Building an Autonomous Enterprise for Real-World Services with Netic Founder Melisa Tokmak

0:05Today on NoPriors, we're joined by Melisa Tokmak. Melisa is the founder and CEO of NetEq, a company that builds AI for different real-world services like HVAC, Petcare, a variety of other things like that, roofers. Prior to NetEq, Melisa was a director of engineering and worked on various aspects of go-to-market for scale.ai and also has experiences from meta. Welcome to NoPriors, Melisa. Melissa, thanks for joining us today on No Priors. Thank you for having me. Yeah. Maybe we can start off by talking a little bit about your business and what you're building, because I think that you're doing something really interesting in the real world and you're kind of mirroring AI in the real world.

0:41So could you tell us more about your company and NetEq and what you're focused on? Yeah. NetEq builds AI to run millions of real world businesses that keep the world running. That means basically we work with large enterprises in essential services. We started in essential services. What would be an example of essential service? Imagine a billion dollar revenue home services companies in HVAC, plumbing, electric, or consumer wellness companies, like where you can become a member and really go do a lot of sports or different activities, hospitality, automotive, pet services across the board. So every single thing that you need to run your life or that you want to do are a good example.

1:29And a lot of these businesses are actually quite large businesses. And they interact with millions of end users themselves, usually that are consumers or businesses themselves. So Netic exists between the company and its customers. So every single thing to understand the customer need or want and match that with how can we even help the customer with the operational rules of the business and even deploy the services or the labor all happens on NETIC. So basically, say a customer calls an HVAC provider, what happens or what is NETIC doing for them? Yeah. So imagine that you are in the middle of nowhere, it's minus 20 degrees and your heat stops working.

2:15So you first find a provider and there are many providers. You want to pick the most trustworthy one and the one that you can get to because you're in a minus 20 degree weather. Maybe you have a kid or an elderly or something is not working. From there, once you find a business, and usually you can find these from aggregators or by search engines or in now LLMs, and you can reach out to the company from any medium you want. If they're using NetEQ, you can call them or text them or go to their website to do an online scheduler. It's NetEQ agents that talk to the customer. What kind of home do you live in?

2:49Do we have any of your records? I see. So this could be like a voice call and NetEQ is actually providing the voice. And then the reasoning around, hey, this person needs some help and we should deploy somebody out to fix their HBQ system. Exactly. And it's actually a lot of the businesses we work with. This is why we started with essential services. The operational needs are very complex. It's not as simple as, oh, Elon's heat broke and now Melissa goes. Is it that actually what kind of even units do you have? What kind of needs do you have? Can we come to you? Is it something that we need to come to you today or tomorrow?

3:21What is your lifetime value as a customer? So should we be deploying the best person who can only work on, let's say, boilers or new age systems today or later? So it's actually quite complex to first and understand what is the need from the customer. Can this company service it? If so, who, when, and to ensure that it is all optimized to create customer delight to generate more revenue for the company, right? That makes sense. What is sort of like an incumbent version of, you know, what you're doing or what are other players in the market or how should people think about, you know, what this replaces?

4:02So let's go back. How do people do this today? Obviously, we are a two-year-old company. So before us two, how were they doing that? So it's primarily with people. These companies are extremely large. And if anything, actually, they can't grow because they have to keep investing in people to think of any kind of growth. And for them, they're EBITDA businesses. Many times they're actually owned by private equity. They need to care about their margins and what they make to be able to invest back in the business. The most important labor in the business is actually the people who are going to deliver the job, right?

4:36You want to focus every single thing to make your end customer happy because a lot of these businesses are also commodities. If you do not answer me, I'm going to go to the next one, next search result on Google, next result on like now charge a biddy. So it's very important to be able to invest your money into your labor, the blue-collar labor. So until now, it was with hundreds and hundreds of people in these companies trying to figure out how to support customers at all times. The teams that support these workflows in the companies are unreliable as well. Let's look at a day in a life with this company that makes a billion-dollar revenue.

5:15You might show up. The business usually start at 4 or 5 a.m. You don't really have anybody in the company then. Even maybe your technicians start at 6 a.m. But before then, no one is in the company. You might come in as a manager, but there are at least three people that quit that way or that day or five didn't show up. So all these customers are piling in starting at 6 a.m. because now it's a heat wave in the country. Actually, this past week, we have hit record waves last week in the country. What do you do as a business? So many of these businesses are cyclical businesses. It's very important in winter, summer, holiday season, season, people start working out, right?

5:56So you have to make sure that you're capturing a lot of your value in those months to be able to sustain yourself and your employees. Because you're providing agents, they can overflow. So somebody's giving you a lot of phone calls, they can pick up the phone calls for you. Yeah. That is many customers how they started. But today, actually, over 70 % of our customers are AI first. We call it Netic first. They go N1. And over 70%, actually, all of their customers' first interaction with the company is with Netic agents. So there's a few different approaches you can do for markets like this. And so, obviously, I'm excited to be an investor in Netic.

6:32I've also invested in AI roll-ups where people will, you know, a company like Long Lake will go and buy a bunch of businesses and then optimize them with AI. And in some cases, these businesses overlap in their profile with your customer set. You mentioned many of them are owned by private equity already. How did you make the decision to build a service versus just doing a roll-up or buying and running the assets or the trade-offs in terms of those approaches? I think three reasons. One, what I want to build in the world, skill set, and scale. And, you know, before building this, I was at scale for about four years and I built a lot of their real world businesses from government to large enterprises.

7:10And Scali, by the way, for folks who are watching or listening to this, was started off as a data labeling company, ended up eventually having some sort of licensing or agreement with Meta or MetaPaid. I think it was$28 billion. Yeah, a little 30. Around there. So real money. and so you were a very early and like important person I think at scale in terms of the variety of the different businesses you worked on and then you decided to leave before that happened actually to start this business yeah for me there were two things really important it's scale that showed me a lot more about the real world businesses so a lot of my business units to give you a sense I built at scale the government business unit and large enterprises in logistics manufacturing, financial services, healthcare across the board.

7:58And I think the tangible impact you can make in the world is incredible. It is the fulfillment you actually get. You know, in tech, we keep talking about this fulfillment that doesn't usually come to many people. But I love doing that. My background, I grew up in a very small town in Turkey. I grew up with nothing and really came here only for college. When I got a full scholarship to Stanford, I didn't even own a computer before. And all of my town is actually in these type of industries. So to me, all of us come here and we talk about tech, we talk about creating impact, but majority of the companies that only really serve other startups or tech companies.

8:37So to me, that was very important. What are we building for the real world? And I combined that with a technical pursuit, which was a selfish pursuit, is that AI is good at assisting consumers or being a co-pilot. But the next most unsolved problem is that how are we using AI in mission-critical workflows? What does that look like to have a fully autonomous, late executing, actually, systems? So Netic came out of really combining these two for me. And at the end, I loved being at scale. I was a very good culture fit, I think. And I loved my team. Some of my best friends actually are from there.

9:14Obviously, Alex was an amazing person to work with directly as a founder. and but to me that it was missing the product right what is the product because it is an operationally heavy business to build the infrastructure for ai even though people don't want to talk about it and it was rewarding but missing that product edge for me so i knew i want to build a product that can scale and compound and two personal skill set i think in a lot of those roll-ups the main important thing is the mna itself i'm not an mna person i'm a builder i I am an engineer. I'm a product person. It just doesn't fit my skill set.

9:53And I don't want to build a business where clearly what I can provide is not the most important thing. And I think third is the scale of the product to what I have seen. There's a lot of successful roll-ups and tech enabled roll-ups, but at the end, all the products you're building are for the company you just bought. It can't really be actually applied to any other company. So you are committing to buying these a few companies in whatever industries that you are interested in and serving those with your products versus what I'm interested in is how every real world business can run on NETIC, right?

10:28If we didn't have to limit them, if they could focus on what they are good at in that business, which is the labor, which is the differentiation quality of the service, how could NETIC run the rest? So when people talk about AI for the real world, they mean two or three things, right? So obviously there is what you're doing at NETIC and serving these businesses that, you know, go and implement different services for people in their homes or their pets or, you know, different aspects of their life. There's people who talk about robotics, their self-driving. Like, do you think all these things converge over time?

10:57Do you think the timeline on that is very far in the future and doesn't kind of matter in terms of these other types of things? Yeah. It's almost, you're looking at the same book maybe, but different chapters. We're talking about much more now chapters and for the next few decades. I do believe that there's a chapter in the future. It is all about robotics. But in some of the industries that I'm working with, that is quite far in the future. And I always say, you know, if you spend a few days with these businesses, which is very important for us, like, you know, I have to tell you about how I learned about these industries.

11:32And every single engineer in our company do have to go visit customers on site to build the right product back home in San Francisco. and if you look around, if we look outside of a window, look at every single building. If robotics is going to do what we're doing with these companies today, every single of those buildings need to be either 3D printed or completely like standardized. I don't see that happening. And that's just because you just think robotics will be able to navigate the different variation or variety in terms of that? I think if you look at robotics capabilities today, it is quite far in terms of dexterity on how to be able to handle different types of screws even.

12:13What type of homes are desks? How am I going up? How am I going into the tiny areas to be able to fix something? Many times it's not clear. You have to open up the whole walls to even see what do you need to fix? How? And on top of that, there is in these industries, there's a lot of the human element too, because when a lot of people are dealing with these industries, it is worst day of their lives, right? It's either their home is flooded or they want to take the day and reduce stress and go play some tennis at the Bay Club, right? But whatever it is that they're actually going through something and there's a human element, I do think there's quite a bit of a while for robotics to be closer in our chapter.

12:56And then I've kind of heard you talk about the big labs, so OpenAI, Anthropic, maybe Google, Meta, etc. How do you think the LaPerson's industry or how do you think what you're doing is different from what they can do? Different way of asking that, maybe can labs do this? I think that's a fair question because there's a lot of startups in today's world that build things functionally and visually very similar to the lab's key products, right? It's either a chatbot or a coding agent. I do chuckle at the question a little bit, though, because I think 10 years ago, that same exact question was, can Google do this?

13:34And then now it became, can labs do this? Sure, some of the things, the core competencies, they can do it. But some of the other things, they're not investing in it. For NetX case, I don't see them as a competitive risk. It's actually, I think the two, especially the leading labs, there are amazing businesses. They're also great partners to companies like us. So I really respect that. But in terms of looking at what we provide to these industries and companies, I actually think two things are very important. One, in focus in what you're building. And I will say, you know, it would be a funny question to these enterprises, right?

14:11OpenAI builds amazing products really fast, but also it kills them really fast. So I don't think enterprises are at least enterprises in these industries looking for that really fast. Or in Anthropics case, you know, Silicon Valley converged in the idea that, you know, they pulled ahead in coding agents or like Claude because they had focus. But you see exactly the opposite in the enterprise case. There's about like 20 products, like what is really happening? And I don't really see that. and meta-focused question, maybe about the labs and specifically researchers, they really care about solving the most generalizable way of the problem, right?

14:49So in this case, maybe looking at the problem we're solving, the answer would be, well, when we get the AGI, we'll ask how to solve it for essential services. And I think that is both operationally and intellectually a bit lazy thinking. And the finally is for, to solve these type of extremely difficult problems with millions in the country that have completely different worries, different accents, how do they want to engage, different contacts, and also even engage them again to make them multi-time customers, there's quite a bit of last mile that you really have to do that doesn't only come from models, that has to come from your harnesses and orchestration, the software and the product that you have to build on top.

15:29So if anything, actually, companies like us and Netic have to be good at all three layers. Yeah, that makes sense. One thing I've noticed, which is more sort of a side comment on what you're saying, is that one big shift I see from four years ago and now, you know, four years ago, I was funding things like Harvey and Perplexity and you know, a little bit later Decagon and Abridge and a lot of the sort of vertical applications, obviously NETIC. And I feel like a lot of founders now are almost a little bit too worried about what the labs are doing. And so they're not entering new verticals or sort of staying away from things that they think is in the roadmap of the lab.

16:01When I think in traditional times, people would have kind of fought it out a bit more. And so I think that's a little bit surprising. Yeah. I do think that's because there's a lot of building going on currently that's focused on how can I exit immediately. Oh, interesting. Instead of, I think being a founder, I actually think was a more honorable thing before. Like you knew you're dedicating your life to it. Like I'll give you an example. Before I built NetEach, I actually really looked for a job. Is there something I want to build? I looked at the fourth thing I want to build and scale? Is there anything else I'm interested in?

16:36And afterwards, is there someone that I really want to help further the mission? I think being a founder is a very difficult thing that you have to dedicate your whole life for decades. It is not something to be taken lightly, but people are worried about this too much because I think they're looking at it on like, oh, will I be able to exit the short timeframe exits? And then the Second thing is, maybe this goes into hiring philosophy a little bit. People who are at NETIC, who deeply care about what they are building themselves, customer obsessed for the long term, have the agency to start thing, urgency to solve problems, but at the same time to really rigor and patience to carry it forward, right?

17:18I see, especially Gen Z in these days when I'm, you know, looking at hiring, obsessed with this permanent underclass mentality. If I don't make my money in the next 18 months, or if I don't learn everything in the world in the next six months, then I am forever poor. I see. This is an AGI-pilled view of, you know, in 18 months, AI will subsume a lot of people and so your value decreases. Which I think is actually a very dangerous mindset. In fact, building really good things take a very long time. I have learned some of the most important lessons in my life from, you know, committing to things and keeping up with it, with all the problems and with, especially at scale, for example, over really those four years.

18:04And now with building a company, because you have to see not just what's the first version of a thing. How are you thinking about what does it do in the world? What do you have to improve? How do you keep up with other research? How do you keep up with people? How do you need to improve that? Right. I think, especially we look for that. We really avoid shiny object seekers. And recently I was reading this quote attributed to Martin Luther, actually. It says, you know, the Christian shoemaker doesn't honor God by putting little crosses on the shoes. It does so by building the best shoe, right? The best shoes, because God cares about craftsmanship.

18:44And I think I really resonate with that when you think about as a founder, what are you building? Why are you doing this, right? It really is about building the best product that are solving the problems of the people you care about. If anything, you actually achieve more with less, with more focus, and with a small group of people that came together to take down the whole world. You mentioned selecting for people with agency. How do you screen for agency? What do you look for? Is it an interview question? Is it experiences? Is it something else? I think agency. What I look for is like not agency now.

19:24If you have agency, you care about agency, you have shown agency continuously in your life. So I will actually dig in. How was it? Like if you're a new grad, you don't have to have a job. Did you do something in college? Did you do something to be able to get into college? Do you have a project? Do you really care about? And not just that like I did this for a weekend, but did you keep up with it? Right? So what are really those examples? And I think I do ask many times, it's just one question I'd like to know about what people do, what has been the hardest thing they have ever done in life. And they can take it anywhere, but it's not just one question, but we'll really dig in to understand the why.

20:02or you pull that apart from someone's life story, right? But the most important thing I care about, not to have one agency example, is just however long you have been alive and conscious, have you been showing agency in things that you did in life? And did you keep up with them? Did you stick through when it got hard? You started something, you did something unique that most people don't do. And then you kept going on it. It's funny, I used to ask the same question of what's the hardest thing you've ever done? and I got such bad answers that I stopped asking it. Well, I mean, you know, I don't know why you asked it, but you know if you get bad answers, you know, maybe that person is not really a good answer.

20:42Well, just consistently. I just mean like the hiring pool that I was at least looking up for that. I do get really good answers. I think they're very different answers, right? Some will really open up, and I'm not looking for a work answer. Like it can be anything in your life that's truly the hardest thing. And sometimes you learn a lot about people's personal lives that something they had to go through, they didn't choose. But it was all about how they reacted, what they controlled. How did they take something they can control in their hands and actually change the future? Right. And sometimes it's about, you know, it also doesn't have to be this grandiose thing.

21:17I'll give you an example of someone we just hired. Actually, he's starting next week. And, you know, he gave this answer. This was the first time someone gave an answer like this. He said, I live a very simple life. I deeply care about my work and I have a crazy regimen about how I think about my health and really outlined a little bit what they meant right like outside of that I don't really have a lot but the hardest thing for me has been I kept up with this for x amount of years every single day like waking up this hour doing these things every other hour at night and showing up for my coworkers.

21:53And the hardest thing has been doing that for over 15 years and without getting bored, without really thinking about anything else and committing myself to what I care about. And I thought that was also a very creative answer, right? Like I'm not really looking for, you know, maybe when I gave that answer, like my answer is a lot about building a company or about how I came from a very tiny town when my parents didn't have anything to hear. But I'm not looking for that. Everybody's story is different. How did you make your own story? I thought that was a great answer and we're very happy to have him.

22:25That's amazing. How do you think about where you want to be with the company in five years or what's your longer term vision for what you folks have accomplished, what you're doing, what's your sort of North Star? In terms of our vision, we are building an autonomous enterprise. We want every single thing in these companies to be handled autonomously with NETIC, except the actual services and the labor itself, that human component, so that these companies can fully focus on that to deliver and create customer delight. That is number one thing with the company. Every single product, every single thing that we build on top of our intelligence layer that compounds and connected to the other products is for that purpose.

23:10Second is, you know, building a company is very hard. And I'm also doing that for the vision, but also to work with remarkable people. I think for me, as the company grows, something I deeply care about, how do we keep working with only remarkable people? And there's no one answer. I think every single company that I know, that I respect, that even thought about these things for the long term, like imagine Palantir or SpaceX or Notion, who really care about craftsmanship. and really delivering for their audience for many, many years have struggled with this. So for me, deeply thinking about that and achieving that is very important in the company.

23:53So you're serving a lot of industries that are perceived as very slow to adopt technology or not at the cutting edge or things that take a long time to use new things and you're selling AI solutions and agents to them. Has that been challenging? Has that been straightforward? Or like, is that perception correct? Like, how do you think about your customer base in terms of just like the rate at which they'll adopt new things or try new things? I think it's a big misconception to think about these industries as old school. Actually, some of the most tech forward business focused people, owners, founders I have met have been in these industries.

24:30So first of all, we work with large enterprises, so they're extremely value focused and they have to be tech forward, right? For example, to give you a sense, you know, like just one of the businesses we close, it can be like a half a million contract. And it took from end to end 14 days. And it's not because, you know, there is, you know, they I'm not a magic potion and the company is not or just AI is not. They're very thoughtful about what they have to do and checking if the value is there. Right. Even in their buying behavior. That being said, I think the way that I think about these industries is that they are extremely primal and tech forward at the same time.

25:11So if you think about a large roofing company, right, is actually they have to have door knockers. So door knockers mean, you know, going neighborhood to neighborhood, thinking about the front, you know, roofs and trying to talk to you about why you should think about a new way or like having solar on your roof. Right. But at the same time, today in Netic, it's a compilation of product from handling everything inbound, outbound, analytics, and even delivery of their labor. So we connect to satellite data to be able to think about in different neighborhoods how the hurricanes affect different roofs.