lots of other things they saw that maybe
- 11:26less outcome. That's you know, that's another
- 11:29thing, but you can those are the examples where you can easily
- 11:32imagine price per results, right.
- 11:34But think about new, for example, we have a challenge
- 11:37where, you know, we're really accelerating the ability of
- 11:40companies to do business in lots of different ways.
- 11:42But it's not like they got bigger solely because of us.
- 11:46Like we do have pricing models that basically say, yeah, we
- 11:49don't charge you. Even our revenue based models we
- 11:52don't charge you for like how much you grew.
- 11:54That is your ROI. But it's not like we made you
- 11:57grow. We helped you.
- 11:58We were part of the answer, but not the whole answer.
- 12:01That's problem #1 so, so unless your system is doing a unitary
- 12:05thing, it's hard to do outcome based pricing.
- 12:09But then you can do variance on it where you can do step based
- 12:12pricing. Like I helped you.
- 12:13How many of this did you do? How many of that did you do?
- 12:15But that's getting back more of the snowflake world, right?
- 12:18The other problem without the outcome based pricing is, is it
- 12:23a conflict of interest between the customer and the software
- 12:27company around how many outcomes they would like to automate?
- 12:31And I and if you have, if you're interested, I'll give you an
- 12:34example that I heard recently that's really kind of drives
- 12:38this point home. Yeah, please.
- 12:43So I was talking with a senior executive in a very old
- 12:46industry, you know, pretty much this like Fortune 1000 stuff,
- 12:50right? And, and this CEO and he's very
- 12:55forward-looking and he's so he, one of the things he does, he
- 12:57takes all his senior managers out, or even the senior managers
- 13:00and literally anybody in the company who who sticks around
- 13:03for five to 10 years, He figures out some way to take them to a
- 13:06BBQ or a dinner or some kind of event to celebrate their tenure
- 13:09with the company. And the question he asks them is
- 13:12what do you know? Because what you do that you
- 13:15think I should know as ACEO that you think I don't know, right?
- 13:20And there's a great freaking question, right?
- 13:22Just so gives you an idea of who this person is, right?
- 13:25It's like a Zen Co almost. Pardon me.
- 13:28It's like a Zen Co on almost. Yeah, exactly right.
- 13:32It's like, yeah, it's like, you know, the, the, you know, did
- 13:35the wind move the Reed or you know, so has somebody in there
- 13:42in their claims processing. It's insurance company.
- 13:45So in the claims processing department and the, the
- 13:48underwriting department says our AI based underwriting system is
- 13:52killing us. And he says, sorry, how He said,
- 13:55well, we used to spend 80% of our time bringing value to to
- 14:02people in the hardest point in their life.
- 14:04And that gave, we helped them with emergency funding for their
- 14:07funeral and then we helped get them through the process of
- 14:10getting their claims settled. And that gave great meaning to
- 14:13what we did. But now that allowed us taken
- 14:16care of by the AI. So the only people we get to
- 14:19talk to you are people where the guy who died gave the insurance
- 14:24to his girlfriend or they did, the person who died stopped
- 14:27paying their fees or we can't figure out if the person's dead
- 14:31or not or, or the person or it's not clear who the beneficiaries
- 14:34are, right? That's our whole day now.
- 14:38And that's a result. Nobody wants to do that.
- 14:39As a result, the part that the AI can't do that the, the human
- 14:43part, there won't be anybody to do that part because nobody's
- 14:46going to stick around, right? And so they're having to salt
- 14:53the significantly salt the work day of these people with happy
- 14:59cases that the AI could handle. So if you're in the software
- 15:01company and you're selling the outcome and now your company is
- 15:04now going actually we're going to salt it back in, people are
- 15:07going to have to build that in as a feature and sell it like
- 15:10the salting is valuable, right? And I thought it was a really
- 15:14interesting experience. The conversation went on to talk
- 15:16about how other parts of the company had an even worse
- 15:19experience. But but it was, I thought it was
- 15:22super interesting and really probative to what we're thinking
- 15:25about an outcome based pricing because the outcome you want may
- 15:29not be as simple as what you think.
- 15:31Like, you know, I resolved the ticket.
- 15:33Yeah, successfully or unsuccessfully.
- 15:35That's a big example, right? Yeah.
- 15:38So in that case, is that the the AI is actually taking the joy
- 15:42out of the work experience for the staff?
- 15:44Is that kind of what he was describing?
- 15:47Yeah. And when you take the joy out of
- 15:49doing what you do, you then take the enthusiasm out and
- 15:52eventually you have staff churn and you have no experts anymore.
- 15:57So if anything changes, there's nobody at you understand or
- 16:00there's nobody to deal with the edge cases and there's nobody to
- 16:02deal with the rest of it. And I think we all have to be
- 16:05cognizant of that in, in, in deploying these solutions.
- 16:09You make it better, but you have to think about it.
- 16:12What's the ultimate objective of the company?
- 16:13Is 0 human humans the objective of the company, or is it
- 16:17actually a cadre of enthusiastic people with high speed decor who
- 16:24are looking after your customers?
- 16:25In the hard cases, that's going to be the hard balance, yeah.
- 16:28You know, that's kind of like, I think cross category.
- 16:31You know, it's like the promise of robots is they take the
- 16:34drudgery out of our life, but it it kind of the robots came for
- 16:37joy first a little bit. If you're thinking about like
- 16:40design and art and music and like these, the creative
- 16:44pursuits right now is where is really struggling.
- 16:48It's really interesting. One thing I wanted to ask too
- 16:51about like outcome based pricing because it what what's kind of
- 16:54nice about it too is it's, it is derivative of the price of
- 16:59compute. Now it seems like, you know,
- 17:03because the desire and need for compute is so great and power,
- 17:08it's basically going to run, it's on a trajectory to run the
- 17:11power for unlimited energy to 0. You know, at least let's say on
- 17:15like a 100 year scope is a result of positive outcome of
- 17:21like AI. Maybe the top one will be like
- 17:24free energy for everybody once AI figures out how to give it to
- 17:27us. So you know it.
- 17:29It makes. It makes.
- 17:30Me wonder how that's going to kind of affect pricing.
- 17:32If you kind of can unbundle the, the price of compute with the
- 17:37price of your product, then kind of what is the, what is the
- 17:41strategy and tactics then about like setting pricing or even
- 17:45what is it today? Because you know, I, I've spoke
- 17:48to, you know, dozens of founders and like really nailing where
- 17:51and how to price becomes like a major pain point for them.
- 17:56Yeah, I I think you need to think about it as what is your
- 17:59differentiating value over the raw compute.
- 18:02So for example, there's all sorts of things we use.
- 18:07We use tools that are based on that, use the large language
- 18:11models from the customers that we actually for our own
- 18:15customers. So the people you don't expect
- 18:17to say for right now to say Anthropic and an open AI, but
- 18:20obviously there's other people and those tools.
- 18:24And obviously, we have enterprise accounts and we use
- 18:28AI across the company in many, many, many different ways.
- 18:31But we don't use necessarily Anthropic directly in all use
- 18:36cases or Open the Eye directly in all use cases.
- 18:40And we are often using them through mediated solutions,
- 18:44right? So this raises 2 pricing
- 18:45challenges. 1 is actually, I'll give an example from new in a
- 18:51second, but one is, are you differentiated from the other
- 18:55providers of that experience? In other words, it's not that
- 18:59hard to differentiate yourself from the raw capabilities of the
- 19:04underlying models because they're not packaged for
- 19:06purpose. So yes, they can be used like
- 19:08for example, you can prompt, you know, open the eye or entropic
- 19:12to do amazing things if you are an expert in doing that.
- 19:15But we use tools that automate the prompting in effect or the
- 19:20agentic reach out and provide results that I don't need to
- 19:23train an AE to be ex expert at that.
- 19:26It just enriches data for them in a then that's the value of
- 19:29that software. So in that case, if that's what
- 19:31it's doing for me, it's not connected to the drop in
- 19:36compute. It's connected to how well does
- 19:41that save my AE time? Now, maybe the drop in compute
- 19:44may eventually change how many AES I need or something like
- 19:46that. But but that's that's, I say a
- 19:48good distinction. If you're selling by way of, you
- 19:53know, lovable and bolt right, going straight at each other and
- 19:58cursor and a bunch of other companies, the competition
- 20:01between those companies and they're all great companies, by
- 20:03the way, they're all interesting and great companies, but they
- 20:06are differentiating on being amazing at different things,
- 20:09right. So if you're if you're, you
- 20:12know, fundamentally thinking of it like a design designed to
- 20:17prototype even to delivery model.
- 20:20You are probably in the lovable bolt end of things and and then
- 20:26if you're in the hard coding and the hard engineering end of
- 20:31things like we are by the way, we'll use all these tools, but
- 20:34but they they are used in different ways for different
- 20:40purposes. So the people were using cursor
- 20:43and and all the other IDE based things are not using, they're
- 20:49not using in the same way as the teams that use lovable use
- 20:51lovable or Bolt or whatever makes sense.
- 20:54So you're differentiate, you have to drive differentiation
- 20:56that is unique to you and then you can price it based on the
- 21:01value and the increase efficiency for the end customer.
- 21:04And if you don't do that, you are going to get either eaten by
- 21:11the model providers, which I think is a relatively low risk,
- 21:15But getting eaten by the other by the other competitors is a
- 21:19very, very high risk. Yeah.
- 21:22And regardless of how you price it, like even if you get away
- 21:24for free, if you get away for free, if there's a better tool,
- 21:28people will pay for the better tool rather than use the free 1.
- 21:32Sounds good. Well, in.
- 21:34Isn't everybody just scrambling for that now?
- 21:36Because Google is just notorious for just making the the best
- 21:41tools in the Internet with the best business model and making
- 21:43everything free. You know, whether that was Gmail
- 21:46or that was like Google Docs and like the the things they provide
- 21:50Google Maps, it's you. When you think about the product
- 21:52roll out for Google, that's really what they do now.
- 21:55You can see that maybe they've had a little bit of fumbles with
- 21:57their products along the way as they're introducing all their AI
- 22:01products, but man, they're on a roll now.
- 22:04So how much of that is considered now when people are
- 22:07thinking like, OK, if we look at history, Google's going to come
- 22:12out and launch a competitor to our product for free in a matter
- 22:15of time. So, you know, getting it right
- 22:18and getting the value right, getting people locked into the,
- 22:21the that certain platform is crucial.
- 22:24So I'm kind of looking at this now and maybe everybody is
- 22:27because there's so many amazing tools.
- 22:29You know, I'm pretty committed to lovable.
- 22:31I've built a bunch on there and I'm, I feel, you know,
- 22:35familiarized with their machine, but I'm always trying other
- 22:40stuff and comparing it to it so that, you know, the loyalty
- 22:43base, at least for me, is probably just with familiarity
- 22:47and then of course price consideration because at some
- 22:49point I don't know what the Max is.
- 22:51I'm willing to pay for all the AI subscriptions, but it's it's
- 22:55probably pushing 200 bucks at this point, you know?
- 22:59And that's that's. Just using kind of the pro level
- 23:01entry point to all of these. So I I feel like no, go ahead,
- 23:06no, go ahead. I was.
- 23:07I was. I was, I I thought, just finish
- 23:10your thought and then I'll no, you know.
- 23:12Just and so it has how it pertains to the models and just
- 23:15the the ability for companies, whether they're AI native or
- 23:20they're spinning up AI products like that.
- 23:23Why new is so important because you can experiment, you can find
- 23:26the threshold, you know, you can show multiple pricing options
- 23:31where people can make a decision like, oh, what feels it?
- 23:33Does usage base feel better for me?
- 23:35Is it just a monthly subscription?
- 23:37Set it and forget it is what I want because I love the product.
- 23:40I want to do that. Like figuring that out is like a
- 23:43very complicated process. Not only that, if you don't have
- 23:47kind of a centralized place to like organize all that things,
- 23:49if you need to make changes, man, you got to find 20
- 23:52different people that have the passwords to to change
- 23:55everything across the board. And you got to explain your
- 23:59change to each of those systems. In other words, that's that.
- 24:02But something I was going to say digging into this, right.
- 24:06So new both has this solves this problem and has this problem
- 24:11which it makes it very meta super fun, right.
- 24:14So we so yeah, absolutely. So new, one of the major
- 24:21reasons, I would say actually the reason why we've won all the
- 24:24AI companies is because they know that they don't know what
- 24:29the next step is. They, they know that this is
- 24:31true, like the pace of change or the pace of change has changed.
- 24:34This little sort of calculus on my chest here.
- 24:37They know that's true. And they, what they don't want
- 24:39is to be locked into a system where they can't experiment
- 24:42because the problem with experimenting in business models
- 24:44is you're stuck with the experiments.
- 24:46Like even if if you decide, hey, we're going to price this based
- 24:49on the number of rabbits you own, guess what, you're now
- 24:51stuck with counting rabbits. And that's what you have to do
- 24:55at least for the, for the next three years, right?
- 24:57And just think how intimidating that is, right?
- 24:59So by having these unified systems or having systems that
- 25:02play nice with others as well, then you, you could kind of de
- 25:05risk that. But I'll give you an example of
- 25:07what's going on for us and then why that and then how that
- 25:10cascades into our, our, our thinking about how to build an
- 25:15AI product, at least in our world.
- 25:17So the first part is we sell ours the same products on
- 25:22exactly on completely incompatible revenue models all
- 25:25the time. So we have customers who buy CPQ
- 25:28on seats. So you can buy our CPQ without
- 25:30buying or billing or you buy our billing without your CPQ, but,
- 25:32but they'll buy CPQ on seats but billing on percent of revenue.
- 25:37And we have other people who say I'm give you a percent of my
- 25:40revenue. I, I, I send $1,000,000
- 25:42invoices. I'm not giving you a percent of
- 25:44the of $1,000,000 to generate an invoice.
- 25:47I'll pay you 10 bucks an invoice.
- 25:49How people are saying I'm not paying you 10 bucks an invoice.
- 25:52The invoice is only $200 like so.
- 25:55So, but this flexibility and pricing model allows for us to
- 26:01have conversations with people say, where do you see the value
- 26:03in our software and how does and how should you buy right?
- 26:06So, but we're not worried about people all of a sudden radically
- 26:11switching. So this takes a lesson the data
- 26:14model and owning the data and adding value off the data.
- 26:19The more data we have, the more valuable the system is becomes a
- 26:25very, very important defense. So if, for example, your
- 26:32company, if your company uses lovable, right and or no say you
- 26:36use lovable and you're amazing and you're great, right?
- 26:40Well, if the company adopts Bolt, right, and now you have,
- 26:46you know, 20-30 developers using Bolt, and I'm not saying Bolts
- 26:51necessarily better than lovable, I'm just saying they're
- 26:53competitors, then that ability to switch becomes a much more
- 26:57complicated problem. So building things into your
- 27:00products that make it easy for people to collaborate, to work
- 27:04together. And you see this actually also
- 27:05in the offerings of Open the Eye and Anthropic, their team or
- 27:08team based products where they have combined workspaces.
- 27:12These things actually at what anchor people because it gets
- 27:15built into how you run the business and makes it much
- 27:18harder to switch. So when you think about it, what
- 27:22I would think about is that the other part I would think about
- 27:25is if your value added is not the underlying model.
- 27:28And certainly you were about to release our MCP servers and all
- 27:31our agentic capabilities. And the real fun thing for us is
- 27:35we get to build those and test them with the people who are
- 27:38creating the technology that they run on.
- 27:41But what we didn't do was say you need to buy, you can only
- 27:46use one of them or even any particular model from one of
- 27:50them. And the reason for that is, is
- 27:53that different customers will have different preferences and
- 27:56different use cases and will want different outcomes.
- 27:59And actually when you run these things, they're materially
- 28:02different, like not materially better, they're just different.
- 28:05And you may decide to test both of them and go or three or any
- 28:09all three of them and go actually for our company, this
- 28:12one's better, right? The other thing is, is that they
- 28:16consider whether you really should be including the compute
- 28:20in the cost of your product at all, right?
- 28:23Because if there were multiple providers and you don't know
- 28:27which one of them is going to be the best, it might be a good
- 28:30strategy as we are doing it new to say, hey, you can bring your
- 28:34own tokens, right? You can bring your own tokens.
- 28:37And why would you want to do that?
- 28:39Well, if you are very sensitive about what data you're exposing,
- 28:43you might not want to just dump it into a general machine.
- 28:48Like say, you know, nobody literally wants to put their
- 28:50product and pricing into an account.
- 28:52They don't know who else. What is learning from like the,
- 28:55you know, you mentioned like, oh, now the accounts going, I
- 28:58recommend you price it this way because your competitor X is
- 29:02pricing it that way. Like that would be a complete
- 29:05disaster. So our view of it is, is that
- 29:09security and portability is going to be really important in
- 29:13the competition. OK, everyone loves to talk about
- 29:17vision, the pitch, the funding round.
- 29:19But you know what gets 0 love? The actual product build.
- 29:23That magical, terrifying phase where nothing works, the docs
- 29:26are out of date, and you've asked your dev team how's it
- 29:29going? For the 47th time today on
- 29:31Slack, that's where Code Story comes in.
- 29:34It's a podcast for startup founders who know that building
- 29:36The thing is the thing. Hosted by NOAA Lab Heart, Code
- 29:40Story goes deep with tech leaders who've been through it,
- 29:43shipping real products, surviving messy launches, and
- 29:46figuring out what actually works.
- 29:48And when you're on the edge of chaos, if you're building now or
- 29:52ever plan to, you'll want these stories in your ear balls.
- 29:56Search code story wherever you get your podcasts.
- 29:58Or visit codestory.co. Because founders talk vision.
- 30:02But builders? Builders tell code stories.
- 30:08This episode. Is brought to you by MO Burst,
- 30:11the AI first growth engine trusted by iconic startups like
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- 31:07creative thinking, advanced technology, and data are the
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- 31:12If you're serious about scaling your business with precision and
- 31:15purpose, it's time to talk to Moeburst.
- 31:18Visit moeburst.com and let's build something category
- 31:21defining together. 100%. Now you mentioned the shirt.
- 31:29I need you to unpack the shirt a little bit because I've been
- 31:31looking at it and I mean, black T-shirt, gang, it's Friday,
- 31:34let's go. So explain kind of the meaning
- 31:37of the shirt, OK. So the back of it is the actual
- 31:42words, and it's something I've been using to explain, oh, by
- 31:46the way, anybody can have the shirt.
- 31:47It's like, you know, get dot new dot IO slash change and he
- 31:52asked, you know, to see what the big T-shirt you want, we'll send
- 31:54it to you. It's not it's about a way of of
- 31:57us all thinking about what's going on.
- 31:59So the thing I was trying to explain actually when I was
- 32:03raising money last time, but why all these AI companies were
- 32:08choosing new and it was basically explaining to the
- 32:10VC's. The other really simplified
- 32:12things to VC's. But I also want to blow their
- 32:14mind. So I said, OK, the thing you
- 32:16have to understand is that the pace of change of the pace of
- 32:20change has changed, right? In other words, things are not
- 32:24just going faster, they're going faster in way, in more ways and
- 32:29faster than they ever went faster before.
- 32:33And the reason that's super relevant to why new is being
- 32:35adopted is now it's the, it's not the, the, the length of time
- 32:42you've been in business is actually potentially a bad thing
- 32:46because you've got all these, you've got a data model, legacy
- 32:50data model is not very adapted. In fact, maybe the answer is I'm
- 32:54just seeing this in some of the emergence very, very high growth
- 32:56companies, the new entrant may be at in the best strategic
- 33:02position to take the market, right.
- 33:04And so you have to think of very, very short planning
- 33:07horizons, very, very short delivery horizons.
- 33:11And, and think about the fact that whatever thing that you
- 33:15create, unless it's really deeply well thought out and
- 33:20complicated to vibe from a better term, somebody else is
- 33:24going to be able to catch up in feature.
- 33:26So it's better be something more than just like feature function
- 33:28that you're selling because that's going to that's going to
- 33:31be really, really important. So, so certainly a lot of the
- 33:34chief executives we talked to this is actually the sleep, the
- 33:39sleep at night problem is this. And then because we're a heavily
- 33:42engineering product based company, we wrote as math,
- 33:44right. So by the way, the actual new
- 33:46the the realtorship were shipping.
- 33:48One of my team came to me and said that should be AV, not an
- 33:51X. I'm like, well, then he goes,
- 33:55no, it's the velocity, it's the pace of change of the velocity
- 33:58that's in shape it. And then we go second derivative
- 34:00of velocity that's actually really changing.
- 34:02And I said, OK, you're right, you're right.
- 34:03It should be, yeah, yeah, the the.
- 34:05The the physics guys are always ruining my my UFO talks too, you
- 34:09know? Yeah, but it was also, they
- 34:13were, it was the same conversation as like, can I get
- 34:16one of these shirts? I can't get some from my
- 34:17friends, right. So it's like, yeah, yeah.
- 34:20Where? Where can you?
- 34:21Get it again. Oh, just go to get dot new dot
- 34:25IO slash change and you just ask for it.
- 34:28It's it's not a product, it's just it's just fun.
- 34:31It's just fun thing too to wear what it it's great too because.
- 34:34It is the can't sleep at night problem, right?
- 34:37If if you you can really only plan 1/4 at a time because boy
- 34:41in three months the world might look really crazy.
- 34:44How do you sleep? I think I've.
- 34:49I think I'm. I'm in the same.
- 34:51Boat as everybody else, I, I, I in some ways really well, I
- 34:55think that having a company, you know, first of all, you know, I
- 34:59didn't found this company. I came in because we have an out
- 35:02now genius running the company and she's amazing Tina Kong and
- 35:06and she never sleeps so that helps me.
- 35:09She's just an incredible bundle of creative energy and and
- 35:14engineering brilliance. But you know, Tina and I openly
- 35:18talk and, you know, people say to us, you know, hey, what's
- 35:20your road map like? Are you crazy?
- 35:22Like, you know, the road maps, like the road map on the at
- 35:25least on the AI side is like 3 months long because the case if
- 35:29we built it three months ago, the capabilities that we have to
- 35:33work with are so different. It's a bit of a joke.
- 35:36Like actually, of course we know what the actual key features
- 35:39are, but the but the capabilities of them are really
- 35:42changing. I think the, you know, the
- 35:45biggest concerns we have at new right now is, is how to is how
- 35:52actually to work with as many people as want to work with us.
- 35:54That's the is a big problem because we are doing major
- 35:57enterprise system changes, but we're using a lot of AI to
- 36:01compress that time period. But that's the I have a big, big
- 36:05worry is, is how do we possibly do this?
- 36:10And actually a funny story, we're building a new enablement
- 36:13things that are driven a lot by AI and part of it, we were
- 36:16training, part of it, we've introduced training for our
- 36:18customers so they can be more effective and using the training
- 36:22and some of the AI enablement capabilities that are in our
- 36:25platform, one of our customers actually accidentally went live
- 36:30like so at the end of the training, they went, oh, at
- 36:33night, we built the entire thing and they were like 95% right.
- 36:36And so that's super exciting for us because that's if you're, by
- 36:40the way, if you're in a consulting business and you
- 36:42think your bit, your job is hands on keys, that's going
- 36:46away. Like if you think if you were
- 36:49really Pete should be losing sleep is if you sell consulting
- 36:53and you do a lot of typing, that's going away.
- 36:56However, if you, if you do consulting and you do a lot of
- 37:01advising about what to do and how to adapt, that's becoming
- 37:04more important. And that's that's a really
- 37:07interesting thing, But that's not something I worry about is
- 37:10something that I know that a lot of our SI partners are focused
- 37:13on amazing your. Customers are some of the
- 37:16biggest, coolest companies out there and largely it seems
- 37:21because you actually created a category revenue life cycle
- 37:25management. And I was reading a great quote
- 37:28where you said the old way of selling is already dead.
- 37:31Maybe you can walk us through the new way of selling and how
- 37:35that helped enable kind of to get these unbelievable
- 37:39customers. Yeah, and by the old way, I
- 37:42don't mean to say that nobody was doing this before, always
- 37:46thinks are on a spectrum. But if you think your job was to
- 37:49go out, browse somebody, make a relationship with them and talk
- 37:54them into something because you, you know, I don't know, because
- 37:57you have reputational strength or because you're a super nice
- 38:01person or something like that. That's what I meant by the old
- 38:04way of selling, right. Hey, I, I've, I hey, this is
- 38:08what we do. Here's the problems you have.
- 38:11Here's how I probably solves your problem.
- 38:13Buy it, you know, you think, well, is that how can I be done?
- 38:17That's actually why somebody should buy a product.
- 38:19The problem is the process isn't going to be the same at all.
- 38:21What's going to happen is your marketing is going to reach out
- 38:24to somebody and they're going to and it's going to touch them
- 38:28with some value offer, right. And the person is like,
- 38:31actually, I do want to do that. Actually, frankly, I do want the
- 38:33systems that open the eye and etcetera are using.
- 38:36And and So what are they going to do next?
- 38:40They're going to go on ChatGPT or, or on Claude or, or wherever
- 38:44a young Gemini. And they're going to ask them,
- 38:50you know, if they're smart, they're going to ask what are
- 38:52the challenges? I meant considering product A,
- 38:54product B, product C. And they're going to jump
- 38:56straight to what are the problems that people are have
- 38:59implementing this software? They're not going to go, what's
- 39:02a happy path and what are the good reasons why people do that?
- 39:04They already got that part from your marketing.
- 39:06They're now immediately going to go, who failed and why?
- 39:09Right. And what are the horrible side
- 39:11effects here? Yeah, what?
- 39:14What? What?
- 39:14Bad things, you know, bad things can happen.
- 39:18And so so this is always being true.
- 39:22You know, HubSpot been talking about this for a long time, but
- 39:24there's a big part of, of the original Salesforce culture, I
- 39:27would say was this commitment to this idea that, that you, you
- 39:32don't let you enable people, you help them be successful.
- 39:35You, you do all this sort of stuff.
- 39:37And so working with customers and listed them is going to be
- 39:40super, super important. But the other part is you have
- 39:42to be open. It'd be completely open now.
- 39:46So what do they want you to do? What they want, what they come
- 39:49to the, when they, they, they do want to talk to human beings,
- 39:52but they want the human beings to guide them through an
- 39:55analysis of why this might not succeed, right.
- 40:01And so the real new way of selling is either nothing in the
- 40:05sense that you just enable people to go down their own
- 40:08journey and then facilitate the transaction at the end.
- 40:10And that's what a lot of PLG and SLG is like.
- 40:13Or. It's very, very collaborative.
- 40:16Like, in other words, you know, we train our people to actually
- 40:20talk about why you might not want to buy new like, so for
- 40:22example, if you like NVIDIA came to us, right, imagine how hard
- 40:28it is to turn down NVIDIA, right?
- 40:30But actually, I'm not sure what they actually bought, but I, I
- 40:33sent them to Logic because they sell basically very, very highly
- 40:38configured compute platforms like the, the computing
- 40:42equivalent to selling helicopter parts, right?
- 40:45And they're infinitely configurable.
- 40:47And we just said, you know what, I know you love our software.
- 40:50I know it's amazing and it's applicable to part of your
- 40:52business, but the big meaty part of your business, we are
- 40:56deliberately not good at that. It's not that we're accidentally
- 40:58not good at it. To be great at something, you
- 41:00have to not try to be all things to all people like RCA is trying
- 41:04to be. And we basically say, so we
- 41:07actually say, you know what? We don't think we're the right
- 41:08fit. Here's a bunch of vendors we
- 41:10respect and you should go talk to those people.
- 41:12Would you like me to make intros for you?
- 41:14Which just then made me want to throw up in my mouth.
- 41:16But, but, you know, but that was the right answer for that
- 41:19person. That's what's going to actually
- 41:21win you more deals. How does the story end?
- 41:24We get lots of back channel from some people that we talked to
- 41:27over there. Yeah, yeah, it's it sounds like
- 41:30the new. Way of selling is integrity and
- 41:32I'm I'm glad the old way is gone because I suck at golf, you
- 41:35know, I, I just can't do that. Yeah, it's, yeah, I, I think
- 41:42still, I think the human part is still important.
- 41:44I don't think it's not important.
- 41:45I think that, you know, you get out of the office and go see
- 41:47people. It's still important.
- 41:49It's just get out of the office and go see people and listen.
- 41:53Yeah, I love that. Amazing.
- 41:56Mark, you've had an unbelievable career as a founder and a
- 41:59leader. Multiple exits, super
- 42:01successful. What was it about new that got
- 42:04you off the bench to come lead this company?
- 42:10Tina. Tina Kung So I was asked by some
- 42:15of the early investors and just think about it like new is
- 42:17basically like another financial system like NetSuite.
- 42:21Like it's not the same as NetSuite, but still a very, very
- 42:25big hairy ass goal of replacing multiple different systems of
- 42:28one thing. So that's the analogy.
- 42:31And I just sold the company TA We owned that company almost
- 42:35completely outright. There was no VC in it.
- 42:37So was great and and we just managed to make money like right
- 42:42from the get go. So that was how we managed to
- 42:44hang on to it. And and so I was planning to
- 42:48just go kite, go kite boarding and not run a company for a
- 42:51while. And then Tina gave me just the
- 42:54most clear, you know, statement about what she wanted to
- 42:57achieve. And it's so true to her and
- 42:59true, like her commitment to our customers is bonkers.
- 43:03Anyway, I once asked her because people try to buy us all the
- 43:06time and we're not for sale, but but I said, how much money would
- 43:10be enough Tina. And she goes no amount of money.
- 43:13We're not done. I think it's just like committed
- 43:16to the outcome for our customers.
- 43:18And I'm just like, I love that about her.
- 43:20I don't think that's actually true.
- 43:21I think think anybody out there who's, you know, thinking about
- 43:23a very, very big number, it's always possible.
- 43:25But but I think, but I think the, but I think it's the ethos
- 43:30of the clarity of vision, the amazingly high level execution
- 43:37even at the early stage when I first joined them.
- 43:39And then this complete obsession with the outcome for our
- 43:43customers that is that I find energizing and joyful.
- 43:47And and we have a thing about new, which we say all the time,
- 43:51this is so hard that if you don't love it, you should leave.
- 43:54Like what we're doing is so ridiculous, like climbing
- 43:56Mountain Everest. If you don't really like
- 43:58mountain climbing, you probably shouldn't do that, right?
- 44:02Amazing, you know. Let's look beyond the the
- 44:06quarter to the next 12 months. You know you guys have raised 40
- 44:11million plus you guys have the biggest logos in the world as
- 44:15customers. What are the big challenges you
- 44:17see over the next 12 months? Well, I think again being
- 44:22customer focused, you know, I think look new is a very young
- 44:28company and we have tremendous appreciation and gratitude to
- 44:33all the early customers. So one of the biggest things for
- 44:36us right now is new is way better now than it was say 12
- 44:39months ago. It's way more mature, it's way
- 44:42more extensive. Working with some of these
- 44:43amazing companies. If you ever heard the Bill Gates
- 44:46interview about how IBM made Microsoft a massively better
- 44:50company was one of the big strategic advantages of working
- 44:53with people who demanded a lot, right?
- 44:56Well, these massive AI companies because their pace of change
- 44:59are, is, are that for us. So one of the big emphasis
- 45:03embassies for the the next year is going back into our customer
- 45:06base and say, hey, can we come back in and look at how we
- 45:10implemented you and talk again about this.
- 45:13And there's no charge for this service.
- 45:14We're going back into all of our customers and saying, hey, can
- 45:17we look again and think, is there a better way to do this
- 45:20now? Can we help guide you through
- 45:22that transition? Because we're profoundly
- 45:25grateful. You know, like I said, God bless
- 45:27the first people to buy enterprise software.
- 45:28Like somebody has to do it and we're very devoted to them.
- 45:34Why? Well, the reason is, is that in
- 45:37order, if you really want to do what we want to do, which is be
- 45:40the biggest business system on the biggest business systems on
- 45:43earth and certainly the biggest recurring billing system on
- 45:46earth, then you really have to be focused not just on the next
- 45:49customers, but on your existing customers.
- 45:51And so that's a huge push the on the new customer side, the big
- 45:56concern is that right now it's a complex product.
- 46:01So the demand for the product is completely right now
- 46:04outstripping our ability even to respond to the phone calls.
- 46:08So we are, I'm very fortunate to have a lot of, you know, senior
- 46:13executives from, from major tech companies on our team.
- 46:16We're, we're basically spearfishing some other great
- 46:19people and, and really laying track for this.
- 46:24They're delivering the same high quality experience to the next
- 46:28generation of customers, the high touch experience to the
- 46:32next generation customers, but not necessarily by us, right.
- 46:36So that's the interesting thing. You need to scale it.
- 46:38So it's how do you let other people build really successful
- 46:41business models. So if you're an SI and you're in
- 46:43the sales force space, we're super focused on helping those
- 46:46companies get through that transition into a much more
- 46:48profitable future rather than just taking their lunch, right.
- 46:52So it's, but that's, you know, it's in, in 12 months, we'll be
- 46:58a very, very significantly bigger company, but we'll have a
- 47:01much, much bigger ecosystem. And that's the most exciting
- 47:05thing going on right now. Romanis, thank you so much.
- 47:09Mark, this has been awesome. Last question, based on where
- 47:12you see the puck going now, if you were entering college as a
- 47:16freshman, what would you study? If I was actually I get asked
- 47:22this question all the time. I would say study whatever the
- 47:26hack is going to make your college experience really,
- 47:33really important to forming who you are going to be.
- 47:36Don't make a call as to what the future economy in 20 years is
- 47:42going to need. In other words, if you don't
- 47:44think, or let me put it this way, if you go to college and
- 47:48you're not so interested in what you're studying that they will
- 47:51become an obsession and you'll learn to be just a a complete
- 47:56nerd and geek about what you're doing.
- 47:59And I don't care what it is, right?
- 48:01Then don't do it because your future value is going to be that
- 48:07you were able to go deep on stuff and that you are
- 48:10thoughtful and that you have a perspective.
- 48:13It will not be that you learned how to do marketing
- 48:17communications. Like the way in which marketing
- 48:21communications will be done will be so different than the way you
- 48:24learned it that you won't get any value out of it.
- 48:26But you can still do marketing communications, but do it in a
- 48:30way where you are not mailing it in, no pun intended.
- 48:34You're you're you're you're you're actually, you know, going
- 48:38there and and do socialize and do enjoy the college experience,
- 48:41But just understand that what you are investing in is you not
- 48:47in some companies future cog for you, because there's very little
- 48:52chance that you will call that right.
- 48:53So if you think if you were really into mechanical
- 48:56engineering, you should go and become A and, and study
- 48:59mechanical engineering. And I don't know exactly how
- 49:02mechanical engineering will be in, in that time, but but you
- 49:07will, right? You'll get to experience that.
- 49:10But if you, but if you go there, because I don't know, somebody
- 49:14told you, you should do mechanical engineering or, or
- 49:16frankly, computer science, right?
- 49:18And somebody says you should go into computer science because
- 49:21there's going to be a lot of jobs.
- 49:24That was never a good reason to go into Pierce Knights in the
- 49:261st place. And it's certainly not now,
- 49:28right? By the way, can I ask you a
- 49:30question? Do you think we're heading
- 49:32towards the AI 2027 future or do you think we're heading to the
- 49:37Jetson future? Like everybody kind of has a job
- 49:39and but they don't work as much. Like what do you, where do you
- 49:42fall on this boy? It really depends.
- 49:44On if I've had my coffee yet or no.
- 49:50Yeah, I think we're going to a Jetsons future, at least that's
- 49:53the that's the future I want to believe, you know, part of the
- 49:58the. Reason why I started.
- 49:59This podcast is to explore that very conversation because I, I
- 50:03tell you the truth, I was feeling a little pessimistic, a
- 50:05little scared about it. But you know, talking to people
- 50:08working in the space and building is very reassuring.
- 50:11And also you seeing all the as great as some of these products
- 50:15are, but they're also half baked in a lot of different ways too.
- 50:19So I'm a, I'm a strong believer that humans are going to pull it
- 50:22together. And I really like your answer
- 50:24too, about studying in college. I've asked that question dozens
- 50:27of times. It might be my favorite answer.
- 50:30And it, it reminds me of the way Myomoto Masashi talked about the
- 50:35way of the sword and how by studying the sword with such
- 50:39intensity, he saw the way broadly in all things and was
- 50:42able to become a expert flower arranger based on his experience
- 50:47with with swords. So I really appreciate you for
- 50:50that answer. Well, I'm going to go back.
- 50:52And read that, that sounds, that sounds fascinating.
- 50:56Look, I think it's the other side of this is 11 things.
- 51:00If, if somebody is building and I start up and, and you're
- 51:05wondering whether you, whether you have the right tools or
- 51:08things like that as well. Make one last point is this is
- 51:11really complicated and what you're doing is complicated.
- 51:16Reach out to us. We're not going to sell you
- 51:17like, frankly, if you're like under $20 million, you can just
- 51:20have our stuff and we'll, you know, to help you grow your
- 51:23company. We all have to accept that.
- 51:26We all have to learn. So why would I want to be
- 51:28working with like little tiny companies when I work with the
- 51:30biggest companies in the world is because I want to learn.
- 51:33I want to learn from them. And I think that's the other
- 51:36thing we all have to do. Whether you're going to college
- 51:38or you're going to, whether you're already an, you know,
- 51:41established executive like myself, you have to understand
- 51:43what this means is you actually don't know what you don't know,
- 51:49right? And so we, the other thing I
- 51:52would say to people is share your ideas, share your
- 51:55objectives. The value of, of closeted
- 51:58intellectual property has gone to 0 like, like nothing grows in
- 52:03the dark, right? So just instead of saying, you
- 52:07know, oh, I don't want to tell anybody because they're going to
- 52:09steal my idea, they're definitely going to steal your
- 52:11idea. That's, that's definitely going
- 52:14to happen. What you want to do is build a
- 52:15community around you of people who believe in you and one, make
- 52:19you successful. Don't like sit a program in your
- 52:23cave and hope that you know they'll come.
- 52:27Go out there and and talk to people and understand and get
- 52:30their perspective. And if it turns out they talk
- 52:32you out of the idea, that's probably a good thing.
- 52:34If it turns out they can't talk you out of the idea, that's a
- 52:36better thing, right? But but I think we all got to
- 52:38basically be very humble through the next, maybe forever.
- 52:43Maybe we should always have been doing that.
- 52:45But but I think that's the other big thing.
- 52:47You try to be humble. Extraordinary, Mark.
- 52:50Thank you. So.
- 52:50Much What's the best place for people to connect with you
- 52:52online? LinkedIn, you know, I, I live on
- 52:57LinkedIn. It's where I recruit, it's where
- 53:00I learn a lot. I don't really, I don't have
- 53:04enough cycles to be really responsive on, on Reddit or on
- 53:09on X. So so LinkedIn is easy to find
- 53:12me. You know, it's easy to
- 53:13triangulate on me and and look if there's anything.
- 53:17My first question when anybody connects with me, I go and
- 53:20connect to every everybody. If you send me a connection
- 53:22request, tell me what I can do to help you, right.
- 53:25If there's something I can do to help you, I'm super interested.
- 53:27I'm more interested in what I can do to help you then then
- 53:29what you can do to help me. But if what I can help you is,
- 53:34is talk to you about your new product or your new service, or
- 53:36maybe connect you with people who'd be interested in in beta
- 53:39ING it or, or, you know, frankly, finding the right
- 53:42person, my company to sell to, I'm open to that.
- 53:45Just as long as you basically consider, you know, come to with
- 53:49the same attitude of, you know, you're coming to help me and and
- 53:52asking me to help you or but if you just need me to help you,
- 53:55I'm totally fine with that too. Amazing, Mark.
- 53:58You thank you so much. Thank you so much to.
- 54:01Rank. This is super fun, thank you for
- 54:03setting it up. You bet.
- 54:05Bye. Hey founders, let me ask you.
- 54:08This. Are you building with AI or
- 54:11getting left behind by it? If you're serious about scaling
- 54:15smarter, faster and bolder, you need to check out AI for
- 54:19founders.co. It's your go to resource for
- 54:23cutting through the noise and actually using AI.