The $23 million raised by Irish-founded company Intercom was spent on building a world-beating team. Tom Lyons meets Eoghan McCabe, its chief executive and co-founder, at the companys San Francisco office.
On the fourth floor of a tower in San Franciscos financial district on Battery Street is the home of Intercom. Its office is behind a nondescript door which opens into a dark reception area lit only by a glowing blue version of its logo.
The first thing you notice passing through this room is a rack of bicycles mounted to the wall on your right and a room filled with people staring intently into their screens. There are no foosball or ping pong tables, hammocks or the other standard start-up bling. Instead, its office has a stripped-back feel. I go into a glass-walled meeting room.
A couple of minutes later Eoghan McCabe, the chief executive and co-founder of Intercom, arrives in. Just 30, he is the dynamic boss of an Irish company which is ripping up the way web and mobile businesses see and talk to their customers. Just over a year ago McCabe and his team raised $23 million (16.9 million) in a series B investment round. It was of a scale rarely seen by an Irish technology start-up. The round was led by Bessemer Venture Partners who have previously backed Skype, Yelp, LinkedIn, Pinterest and Box to name but a few. Other investors include Twitter co-founder Biz Stone.
Bessemer is a 103-year old fund. It is American investment royalty tracing its roots back to Henry Phipps Jr who co-founded Carnegie Steel, which he sold 29 years later giving him the capital to go into investment. Bessemer put its Menlo Park based partner Ethan Kurzweil on Intercom’s board. Early investor Mamoon Hamid, general partner at Social+Capital in Palo Alto, also became a director. This was the big league.
Were dedicated to going all the way
In a blog post after the investment McCabe summed it all up: Our vision is to be at the centre of all customer communication for all kinds of internet business, which increasingly every business is becoming. Were dedicated to going all the way with this.
“So how is it going one year on after raising $23 million? I asked.
Raising money is sufficiently hard, you dont do it often. One random day of the week youve got an extra $23 million to play with. Because thats the case you make these big, big adjustments, McCabe explained.
We hired a ton of people in Dublin. We went from 33 people to 90 [in Dublin and San Francisco]. That was one of the things. Intercom was started by four product guys. We knew nothing about sales and marketing, nothing.”
“Just product guys, building something for themselves, obsessing about this product, he added. All of our incredible growth was just propelled by this fucking raw passion for the product.
It was time for marketing and sales, but McCabe’s instincts said to keep putting everything into product, and just let Intercom grow by word-of-mouth. But then he met a sales guy called Russ Thau at a tech conference in 2013. He told me, Eoghan, I loved your presentation, I love your business, but you need a sales team. McCabe was sceptical, but Thau kept twisting his arm, and in January 2014 McCabe hired him. He was a team of one, but quickly he began to prove his worth. Thau knew how to do it. He had worked with Box and SuccessFactors, helping them grow sales from $10 million to over $100 million. He gets doing some deals and then he gets doing some more deals. The companies he sells to are three times the size of the companies that sign up on our website, and of course that means they end up paying three times the amount of money, too, McCabe said.
So, Intercom set his team targets they felt would be very hard, or even impossible, to meet. Our sales people not only made their quota but they made it two times over [in the last quarter of last year]. McCabe said. So that was the first lesson of 2014. Having real human beings talk to our customers, listen to what they need, help them buy the product, is amazing.
From zero, Intercom built out a marketing team of ten people, and a sales team of six people. Revenue grew by five times last year, McCabe said, with 4,000 paying clients, twice the number of clients that it had a year ago. Can you give a sense of how much revenue youre earning? I asked. He replied: No we cant. I dont want to say more, certainly multi-millions.
This year, McCabe said, Intercom will start to hire a sales team in Europe, and this will help its existing R&D team in Dublin. One of the best things about just having sales folks around the office is that theyre constantly overhearing stories from our customers, and that will feed into our product he said. Whats it like having an office in Anglo Irish Banks old headquarters on St Stephens Green? We didnt even think about it. I mean its just a great space, he said. Its a non-thing. Weve gutted the entire place and made it our own. McCabe is a big fan of having a base in his hometown. It is so insanely hard to hire here. But in Ireland we have, amazing folks whove been through a couple of technology companies, coming from Amazon or Facebook.
Intercom has not just beefed up its sales team. It has hired Emmet Connolly as director of product design, who previously worked with Google as top guy in its wearables operating system, and Sian Townsend, another Google veteran but this time from its Google Maps team.
In addition, it appointed Matt Hodges as senior director of marketing from collaboration business Atlassian, and John Collins as managing director of its blog from the Irish Times.
Perhaps Intercom’s most seismic hire was made in May 2013. That was Paul Adams, to run its product and design team. Previously, he was global head of brand design at Facebook. Fortune magazine called him one of Silicon Valleys most wanted.
Would I love to build a billion-dollar business? Its the only reason Im doing this. Does it have the potential? Yes, absolutely.
A strong team has allowed Intercom move from serving mainly start-ups or small divisions within companies to working with entire businesses as well as larger companies. Its a gradual build though. Any great and self-respecting company doesnt want to be by far the biggest firm youve ever worked with. Big companies beget more big companies, McCabe said. Weve very much a bottom-up approach. Salesforce [a $39 billion cloud and customer relationship management giant] started selling to little guys. They were considered a crazy idea, no serious company was ever going to use internet CRM, but look what happened.
Would McCabe ever see Intercom being snapped up by a rival giant? For everyone in the company, and specifically for the leadership whove been around a while, its not about the money. We would be heartbroken if we sold today.
What about a stock-market float? Thats different, we can remain independent in that instance, McCabe said, before adding this was not on the immediate horizon. What does Intercom want to do in the next year? Financial targets are private internal things. The big targets are more strategic. Theyre like us, getting deep into mobile.
Intercom, he said, also felt it could sell more to different divisions of existing clients. Youll see more and more bigger companies pick us up. If you look at the average price that people are paying for Intercom, the average amount of people they have in their team using it, the average amount of users that they have, all the charts go like this, McCabe said gesturing with his hand upwards. We have a big, big passion to remain very, very useful for all sorts of little guys. There may be a time in the future where the bulk or our business is made up of bigger folks, but all that would encourage us to do would be to just make it cheaper for the little guys, McCabe said. Were start-up people. Until very recently we were tiny too, so theres a big, big appetite to continue working with these guys even while were selling to bigger businesses.
How big could Intercom get? Is it a $1 billion company? McCabe considered for a moment then replied: Would I love to build a billion-dollar business? Absolutely, its the only reason Im doing this. Does it have the potential? Yes, absolutely. But its tough. Its so hard. Its so, so, so, so, so, so hard.
Where does McCabe ultimately want Intercom to go? What does any kid in this industry think of when he closes his eyes and indulges himself for a split second? We would love for Intercom to have an insane impact on the world and to enrich the communications that businesses have with their customers and vice versa. If we can actually deliver our platform to every single type of internet business so they can have relationships with their customers and build those relationships, thats really what we want. And that is easier said than done. That is a big, big, big, big, big goal. Thatll take five to ten years.So weve just this long road ahead of us. Would we like to be used by every single type of internet business? Of course, yes, thats absolutely what were trying to do.
No less, no more.
Originally published in The Sunday Business Post.