Revolutionizing Customer Success with Agency’s Elias Torres

0:05Hello, and welcome to KnowPriors. Today we've got Elias Torres with us, repeat entrepreneur and CEO of which is working on enabling every company to make their customers successful. Elias is no stranger to entrepreneurship. He's founded four companies, led engineering at the juggernaut SaaS company HubSpot, and most recently sold his last business, Drift, for more than a billion dollars to Vista Equity Partners. Elias, welcome. It's a pleasure. It's been a dream of mine to be here with you. You're doing company number five. Can you just talk a little bit about who you are getting to this place?

0:38Yeah, absolutely. The journey, I think for me, is what's interesting bits about it. I'm from Nicaragua. So I came first generation, could not speak English, right? Imagine me at the back of a McDonald's, you know, reading the printouts to founder number five, three times with Sequoia, you know, and great outcomes, IPOs, etc. It's been an incredible journey, right? I worked at IBM for 10 years. And then I wanted to be an entrepreneur. I just could not be inside of IBM. I needed to be free. I needed to have a chance of huge impact. And so here I am. I'm in Boston. That's another interesting bit, right?

1:18I'm not in the Valley. I came to Florida from Nicaragua, and then I had a shot at IBM in the Northeast, and I've been here ever since. You know, one tidbit I will insert because I feel like the tech community has somehow discovered that smart kids who end up in tech often do math competitions growing up. This has been going on a long time, guys. Alias, you were one of the math competition kids. I was in math competition. I wish I would be like an Andres or something like that, right? But yes, we're talking, let's say, 1992, 91. This is Nicaragua. But I get picked somehow to represent the school nationally at these competitions, right?

1:58I placed third in the country. It's not a great accomplishment. But the point you're making is that math is fundamental to this and the ability and the thinking is applicable. And when I came to the United States, I'm in a low income town in Tampa, Florida, low income school, public school. And somehow, again, I don't speak English, but somehow the math teacher says, do you want to be in math competitions? Mu Alpha Theta. And I'm like, sure, I'll join the nerd club. And I'm like, just had a blast there. I did have a lot of trouble with the word problems, but I was able to do well in the other ones.

2:36I want to talk a little bit about the last two journeys, because HubSpot is a company that everybody knows that is like an important public enterprise SaaS business now. And you've done leadership at different scales, like coming out of even the success of HubSpot where you were leading engineering, like why go start Drift? I think my whole life has been a journey of not having any clue what's ahead or what's possible. I mean, that math competition I had in Nicaragua to go to compete in Mexico, representing my country, and meeting kids from all over Latin America was mind-boggling. Then I come to the United States, then I'm in Florida, and then you start, I don't know, MIT and stuff like that.

3:26So there's always more. It's just been fun not knowing what's ahead until you get there. And taking HubSpot public, when Brian Halligan came to me and bought my company Performable, so he's like, our goal is to take it public in the next year or two. I had no clue what taking a company public meant. I mean, we had 30 million in revenue, 200 employees when he said those things. Brian says, you're in charge. You and David can do anything you want with product and engineering. We've got to go public. And so on my mind, it's like, OK, we're going public, but I have no idea what going public means.

3:59That naivete is great, right? We go public, a billion dollar company, three years, everything was great. We went from 30 to 130 million. I said, if Brian can do this, why can I do this too, right? It should be easy to go from zero to 100 million. And that's why I left HubSpot, really. I was so naive thinking that was going to be easy. Well, you were not so naive that it didn't work, right? So your last company, Drift, it sold for more than a billion dollars and you could do it. And yet you told me you think of it in some ways as a failure, which is like a like a very odd, uncommon point of view on that sort of outcome.

4:39Why would you describe it that way? Look, I'm very happy with my life. I had almost no food growing up, right? So like to me, every year has been a better year than the one before for me, ever since growing up. So like I have zero complaints. But when we left HubSpot, you know, to start a company, I left it at a billion dollars. And I saw it grow to 30, right? And so as I'm building Drift... Oh, the goalpost moved, I see. The gold post moved, right? So the day that we sold Drift to me, it was a very sad day. I did feel like a failure. It was super anticlimactic. It was literally, I was at home in bed, tired.

5:21It was like 11 o 'clock. We've been waiting to sign the papers, you know, power of attorney. I just got a text from one of the lawyers. It's done, you know? And that day I felt nothing, right? And the next day felt even weirder and weirder. it took a long time for all those things to clear up what it meant to sell for a billion in cash, right? A company that we grew to a hundred million in revenue, eight years of hard work, but I lost the dream of building a$30 billion company or taking a company public, right? And so I felt at that time, I was so tired, uh, worked straight 45 years of my life, you know, and I was like never taking vacations really.

6:03And I was worried that I didn't have it in me at the time. If you asked me, are you going to start something else? I would be like, I'm done. It's like, I'm like, how can I start over? I know. So I was like, I'm done. It's like, people are like, I want to start a company. I go, that's stupid. Don't do it. So you took a minute, you're kind of hanging out for a while. Then you started doing some consulting for OpenAI and like helping their customers. Like where did the energy come from again. As Pat says, like I have like I'm like I have the energy of a teenager. I was I was a little tired. You're aging in reverse.

6:34It's a little weird, Elias. It's a little weird. You too. It's like we're lucky. What happened was I was tired. I was in I was November of 2022. What happened? ChatGPT. ChatGPT. And the launch of conviction, everybody. This is very important. At the same time? Yeah, it was. October. Yeah. October. No, you knew you stole the thunder. So I was in Brazil. Actually, technically, that was the first real vacation I took post-acquisition. Because I worked, I stayed at Drift for almost two years. And I was there. And I kite surfed. That's one of my hobbies. I have hobbies now, you know? Nice. Poor immigrant does not have hobbies, but now I have hobbies.

7:16For the first time, I felt like I get up in the morning. We'll kite surf in the afternoon. We just have breakfast. We feel the ocean breeze. just four of us, four friends, and we were just like kite surfing. And I'm explaining chat GPT to them, right? And I'm like, this is insane. I don't even know how to explain chat GPT. I don't know what an LLM is October 2022, technically speaking. I knew BERT. I knew Word of VAC. I knew Transformers. I don't know this. And I'm like explaining to them why this is different. So that's the first moment. I had the chat GPT moment where I was like, you know what?

7:53Again, I missed the boat. what happens? Why wasn't I working for OpenAI? What wasn't like, is this it? Is this game over? Many of us asked ourselves that question. People are still asking themselves this question. And so that was the first thing that happened, Catalyst. I've already gone through that journey of a post-exit founder, but I'm already coming to the conclusion. The only thing I know how to do is build and I want to learn. And so I get introduced to OpenAI just to do like one of those networking calls and they tell me we're drowning customers are asking us for help we're two three hundred people we don't we can help them implement their own solutions we don't have the bandwidth so we're looking for people we're trying the big firms and and it was an idea they were giving me and i said i want to do that i want to do that i don't know anything about it i've never used the GPT API, but here I go.

8:49And so they were like, are you sure? They looked me up and they're like, is this what you want to do? And I said, yes. And so I did consulting for them. And I started from, from the bottom, right? People were like, who are you? I was doing some support tickets for them, et cetera, explanations. But then I started getting contracts, like the NBA, you know, Ticketmaster. I'm in Dubai talking to customers, Red Bull, and I'm just having a blast with a small team, implementing agents, LLM apps, and Klaviyo, one of the customers too. And it's, my whole world changes, right? It's like, this is the dream as an engineer to build solutions that are this intelligent.

9:35Okay, so you come around to the idea that you have this like capability that you're actually really inspired about. How did you end up thinking about customer success? Like, can you sort of give us a line about, you know, what agency is and then landing on that idea? Yeah, I mean, agency is really the lessons learned in all my prior four companies, right? Startups, we know how to like build products. I mean, we know how to raise money. hire people, build products. We know how to sell it. Sometimes we know how to market them, but I don't believe we know how to take care of our customers, especially in the B2B.

10:11I think managing customers both at scale, when you have tens of thousands or hundreds of thousands of customers, I don't think anybody has the answer to do that. This is something that happened in the past 10 years, and we're struggling as companies. How'd you end up focusing on CS? Yeah, I ended up focusing on CS because one of the customers that I started, I'm a good friend with Andrew. So Andrew used to work with me, a performable Andrew Bialecki, CEO of Klaviyo, Boston-based company, amazing success IPO. I did some consulting for him. And one of the ideas was, how do we help scale the customer success organization, right?

10:53Like at Drift, I built in 2019, the first AI SDR. But now I was helping, how do we help customers at scale? Because she has hundreds of thousands of customers. So when I started solving that problem, which was a little bit of applying my experience between marketing and LLMs, is when I realized the amount of help that we can provide as a company to help scale benchmarking, reporting, inside generation, idea creation to the customers that they have, right, at scale. Because it's something that humans struggle, right, to do that in a very detailed manner. And so that's kind of where the idea was born, right?

11:36It was like, wow, I can do this for all B2B companies. What do you think CS looks like five years from now? It's not been a focus of a lot of AI applications to date. One would argue that investors and CEOs often don't think of it as like super strategic. You can be better or worse at it. But does it become much more powerful somehow? I think CS is everything. I think the word CS maybe is the misnomer. I think that that's where people are getting lost. I think, no offense, right? But, you know, VCs are like saying, oh, here's CS. Here's a category. How many software companies are in it? What's the TAM?

12:11How much is the revenue? Add up the valuations. Is that something that we're interested in? I'm not necessarily interested in CS, right? I'm interested in customers. I've been in the pre-sales world for like 15 years. I know that like the back of my head, right? I'm a true customer obsessed founder, right? All my companies, I'm the one who services the customers. And when I went to HubSpot, I went from 20 customers to 5 ,000. And I was crying because I couldn't, they called me and they would say, Elias, help me get on the screen and help me fix the product, help HubSpot, fix HubSpot for me. And I would say, no, I'm sorry.

12:50I have 5 ,000 customers. So the moments where I stop servicing my customers, like if they were the only one, my soul gets crushed because the company shifted. Right. And so that's what I want to solve today. Right. So that it's not CS. What I'm trying to solve is how do we service the customer? Or how do we give the power, the agency to the customer itself? I'll give you an example. Like, I like to have personal relationships with the business that I work. Ah, yes. This very much. Yeah. Right? Like, for example, I have a guy that in the winter I have to store a car or two, right? And so I can text.

13:29He has a warehouse. He saved his space for me. And I can text him. He lives down the street. And he can come and pick me up. We can take the car, drop off. and he's super flexible to me, to my needs, right? I'm in charge of the relationship. Yes. I go to my barber. I just booked two haircuts on Saturday for my son and I. My second son says, can I come? And I said, you text Mel and you go and say, like, see if we can squeeze us in. So he texts Mel and says, okay, I'll squeeze you in in the two slots, right? And so I like that experience. Can we have that experience with like a service now today?

14:05Can you text, you know, it's like, I want to be able to provide businesses of the future the ability to put the customer in charge. Yes, at scale too. At scale. With hundreds of thousands of customers. That's the essence. Yeah, I was going to say, this is actually something I believe very deeply about venture, which is like, I do not want a bunch of, could be conceivably very talented people, like between me and the founders that I, you know, owe support and partnership and work to. Because I don't have any of the context. I don't care as much as I do. And I think it's like, you know, not a great experience when there's like four layers of people who are passing around some task for a founder.

14:49But it does mean venture doesn't scale if you're doing it in a particular way. And I guess that's true of many customer relationships with like, you know, an owner of the product. I think you and I are alike, right? I want to disrupt how startups work. I want to break the status quo, right? Which is what you just said. You don't want four layers of people between you and the founders, right? And so the same is with me. At agency, there's only going to be one email address. Aaliyahs at agency.inc. It's very dangerous, man. Everyone will email. I will always take care of all the customers, right?

15:25That's the company of the future. Because I drift, I had 800 people, like 250 in the customer organization. That cannot happen again because it wasn't working, right? That number of people didn't necessarily solve the problem, right? And that's something that every other company is struggling with. And so I want to maintain that relationship. And so the only solution out of this is by leveraging AI. I want to talk a little bit about like how you think about company building now, both in the era of AI and then also like fifth time around. You don't want 800 people. You say like, I think I can get to a billion, you know, is that value?

16:01Is that revenue? I would think revenue. Yeah, that's a better one. Value is too easy. Yeah. Okay. The goalpost move. It's a billion in revenue. That's a good goal. It's a billion in revenue. With a hundred people. How do you not hire the other 700 people? We have to question everything. I'm a big fan of Elon, right? I think I heard him speak about, like, you know, he just thinks about building a rocket and he says, well, how much does it cost to build a rocket, right? And instead of just saying, like, how much the parts cost at the existing marketplaces, right? It's like, well, I'll just build the part, right?

16:31It's like, it's a metal. I think the same way, right? It's like, I have to produce something that has high value and that is very rare, right? There's two ways to make a lot of money, right? A billion dollars. You either have something that a lot of small businesses can acquire for free, right? With very little marketing costs, or you sell something that is very, very expensive, right? To enterprise customers. And so, uh, I'm, I'm picking to choose something to solve very, very, very big problems for, for big enterprises. Uh, second, uh, I think I want to challenge, like Paul Graham says, do things that don't scale.

17:06I think that that's game over for that statement, right? I think now we only have to do things that scale. I already know all the things that I could do before that not scaling. I could always throw a body at something and be like, okay, let's, you go do that. I think you said it in a tweet recently, right? And an ex, and you're like, can we just hire an intern, right? And then I think for now, where somebody says, well, we can throw a Devin at it, right? It's like, that's the thinking that we need to have, right? Do not do things that don't scale. I already know that they will work for a year and then they're going to break in a year.

17:38I now have to solve the things right from the first place. What are the fundamentals? Customer intelligence, customer communication, understand the problem deeply, get pricing right, get pricing better, build the right relationships with the right customers. Who's going to take you there? I'm building a company at a much faster speed. It's only been a few months, but I'm already much further ahead than Drift was almost three years in, right? When it comes to understanding my passion, what I'm trying to solve, how big the problem is, the market, my position as a company, the team, the engineering organization, the infrastructure, the branding, the marketing.

18:22I'm moving at a speed that I just never felt before. And it just feels natural, partly because of AI and partly because of my experience. What advice do you have for people who, I think like one reaction is like, oh man, if you can get to a billion dollars in revenue with only a hundred employees, it's like, I want to be part of the hundred employees, right? Like what makes those people valuable and special in their work? Like, how do I end up in that last hundred folks? You're asking for something very deep right here, but I'm going to say as much as I can because I really don't care anymore.

18:56Let's go deep. Look, as a founder, I see founders all the time doing this. By the way, I was part of three incubators this time around. I'd never been part of an incubator until now, until my fifth time. And I got to spend a lot of time with a lot of first-time founders. And it was amazing because he gave me a little refresher of what I was like, you know, the first time around. And so I see a lot of founders of keep making so many mistakes in hiring. I've made them all too, right? Too many times you get excited, you meet someone and they say the things like, I want to work for you. I'm going to make your company get to a billion dollars in revenue, you know, 25 % faster than you think, you know, they say all these right things and they're available and they give these pitches and, and I no longer buy any of those things.

19:43I've hired every executive, every C-level suite that you can think of multiple times. I have hired from the best companies. I have hired people that went from zero to 200 million in revenue in four years. I've hired them all. I know them all. I'm much more disciplined in my interview process. And no one joins agency until they have work for me as a contractor. I'm going to put you to work and I am going to be real, exactly how I am with everybody in the company today. And if you don't deliver at a level that is world-class in that one or two-week timeframe, there will be no room for you, right?

20:22And I'm focusing mostly on engineers right now. Everybody has to have a clear role of what they do. It's very difficult to be part of this 100, right? What's on the other side then? What do you think is going to be the hardest thing about building agency? Building agency is always, always about product. is always about change management. Everybody thinks that, oh, I just put an LLM on it, generates some stuff, summarizes a meeting, and bop, bop, here's the next CRM, here's the next customer platform, right? No, no, no, no. It's like being in the weeds with a, building the product is the most, is the hardest part.

21:01Like LLMs are solving one tiny part of the problem. We still have to build the products that solve a specific problem, the solution, right? If everything was just passing it to the LLM and it does it, but we have to transform organizations from very large organizations struggling. It's a lot of chaos in the customer and the post-sales organizations that we need somebody to go in and understand them, talk to them, nurture them, see what's broken and slowly transition into the future, right? It's not something I've talked to CEOs of public companies and no CEO comes to me and says, I want to change everything right now.

21:42Just throw it away. Let's swap it. And so most companies don't understand that that change management is the hardest part to get through. Building a product that people can use. Gaining trust from an LLM. I mean, people are people like it's OK if you get the summary of a meeting from an LLM. Like nobody cares. Right. It's like, whatever. It's great. Look at this. I can read faster. But to trust the output of an LLM to send an email to a million-dollar customer, it's like when you present that to a CSM, they're looking at it, and they're questioning every word. You have no idea. They're questioning every word in that email.

22:22Yet when they're writing their emails, they're not questioning their words, right? And they're just as bad. So it's like we have a long road ahead for this. This is a problem that there's not one solution to it, right? This is not one LLM or one foundational LLM is going to be able to fix. I don't know. AGI will solve everything, but whatever. I don't, it's that. I'm not worried about that. I'm really worried about what is it that I want to build as I listen to the customers, right? To my customers. And how do I take them where I want to take them, right? And then do they want to come along in the journey with me?

23:03I want to take the last few minutes and talk a little bit just about the software industry, because, you know, for somebody who's been building software for like 30 years, you're pretty anti-software now. Like as somebody who's quite dismissive of like, oh, I've just been putting shit in databases and taking it back out. Like, explain yourself. Like what, you know, why do you think that's so irrelevant? that. People are like, oh my God, like AGI is going to, you know, enslave humanity. What's going to happen. Right. I'm telling people like they're enslaved today. We make fun of it, but like who wants to be a sales rep, you know, that after you finish a meeting goes and puts like a task to remind you, to remind the customer to do something else to put.

23:48I mean, like, it's just like, I just think it's utterly ridiculous that we just like the emperor has no clothes. Nobody wants to say anything about this. Our software is shit. Everything is ridiculous. I mean, there's no good software out there. Uber is great, right? Because you need to go somewhere, you call it, shows up and it takes you there, right? That's good. Fantastic. That's the one software product Elias likes. Okay. Uber. I just want people to realize that why do you want to enter all this information in all the systems? And if it doesn't do anything for you, for example, that agency, Should I install a CRM?

24:23Should I install Salesforce? Why would I buy Salesforce? It's a monstrosity of a software that I would have to hire somebody else to go configure. And then I don't know how to use it. And then that person that is going to configure it for me, do you think that person knows how to do business better than I do or knows my customers? They don't. And so they're going to tell me some, you know, antiquated way of working with my customers and what to do. And then I have to hire people to put stuff into the software. And then I have to have people to manage those people to monitor what they put into that software.

25:00At what point did we talk to the customer? I mean, like I'm telling CEOs, you should just throw away your instance of Salesforce. Just throw it in the trash. Like it's like, what is it doing for you? We're just so busy configuring it and sending data to it. And we don't ever use the data that is in it. And so software has to transform to do things for me without me even asking. Like we are in the era where like, hey, Eliezer, you're going to speak in San Francisco. There's a calendar of a JetBlue flight on my entry and on my calendar. It should read it. Let me look at everybody that always asks you to grab coffee in San Francisco and send them a message.

25:43I'm in town and I'm in town from this day to this day. and lock out two-hour slots every day and say, if you want, meet me here. I'm going to be at this coffee shop and let's catch up. Prioritize that my customers that I'm trying to chase and send them two weeks in advance messages that are repeating every three days, right? Why can't we have software that does that? That sounds useful, right? That's the level that we want. Like, you know, when you can text someone, it just gets done. Like, that's wealth, right? And so we want software to make us feel wealthy, right? Yes, I do not feel wealthy from my software today.