What is agentic commerce? Stripe’s CRO of AI explains.

0:00Hi, everyone. It's Rana. The future of AI is not built in isolation. It is shaped in rooms where ambitious people challenge each other. Masters of Scale Summit is back October 20th through 22nd in San Francisco, bringing together founders and innovators pushing the edge of what is possible. If you're building what comes next, you should be in this room. Apply now at mastersofscale.com slash pioneers. That's mastersofscale.com slash pioneers. When it comes to AI, we spend a lot of time talking about what it takes to move models from research into reality. Enter LTX2 from Lightrix. It's an open-source audio-video foundation model built for synchronized sound and video, native 4K output, expressive motion, and precise multimodal control, all running on consumer GPUs.

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2:18Okay, so I want to try an experiment. If you know me, you know I love chocolate. But I'm also trying to be healthy and like really thoughtful about what I put into my body. And so I am going to see if I can get AI to help. All right, so I'm opening ChatGPT and I am going to ask it for some help finding some chocolate options. So I'm looking for a chocolate bar that has no added sugar, maybe gluten-free, is packed with antioxidants, and maybe has some protein. Okay, so ChatGPT gave us three options, Pascha, Lilies, and ChocZero. And it basically has these like little tiles of each of the chocolate options.

3:18Lilies I've tried before, but pascas and chocsier I have not. And I'm curious to try it. So I'm going to click on pasca. And on the right, basically, there's this little bar that popped up. And if I click on that, it takes me to the pasca website where I can directly order the chocolate bar. And I can do this all through ChatGPT. This kind of AI-powered shopping is called agentic commerce. And my guests today argues that this is the future of shopping. Maya Hozabukavili is Chief Revenue Officer of AI at Stripe. On this episode, she makes the case for AI chatbot shopping. We talk about the risk of commodification and how AI can bring new customers to businesses of every size.

4:11I'm Rana El-Khalyubi, and this is Pioneers of AI, a podcast taking you behind the scenes of the AI revolution.

4:25Hi, Maya. Welcome to Pioneers of AI. I am so excited for our conversation. Hey, Rana. Thank you so much for having me. So we're going to talk about AI for most of the conversation. But before we dig in, I want to talk about you being a very accomplished skydiver. I don't think I will ever skydive. So that sounds like too terrifying. What was that first jump like? You know, I don't know that many people grow up and say, I want to be a skydiver. I will tell you, I certainly didn't think that. And then I did my first tandem jump and I landed and I said, I want to be a skydiver. Like I just knew. There's this feeling you get when you just jump out and you have, call it 60 seconds of free fall, where the whole world goes away.

5:12And all you can do is think about what am I doing in this one moment? And there's just absolutely nothing like it. Do you still skydive? No, that was Maya in her 20s. Definitely not now. That's great. So you then went on to become a founder. And I feel like that's a kind of a different type of adrenaline rush. But still, you know, you still have to take a leap of faith. So what has your skydiving experience kind of taught you about being a founder? You know, my skydiving instructor, Oli, who was this, at the time, you know, probably 40, living in Vermont. And when you're in college, 40 is very, very wise.

5:52He used to always say, you know, I'd say, Oli, I'm scared. And he would say, well, that's good. It's a sign of intelligence. I'd be very concerned if you weren't. But what could possibly go wrong? And, you know, there's something very funny in asking what could possibly go wrong in a skydive. But what was very helpful, though, is then you'd actually just walk through what are all the things that could go wrong and figure out how you would handle them all. And I think taking a leap of faith as a founder or a leader or experimenting with new forms of AI, you can kind of go through the same process, which is really walk through what are all the things that could go wrong.

6:25And at the end of the day, it's not that bad. And so just go ahead and jump. Yeah, go ahead and jump. I love that. So you're now at Stripe. Your current role is chief revenue officer of AI. That is a very new title. How did that come about? What does it mean? What are your responsibilities? Like, we're always very curious about the new jobs that AI is creating, and I believe this is one of them. Yeah, absolutely. At Stripe, we're creating the economic infrastructure for AI. And that means we power the world's fastest growing and most ambitious AI companies on their growth journeys. So in fact, if you take the Forbes AI50 and you look at anyone who takes online payments, they do so with Stripe.

7:10So part of my job is really partnering with all of those companies. Take OpenAI, Anthropic, Cursor, Replit, working with them on their growth journeys. We also are powering the new Agenda Commerce wave that you're seeing across the board. So, you know, OpenAI released Instant Checkout. Microsoft Copilot has a solution. Google has a solution. We're powering some of the world's largest retailers on those platforms. And so when you say agentic commerce, what do you actually mean by that? Yeah. So we're referring to AI-enabled commerce in really two forms. The first one is autonomous agents completing purchases on behalf of consumers.

7:56And the second is humans making purchases within AI applications, such as chat interfaces. The industry generally uses the term agenda commerce to cover both. And as we partner with our customers, they do as well. And so we think about agenda commerce as the whole suite. Of these two scenarios, which ones are more common today? And can you give us an example? Yeah, absolutely. We're seeing a lot more pull right now on the second one, which is humans buying within the chat interfaces. And so we're really focused on helping everyone prepare for the agentic era. So as an example, buying a coffee table.

8:33In the before times, you would go to 10 different websites of the brands you knew. You'd go into the search and the filter and say, I want a coffee table. And you were very limited in the options. You could choose, you know, wood or metal, round or rectangular. And then you'd flip through and see what you could find. Yep. And then you'd get like your first 20 options and then you have to click onto the next page and so on. Exactly. Now you can take a picture of your living room, upload it to your favorite LLM surface and say, I'm looking for a warm, modern vibe coffee table that fits in nicely here.

9:10And what you'll get back is a few different or, you know, if you prompted, you can get back a few different images of different types of coffee tables already situated in your living room that fit your aesthetic. And then you click buy? Well, that's where we're all heading, right? So today, a few retailers are live today, but we're working on powering getting more merchants live. And the vision is that Stripe will be the fastest on-ramp for brands to participate in agenda commerce. But you can see how this is just a much more powerful shopping experience and better for the end consumer. Yeah. You have actually said that AI is a much bigger shift for commerce than mobile was.

9:51Why do you think so? Well, in mobile, you still had the purchase happening in the brand, and you still had to have consumers know where they were going, right? What Agentic really brings is the ability to bring commerce to where intent is happening. So people are already using these LLMs to search, and now we can bring the different options right where the consumer is. I'm really excited about it for a lot of reasons, but it also just then democratizes the ability for these brands to get in front of consumers. You know, we have Etsy Live in ChatGPT and Microsoft Copilot. That is so cool. It's so cool.

10:36And you have these local artisans who may not always be able to get in front of, you know, ex-consumer. But all of a sudden now, if someone is searching for, you know, a Pokemon Halloween costume, that might now show up and give that local craftsperson access to consumers they didn't have before. Yeah, very cool. Actually, on that topic, because AI is changing the way we are discovering information and finding products, search engine optimization is really becoming reimagined, right? So SEO was how we found, like how basically Google surfaced products to the top. How is AI changing all that when you're shopping inside these basically models?

11:20This is one of the big conversations that's happening right now. And brands are really thinking about how do I show up where the consumer intent is? And so the product catalog really matters and the nature of the product catalog really matters. How do you get this information to be really agent legible? That is a new term. What do you mean by that? You've got agents now trying to understand and make sense of all the different SKUs on your website, all the different SKUs in your product catalog. How do you make that really digestible for them so that when someone is searching for the warm coffee table, that shows up?

12:01Right. It's basically for every product item, what is the information you have about the product and can you make the agent access that information? That's pretty cool. Yeah. Yeah. It's a real shift in the infrastructure that these retailers need in order to participate. And so we obsess over what it takes for businesses to thrive in the agentic era without giving up control. And that control is an important piece to them. So we're talking about all the benefits. It's the concern we hear from a lot of merchants is that they still want to have a relationship with the customer. And so something that was really important when we were designing the Agenda Commerce suite was how do we make sure that the merchants are still the merchant of record and they can still have the customer relationship?

12:50And that's been one of the big priorities as we've been building is how do we build the most merchant friendly infrastructure so that the world's leading brands can participate in Agenda Commerce?

13:03We're going to take a break. When we come back, the role of ads in our agentic future. Stay with us.

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16:03So OpenAI announced that they are rolling out advertisements on ChatGPT. And they've actually said that these ads won't influence what products you see in answer to queries, but rather they will just allow advertisers to advertise at the bottom of the ChatGPT kind of interface. What do you make of all of this? I think it's a natural extension and it's to be expected. Do you think people should be allowed to pay more to show up more in answers to queries? I personally, I can see a world where that is fair game. But I also worry because then if I'm asking ChatGPT for advice on, I don't know, what supplements to take, right?

16:44I want the answer to be impartial. So I can see the pros and cons. I don't know. What about you? Yeah, I'm thinking about it because I think it's a really good question. My personal opinion is that if it is going to show up, you need to know it was influenced by ads. And I think that might be a way to get around it. I also think it is really early days and things are going to look very different in a year and two years time. And I think a lot of companies are going to experiment and see how it all plays out. Yeah, that I'm sure is going to be true because things are moving so fast. So we had Suresh Kumar, the CTO of Walmart, on the show.

17:22And he talked about how they're integrated within ChatGPT. So again, now you can be shopping and then Walmart products could show up. Did Stripe power all of that? We're under the hood on the cases today in some way, shape or form, different integration shapes. So we're under the hood of the instant checkout experiences that are live today. So you power a lot of the top AI companies out there. So what are some of the trends that you're seeing? Two really major ones, and they both have to do with growth. The first one is the pace that these companies are growing at is just unprecedented. So we've indexed the top 100 AI companies on Stripe, and the ones that hit 30 million in ARR did it in about 18 months.

18:07By comparison, if we look at the SaaS companies from 2018 that got there, it took them five years. And then even within that, you have Lovable getting to 100 in eight months. Manus, the general purpose agent, went from zero to 100 million in eight months. Higgsfield, if they're not on your radar, they got to 200 million in nine months. What did they do? Video generation. And so that's all sort of, you know, if you're hitting 30 million or 100 million, Even the companies we see that are hitting 1 million in ARR, the AI startups are scaling 4x faster than their peers. So AI companies are global from day one.

18:41Another stat, the median AI startup, when we look at the top 100, is operating in 79 countries by their second year. Wow. 79 countries. That's about twice the internationalization of their equally promising earlier SaaS companies. Yeah, it's incredible. So they're getting to revenue much faster than kind of the traditional SaaS companies. They're global from day one. And I am really curious about different monetization schemes. We're tracking that very closely as an early stage fund as well. And I find that very interesting. It really seems like right now this hybrid subscription plus overage and usage-based billing is starting to be the norm.

19:25And I'm sure when we talk again in six months, we'll hear new things. But the rate of change is really impressive. Yeah, I'm just kind of thinking about some of the AI companies. How can you tell if a company is going to explode in terms of revenue and growth? The journey looks different for different companies. But there are certain signals you can see of when they're about to pop. And it might just happen at different times in their trajectory. Yeah, yeah, that's interesting. So you're providing this infrastructure, but you mentioned how online retailers really want to still own the relationship with their customer.

20:02How are you enabling that? And have you gotten any pushback from some retailers? You know, it sounds like you're working a lot with like AI companies that are at the forefront of innovation. They're really reimagining what commerce looks like. But what about like traditional online retailers? What's the feedback been so far? The shift in the last seven months is pretty staggering also. So we have a customer advisory board with, it's 20 of our largest retailer, well, largest merchants, many of them retailers. And last summer, when we were talking to them about Agenda Commerce, there was a lot of wait and see, I'm not sure.

20:45You fast forward, and 19 out of 20 of them had already started implementing an Agenda strategy. And everyone is somewhere on the spectrum from experimentation to I'm all in, but everyone's jumping in. So much of retail at the moment is done through brands really investing a lot of time and effort and money into that brand identity, right? Whether it's a logo or it's, you know, the colors, the sounds. What does that look like in an agentic commerce world? And how do we prevent this world where it's just everything gets commoditized, right? I'm buying my, you know, pair of snow boots and it doesn't really matter.

21:29what brand it is. It's really top of mind for us. We obsess over what it takes for businesses to thrive in the authentic era without giving up control. And that means a couple things. That means they get to stay the merchant of record and control the whole post-purchase experience. And their brand has to show up in that interface. And so when we designed ACP, the Dental Commerce protocol that we co-launched with OpenAI and our Dental Commerce suite, a core tenant of both of those was that the brand had to show up in that discovery. And so this is something we heard loud and clear from our merchants.

22:08And again, we're building the most merchant-friendly infrastructure so that businesses can thrive in the authentic era. Having their brand show up and having control of the customer were two of the most important tenants. So let's talk about some of the kind of the challenges or maybe the things to look out for. And I want to start with fraud. In this agentic commerce world, how do we prevent fraud and what are you guys doing about that? Yeah, absolutely. You know, we spent decades preventing bots from buying on our websites. And now we're saying, actually, we want the good bots, please come and buy all the things.

22:46And so one of the things we've launched is the shared payment token. When someone is putting in their information within a chat experience, we have what we call the shared payment token, which basically wraps that credential and gives it to the merchant. And this way, the merchant can retain control. They are the merchant of record. They have a relationship with the customer. In this, we also package a risk score so that you have a better sense of how risky is that buyer. Exactly. But how would you come up with this risk score? What is it based on? So how we built our fraud and risk models has completely changed.

23:28So historically, Stripe used specialized models. We had authorization optimization. We had one for fraud, one for disputes. It worked well, but recent breakthroughs in AI have shown us that actually a generalized foundation model can outperform the narrow ones. And so we created our payments foundation model, and it's trained on tens of billions of transactions across our network. So much like an LLM understands language, our Payments Foundation model understands payments. Oh, that is fascinating. And then it's able to basically flag if this is a payment that looks okay or is fraudulous. Yeah.

24:03So what we've seen is that as we've used this new Payments Foundation model, we've reduced card testing for businesses on Stripe by 80 % over the last two years just by using this model. We were able to detect that class of attacks from 59 % of the time to 97 % almost immediately. What are some examples of fraudulent behaviors that AI companies are experiencing? In the same way that we're seeing new monetization models and different growth, we are also seeing really new fraud patterns emerge with these AI companies. So one example is free trial abuse. So what we see is bad actors will chain accounts together, trigger AI workloads, and then they leave the startups with massive compute bills.

24:48Oh, wow. In traditional SaaS, a stolen trial didn't matter that much because there wasn't much marginal cost. But with AI, when you have real compute costs, these can be existential for those AI startups. So we've seen some AI companies actually be forced to turn off free trials altogether because of this. we've since invested in Stripe Radar, our fraud detection tool, so that we can detect and block this behavior and help AI companies let the legitimate users go through while stopping the abusive ones. More with Maya after a short break. Stay with us.

25:39Maia Josebachvili:In our new podcast, Everybody's Business, we talk about the business news that concerns everybody. From Bloomberg Businessweek, I'm Stacey Vanek-Smith. And I'm Max Chavkin. Each week, we unpack what is happening on Main Street and Wall Street, all the streets. WrestleMania has taken over the U.S. economy. A poetry that executives write on LinkedIn. A little actual magic in our underrated story of the week.

26:18So I want to talk next about like how AI is changing kind of the way we do work. So I kind of would love for you to take us inside Stripe. Yeah, one of my investment theses is basically AI is shifting value creation. and specifically through this idea of agentic AI and AI co-workers that get work done on your behalf, right? So it's not just creating a tool that helps you be more efficient. It's actually also like taking on end-to-end tasks on your behalf to Stripe deploy some of these workflows. And how has that changed the way people do work and especially culture to the culture of the organization?

26:57I love that you mentioned culture because one of the most important things we've learned is that AI adoption is as much a culture shift as it is a technology shift. And what we're seeing is the companies that benefit most are the ones who build a habit of experimentation. So at Strive, we focus on making it easy for every team to safely interact with a range of models and for those models to safely interact with our internal tools and systems. I'll give you a good example here. So local payment methods are really important for businesses for conversion, reach, or trust. And what I mean by that is, you know, customers in Germany prefer to pay with gyropay.