How Intercom rose from the ashes by betting everything on AI | Eoghan McCabe (founder and CEO)
Eoghan McCabe, founder and CEO of Intercom, shares the unfiltered story of transforming a multi-billion dollar, stagnating SaaS business into a rapidly growing, AI-first company. He details the necessity of 'founder mode,' a radical cultural overhaul, and why having nothing to lose is the ultimate advantage in the AI era.
Eoghan McCabe, founder and CEO of Intercom, returned to his company to find it in a precarious position. After years of success, the business had become bloated, its strategy unfocused, and revenue growth had slowed to low single digits, nearing negative territory. This challenging situation, however, became a crucial advantage. McCabe argues that coming from a point of having “nothing to lose” was the catalyst that allowed Intercom to pivot aggressively toward AI when many comfortable, late-stage companies are failing to do so.
The AI Pivot: A Necessary Bet
One month after McCabe’s return, ChatGPT launched. Intercom’s existing AI team quickly recognized its disruptive potential for customer service. Within six weeks, they had a working prototype of what would become Fin, their AI agent. The decision to go all-in was a combination of factors:
- Desperation: The old business model was failing, and a new engine for growth was essential.
- Intuition: A strong sense that AI was the future and that they had to be part of it, not fight it.
- Advantage: Intercom possessed a massive dataset from 30,000 paying customers, providing a rich training ground for an AI agent.
This pivot represented a philosophical shift. McCabe, once “anti-bot” due to their impersonal nature, now believes a well-designed AI agent offers a more personal experience than a human agent. An AI can be “highly engaged, instantly available, expert, consistent, fast, charismatic, funny, friendly,” and available 24/7, which is often superior to making a customer wait days for a canned response from a human.
Executing the Transformation: “Founder Mode”
To turn the ship, McCabe adopted what he calls an “authoritarian, top-down, aggressive founder-first approach,” believing that great companies are built on a clear hierarchy where a CEO makes brave, unilateral decisions and owns the outcomes.
This “founder mode” involved several key actions:
- Strategic Focus: He declared Intercom a “service” company, abandoning other distracting product lines despite their revenue contributions. This provided clarity and focus.
- Fiscal Discipline: He aggressively cut costs, canceling expensive projects like a lavish new office build-out to instill a sense of frugality.
- Cultural Overhaul: This was the most significant change. McCabe rewrote the company values to be a “sharp knife” designed to cut out parts of the culture he deemed ineffective. New values emphasized resilience, high standards, hard work, and shareholder value.
- Performance Management: He implemented a quarterly performance process that graded employees not only on their goals but also on their adherence to the new values. A formula was hardcoded to remove manager discretion, and individuals who didn’t meet the bar were let go. This led to a 40% turnover over a couple of years.
This aggressive approach caused significant internal friction, including letters to the board and a “soft coup” attempt. However, McCabe argues it was necessary to create a highly aligned, high-performance organization. An anonymous survey 16 months later showed 98-99% approval of the new leadership and strategy.
A New Pricing Philosophy
Intercom’s old pricing was notoriously complex and widely disliked—a meme in the SaaS community. The complexity stemmed from an unfocused strategy of trying to be everything to everyone. The new approach for Fin is built on a different philosophy:
- Value-Based Pricing: Fin is priced at $0.99 per resolved ticket. This model directly aligns Intercom’s revenue with the value delivered to the customer.
- Bold Bet on Costs: When launched, each resolution cost Intercom $1.20, meaning they lost money on every transaction. This was a deliberate bet that the underlying cost of AI would decrease dramatically, which it did.
- Simplicity and Fairness: The goal was to create a pricing model that was simple, predictable, and fair, rebuilding customer trust that had been eroded by the previous model.
The Future of Business and Work
McCabe believes the AI disruption will be “aggressive” and “violent,” and companies have no choice but to engage. He envisions future organizations as a “medley of humans and agents,” leading to smaller, flatter structures.
- On Jobs: He sees AI automating repetitive and “demeaning” work, such as answering the same support questions repeatedly. While this will displace certain roles in CX and sales, he believes it frees up human potential for more creative, connection-oriented work. The value of human-created art, stories, and connection will increase in an age of AI abundance.
- On Competing in the AI Era: The only way to win is to work with an intensity that matches the new generation of AI-native startups, whose teams “are literally working 12 hours a day, literally 365 days a year.” This requires a complete cultural shift, embracing young AI talent, and integrating AI tools into every workflow. If founders of established companies aren’t willing to adopt this mindset, McCabe’s advice is blunt: “hire a kid” to run the company.