Intercom On Capital, Dublin 17/09/15

Focus on making a great product and investors will find you.

Intercom stuck to their guns once again. They made last night’s Intercom On Capital event all about great product.

They had a board meeting in Dublin and used the opportunity to share their investors with an eager crowd. The event revolved around three heavy-hitting investors who sit on Intercom’s board. They were playfully bought on one by one by Intercom CEO Eoghan McCabe. In the order that they had invested!

Mamoon Hamid and his partners at the Social & Capital Partnership came on board at Series A.

S23P have a $1.2bn fund overseen by just three partners. Their current big hit is a super-early investment in Slack. They wrote them a $25m cheque whilst still in beta.

Mamoon shared that what swung their investment was the trial data. Slack had unprecedented engagement, conversion and monetization rates.

He also revealed that S23P “Could have done an investment four months earlier at a fraction, but there was no data so we had no conviction.”

Mamoon decided to invest in Intercom almost instantly.

As he explained to Eoghan on stage. “You did a very good job telling the story in three minutes, where Intercom was and where it would go in ten years. I knew within five minutes I wanted to invest.”

S23P look for “Product driven founders who have a mission and are really trying to solve a problem in the world. Some traction is good, but not so much that makes it clear to everyone (else) it’s going to work. That’s why we’re early investors.”

Eoghan’s main recurring theme was that if you have a great product there are multiple investors looking for you.

“I’m a big believer in letting them come to you. My focus is on building a fucking great company. It’s true to say that I had to hustle to raise 500k at the start but we had yet to build a great company and a great product. When you do those things money will come to you. It’s a great filter for people that get what you’re doing and are probably excited to do a deal with you.”

Representing Series B was Ethan Kurzweil from Bessemer Venture Partners. They’ve been in business since 1911 and have been involved in 115 IPOs! BVP was founded by Andrew Carnegie’s lesser-known partner Henry Phipps.

“We don’t want to be known, we want to support our clients”, explained Ethan when asked about their ethos.

Ethan has led BVP’s investments in Twilio, Twitch and Periscope.

Ethan loves Intercom because “It’s a better way of doing what you’ve done before.”

Again the underlying metrics were crucial for their Intercom investment decision: “We want to see the data that supports product market fit.”

Bessemer look for founders who are solving big problems but “Don’t forget job one – building a great product. Don’t think of a funding as a be all and end all.”

Series C’s lead investors in Intercom are Iconiq Capital. They don’t tweet, they don’t blog, they don’t need to. They are the fund who invests on behalf of Mark Zuckerberg, Sheryl Sandberg, Jack Dorsey and Reid Hoffman.

In keeping with their low profile vibes, Iconiq’s Matt Jacobsen requested that all of his comments last night be off the record.

When introducing Matt, Eoghan said that Intercom was “One of the smallest cheques (Iconiq) had ever written, and that “They are bringing Intercom to a higher bar.”

Part two of the evening was a roundtable session chaired by Intercom’s Chief Of Staff Kathleen Estreich. Kathleen was one of Facebook’s first 200 hires and was there from 15m to 1bn users!

She turned the floor over to other Irish CEOs to question the panel. Kevin Holler from Shake asked a great question about the best time for companies to go to the Valley.

Mamoon thinks that before you go you need to have “Product, vision, team and early signs of product market fit. You’ll need to have raised some capital locally to have achieved that. It’s step two, not step one.”

This led to a question from Kathleen about whether Intercom were part of a new trend of splitting functions between the valley and elsewhere. Intercom’s design and dev teams are based in Dublin, whilst sales and finance are run from SF.

Ethan reckoned you have to “Work with what you’ve got. What Intercom has gotten set up gives them advantages. There’s no magic to Silicon Valley. We have a company in Sioux Falls Dakota. Silicon Valley has no monopoly on innovation.”

“What about the trade-offs in having two offices?” Kathleen asked Eoghan.

“Eight hours (time difference) is rough.” Responded Eoghan. “When I start, people in Dublin finish work – that’s not useful. Keeping people as an organisation that’s supposed to be one. How do you do that if you have large amounts of people who never see each other? You need to make these your strengths and find a silver lining. It’s amazing to see people from the U.S. talking about going for a few scoops on a Friday. You need to ask yourself is that trade-off worth it, and over time it is worth it.”

A question from Don Moynihan then sparked off a great discussion about valuations.

“Valuations are high, there’s no question.” Offered Ethan. “The repercussions of that are entirely predictable. People tend to chase false signals like the size of the next funding round.”

“The question of valuation is not unrelated to round size.” Added Eoghan. “The investor view is that it’s impossible to give a CEO $50-100m more than they need as they will spend it faster. Valuation is not the be all and end all, but investors will always say that. I’m proud of the fact we don’t do stupid valley bullshit … like fussball tables.”

There’s something magic happening here. We’re making a big bet on Dublin, we believe in Dublin. We want to be part of the community.”

Kathleen rounded the evening off by asking the panel for a peek into the future.

Mamoon: “Tech’s going through all our ways of living and affecting one industry after another. 30 years from now, they’ll all be tech companies.”

Ethan: “Healthcare possibilities are coming sooner than people think. Also, some kind of VR that people can share in a social sense online will fundamentally change how humans interact.”

Matt referred to what WhatsApp had already put ‘on the record’, the massive opportunities relating to China and India coming online more, pointing out that WhatsApp services 900m users with only 50 engineers as an example of scaling getting easier.

Eoghan: “99% of software is shit. Now it’s technologists making software for technologists. What I’m excited about is the opportunity to make better software for more people.”

As an encore Eoghan wrapped up.

“Dublin is my home, I have such a pep in my step when I wake up here. There’s something magic happening here. We’re making a big bet on Dublin, we believe in Dublin. We want to be part of the community.”

That beautifully rounded off two great events in eight days from Intercom. Both were different in feel but were united by their guiding passion for product.

There’s a lot of work to be done replacing the “99% of shit software.” Intercom are going a long way towards fostering the conditions for a chunk of that to be built in Ireland.

The best way to learn is from people who have done the thing you want to learn about. Intercom are throwing up plenty of opportunities for us all to learn.

Let’s all make the most of the trail they are blazing.

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