Rebuilding Front for the AI Era | CEO Dan O’Connell

0:00Don't make compromises. If you make a decision, you feel like you're compromising at times. Like you're going to go home and you're going to look back and be like, I compromised or I gave some of myself away in order to make everyone else comfortable with the decision. If you are a 10-year-old business that's been around or been founded in the past 15 years, you have to be willing to burn the boats, got to do things differently on culture, driving innovation. I don't think all of these businesses have all a time in the world. Like we play in the CX, CS market, like one of the biggest markets that's going to be disrupted by AI.

0:30we have to recognize that we have to do things differently and urgently. When I see something and I want to do it, I literally am like, I wonder how hard it is. I am curious to know what that experience is like. I'm not afraid of the experience. I'm not afraid of the challenges. You got to be committed. You got to like the grind.

0:57Welcome to Grit. I'm Jubin, partner at Kleiner Perkins, a show where we go beyond the highlight reel and explore the personal and professional challenges of building history-making companies. Today on the show, we're joined once again by my friend Dan O 'Connell, now the CEO of Front. Dan joined Grit several years ago, and since then we've had an amazing relationship and friendship. I wanted Dan back on the show because he always says it how it is, and I find that a breath of fresh air these days. Enjoy the episode. So last time we talked, we were not friends. So pretty cool that over the last few years, we've become friends.

1:32You were the CRO of Dialpad, now the CEO of Front. The world has, like I said, changed a lot since then. Yeah. Like we've talked a lot about a lot of things in private. One of the things that I was thinking about that you just reminded me of on the UX front was like you see companies like OpenAI, whether they're right or wrong, they're really ambitious. Yeah, yeah, yeah. Crazy. They're insanely ambitious. And, you know, I don't know, does it even feel silly for you to be like, yeah, we should like upgrade this like front end by 5 %? Like, is the cognitive dissonance worse than what it ever was?

2:09Because you're like, all right, these companies are going for it. Like any business, I was just at this CEO conference last week, and we were talking all about this with some investors and some other folks that bankers that are in the room. If you are a 10 year old business that's been around or been founded in the past 15 years, like you're in existential crisis around your identity, which is you, which is yeah, which is us for sure. I think it's really exciting. But you have to be willing to burn the boats in terms of going to do things differently on culture, driving innovation. I don't think all of these businesses have all the time in the world, especially in I would say, like very specific markets.

2:49Like we play in the CX, CS market, like support market. You talk about one of the biggest markets that's going to be disrupted or is being disrupted by AI, perfect application, perfect positioning of value that you can get. We have to recognize that we have to do things differently and urgently. Yeah. And so it's been really interesting to get to join a business and to not be the founder, as I said, a 10-year-old business and figure out the transformation. Yeah. But that pressure is real. So like I've explored this with like Yamini at HubSpot and with Howie at Airtable with like great SaaS companies.

3:24I'll put front like great 10 to 15 year old SaaS companies. Okay. And they all say the same thing. They're like, Juven, like it is urgent. Right. But we are now, let's just say two years into LLMs. Yep. Two years. and the urgency so far has shown up as like incremental, if you will. Like it has not been a complete rewrite of your entire stack, which threatens your existing customer base, which threatens the type of employee that you have today that might need to be refactored for the future, all these things. Right. And they're like real tension is probably you tell me is like, well, yeah, you have like over a hundred million of ARR that like people are using, you know, like you have renewal contracts that are coming up.

4:23They're like probably going to expand. Well, all of this tension exists there, right? Like you can't, um, you can't just go to an entire employee base and say, I guess you can. And just say, look, like overnight, we're going to turn over everybody who doesn't believe this or take these actions, right? Like you, again, you have distribution and scale and real customers in real revenue. And so I think the impetus is like, look, like that's a very real opportunity. We have distribution, we have scale. There's some argument that that's an advantage. It should be easier for us to go and do some things, right sell some add-ons to whatever it might whatever it might be that push the innovation but there is the challenge of like look we have tech that that we probably need to work through and we've got to go convince jubin to use these tools right that maybe jubin doesn't believe in or is a skeptic right and so we've got to go through this change management communication but i think the urgency comes from like the top and the leadership to be like we have to change the way.

5:25And we don't have all of the time in the world, not meaning like the business fails, but just like the market opportunity goes away because you can go and see, you know, the startups that are 996, right, or working hard or pushing innovation or using tools that people don't know about, right, whatever it might be like that tension exists. But I think it stems to the leadership, like is the leadership aligned? Are they willing to push on the culture? How are they communicating like that message and that urgency to the, to, to the employee base. And then it's hard. It's hard. And then on the leadership question, like you, you mentioned it, like the founder versus CEO, I will say like in our private conversations, it does sound like you have one of the better setups as far as it goes of like having a founder that is still helpful exactly when you want it to be helpful, but not overbearing in a way that, you know, can get in the way of like many of these transitions have like I actually do think I'm not just saying this I actually do think you have a pretty good setup yeah I really agree um but like all that being said like uh do you have the moral authority to be able to do you have the courage like to really be able to like will the board take bullets for Dan if he's like we are gonna burn the boats and And by the way, can I just like maybe qualify this a little bit more?

6:45Like the people that I've also had these conversations with, like that are at the helms of these SaaS companies, they're still founders and it's still hard. Like they still haven't done it in earnest. Yeah. Well, I think, I think like the courage is a good one. Matilda and I talk, like, I think we, I have a perfect setup, right? You've got a founder still in the business. It's our CTO, who's a technological savant. Mathilde, who is the founder and CEO. Like, Mathilde and I catch up on a weekly basis, but trust me wholeheartedly and always tells me, like, make decisions that are going to energize yourself.

7:22She constantly tells me that. You know, our lead investors from Sequoia, Brian Schreier, who's exceptional. Brian and Mathilde, and that's the board, like the four of us. Two founders, Brian and myself. It's actually a pretty small board. It is small board. I actually didn't know that. Really small. Separate conversation for, you know, of what do we want to do with that, right? How do you evolve it? These are very real conversations like we have. Like I'm speaking with Brian tomorrow of like, there's some bets we want to make next year. I don't think we have all of the time to shake things up and to be more aggressive.

8:00And there's going to be times where like metrics might be imperfect or not exactly what you want. but I look at the market opportunity. I'm like, things aren't slowing down. We sit in a healthy position in terms of capital. I think we've got product momentum. I've turned over the entire executive team over the past 18 months. We got amazing executive team that I trust. Revenue is growing. As I said, product momentum. I want us to be more aggressive and lean into it because I don't see the world slowing down. And either we're that old ship or viewed as the legacy and the old guard and you kind of like the photo your way through it.

8:39I don't know how you get to be a category leader. And we know that category leaders have obviously like outsized returns for everybody, momentum, like you name it. And this market is probably one of the biggest markets that's going through this complete shuffling of the board. And we want to be part of it. It means we got to take some risks. So you talk about courage, for sure, courage. I think that's where like gets people excited and energized, but you got to be willing to like, are you willing to trade off 30 % of your revenue or 40 % of revenue to capture it? Like those are the very real conversations.

9:07Like we are, we are like, we collectively as a leadership team and as a unit with the board and the company are having, which is like, what do we want to do? And can I like, why, like, let me go into that decision a little bit more. If you have to, why would you have, like, why, maybe not just you, everybody, why do you have to give up, let's just say half of your revenue? Like what is the actual trade-off or a third of your revenue? Why, what is the sacrifice that you have to make in order to, why can't you do both? Yeah. Ours, ours might be, and I'm making it like to be, to be funneled, like I'm, I'm making up that, that number right on this pieces.

9:43Even 10%. Yeah. So, so let's take a, let's take a step back for our business. Like our business started 10 years ago, we're email productivity tool. I would argue when you're an email productivity tool, like you lack a really clear ICP and buyer, You might be selling to the CIO one day. You might be selling to somebody in HR the next day that's using you for whatever reason. You might be selling to go-to-market teams. So when I look at our customer base, our ICP today is B2B support, customer success account management. Those are the teams we want to sell to. We have ICP within our customer base that is old ICP.

10:20They're not the buyers we would have today. So that's the hard part, which is like, look, how do we go and understand what that opportunity is. Can we sell those people? Can we get to the right people? Are we willing to work with them? What's the percentage revenue that we might be giving up if we don't? These are all the very real questions and inertia of your say, you know, a 10 year old business that has gone through, you know, some changes in positioning and evolution. That's where the friction in, I think shows up. When Matilde tells you to make decisions that give you energy, is that how you is that how you say it what does that mean yeah for me like don't sacrifice and i was listening to to um you know really nice podcast by owen from from intercom the other day he said something i was like i'll bring this back to you um which is like uh if you make a decision you feel like you're you're you're compromising at times like you're gonna go home and you're gonna look back and be like i i compromised or i gave some of myself away in order to uh to make everyone else comfortable with the decision and like that happens constantly and constantly constantly again and like before you know it kind of like the thing that you wanted to build is is uh i don't that hopefully you're following yeah of course yeah the thing that yeah it's like death by a thousand yeah exactly and so i think like mitholtz pushed me for that which is like her and i have uh i think we see the world very similarly but we have different styles um how we view culture within a business i would argue is probably different i wasn't there up front right prior to prior to me obviously prior to me coming in but i think those are the things but she's like don't make compromises don't compromise on the leadership decisions whether it's changes you want to make on structure whether it's the bets you want to go and make like she wants to fully make sure like i feel empowered to go make the best decisions and the ones that are going to give me energy and she trusts me to make those decisions and i love that and i think that's so true because again, I look at little things.

12:16There are times like I make a decision. I'm like, feel like I'm giving in to get something across the board. Right. Or to make somebody more comfortable with it. And then again, death by a thousand cuts of like, go home, compromise, compromise, compromise, compromise. Yeah. But on those little ones, if it's a small give, like, don't you think the tension is actually like, and I've been going through something similarly where it's like, all right, this is not a big deal. Yeah. This is not a big deal. But like the big deal to me is like, well, like I have a core belief around this decision around like the identity of merit and the culture that I want to stand for.

12:57And so this is something very small and extremely innocuous relative to like that core belief that I have. And I've spent like five days spinning around this thing that like is probably wasted energy that I absolutely should have just like made the decision and moved on because it doesn't really matter except for that one thing yeah but that like gnaws at me what were you gonna say I was gonna say but these things like you think they're small I think they're small uh but suddenly when you're talking to a culture and our center example for, you know, we have 300 other frontiers and leaders. Those little decisions can be, they might be little to you.

13:38They might be big to somebody else, right? We're trying to move fast on talent. There are times I would like push on like, look, this is your person. This is your hire. Make the hire. Have them meet with a couple people. You don't need to put them through eight people and have them present. Like we don't have the time, right? Again, we don't have the time. I'm not saying make a bad decision. I'm not saying just trust your gut on something, but I'm like, if you've worked with somebody, I've been coming to meet with a couple of people, like cut the cadence down. We got to find some places to cut corners.

14:09That doesn't mean sacrifice quality. But what somebody might hear in that is like, now I'm not part of the process. Does my voice matter? Right. Do I have a seat at the table? And so like even little decisions, I think should be pretty easy in the pressure of like, Like, hey, move faster. We got to reinvent ourselves. We got to get the right talent on the table to do that. This is where I think there's like that natural friction that shows up is somebody is going to say like, I'm not part of the process. My voice doesn't matter. Yeah. I think that's the real complexities of like, you know, the CEO role is like every decision you make touches somebody.

14:44And then they want to have the context and understanding of it. So you mentioned Owen. Like, I actually think it's a fascinating case study that I would love your perspective on. Yeah. Okay. Cause they're in a adjacent space. Yeah. Direct competitor. Direct competitor. Yeah. I was like, we don't need to push it. I was like, direct competitor. That was a dance around it. And you also have new entrants in the space. For sure. Sierra and Decagon. And they're all growing like crazy. And that's the hot new shiny toy. Yeah. Okay. And probably intercom is one of the like very few examples I can count that have actually made the transformation.

15:21Yeah. in a pretty good way relative to most. Go ahead. Yeah, I was going to say outstanding. I think it's been a masterclass in branding. The thing is, it is like the thing that Owen had to come back to the company. He left the company. The founder had to return. He had to make some really big hiring moves. Like he brought on Archana or whatever, like things that are not easy to do that you have to have deep conviction in. you know? And then he rebranded the company. He basically bifurcated the company into like two different things. One, which is the core and the other, and like probably like 50 other things that we don't see or know that are all probably like relatively miserable to do.

16:07Let's be honest. Like they're probably really sucky decisions. And they probably like divide the organization like crazy. Yeah. I think you can see, he talks about it, right? I mean, you can see it. Glass door is is one way to look at yeah but yeah but he'll but he will he he would say that too right but i think that's the thing with like bold hard decisions right it's like you have to reinvent yourself and i think those are those these are those moments i'm like what's your what's your outcome at the end of the day though right you're a low teens growing or single digits business maybe you're break even maybe not you're i don't know how much revenue too i'm just picking let's just pick, not necessarily on them, pick a business and that's, you know, a couple of hundred million in revenue.

16:50And you're like, well, it's 600 million to probably be a public business. You got to be growing faster. You have to do, you have to, like, what is the other alternative? Well, this is assuming that the end game is to go public. Yes. But I would argue that you're trying to build, much like all of us, you want to build as fast growing, profitable business as possible. Yep. And control your debt. But no, it's not optionality, right? So you're like optionality, right? So I would be like, regardless of whether that's it, is you're like, look, there is a complete shuffling of the deck that's there. These are those moments where I look at Salesforce and I'm like, I think Salesforce, I think somebody at this conference last week, somebody that a VC said, look, I believe that Salesforce doesn't need to exist or shouldn't exist.

17:36And I was like, these are probably those moments where there's a very real shuffling of the deck that's happening here. And so that requires you to be bold and make at times, you know, brash, but rational decisions. Yeah. I mean, the reshuffling reminds me a lot of like, you know, previous to KP. I just don't know the alternative. I think that's where I have a hard time. I have like a hard time of like, you know, even for us where I'm like, Hey, we want to lean in and make some bigger bets. Like, I just don't know what the alternative is. Like you play it safe. You played sports. I played sports yeah i mean you see it on on fields like you know when somebody's playing not to lose as opposed to playing to win yeah but the playing to win has much bigger like there is optionality because the playing to win means it's there's a very real chance that like it's a full loss like it's a like you've abandoned your customers you know what i'm being dramatic yeah yeah i was Going for it also has a high opportunity cost relative to incremental.

18:44Yeah, but I think a lot of these, like the businesses we're talking about, I don't think the downside is as true. I know these are dramatic points we're making. I don't think the downside is that bad. So your downside is like you're overly ambitious on the bet. You burn through more capital than you would like. You haven't put the business probably in a place that is so catastrophic, it can't return or get an alternative outcome, right? Or have time to navigate that. Yeah. And I think that's the difference that if you're like, look, like we're at a business that has seven months of runway, I would be like, well, then you're really burning the boats and going for it.

19:20But at that point, you probably have no alternatives. I think a lot of these businesses are like, look, they probably have capital. They can take some bigger, bolder bets. They need to have conviction. You got to have the right people. You got to have the right vision, like all of those pieces there to lean in. And if there's not some trajectory that's inflected in the near term, then you're probably going to course correct and run it this differently. You had an amazing run at Dialpad. You got acquired in. You were one of the co-founders and the CEO of the company that you were acquired into.

19:50Then you were like basically, I don't know, you had all these crazy fancy titles. But by the end, you were like whatever. They're like president of Dialpad. Okay. And you took it from like three to a couple hundred million of ARR. It was great. Good run. Still a great company. And at that point, it was clear that you wanted to do something next. It was time. And I remember you and I would sit down for lunch or dinner. And I was like, dude, there's some insane companies that need a president. And they're ripping. They're on fire. They are in the eye of the AI hurricane right now. and my observance experience was that i'd say like and i'm not putting words in my mouth so tell me you're good you're good tell me where i'm wrong one i was never president about okay whatever whatever it doesn't matter you were like owning a bunch of the scope okay and i would you would go talk to one of these good companies and then every time you would kind of back into I think I want to be the CEO.

20:59And then you go talk to another one. And it was almost like you testing yourself to see like, do I have to be the CEO or not? And now like, obviously you made that decision. Yeah. First of all, am I right or wrong? You're right. I don't regret my decision. There's not a moment in time. You teed me up with some great, not great, like fantastic. I look back and I'm like, ah, I made a different decision. And I do not regret my, there's not a decision I have made in my career. Fortunately, that I look back and regret. This was like another one that I am now 19 months into this journey. And it's been like a gift, way harder than I thought.

21:42I think it's infinitely easier to start and build a business than it is to take over for a business for a CEO. um i think this one's unique i think i think you have like an amazing you have amazing founders one of the founders that in which has like an aura and a culture around her um and so that's hard to you're i am compared whether i like it or not i am compared every day to that person right uh even employees that have been there a long tenure um that's hard you're stepping in somebody else's footsteps and legacy on the pieces. I think you have natural business inertia that shows up. And so those are things of like really fast run up.

22:25You have a plateau that you've got to push through. That means that we have to change the way everything has to change. Culture, perspective of the market, our ICP changed, the leaders changed. i thought it was going to be easier to come in and not have as much kind of inertia that's there in a business that's 10 years old like that has been the surprising piece to me yeah um it's just taking more word not like you can't you can't get there so i'm just like oh i thought it would be easier at times um trying to think the other things that have like surprised me it all comes down to like the leadership the seat like the c-suite and i've turned over over 18 months all of our all of our c-suite except for one member um i think that was uh you i get it people want to have like their team on the field and i think you're trying to match experiences within the system that you have and the culture that you have but that was hard that takes time but now I look at it I'm like 18 minutes and I got like the team that I want I love our team yeah but that's been hard that's been harder to taking more time than I than I thought than I would have liked why like uh like uh if you were really honestly introspecting on why you wanted to be the CEO knowing what it means to be the founder and CEO versus a CEO versus the CRO of a sick company or whatever like do you think it was an ego thing like do you think it was a control thing do you think it was a money thing these are all things that people don't feel generally comfortable talking about yeah yeah i'm glad that you brought me here i'm glad our friendship is like let me ask dan no no i think it's all i know you'll be honest i think it's all those things i think this was like a perfect opportunity of like legitimately this was space i loved yeah and and like you and i have talked about this where i'm like the place I really like to build software is for go-to-market teams, whether that's on the sales side, on the service side, support side.

24:33So I was like, backed by best investors. You know, tier one firm backs it. Didn't need capital. So you're like not going in and are like, you got seven months to figure this out, right? Or whatever it might be. And so it's the space, right size, you know, 75 million in ARR at the time. You know, 250 odd employees, like just a really nice size. it based in the San Francisco hit every child. I went home and like wrote down this checkbox and I was chatting with Ann. Um, and she's like, there's no reason why you shouldn't take this. This is like my life partner telling me on this. And I felt the same.

25:11And then, and then to your point, like the other things for sure control. Like I like me, I hate being like, I like being in control. It sounds like it has such a bad connotation to it when people say it. Like I trust my judgment. I like to take risks. I'm like a sense of, I I'm like an eternal optimist. I like to think that I'm like self-aware and humble enough to admit mistakes. I think I can sell a good vision. I know what good talent looks like. And I'm like, this is such a good shot. Like, why would I not do this? And it seems to have a headstart because we have 10 years because we have all these customers, because that to me didn't seem like debt.

25:48It seemed like an advantage, but you got to be willing to press on the advantage and play offense. And I needed the right team to play offense. And I was like, I think I can get the right team on the field. Yeah. In the window that we need to move. And I view this market as like, this is a 12 to 18 month market in terms of kind of like, how do you go maximize opportunity? Control, ego for sure. Yes. Compensation, equity for sure. Right. And maybe that's a little bit more guaranteed. I don't think of it that way, but I'm like, you know, But you're at scale. Yeah. So as I said, like, but nothing scary, there's nothing guaranteed.

26:24For sure. And is that why, like, you know, I guess in our conversations, there wasn't that much of like, I think I want to start from square one. Like, I think I want to build from the ground up. Yeah. Like, maybe I'm misremembering, but there wasn't too much of like, Jubin, I have to be the founder. Yeah. Like, there wasn't that much of that in our conversation. Well, I think that gets in, like, I'm the non-technical founder, right? Yeah. So I feel you always need a really technical counterparty. I hope that I'm the CEO for a long time at front. I think there's a multi-billion dollar revenue business that's here.

26:58I would like to, at some point in my career, go and start something from scratch. And I think that itch will be there. But that itch, I think we have such a fantastic opportunity and hits everything I'm looking for. I'm like, I want to go execute on this. Was Talk IQ from scratch? I joined when it was five people. Okay. And do you feel like, are you still like, do you still feel like, you know what? Damn it. I have never actually done it. A little bit. It's also funny to look like we went through this acquisition. We were talking about 11 labs in Malti and I had met him way back in 2016. We were both building speech recognition, real-time speech recognition.

27:38It's like way back. It's so funny. It'd be like a decade ago. Like iPhone 12. Yeah. and so i was like oh if we had not gone through that acquisition like what would have you know where would i like what would now things look like right um but yeah even there you know like i think there will always be this itch in me that is like i just want to do it my way from the start from the very start my culture, my way, my investor, you name it, I think that's going to be there. And I think when we first talked, speaking about my dad passing, this profound impact on me, so immersed in tech, I thought I would miss my dad was CEO.

28:27I lost him when I was 32. And I was picturing myself in my deathbed and being like, this would be such a bummer if I never, never run something. And I think the same that I'm like, if I don't start something from scratch, I think I'll like regret that piece. Yeah, really regret it. And when your life, like when you go to your partner, and you go through the like checklist, is there a part of you that is like, okay, like, how does our life work together? Like, meaning, I believe that your level of responsibility and stress and like all the things has probably meaningfully ramped up. Yeah. From dial pad to here, just by the nature of the job.

29:14Yeah. Then we introduced that. We have our newborn that showed up and I'm like, yeah, so you're ramping up the stress in all sorts of ways. And I don't know, like, is that like, uh, she knows you. She knows like this story about your by the way like that I still get messages about that that story that you told to this day about how much it moved people but she knows the like chip on your shoulder that you have she knows it and so like is there even a conversation when it's like hey I like I'm gonna like like you know it's like I gotta go do this because like what is the bizarro world like inverse response to that it's like no no i don't i don't know i mean the nice part is is and is in architecture and interior design worlds and so not having a partner for me that i go home and then talk about lfms and scaling gpu like you know like go home and be like oh everyone cares about cogs again you know whatever it might be uh i think like there is such i think such a unique balance in our relationship of like she truly is like the in like the opposite of me i will be like the last person to leave a party i like love being in the party but then i'll when i hit my my limit i'm like yeah i need to go and we'll be there forever yeah uh and i think that shows up of like that counterbalance.

30:46And I think that's really nice. And I think she knows that. And it's like, look, like you want to have these intense experience. I like intense experiences, whether it's like athletic endurance to like work. She knows that's like who I am. And so trying to like tell me no on that is probably a recipe for disaster. Just like, I'm just not going to be myself. And so I think it's so important for people to find partners that you can have that type of relationship with and trust. And I'm not going to make a reckless decision for our family, like our family, you know, on those pieces. But I think it's been really nice to see like how much she's supportive of it.