Taking on ServiceNow: Coding Agents the Rest of Us with Serval Co-Founder and CEO Jake Stauch

What happens when you put code-generation agents in the hands of enterprise IT teams? With Serval, you get a system where it's easy for everyone to be a builder. Sarah Guo and Elad Gil sit down with Serval co-founder and CEO Jake Stauch to analyze his company’s direct challenge to ServiceNow as the enterprise automation and service management system of record. Jake explains that by building an AI platform for enterprise IT departments with Serval, users can safely build while still safeguarding permissions by strict deterministic approvals and an audit trail. He also talks about ProServal, the company’s team that embeds automation engineers directly with customers in order to provide ongoing support and service. Jake also discusses how AI was the big unlock to taking on ServiceNow, why he’s betting on coding agents getting even better, why consumer is a window into what will happen next in enterprise and why the SaaS-pocalypse might look more like a consolidation, why background agents are still a moonshot in enterprise software, and the importance of hiring product-oriented engineers. Sign up for new podcasts every week. Email feedback to [email protected] Follow us on Twitter: @NoPriorsPod | @Saranormous | @EladGil | @jakeserval | @getserval Chapters: 00:47 – Jake Stauch Introduction and Serval’s Background 03:00 – Expanding Coding Agents Beyond Engineers 04:40 – Limitations with Personal Agents in Enterprise 06:29 – Deploying Serval Effectively in Large Orgs 07:55 – Day 1 Ambition and Attacking Enterprise Systems of Record 09:51 – Taking on ServiceNow with Workflow Automation Platform 11:01 – Betting on the Evolution of Coding Agents and Building Guardrails in Enterprise 13:48 – Big Risks, Big Rewards, and Big Predictions for Serval and Coding Agents 16:40 – Adopting Different Sets of Building Principles at an Enterprise Level 20:49 – Token Maxing, Long-Term Budget Impacts, and ROI 22:39 – The SaaS-pocalypse and SaaS vs. AI 24:39 – The Mental Model for Delivering Platform-Level Power to the IT User at Enterprise 26:43 – Building Automations with Catalyst and Raising Technical Competence 28:55 – The Next Wave: Background Agents and Autonomy in Enterprise 32:23 – Hiring Velocity and Unlimited Ambition at Serval 34:17 – Keeping Pace with Customers and Fundamental Shifts in Product Function 37:05 – Conclusion

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  This is the ultimate moonshot in enterprise software. These agents that go off and do work for you and magically discover all your problems and solve all your problems. And I think no one's really figured out how to do this well.

• 0:09Speaker 01

  This is kind of the OpenAI hugging face incidents or other things where agents are given a task and they do something that's unexpected.

• 0:15Speaker 00

  The agent becomes pretty competent. It could theoretically just start writing code that could take action on all your systems. And that is an unbounded security risk that I don't think anyone's going to be able to take anytime soon. On the one hand, you want these to be very autonomous without somebody babysitting them. On the other hand, autonomy is very scary in the enterprise. Serval is the boundary. Serval is the guardrails. We are the way that a large enterprise with a lot of rules and approvals and process and politics can adopt these tools safely and comfortably at scale.

• 0:48Sarah Guo?

  Hi, listeners. Welcome back to No Priors. Today, Alad and I are here with Jake Stouch, co-founder and CEO of Serval. Serval, with all the speed of the African wildcat, is trying to attack ServiceNow and more broadly, bringing the power of code generation to IT and enterprise teams overall. Welcome, Jake.

• 1:08Speaker 01

  Jake, thanks for joining us today on No Priors.

• 1:10Speaker 00

  Thank you. Great to be here.

• 1:12Speaker 01

  Maybe you could tell us a little bit more about your history and how you started Serval? And what is the problem that you started with or why did you start working on this to begin with?

• 1:18Speaker 00

  Yeah, so background, Serval is enterprise automation, enterprise service management. The idea is you can ask questions and get help at work and automate a lot of the parts of the job you don't enjoy. And we do that through code gen agents. So that's what the company does. We compete with companies like ServiceNow is historically the big legacy provider in the space. I discovered this category actually working at a previous company called Verkata, where we sold enterprise physical security products to IT teams. Spent many, many years talking to IT teams, figuring out what to build for them. And one of the things I love to do with these teams is ask them, what do you spend the most money on? And what do you hate the most? And ServiceNow would top a lot of those lists. And so I was always interested in this category of maybe there's a better solution here.

• 2:00Speaker 00

  But it wasn't clear for most of my time there, how you'd ever beat ServiceNow. They're a great company. They've done so much, so well. And why would you be able to compete with them?

• 2:10Sarah Guo?

  What was frustrating for users about it?

• 2:12Speaker 00

  I think so hard to build in the platform. So it's a very robust, customizable, powerful platform that can map to all these enterprise workflows. Fundamentally, it's a workflow automation platform. And so it can do so much, but every idea you have for doing something cool, you have to go and implement. And a lot of times you're bringing consultants to implement it. So it's always kind of running six to 12 months behind where you want it to be. And it's fine if you're building something that's going to last five, 10 years, like a big onboarding flow and nothing about your business is going to change. So you can invest all that upfront effort and then it gets deployed and it works for a while. But for just trying to keep up with all the automation that you want to build, ServiceNow is not able to catch up. And then it's very expensive and it keeps getting more expensive over time. So that frustration of it's not keeping up with where I want to go as a business and it keeps getting more expensive.

• 2:57Speaker 00

  That's what was driving a lot of the frustration.

• 3:00Speaker 01

  I think one thing that you mentioned that's really interesting about what you do is if you look at the world of AI adoption, a lot of the really early adoption is coding agents.

• 3:08Speaker 00

  Yes.

• 3:08Speaker 01

  And that's engineers using it to build applications for their business or products, other things. And what you folks have been doing is really pioneering expansion of the category in terms of saying, we should let anybody internally, an IT person, et cetera, build internal products or tools that can be used broadly across the enterprise. You're basically providing like coding agents for all the internal stuff.

• 3:29Speaker 00

  Yeah.

• 3:29Speaker 01

  For people who often aren't that adept at coding. So can you talk more about that? I think it's like super fascinating.

• 3:34Speaker 00

  Yeah, we love this idea of coding agents for the rest of us. Because we think so much of the early enterprise adoption in AI has been engineering teams. And if you think about why that is, there's a lot of reasons, obviously, early adopters and a lot of different technologies. But also they're able to build and experiment with these tools because they have this process of code review. It's very safe for even a 19-year-old intern to build something very powerful and then go through this process before it goes into production. We want to bring that same capability to the rest of the enterprise. So we build a platform that brings coding agents to IT departments, who then can bring it to HR and finance and people teams and legal teams. And they can do it because under the hood, it's coding agents. But then you have all these abstractions and guardrails and controls. So things go through approval, they go through a staging and approval cycle and audit trail and all of that.

• 4:17Speaker 00

  And so it's how do you build a system that makes it easy for everyone to be a builder? And the core insight here was that IT actually wants to build stuff. And for most of the world, they don't have an engineering department. They have an IT department. Most companies have an IT department, not a team of software engineers. And so IT is what's building and configuring technology for the company. And we're building essentially the AI platform for them.

• 4:40Speaker 01

  How does that run into things like all the different more like workforce agents that are being developed? Like DOT from OpenAI or you know, some of these things where you almost have a virtual assistant that will go and do things for you.

• 4:51Speaker 00

  Yeah, I think those really work well for consumers and SMB and even a lot of the mid-market organizations. In a large enterprise, there's so much, and I didn't even really appreciate this going in. There is so much process around approvals, around what you can and can't do. The permission sets of any individual are so limited that even if you were allowed to bring your agent to work, which a lot of cases you're not, what it can do is so incredibly limited, it can barely even read your emails. And so when you think about all the stuff you need to do at work and all the systems you want to touch and all the interesting automations you could build, your personal permissions end up being so limited that these personal agents are also incredibly limited and not all that useful.

• 5:33Speaker 00

  So what we can do, because we work with these IT teams that can connect with service account credentials and admin level permissions, we can create a structure where people can access elevated permissions and do all these crazy things in the work, but with very, very strict deterministic approval cycles, workflows that are deterministic and an audit trail. Because under the hood, we are also a ticketing system. So you say, okay, I want my agent to go do X, Y, and Z. Well, most organizations are going to be very uncomfortable with that at the large enterprise scale. But with Serval, that's going to create access requests that go through an approval process. And all of that's going to be documented, logged, and then you can get just-in-time access to be able to run that deterministic workflow one time. And all of it's going to be tracked.

• 6:16Speaker 00

  And yes, it's a little bit more annoying than the magical personal agent experience we love with Instinct and Muse and all these tools. But it's what has to be true for a large enterprise, especially a regulated enterprise, to ever adopt these kinds of technologies.

• 6:29Speaker 01

  And this also, I guess, feeds into the traditional diffusion of this technology, which has been consulting firms, the Accentures and Deloitte's and the like of the world, kind of owning a piece of this, doing the implementation for people. You're kind of taking that and putting it in the hands directly of the IT department. Are you also exploring this more sort of forward deployed motion? Or how do you actually get this really built out in the enterprise or used effectively?

• 6:51Speaker 00

  Yeah, absolutely. Diffusion is obviously the gap here. The technology can do so much and enterprises have barely scratched the surface of what's possible. And a lot of that is just understanding the people, the process, what workflows actually exist, how you want them to exist in the future. And we think that you still need people for that. So we deploy both a deployment strategist, we call them, and a deployed software engineer that go onsite with customers. Figure out how do we implement this? How do we solve all your problems as a business and then walk you through the implementation? What we found, though, is that a lot of times after we've got this implemented and deployed, customers then have a long tail of more stuff they want. And as we've discovered with software engineering, there is actually unlimited demand for work.

• 7:33Speaker 00

  And we've started to build out a team, we call it ProServal or automation engineering is the field. And we bring in these automation engineers to kind of do ongoing continued support and services because there's so much that they want to automate and they need the help to build a figure out what can be automated. What do the processes look like? How do we navigate all of our systems? And then put it into production with a product like Serval.

• 7:55Sarah Guo?

  How old is the company today?

• 7:58Speaker 00

  Two and a half years.

• 7:59Sarah Guo?

  And you know, if you just look at ServiceNow as a business, I feel like Serval is one of the only companies that is like, we are direct attack, replacing enterprise systems of record, including for large enterprises. At the beginning, did you think you were going to do that? Like, do you, how do you eat the elephant?

• 8:17Speaker 00

  Yes.

• 8:17Sarah Guo?

  Just in terms of, you know, how big that product suite is.

• 8:20Speaker 00

  I like to say everything has gone exactly according to our very delusional plans. So we set out from the beginning to be the largest enterprise software company of all time. We actually made a list of all the companies. We circled ServiceNow. We said, we're going to beat them and we're going to build something much bigger. We said that on day one, when it was two people in my co-founder Alex's living room. And we just said, we're going to do it. And so even though that was crazy, that was always the intention. We didn't grow into that ambition. We set out from the beginning. I think that that actually.

• 8:45Sarah Guo?

  A lot of people would have started with like, you know, automation on top of their ticketing system, for example.

• 8:51Speaker 00

  Yes, exactly. So the way you typically go after these large enterprise startups, at least, they build like the layer or they go down market. And those are kind of the two common approaches. Let's build a small layer, play nice with the big incumbents, AI agent on top of Salesforce. Which like, you know, it really caps up.

• 9:06Speaker 01

  Maybe the only one that worked is Viva or something, right? Because they started off on Salesforce and then they migrated to become their own platform. So they're the only one that I can think of that backwards integrated.

• 9:14Speaker 00

  It's really tough. It like caps you unless you find some niche to kind of like expand into later on. The other approach is we just go down market, you know, go down market, service the SMB and mid-market. And you see that with a lot of competitors to work day, competitors of Salesforce. They just say, we're going to be that, but for the lower end. And we just looked.

• 9:29Sarah Guo?

  This is Rippling or HubSpot for the first 10 years.

• 9:31Speaker 00

  Exactly. And we looked at that and we said, why not just go after the big one? It's much harder, but at least the prize is quite big if you win. And I think that was so important for us because you end up making so many different decisions. If you're building for the large enterprise from day one, all the product decisions, how you build your team, how you think about growth, they're fundamentally different than if you go and you serve one market and then you hope to expand later on.

• 9:53Speaker 01

  How'd you choose this versus Salesforce? You know, there's a few other sort of canonical giant companies in different categories.

• 9:59Speaker 00

  I think we didn't really understand how we'd beat the other companies and why we had an advantage and what AI unlocked that they couldn't catch up to. And what we understood about ServiceNow because of our experience with IT is that fundamentally, it is a workflow automation platform. And our belief, me and my co-founder and my co-founder really had this idea early on that code was the right way to express automation in the enterprise, that you should just build all automation in code. And these drag and drop workflow builders is a painful level of abstraction because it's too complex for non-technical users and it's annoyingly abstracted for technical users. Code is a better way of building automation. The problem obviously is not many people can write code and do it quickly enough for it to make sense

• 10:43Speaker 00

  for automation. And so as AI made this possible, that was what clicked for both of us, that actually if code is the right way to build automation and now anyone can write code, we can build a better automation platform. And what is an automation platform is actually, what is the best market for an automation platform? It's actually taken on these massive legacy software companies like ServiceNow.

• 11:02Speaker 01

  I guess two and a half years ago, when you got started, though, most of the coding stuff was sort of tap complete.

• 11:06Speaker 00

  It did not work.

• 11:07Speaker 01

  Yeah.

• 11:08Speaker 00

  To be very clear, like this is a brilliant idea, but in practice, when we started building this.

• 11:13Speaker 01

  Yeah. What was the assumption? Was it that the coding would get much better? Was it that you'd built tooling and then you didn't need to because things got so good? I'm sort of curious of that transition.

• 11:22Speaker 00

  The bet was that coding agents would be, would get very good. And the theory there was it's a verifiable domain and it should actually hill climb fairly well. And so we believed fundamentally that coding agents would get good, at least for these very, I didn't expect them to get as good as they are for just general purpose software development, but for deterministic procedural scripts of reset password, get approval, like all of these things are just so defined and verifiable that we felt like it would get good at those things. And so from a workflow automation perspective, we thought it would get there. In the early days, it did not. So what we ended up doing in all our early demos, we would prompt the LLM and say, hey, here's a suggested way you might want to build a

• 12:04Speaker 00

  password reset workflow. And so we'd seed it with like a lot of examples. And then over time, we'd make that library bigger and bigger. But then the models just got so good that eventually it became hard to break. It became hard for you to give it a workflow that it couldn't automate if the APIs existed.

• 12:20Speaker 01

  Yeah.

• 12:21Sarah Guo?

  When you think about where coding agents are today and what your customers want, like what are you, are you and Alex excited about them getting better from here? Are you nervous? Like, what do you think it looks like in terms of impact on your own product?

• 12:35Speaker 00

  We are so excited for them to get better because I think it unlocks a lot of the things that we'd love to do around, you know, better browser use and computer use and more of a approach to background agents and personal agents that can be really useful in the enterprise. So we're excited for the evolution of the category. We've always believed fundamentally that we are not building the LLMs ourselves. We are building the guardrails. We are building the boundaries. And the boundaries are the product for us because we are the way that a large enterprise with a lot of rules and approvals and process and politics can adopt these tools safely and comfortably at scale. And so Serval is the boundary, Serval is the guardrails. The intelligence getting better just makes our product more powerful and

• 13:20Speaker 00

  also makes our customers want to actually clamp down even further on those boundaries, on those guardrails. And I actually think access is going to get more and more controlled for individuals in the enterprise. And as access becomes stricter and you let people do less and less and your permissions get more and more narrow, which I think is going to happen.

• 13:39Sarah Guo?

  Why is it going to happen?

• 13:40Speaker 00

  Because I think if, if you think about, you know, I might safely give you more permissions than you need because I don't actually think you're going to do all that much damage. But if you have access to all these agents, then the damage you can do with any kind of like slightly elevated beyond normal permissions expands. And we're seeing this in cybersecurity risk right now.

• 13:58Sarah Guo?

  Absolutely.

• 13:59Speaker 00

  And so what I'm actually going to want to do, if I'm a large enterprise, is shrink everyone's permissions down to truly least privilege. Like you cannot access any document and you cannot take any action unless you absolutely need to do it for your job. But then you're going to have exceptions all the time. We are the layer that grants those exceptions and makes it possible for you to set up approval procedures around that, have an audit trail and a ticket associated with that. So by owning how privileges get escalated in the enterprise, we actually become more powerful and more essential, the more you clamp down on end user permissions.

• 14:31Sarah Guo?

  Is there like a story or a win you can share as to, you know, people would be taking a big risk going with you to replace a very embedded incumbent, right? It's an investment of their own time. I assume it's like personal risk. Like, why do that? Or is there, is there an experience where people have already gone through to the other side?

• 14:52Speaker 00

  I think we have to convince ourselves and our customers that Serval is the way you get promoted at work. It can't be the fact that Serval is a risk that you take to hopefully get something on the other side. We have to convince customers that you do this and you're going to make your career. You're not just going to not get in trouble, but you're actually going to get a promotion.

• 15:10Speaker 01

  And this is top down, right?

• 15:11Speaker 00

  Top down. So we sell into the C level, we sell into IT leadership in many cases and then distribute into other departments. And that is a message. This is, people built their career on ServiceNow. You're going to build your career on this next generation. And we're seeing this play out. So one of our largest customers is Fox. Fox Corporation adopted Serval company-wide. And the person who led that migration on the ground level actually got nominated to be the MVP of the entire company.

• 15:38Speaker 01

  Wow.

• 15:38Speaker 00

  And got an award for his work there. And that is really what we're about, is we're convincing our customers, saying like, this is the way to not just prove that you're useful to your organization, but to prove that you might be the most essential person in your company because you're leading this change. And we're so pivotal to the AI transformation story that I think it's a, it's something we can sell really nicely to our customers.

• 15:59Speaker 01

  When you started Serval, I think you were very adept at thinking ahead, right? So you knew coding agents or coding would get better. You knew there's this way of transformation. You kind of identified the good market segment to go after. What do you predict will happen in the next two, three years, not only for your company, but for more broadly? Like, is there something else you're seeing on the horizon that you're very excited about or a big shift that you see coming?

• 16:19Speaker 00

  I think consumer often gives us a win window into what's going to happen next in enterprise. And it doesn't always look the same, but I think it's a nice window. So I'm very bullish on what do personal agents look like in the enterprise? I think in the same way that email and Slack and these tools transformed how we communicate at work, I think personal agents will also be a big part of that. I think everyone will have their personal agent that does tasks for them, that delegates to other personal agents. And so your agent will talk to other agents at work. So I'm really excited about that. But then how do we secure that in a world of increasing cybersecurity risk and increasing concerns at large enterprises around what's happening with everyone's agents taking action

• 16:57Speaker 00

  in all their computers and using their browsers? And so that tension between what employees, consumers want out of their personal agents at work and what enterprises need from a governance perspective, I think is really interesting. And I think there's going to be a lot of opportunity in that, in that tension of.

• 17:15Speaker 01

  Do you think there'll be a separate personal and work agent?

• 17:17Speaker 00

  I think so. Yeah. I think so. In the same way that I have a Gmail and I have a corporate email. Yeah.

• 17:24Sarah Guo?

  If there's a premise that, I mean, there's a bunch of different ideas here, but one is that, you know, exceptions or access control is going to get complex and require a different level of scale, right? Another is that you're just going to have more automations overall because people, you know, if you make it easy, people are going to extend in all different places. Are there like core design principles beyond code generation should be the actual form of automation that you have put into the product today that reflect that?

• 17:57Speaker 00

  I think the biggest one is the software development lifecycle, something that we take for granted in engineering context of the, hey, there's actually like a dev environment and then there's staging and then there's prod and there's like these gates between them. And maybe you've got, you know, branches that people can develop on that's not going to harm the other systems.

• 18:13Sarah Guo?

  And sorry, just to be clear, that's not how IT automation works today.

• 18:16Speaker 00

  It does in some cases, but I think most new AI products are not embracing that. They're basically saying, hey, let's build these cool agents and ship to production. But this idea of, hey, you have to actually follow an SDLC process if you're a large enterprise. A large financial institution is not just going to ship new agent capabilities without a review and user acceptance testing and all of these.

• 18:38Sarah Guo?

  Compliance checks.

• 18:39Speaker 00

  Exactly. And so I think that's something we think about a lot is what is going to convince the largest companies in the world to adopt this technology, not just what is powerful and cool and something we're excited to get in the hands of customers.

• 18:49Speaker 01

  It feels like it takes a lot of AI companies, particularly if they're vertically centric, a year or two to figure this out, sometimes longer. And it's interesting to watch the whole industry now adopting both the forward deployed motion, starting to think through software development lifecycle, compliance, other aspects of the enterprise in a way that was almost missing.

• 19:05Speaker 00

  I think in some cases, they never get there. Like some companies just, they look at what enterprise software takes and they decide, we don't really want to build that. And it takes, you know, you look at the story of a lot of these companies that we mentioned earlier that have gone down market. I think sometimes they do look at the opportunity to go and build for the enterprise. And it requires a whole different set of building principles and products that you have to build. And some just don't choose to do it. And they seed that ground to other companies. And we've chosen to say like, hey, give me your gnarliest problems and we're going to solve them and make AI transformations possible in this, this crazy world, in this world of risk and governance concerns.

• 19:43Sarah Guo?

  When you have your, you know, deployment, sort of in customer environment engineers and then ongoing automation specialists, and then you have the core platform, how do you decide what is actually brought into the core of platform or, you know, in every individual customer's environment?

• 19:59Speaker 00

  Yep. So when we deploy these software, I think what's really important is we actually never build. Custom features. We don't build bespoke product capabilities. And luckily for our category, no one asks us to. Everything that people ask for is something that every other customer is going to want at some point. Maybe they impact the prioritization, but it's still something we've always wanted in the platform. Now, because it is a co-gen platform on the hood, what you build in Serval is very, very unique. So the password reset workflow for one company is going to be very different, shockingly, than the password reset for another. Same with onboarding and offboarding and all these different automations internally. They look very different, but that's just baked into the core primitives of the platform. Serval almost becomes the IDE, right, for the IT department and other departments to build their automations and manage them at scale.

• 20:44Speaker 00

  So what we do do is if we look and we see the same customer building the same automations over and over and over again, and having to customize them and build them in the product in the same way, we start to consider, hey, should that be a first-class feature in the product? So one example is we saw a lot of customers building workflows to detect knowledge-based articles that were conflicting or out of date.

• 21:07Sarah Guo?

  Uh huh.

• 21:07Speaker 00

  And so he said, hey, we should just do that automatically. And we, we had customers that, you know, would, would set up automations to reclaim old licenses. So licenses for software you're paying for that no one is using, let's automatically cancel those subscriptions. Well, we just decided to build that in the platform. So it is a way for us to kind of test the waters of what should be really first-class features versus what should stay as automations in Serval.

• 21:32Sarah Guo?

  Or enterprise customers, as it relates to just general spend on code generation for software teams, have come through a journey this year, right? They're like, ah, we're gonna let people try it, then we're gonna token max, and we're gonna like restrict that and figure out who's actually doing this productively. How do you think that reflects for your, your business? And how do you think about the sort of actual intelligence cost?

• 21:53Speaker 00

  Yeah, I think we're still watching this. I do see our CIO customers trying to pull back from that initial token maxing era. But I also think we're so early in the adoption curve that it's not going to be a clampdown in aggregate. It's actually going to continue to be a pretty dramatic rise because most companies are still figuring this out for the first time. And they're, they are all going to go through this cycle of rapid early adoption and then kind of a pullback of spend and trying to measure and calculate ROI. But what I hear from our, our customers all the time is not really a concern about the long-term budget impacts. They, they realize that there's going to be a short-term pullback, but they're still planning on increasing spend. What they need, though, is more proof of ROI.

• 22:36Speaker 00

  And that, I think, is what's going to transform in the industry is, is people looking for how can I prove that this spend is giving me something? And that is hard. I don't know that anyone's really figured out how to measure what you're getting from the tokens that you're buying. But that, I think, is going to be a huge opportunity for us to show the work that's being done and try to equate it to work that would have been done in other platforms or with other cost models or by labor. And so that's what our customer asks for is, is help me prove that this was worth it. And, and that's what the assignment is, that's what we have to do. We, we try to price on workflows run because I think it's a better reflection of actual work being done versus just tokens, which is more like verboity and inefficiency.

• 23:18Speaker 00

  But, but I think we're all going to figure out different models of proving that what we're doing makes sense.

• 23:22Speaker 01

  One of the things people have been talking about is this sort of SaaS apocalypse, where the idea is, you know, people will just build their internal SaaS software and all these categories will go away. And a lot of people, to your point on calculating the ROI on tokens, are kind of trying to sort, is it worth rebuilding these systems? And can you actually do that effectively? What is your view on the SaaS apocalypse or this sort of shift in, in SaaS versus AI?

• 23:44Speaker 00

  I think all the companies I've talked to that tried to vibe code these tools internally, especially the, the main system record tools, not the, the kind of point solutions, but the main system record tools have discovered that it's quite expensive to build and maintain enterprise software. Even if you can do it, it doesn't make economic sense in many cases to do it unless your needs are very bespoke and unique in some way. And so buying off the shelf for things that are not your core competency, I think, has always been the build versus buy argument. I think that that is, is true now as it is, as it, as it's ever been.

• 24:14Speaker 00

  Because it still is hard to build enterprise software. A lot, a lot of companies are discovering this or relearning this, that actually enterprise software is complex and you need people to maintain it.

• 24:22Speaker 01

  A lot of use cases and edge cases.

• 24:23Speaker 00

  Edge cases, things, things that break down and people need to update. So then you have to staff the team and then you're paying for that labor. And, and then no one really wants to work on the internal tools team in many cases. So you have all these problems with doing that. Where I do see it is in kind of the point solutions, where a lot of companies have hundreds and hundreds of SaaS applications. They probably need a couple dozen total. And so I do think you're going to have a shrinking of the, the sprawl of different point solutions. And they're going to be eaten by the core systems of record and the core platforms.

• 24:51Speaker 01

  All the middleware too, I think is just going to go away.

• 24:53Speaker 00

  Exactly, exactly. So I think there is going to be consolidation. And so this, there will be a SaaS apocalypse, but in that kind of point solution, smaller market cap type companies, I don't think that you're going to truly get away from the courses, records, the ERP, the HRIS, the ITSM, the CRM. I think those are going to stick around. They might transform. And what we're seeing with Serval is, is we are displacing those tools. So I think there will be a new generation of incumbents, but I don't see those categories just disappearing.

• 25:22Sarah Guo?

  I'm curious as to what mental model or what theory of mind do you have for the IT user? Given, you know, they're not software engineers, but they understand their business. They understand what they're trying to go automate. Is it, you know, when you talk about vibe coding, I'm like, okay, but do you understand like security architecture? Like, do you understand how this is going to integrate with governance? Like, how do you square, you know, code generation and how we think about vibe coding? And what the challenges are with that with, you know, we want to build robust IT systems?

• 25:55Speaker 00

  Yeah, absolutely. I think IT is really interesting because they're, they're closer to a software engineer that I think a lot of people give them credit for. Especially in, in large enterprises, the IT department is the engineering team. In a lot of cases, they don't have the, the software engineering team. So IT runs all these systems and, and IT often does write code and manage the systems. And so I think we treat them as adults. We give them the tools that we would give software engineers. Now, we abstract away some of that complexity. We make it easier to use in some regards and, and we don't just kind of hand them Claude code and tell them good luck. We actually, we build a platform that's dedicated to their use case. And we don't expect them to be able to necessarily write code or, or understand what's being written. But we still give them access to it on the hood.

• 26:36Speaker 00

  So you can always see the code and you can always treat this through a full software-driven lifecycle, but you also don't have to. And so a lot of the, the product principles is thinking with a few different personas in mind. You know, an IT engineer who actually can and does write code all the way through someone maybe in the marketing department and the, the people team that doesn't want to see code ever, but still wants to have that flexibility of, of code gen under the hood because they've got a complex workflow that they want to build, that they don't want to drag and drop their way to. So I think a lot of it just comes to having multiple personas in your head and also treating IT like an adult. I think a lot of the products that have been out there have actually kind of been pedantic to IT of like, oh, you don't actually understand this stuff. So you need this very stripped down, more opinionated, simpler version.

• 27:22Speaker 00

  Actually, IT appreciates the complexity and appreciates the power of these platforms. We want to deliver that to them.

• 27:27Sarah Guo?

  You guys built an agent that helps you build automations. Can you explain how that works?

• 27:30Speaker 00

  Yep. So one of the things, I think every company discovered this as they're building kind of the first generation of these, these AI tools, is that you could build such amazing, complicated systems. But then you had to train people to understand all of your product primitives and how these systems fit together. And so the first generation of this is we deployed all these FDEs to explain to customers, okay, here's, here's how to build the platform. Actually, let me just build it for you. And then realized it would be really nice if customers could just talk to an agent that understood their requirements and then translated that into the product primitives. And so we built this agent called Catalyst that does exactly that. It's an agent for managing the platform. So it's an agent for admins to build out all those underlying automations,

• 28:10Speaker 00

  but also configure the rules around approvals, permission checks, build out different policies, update all these different systems, understand the, the entire deployment. And so because Serval is all co-gen of the hood, having the agent on top of that to help you manage the system just made a ton of sense and is so powerful. Because now I don't need you to train yourself on how to use Serval. You can just talk to an agent that actually understands how to use Serval and how to build on it. And, and that is your primary interface into the product.

• 28:39Sarah Guo?

  I, I think one thing that's underappreciated and I think is cool is that the experiences for agents in different products and actually in, you know, code generation agents as well, being able to bring a user along as they are building a product or an implementation or something is actually like raising the technical competence and ability of a huge number of users and, and turning people into more, you know, engineers, actually.

• 29:04Speaker 00

  Absolutely. You have this blank slate problem in the old generation of automations of where, where do I even begin? I know I want to automate all these parts of my job, but where do I begin? Products like ours say, where do you want to begin? And just can start making suggestions and you can iterate with them. You can say, I actually don't understand that. What are you trying to say? Can you explain this to me? Okay, I'm trying to do this. How would I even go about doing this? And they can give you that information, they can fetch the information, they can explain concepts to you. And so it does become a build partner. And you can achieve so much more than just prompting an agent to go and build something and it can actually walk you through the process and help you explore new opportunities that you wouldn't even have even thought of.

• 29:39Speaker 01

  So one thing that seems a little bit under discussed right now is background agents. Could you tell us more how you think about that and what you think is coming in terms of this next wave?

• 29:46Speaker 00

  Yeah, I always describe background agents to the companies like this is the ultimate moonshot in enterprise software. Just these agents that go off and do work for you and magically discover all your problems and solve all your problems. And it would be amazing if we could get that deployed and it could work and it could follow our permissions. And I think no one's really figured out how to do this well because on On the one hand, you want these to be very autonomous, to go off and figure stuff out and then solve problems without somebody babysitting them. On the other hand, autonomy is very scary in the enterprise. And so you do want to see what exactly can they read.

• 30:18Speaker 01

  This is kind of the OpenAI hugging face incidents or other things where agents are given a task and then they do something that's unexpected in order to accomplish that task. And so what are the guardrails you can put in place?

• 30:27Speaker 00

  Exactly, because my best employees, what do you do with them? You say, here's the general high level mission, go off, don't talk to me and go do it. And you'll come back and you'll have done amazing things. I want to be able to trust agents to do the same thing for me, where I can give them this high level task and they can come back and solve this problem and come back to me. I don't think we've figured out how to do that in a way that feels safe in the enterprise.

• 30:46Speaker 01

  What do you think is a way to make it safe? Is that, I mean, people have experimented with different things over time, everything from constitutional AI to certain forms of RL. I'm just sort of curious if you have a solution in mind or is it just?

• 30:57Speaker 00

  We think of it in the large enterprise, it's not perfect, but it's it's kind of an incremental escalation of capabilities. So you go off and you do these things and it comes back and says, hey, I would like to be able to do all this stuff. This would help me do my job and you approve them and all the stuff are deterministic workflows. I want to call this tool, I want to run this script that does X, Y, and Z. Can I do that? And you just kind of approve these with certain permissions and guardrails around them and you say, okay, yeah, that's okay, that's okay, that's okay. And over time, the agent becomes pretty competent because it has a big enough toolkit that it can solve most problems. And it's not perfect because it's annoying to have to babysit that process. But I think it's what you have to do because otherwise it could theoretically just start writing code that could take action on all your systems.

• 31:41Speaker 00

  And that is an unbounded security risk that I don't think anyone's going to be able to take anytime soon.

• 31:46Sarah Guo?

  Do you think to your point of being excited or you and Alex being excited about future capability? Like, we're still missing some model capability here. The reason I ask is, you know, the ability to be proactive and then predict what an individual, Jake as CEO, me as an investor, or me as a human being, you know, and and get it right is still very hard, right? You need a lot of preference data, think about employee working for you, like, okay, what are Jake's actual priorities? When he gives me this high level mission, what does he mean? Do you think that's a model problem or is entirely like a guardrails and harness problem today?

• 32:22Speaker 00

  I think it's it's both, honestly. I think memory obviously has to be better and better because you want to understand the preferences. You want the context to be insanely large because I don't want to have a bunch of different chats with you. I want to have kind of one single chat that goes back all the way to our very first conversation. And you remember the key points of that that are relevant.

• 32:42Speaker 00

  And then I think the permissions problem will always remain the biggest thing. Because even if I feel like you are a very, very valuable, smart agent and I, you can do all these things for me. How much do I trust you to just run wild and not have to babysit your actions?

• 32:57Speaker 01

  You have to do that with people too, right? I mean, anybody who works for you has to come back and check in and is this what you wanted? And here's three options. And so I think it's a very normal just process.

• 33:05Speaker 00

  Yeah, yeah.

• 33:07Sarah Guo?

  The company is about two and a half years old. You have gotten very quickly to at least an enterprise mature product. How big is the team today?

• 33:16Speaker 00

  We are 200 people today.

• 33:18Sarah Guo?

  200 people?

• 33:19Speaker 00

  We're 20 in January, so it's been an incredible ramp year.

• 33:22Sarah Guo?

  That's quite a year. One, I guess, do you expect to continue hiring so fast and as somebody who clearly believes in AI, like, why? And then two, just, you know, you've been part of, you and your team have been part of startups before, like, what are you operating, how are you operating very differently, you know, the last two years and the previous 10?

• 33:39Speaker 00

  Yeah, the hiring velocity, I think, will will increase even from where we're at today. We believe that there is unlimited demand for work and there is unlimited competition and there's unlimited ambition. And so even though every single employee does so much more than what they could do a year ago, we have even bigger ambitions for what they could do. And so I think because every employee is so much more productive, we actually want more of them, not less of them.

• 34:04Sarah Guo?

  Given your, you know, time at Verkata before, how are you operating differently over the last two years than the previous 10?

• 34:12Speaker 00

  I think what's so unique about Serval and the category we're in and the moment we're in is the TAM is unbounded. So it feels like the addressable market is really more about the size of our ambition than it is about fundamental limitations on how big this business can get. Because we are automating essentially all kinds of work for every single employee in the world. The TAM is as big as we want it to be. And it's really how fast can we grow and what is our ambition? And making decisions based on that versus, okay, here's, here's what the market looks like, here's what we think we can actually do. And that's a different set of challenges. It's not, it's not strictly better because now there's so much open space and there's so many more decisions we have to make about what we actually want to focus on.

• 34:54Speaker 00

  But it is really fun to not be constrained and hemmed in by what the market allows for.

• 34:59Sarah Guo?

  How, given that scope is very broad, how do you organize like the cadence or the, you know, the EPD team?

• 35:06Speaker 00

  We are embedded with customers. So even the engineers that are not necessarily deployed, they are in the customer Slack channels. We are talking about customers nonstop, they're hearing from customers every single day. Most engineers are on at least one customer call a week. I think most of them are actually on at least a customer call a day. And so what this is, it's it's like immersion in a country to learn a foreign language. You become so immersed in your buyer and your customer's mindset that you understand what they want. You understand how they're thinking about things and you're adapting to their preference changes in real time. So as they're moving with the market and they're starting to talk about different products that they're trying out and things that they're excited about, our engineers are constantly aware of all this and able to adapt very quickly.

• 35:50Speaker 00

  So we've decentralized product development really to the engineering team. We don't have a product function because they're the ones talking to customers every day and they're able to rapidly adapt to whatever customers are saying today and this week versus what they're saying a month ago.

• 36:05Sarah Guo?

  That sounds like a really like natural way to keep pace with like a ripping market and changing priorities for your customers. How do you and Alex and leadership then make sense of it? Like, you know, in a traditional enterprise software company, you'd have like architectural review.

• 36:22Speaker 00

  Yeah, you have a quarterly roadmap and you prioritize the roadmap and you, you know, train all your customers on the new launches.

• 36:28Sarah Guo?

  And you'd communicate with your customers that like things aren't going to change too fast because they can only absorb it so fast too.

• 36:34Speaker 00

  Yeah, it's a big challenge. Our product ships and changes faster a lot of times than anyone can keep up, including myself. We just try to make sure that, one, the engineers that we hire are really product oriented. That's one change we've made is they have to really understand our customers and we want to put them in front of our customers because they're going to have to make so many decisions at the edge. And not every single product decision can be bubbled up to leadership every single time. That is a fundamental change is you have to be willing to push a lot of the product decision making down below. And you have to be willing to move fast and also undo and revert if you go in the wrong direction and and kill your darlings. You have to be willing to get, you know, change course on things that you thought were fundamental to the product

• 37:14Speaker 00

  and switch gears when your engineers bring you something that, hey, this is how the customer sees things now. And this is what we should do differently. And one of the things I'm proudest of at Serval is how many times we've decided to erase things we've done in the past that we're very committed to and just say, you know what, the market's changed, the customer's changed, we're going to do things entirely different. And and I think that is what's enabled us to keep up is that ability and willingness to reinvent ourselves over and over again.

• 37:41Sarah Guo?

  It's one of the most durable things in this era. Thanks, Jake.

• 37:43Speaker 00

  Thanks, Alex.

• 37:47Sarah Guo?

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