Sunday 22 April 2018

'We've engaged a billion people - that's a better value discussion than a dollar sign'

Intercom, one of Silicon Valley's fastest-growing tech firms, is designed in Dublin. With a billion-dollar valuation approaching, co-founder Des Traynor spoke to Adrian Weckler

Intercom’s Des Traynor says firms will want to talk to customers more
Intercom’s Des Traynor says firms will want to talk to customers more

There aren't many Dublin tech companies that are routinely spoken of as nearing a billion-dollar valuation. But Intercom, with offices in St Stephen's Green and San Francisco, is one of them. The company lags only Slack in growth trajectory, according to recent figures.

Not that co-founder Des Traynor thinks that being assessed in terms of valuation is particularly useful or relevant.

"There's been a bit of a backlash against the whole unicorn thing," he says.

Still, the company marches on. Intercom now has more than 25,000 paying customers, Traynor says, and a lot more who are non-paying.

"We power 400 to 500 million conversations per month," he says. "We've touched or engaged a billion or so people on the planet. So that's a much better discussion of the value of Intercom than the dollar sign put on some term sheet a while ago."

For the uninitiated, Intercom's main business is a customer messaging platform online. Typically, this can be through dialogue boxes and other techniques. So you've probably seen its product without realising that it has been designed and configured by the Irish entrepreneurs.

From its origins, Intercom - which was co-founded by Ciaran Lee, David Barrett and Eoghan McCabe, as well as Traynor - has had high-profile backers. It has raised almost €100m to date from savvy Silicon Valley investors including Index Ventures, Iconiq Capital and Bessemer. Twitter co-founder Biz Stone, the Collison brothers and other top tech entrepreneurs, either through investment firms or through social capital, have also backed the company.

But it's not just the scale of its funding or the weight of its Silicon Valley backers, nor even citations (alongside Stripe) in investor industry tomes such as Mary Meeker's Internet Trends Report.

It's Intercom's peer recognition. The company is now namechecked among Silicon Valley types as an industry standard. That is something that very few tech firms from any part of the world get associated with.

It also makes the Irish part of the story rather more pointed, as the whole thing continues to be designed and developed in Dublin, not Silicon Valley, even if its headquarters is now technically in San Francisco.

But with over 400 employees divided between offices in Dublin, San Francisco, London, Chicago and Sydney, Intercom is scaling fast.

With scale, comes cultural challenges. Traynor is hopeful that Intercom won't fall prey to some of the culture problems that fast-growing tech startups appear to experience, some of them in notoriety.

He references a recent talk by the veteran US journalist Kara Swisher, who has been critical of how tech firms have often ignored the destructive effects that their culture has wreaked as they chase rapid growth.

One of these effects is gender bias and sexism. This, says Traynor, is something that Intercom takes very, very seriously.

"It's something we care deeply about, to not let it grow within our own company," he says. "We've done a lot of internal training on things such as unconscious bias, to really address this. I think we have a lot of natural checkpoints that would stop us going too far in any extreme. Just about half our executive team is female, and over half our company reports into our COO, Karen Peacock."

Tech companies have emerged unfavourably on gender issues over the last two years thanks to high-profile problems in industry totem firms such as Uber. Even Google, which prides itself on fostering diversity and pluralism, had to fire an engineer - James Damore - who circulated a memo arguing that women were not as naturally attuned to certain engineering tasks.

"Sexism is a problem across a great many industries," says Traynor. "It's a difficult and important issue. But there's no push-button solution, which is why no one is immediately solving it. This goes to the heart of company culture - how you hire, how you screen, how you source your candidates, what the tone is in your company all-hands meeting, who gets to present and what sort of topics do you cover.

"It's also about issues such as what the natural state of your design work is, whether you assume your user has a male icon, a female icon and whether you talk about the user using the word 'he' or 'she'. It leaks through every single aspect of a company.

"What happens it that a lot of people look for the most visible or tangible thing that they can quickly fix and they'll do that. But this won't be gone in a year, and it's been around a lot longer than it's been covered."

That said, Traynor thinks that things may be improving.

"I do think things are changing," he says. "I see more positive signs for it getting better across Silicon Valley, not least because of the good work done by journalists, who are not letting it go away. This is really important because it means that it's getting less savoury, if you're a VC, to back a company that has 75 people and which is 100pc male, or has a specific demographic of men. I do think that accountability is flowing a lot deeper than it ever did before."

Traynor has a front-row seat on such change happening. Recent figures across other Irish firms, however, show that a lot more work needs to be done.

Research conducted by this newspaper in recent weeks shows that just 3pc of venture capital in Ireland went to female-founded companies during the first nine months of last year, or €24m out of €781m invested into tech here.

The research also shows that women have no chance of becoming CEO in an Irish VC-funded tech company unless they personally start the company.

Of 132 VC-funded Irish tech firms founded by men, all have a male CEO. By comparison, 12 of the 21 VC-funded Irish tech firms with a female co-founder have a woman as CEO.

This is a more complex problem, Traynor says, particularly if some are looking to venture firms to play some part in recommending a CEO based on their gender.

"I wouldn't bank on the future of female CEOs of startups coming from investors rolling over CEOs after they fund them," he says. "I'd bank on women starting companies and becoming CEO that way. I mean, if some VC said that to us [to pick a different CEO], we'd have said 'no thanks, see you later, we have a CEO'.

"I would imagine you'd see similar fortitude from others crazy enough to start a company. Usually if there's a group of founders, you'd hope that one of them would be taking the initiative and saying 'okay I'm going to be the CEO'. I can't imagine founders saying 'okay, they'll give us 10 million but we have to replace our CEO'."

Traynor says that he dislikes much of what passes as 'brogrammer' culture and what he describes as "adult playground" aesthetics that some startups seek to design their offices around.

"There's a bad pattern going around in designing an office that you supposedly want to live in," he says.

"For us, there's a lot of value in being able to mentally and cognitively separate environments for work from environments for relaxation. I dare say that that's where a lot of these problems we've been talking about come from, to be honest. In that people don't realise they're in a workplace and they act like they're in a bar. Mixing those two worlds is not great. Make work like work."

As to the future for Intercom's business model, the company has always operated on the assumption that all businesses are becoming internet businesses.

But Traynor also thinks that subscriptions could play a big part in future commerce. "We believe it will affect most businesses," he says.

"So rather than buy a few CDs at a time, you might now pay a tenner a month. In a lot of cases, you can subscribe to razor blades or boxer shorts. You can subscribe to books, to beauty products. To me, that brings up the issue of brand loyalty versus brand monogamy. People can be loyal to multiple brands, but that would like polygamy of sorts. Whereas brand monogamy is one I subscribe to. Take razor blades. If I subscribe to one, I'm now never shopping for razor blades again.

"What we're going to see, then, is the customer relationship becoming the most important thing. So that means that businesses will want to talk to their customers, which is quite a departure from the early days of the internet when the promise was that you'd get all this no-touch revenue.

"Intercom's belief is that you probably want to talk to these people. So we'll see a lot more conversations."

To hear an extended interview with Des Traynor, stream or download The Big Tech Show (episode: 'The Fast And The Notorious') from iTunes, Soundcloud or independent.ie/podcasts.

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