20VC: Intercom's Eoghan McCabe on What Makes A Truly Great CEO & What Founders Should Look For In Their Investors

Eoghan McCabe is the CEO and co-founder of Intercom. The customer communications platform that has taken the SaaS world by storm in the last few years with 116m in VC funding from truly some of the world’s best including Bessemer, Social Capital and Index Ventures. Prior to Intercom, he founded Contrast, an award-winning software design consultancy, and co-founded Exceptional, a developer tool startup acquired in 2011 and now a part of Rackspace. In Today’s Episode You Will Learn: 1.) How Eoghan came to found Intercom? 2.) Question From Andy McLoughlin: What were the biggest lessons from your previous startups? 3.) How did Eoghan find the early fundraising process? How did he come to meet his angel investors? How did he get them to look beyond the product and invest in him? 4.) Eoghan raised his Series B just 6 months after his Series A. Why was this so quick? How did he select his investors? 5.) What separates good from truly great CEOs? How has Eoghan seen his own management style changed over the Intercom journey? Items Mentioned In Today’s Show: Eoghan’s Fave Blog: SaaStr, The Intercom Blog As always you can follow Harry, The Twenty Minute VC and Eoghan on Twitter here! Likewise, you can follow Harry on Snapchat here for mojito madness and all things 20VC. Eve make 1 perfect mattress – made with 3 layer technology and next generation memory foam. It comes packaged in a beautiful box and arrives the day after you order. You get 100 nights to try it with free return pick-up – it really is the perfect mattress for everyone. Just go online to evemattress.co.ukand enter the code 20VC for £50 off. Everybody deserves the perfect start with Eve. Cooley are the global law firm built around startups and venture capital. Since forming the first venture fund in Silicon Valley, Cooley has formed more venture capital funds than any other law firm in the world, with 50+ years working with VCs. They help VCs form and manage funds, make investments and handle the myriad issues that arise through a fund’s lifetime. So to learn more about the #1 most active law firm representing VC-backed companies going public. Head over to cooley.comand also atcooleygo.com.

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

• 0:00Harry Stebbings?

  Welcome back to the 20 minute VC and Founders Friday with your host Harry Stebbings. And if you haven't already, you can follow me on Snapchat at H Stebbings. But to today's show, and this one is a special one, as we welcome a truly phenomenal founder in the form of Owen McCabe. Now Owen is the CEO and co-founder of Intercom, the customer communications platform that's taken the SaaS world by storm in the last few years, with over $116 million in VC funding from truly some of the world's best, including Bessemer, Social Capital and Index Ventures. And prior to Intercom, he founded Contrast, an award-winning software design consultancy, and co-founded Exceptional, a developer tool startup acquired in 2011 and now forms as part of Rackspace.

• 0:41Harry Stebbings?

  I also have to say a huge thank you to Jason Lemkin at Sasta and Mamoun Hamid at Social Capital for making the intro to Owen today, without which the episode would not have been possible. But before we meet the man behind one of the world's hottest SaaS startups, and speaking of startups, and with it being Founders Friday, for the past few days, you've heard about Cooley, the global law firm that formed the first venture fund. Well, they're also one of the market leaders in working with thousands of entrepreneurs and newly formed companies to ensure that they're structured for growth and long-term success. Now, Cooley is a world leader in financings, M&A and IPOs. And since 2005, Cooley's been ranked the number one most active law firm representing VC-backed companies going public.

• 1:23Harry Stebbings?

  So to learn more, simply head over to Cooley.com and also check them out at Cooleygo.com. And with the weekend approaching, it's also time for that Saturday morning line. And so good to know that we have Eve to make that all the more enjoyable. Now Eve is the UK's number one direct-to-consumer mattress company. Because they don't sell through high street stores, they have the ability to cut out 70% of traditional costs and pass those on to you and I, the consumer. They've developed these mattresses over four years with thousands of prototypes. And Eve is so confident of their product, they give customers 100 nights to try it at home before committing. So for those of you who don't love it, they even do a free return pickup with a full refund.

• 2:01Harry Stebbings?

  There really is no risk. Simply head over to evemattress.co.uk, enter the promo code 20VC, that's numbers 20VC, for £50 off and it'll be with you the next day. However, without further ado, I'm now delighted to hand over to the main man, Owen McCabe, co-founder and CEO at Intercom.

• 2:25Speaker 01

  You have now arrived at your destination.

• 2:28Harry Stebbings?

  Owen, such a pleasure to have you on the 20 Minute VC today. Thank you so much for joining me.

• 2:33Speaker 02

  Yeah, thank you.

• 2:34Harry Stebbings?

  Now, I'd love to get started today by discussing how you came to found Intercom and a quick bio of you.

• 2:40Speaker 02

  Pretty straightforward. So, Intercom just turned five and at our birthday, I realised that myself and one of my co-founders, Dez, we've been working together nearly 10 years. That's pretty unique for founders. I can't imagine what it's like for those who meet via the beat dating, but hopefully it does work too. But Dez and I have known each other and worked together for quite a number of years, nearly 10 years, like I said. This is our third company. The first was a consulting firm. I started it straight out of college. I poached Dez from another company in Dublin. Sorry about that, but he was absolutely their best, kind of like user experience designer. I was kind of like an interface designer. And initially, we just worked with other startups to design their apps and services and products.

• 3:21Speaker 02

  That taught us a lot about business in general and people, and we got to see the insights of a lot of different types of companies. It turned out that we were good at our craft, but terrible at the professional components of consulting. Consulting is made for a very special type of person and hats off to those who can stomach it for longer than we could. But we made every single effort to try and get out of that business and to do so, we made a bunch of different apps and services and products. We wanted to morph into a product company. The first that was not a total failure was called Exceptional, and that became our second business. And Exceptional was a developer's tools, developer tool product. You would install it in your web or mobile application.

• 4:03Speaker 02

  Anytime that application crashed, it would notify the developers. It was the first in a very unexciting industry that would be called error tracking. And it was pretty damn successful. We had thousands of customers. We were on a European space satellite used by MTV. That was a big deal for kids from Ireland. But one day, someone who shall not be named said to me, "Hey Owen, do you wake up every morning thinking of Rails errors?" My first reaction was fuck you. My second reaction was... Actually, uh, no. And, uh, not only do I not think about rail errors, but I don't think about exceptional. I'm not passionate about this thing whatsoever. And that was a stark realization and one of my earliest lessons in business,

• 4:45Speaker 02

  which was that it is phenomenally important to work on things you're passionate about. So as we started to try and find a buyer for exceptional, we tried to sell that. We started to think about a range of other problems. One of the problems that we were particularly passionate about was that we never really got to connect with our customers. I got to know this guy in Dublin called Colin Harmon. He started a coffee store called Three F E, stands for Third Floor Espresso. The first incarnation was in his first, rather his third floor apartment. The second was near our office in Dublin. And Colin is famous in Dublin for bringing hipster coffee to Ireland. And kudos to Colin for that.

• 5:20Harry Stebbings?

  That is quite a claim.

• 5:22Speaker 02

  And, uh, it was the coffee that attracted us hipsters originally. But we stayed for Colin himself. Colin is a wonderful human being. I won't claim that he does anything magic beyond any, uh, wonderful human being. But we got to actually appreciate him because we got to meet him and interface with him and connect with him. And the relationship that we, uh, ended up with, with Colin created real loyalty. We were fair friends and forgave mistakes and we gave feedback and paid more, bought more coffee. It was magical and we never had that with exceptional. Again, we had thousands of customers and I guess I probably meant twenty. Uh, and incidentally so too, like at conferences or whatever, maybe I meant thirty, fifty, I don't know.

• 6:05Speaker 02

  It doesn't matter, but I never really connected with our customers. Especially never at any pivotal moment where they might actually want to know that there are people behind this business that care about it, who will help them if they choose to, uh, bet on it. And so, um, I started to ask myself, like, what's the problem here? Is it just the case that inherent in internet business that you get in return for this great scale and, uh, other cool benefits, uh, no opportunity to have a relationship with your customers? Or has the internet simply just not caught up with how humans have always interacted? And it started to appear that it was the case that all the tools that people use to talk to customers were anything but personal, anything but human, they were the opposite. They were transactional, fake, spammy, shitty, bloated.

• 6:48Speaker 02

  They had everyone, uh, in the company on different tools, no one on the same page. No one really with any potential or opportunity to, uh, properly connect with their customers. And so we set out with Intercom to fix that.

• 6:59Harry Stebbings?

  Absolutely. Now, I promise you here, I'm not a stalker, but I do always like to do my research. And so for this interview, I wanted to make it a little bit different and inject some, some personal questions from some investors of yours and then from our, of course, the godfather of that's Jason Lemkin. So starting with one from Andy McLoughlin at Soft Tech, an angel in Intercom. He says, you mentioned previous entrepreneurial endeavors there prior to Intercom. What were your big lessons learned from those journeys other than the extreme passion that one has to have for the endeavor that they're doing at the moment?

• 7:31Speaker 02

  Yeah, that's a good question. I mean, I think a lot of the, a lot of our deepest learnings or lessons learned came through our consulting experience. With consulting, you're, like I said, exposed to so many different types of businesses, different types of people, different approaches, different markets, different go-to-market strategies. And you need these number of different perspectives to kind of like get a good feel for what it is the thing you're looking at is. You know, if you think of how you might assess an object, think of a cube, if you have just one view of a cube, you might think it's a square. If you added another perspective, a 90-degree view, you'd see another square. If you maybe added another perspective, I don't know, a 30-degree perspective, you might get the hint that it's a cube. If you like, you know, move up another 30 degrees

• 8:15Speaker 02

  in the Z-axis, now you really know it's a cube, you know? So you need these few different views, different perspectives, different takes on the same thing to really get a sense of holistically what it is that you're dealing with. And so in our consulting experience, because we got to look at so many different forms of business and leaders and whatnot, I think that we ended up with a pretty wholesome set of values and principles that we could apply to all businesses and especially in including Intercom. So it was really like that foundational grounding. Like, when I started, because I had a little more experience in business, the founders starting at the same time as Intercom would ask me very pointed tactical questions about some ground-level foundational things, you know, that we never asked ourselves. All our questions, all the things that puzzled us the most were about

• 8:58Speaker 02

  Intercom. Yet the questions that these new founders had were more fundamental things about how people work, or how, how customers work, how to price thing, how to sell, how to pitch and market, you know? We never had those types of questions. So I think the consulting, as terrible as we were at that profession and as much as we hated, actually was a crash course in just a bunch of foundational principles that I'm really grateful for.

• 9:22Harry Stebbings?

  And you spoke about the cube there with its multi-dimensions and how you know you need to have that multi variant approach. I'm intrigued then what your view is and self-assessment maybe of yourself as a CEO. We've seen the rise of specialized CEOs. How do you view yourself as a CEO? Do you agree with the specialization of CEOs? Do you take the diverse multi variant approach? How do you look at yourself as a CEO?

• 9:45Speaker 02

  Yeah, all all successful CEOs I know of are both skewed or specialized in one area, but also extreme generalists. And it has shocked me to the degree to which I have had to become a generalist. We grow up in our society and in our education systems. We grow up to be told that you should be a specialist and you should focus and you should be a thing. Like, what do you want to be when you grow up? But actually, a great CEO needs to be just an extreme generalist. It needs to just be really fucking good at a lot of things. Like I said, they'll be skewed in one direction. My particular skew amongst a couple of other things is kind of like product and product market strategy and business strategy and maybe some people stuff.

• 10:30Speaker 02

  But other people are skewed towards go to market or sales. Other people understand how to sell into, say, very large organizations and what the buying process looks like, what the internal politics are. But still, all successful CEOs have to be these extraordinary generalists. And so my own story and my own experience and how I've managed to get at least to where I am today has been through being able to learn about everything, frankly. You know, I didn't know a lot about finance in the finance world and capitalizing businesses and raising capital and how to think about cost of capital. Among so many other things, and I've had to learn that and be pretty damn good at it. I'm not an expert in that area, but I have to be pretty damn good at it.

• 11:09Speaker 02

  And be able to speak fluently with actual experts on that topic, you know, like venture capitalists, for example, are professional financiers and they will know a lot more of the intricacies and the ins and outs of their business than I ever will. And yet I need to be able to go toe to toe with them if I'm to be able to work with them and partner with them and negotiate with them. So, you know, one of the things I've been surprised about with myself, and there's a lot of things I'm failing at and I'm terribly shit at. But one of the things I have been impressed with myself for is just being able to learn about all these general types of areas and be able to become this extreme generalist.

• 11:40Harry Stebbings?

  It's interesting for me to hear, just in terms of, we always hear about the importance of focus in our industry and how focus drives success. How do you combine focus and generalisation as a CEO?

• 11:50Speaker 02

  Wonderful question. You know, I think you, another part of the job and part of the challenge of business and scaling and growing and operating organisations is the practice of applied prioritisation and resource allocation. And focus can also be described as like what you give your resources, your resources could be time, money, other things. And so, you know, you need to be proficient in a lot of different things, and that's very different from the idea that you need to like very carefully prioritise all your resources, your personal resources, like what do I put my time into, and then the resources of the company. And prioritisation is more a process and practice of saying no than it is saying yes.

• 12:31Speaker 02

  You will always have more things than you could do than you can do. And especially successful businesses, they come across these wonderful ideas and opportunities. I mean, every other week, for example, I get an email from company founder or a VC saying, hey, here's a company that you could buy, you know, they're a perfect fit for Intercom, they're excited about Intercom, they're probably quite affordable, and it's just straight up a fucking great idea, it would be a great idea, and yet it's just not something that we could prioritise right now, so we have to say no. And that's just one example of all the little opportunities that you get. So it's a different topic, great CEOs need to be great generalists, but successful CEOs

• 13:15Speaker 02

  need to know how to prioritise, and that process of prioritisation is saying no to all the wonderful opportunities that you get when you're successful.

• 13:20Harry Stebbings?

  And you mentioned fundraising there and being, becoming acquainted with the fundraising process. So this is a VC show, so we do touch on it a little bit, I have to admit. So talking about the fundraising process for you and Intercom, another one from Andy McLaughlin is, he says, you've got a very large angel investor base, how did you meet them and how did you get them to invest?

• 13:41Speaker 02

  With incredible difficulty, the phrase herding cats comes up in this type of circumstance. And if you can imagine trying to herd even two cats across a room, you'll understand the challenge with which I managed to herd fourteen cats, AKA investors, towards a shared goal of giving this crazy, silly set of people who didn't know what they were doing their hard-earned cash. When we were raising our seed round, we didn't know what the fuck we were doing. We didn't know what we were. We didn't know what it meant to define a product category. We went in very much trying to solve problems from scratch. We never, ever, ever, ever looked at other companies and said, let's do that better.

• 14:23Speaker 02

  We're very prideful, honestly to a fault, but it meant that we could never copy people. We always said, what is the problem that we want to solve? And let's solve it in the very best way. Again, that's something we learned from consultants. Consultants love to like invent solutions, often invent solutions for invented problems. But we saw some very real problems that we loved to invent solutions for. And so anyway, we were not entering a well-understood category. And so investors said, we don't know what you're doing and it sounds like a crazy idea. So we couldn't convince any actual, real and professional investors to invest in us. Rather, we relied on the wonderful group of people who decided to bet on us rather than to bet on our ideas. Thankfully, we've been able to pay them off in grand fashion, but it was not fun or easy.

• 15:06Harry Stebbings?

  And kind of moving forward a stage there, you raised your Series B. This is from Jason Lemkin. You raised your Series B six months after the A. So talk to me about that process and what that was like for you.

• 15:18Speaker 02

  The standard typical story of how rounds get raised is that some brave and brilliant founder has a fascinating and fantastic idea, a brand new idea in the world. And they go out at orderly, organized, regular intervals and capitalize this idea as they become more successful and put that capital to very considered, careful use and would fit nicely in a spreadsheet. The truth is that, at least for our part, it never looked anything like that. And I suspect in the most cases, it's just not as clean as that for the most successful companies. I never, ever, ever, ever, ever, ever, ever ran a process. I never ran a process.

• 16:01Speaker 02

  And in fact, for the first couple of rounds, I thought I was presumably doing it wrong. You know, the idea is that you're supposed to like figure out how much you want to raise and who you want to raise it from and you go out and you pitch all these investors at the same time and then you like organize some other deadline by which they have to give you a term sheet, blah, blah, blah, and you make some competitive situation, whatever. What we actually did was just focus on the fundamentals, build a great fucking product, do other things we're excited and passionate about, including creating popular content or just hiring brilliant people. And we let people who best understood and were most excited about Intercom come to us and every single one of our rounds came from people who came to us. I always took investor meetings and I was always just naturally intrigued by their world.

• 16:43Speaker 02

  And so I would always meet with people, including Jason Lemkin, for example, and ask him, how does this work? You know, Jason is a great story because he himself has most recently become a VC and he's still learning himself, but he was really, really useful to me when I met him. How does VC work? And I asked him, how does it work? Can I be learning about it? So I always had a good feel for what was out there, what the finance market looked like. And so when people came to me and said, oh my God, Intercom is incredible, here's why. And they were able to verbalize our vision without me even getting the chance to explain it to them. I knew what a good investor looked like and I knew that they'd be a right partner for us. I said no way more times than I said yes. I've only said yes four times. But when I said yes, I could tell that the people really got it. And so it was always very organic.

• 17:28Speaker 02

  Basically, all our rounds went from first meeting to sign term sheet in a number of days, if not like half day. But all of these people were the folks that had some certain sparks, some certain thing that I didn't find in the other investors. But because it was very organic, you don't get to choose the time periods. It ends up being a kind of an opportunistic kind of a thing. And so the B opportunity came to us and the price was right and the round size was right and the investor was right and the partner was right and the rest is history.

• 17:56Harry Stebbings?

  And then post funding, I'm really intrigued, kind of, there was the term sheet and the kind of onboarding for investors. Post term sheet and following the investment, you've now seen several rounds. What does good investors look like to you now?

• 18:08Speaker 02

  You know what? The best investors, they very quickly switch to being partners who are very much in the trenches with you and who now own your problems. The best investors say, okay, you've got my money now, that's irreversible. Hopefully this all works out, but we know that there's a lot that's really broken. Let's all try and figure it out together. The worst investors try and say, hey, you've set these expectations, there is a certain timeframe, there's a certain way that things should be done, there's a certain way that we want you to work, here's some milestones, here's some criteria you want to meet. They're the very worst investors and all those constraints and that pressure is so incredibly damaging to creative people.

• 18:53Speaker 02

  Great founders are deeply creative in so many different ways. So again, the best investors are partners and they immediately jump to the other side of the table and say, okay, we really hope this works, but let's not take it for granted. We know lots of shit's broken, we're in this together, so what do we need to do? And the worst investors say, right, patients, get to work, here's what you need to do. So it's like a true partnership.

• 19:17Harry Stebbings?

  And I'd love to finish today on a quick fire round. So I say a short statement and then you give me your immediate thoughts. About sixty seconds per one. How does that sound?

• 19:24Speaker 02

  Sounds wonderful.

• 19:25Harry Stebbings?

  Okay, so let's go for your favourite book and why?

• 19:28Speaker 02

  My favourite book is also one of the few books I've managed to even finish in the last year or two. And I've managed to finish it because I think it's no more than ten pages. And it's called A Technique for Producing Ideas by a guy called James Webb Young. It's a very old book. But it's, oh, hold on a second. This is quick fire? Is that it?

• 19:46Harry Stebbings?

  That's it, that's it. You've done brilliantly well.

• 19:50Harry Stebbings?

  But that's good. I've never had that book before, so brilliant suggestion. Biggest challenge for you in your daily role with Intercom?

• 19:56Speaker 02

  I mean, I guess we've touched on it already. It's continuing to grow in scale. It's well understood that individual contributors and managers and leaders will tap out at a very, at some point in a fast-growing and scaling organisation, and that there are certain phases that they're best suited for. Yet, it's expected of the CEO and the CEO founder that they'll be able to go all the way, or at least quite a way. And so the biggest challenge is continuing to learn and scale. Somehow, like I said, amongst all the other things I've fucked up, I have managed to learn at the pace that this business requires. And so the biggest challenge is continuing to grow at that pace.

• 20:31Harry Stebbings?

  And then we spoke before about prioritisation and productivity. What are your tools and hacks for staying as productive and Owen as Owen can be?

• 20:38Speaker 02

  I am not a tips and tricks kind of a guy, so I have not a good answer for you. I will say that if you saw how I got things done via at least two dozen post-it notes stuck to my computer every day, you wouldn't even ask me that question.

• 20:52Harry Stebbings?

  No, that's a good thing. A sticky pad does count as a productivity hack. And then your favourite blog or newsletter, what are your must-reads?

• 20:58Speaker 02

  I would have to say, because you've just handed me this opportunity, my favourite blog.

• 21:03Harry Stebbings?

  It's Saster. Well done. Well done. No, go on.

• 21:08Speaker 02

  My favourite blog, by a long shot, is the Intercom blog.

• 21:10Harry Stebbings?

  Okay, well, that's a brilliant suggestion. Yeah. And Saster, there we go, we can both have it.

• 21:17Speaker 02

  I'll go for two.

• 21:19Harry Stebbings?

  And then let's go for vision for Intercom. What's the roadmap, five, 10 years' time? That one's actually from Mamoon.

• 21:25Speaker 02

  Okay, yeah, I mean, hopefully he actually has some sense of this already, but I'll answer his question.

• 21:30Harry Stebbings?

  I'm sure he does.

• 21:31Speaker 02

  Mamoon, the goal is to fundamentally change how companies connect with their customers. You know, in the future, if Intercom is successful, a customer of an internet business, which we believe all businesses are becoming, will feel like they're actually getting to connect with a human, that they'll have a real, personal interaction, that it will feel anything but fake, spammy, shitty, transactional, which is how business online works today. So if Intercom works out, if our vision is successful, if our mission to make internet business personal works out, we'll have made exactly that change.

• 22:01Harry Stebbings?

  Well, Owen, thank you so much for coming on the show today. So appreciate it. And absolutely fantastic to hear the Intercom journey.

• 22:07Speaker 02

  Yeah, thanks. It's been a pleasure.

• 22:11Harry Stebbings?

  Now, I do really want to give a huge hand again to Owen for giving up his time today to appear on the show. It really was so fantastic to hear his incredible scaling journey with Intercom. And also, I want to say a huge thank you to Mamoun at Social Capital and Jason at Sasta for making the introduction today, without which the interview would not have been possible. And if you love the show with Owen today and do not want to leave the world of the 20 Minute VC, then you can add me on Snapchat @HStubbings, or you can follow me on Twitter @HarryStubbings. Hey, you can even sign up for the newsletter on the 20 Minute VC, so you never have to miss an episode or an update from us. Do not forget to check out Cooley. If you're a founder setting up or running a startup, Cooley are one of the market leaders in working with thousands of entrepreneurs and newly formed companies to ensure that they're structured for growth

• 22:55Harry Stebbings?

  and long-term success. Cooley is a world leader in financings, M&A, and IPOs, and since 2005, they've been ranked the number one most active law firm representing VC-backed companies going public. So to learn more, simply head over to Cooley.com, or you can also check them out at CooleyGo.com. And with the weekend fast approaching, it's also time for that Saturday Morning Line, and so good to know that we have Eve to make that all the more enjoyable. Now, Eve is the UK's number one direct-to-consumer mattress company, and because they don't sell through high street stores, they have the ability to cut out 70% of traditional costs and pass those on to the customer. It developed over four years with thousands of prototypes. Eve is so confident of their product, they give customers 100 nights to try them at home

• 23:39Harry Stebbings?

  before committing. For those of you who don't love it, which there will be none, they even offer a free return pickup with full refund. Simply head over to evemattress.co.uk, enter the promo code 20VC, and they'll give you an incredible £50 off, and it'll be with you the next day. As always, I so appreciate all the support. You can always email me on harry@thetwenty minute vc.com, and I cannot wait to bring you next week's shows.