Building Customer Relationships in the Age of AI: Klaviyo Chief Product Officer Elias Torres

0:00This episode of Retail Remix is brought to you with support from National Retail Federation.

0:05Elias Torres: Take risks, say yes. I always say yes. When opportunities come to me, I say yes. I think a lot of people think about it for too long. They think about it really too hard and they're like, should I do this? Andrew came and says, let's do it. And I'm like, yes. You know, Brian Halligan said, you should start a company. I said, yes. David said, let's start Adrift. I said, yes. Brian Halligan came before and says, join HubSpot. I said, yes. I just hear because I've said yes to opportunities that came in front of me. And so if you don't know how to read or see those opportunities, you got to think about how many times have I said no, and I just have said yes.

0:42Elias Torres: And I think that that will take you far.

0:50More shoppers are starting their buying journey inside ChatGPT, Gemini and Perplexity, and not on a brand's website. So what happens to the brands standing on the other side of that door? I'm Kate Robertson, and this is Retail Remix. Today, I'm joined by Elias Torres, the serial entrepreneur behind Performable and Drift, and he's now the chief product officer at Klaviyo after the company acquired his latest venture, Agency. Elias and I get into the big questions reshaping commerce right now, like why he believes context beats the model and how brands keep a direct relationship with customers when an AI sits in the middle.

1:29We also talk about how being a people person and making friends is one of the smartest career moves you can make. Let's get into it.

1:39I do want to talk about your new role as Chief Product Officer at Clavio, but let's start with some of your entrepreneurial ventures first, such as Performable and Drift. Tell me more about those ventures and how that's brought you. We'll get into agency after that, if you don't mind.

1:57Elias Torres: Yeah, life has been super interesting for me, right? I'm an immigrant. Hold on, I'll tell you this just because it was fun today. But I'm just going to tell you something. Tell me if it's interesting. A friend of mine says, can you interview this young kid I'm hiring to help my firm with AI? And so the kid sends me this email with this kid's name. And I'm like, Swistenberg. How many Swistenbergs could they possibly be in Boston? And so the kid replies and says, Mr. Torres, I want to meet with you. I want your advice and blah, blah, blah. And then I realized I know him. And so I texted the father and he's showing me a picture.

2:30Elias Torres: Oh, my gosh. This is in 2000. There you go. You see me with the baby. And now he's a 25 year old, right? And so somebody replied like this is relationships matter, right? And so the thing about it is that here I have a friend that I used to work with at IBM, had a baby. I was young and I used to hang out with them. And now he's coming back and he wants my help and advice as a young entrepreneur. So life is amazing, right? It's full of surprises. And I think people need to learn from that, right? That every person that you interact with and you work with could go and do amazing things, right? And so Performable was the first company I started as a founder after leaving IBM for 10 years, right?

3:10Elias Torres: I joined my friend David Cancel, where he was at Lookery. I worked with him as a VP of engineering. but Performable was the first one I started as a founder, right? And so very stressful, very difficult. My first time really carrying this responsibility of building product and competing with the best companies in the world, right? And we were competing against Marketo and we were competing with, you know, mixed panel data analytics, A-B testing companies, Optimizely. And so it was a fantastic experience where you like sink or swim. One of those things that I started recognizing by myself at Performable was really the notion of finding amazing talent, right?

3:51Elias Torres: And so one of those things was I started the responsibility that every founder has, which is like, who do you hire? How can you hire? And so hiring people is so difficult to get right and just to even execute it, right? And so one of those, my early, early hires ever as a founder, right? Was Andrew Bialik. Wow. So he joined my startup Performable and we worked together. and this was his first time working more like on the cloud and AWS and marketing and like JavaScript tags and cookies and workflow campaigns, automations, etc. Right. And so it's like, it was an amazing time where we were like just a handful of engineers and we had to build everything ourselves on the cloud, get customers.

4:35Elias Torres: And so there's a lot of principles that a first time founder, I was applying based on my nature and my personality and my upbringing that him and I are very, very similar that he appreciated and remembered. And he carried throughout his journey himself. And we went on a different path. You know, I sold the company to HubSpot in 2011 and he went a different direction. He wanted to start his own thing. And so, you know, that's kind of like the genesis of Clavio in a way. And his experience and what he observed there as a marketing platform, right? And I went ahead and go, I went to HubSpot to fix HubSpot because HubSpot had a lot of potential, but the product wasn't working and then the situation was tough and then they were having a lot of issues and not enough innovation and team and scale to be able to go public, which we did eventually three years later, right?

5:25Elias Torres: And so that's kind of was my journey there. And so I did HubSpot as a VP of engineering from 2011 to 2014. And we left to start a company called Drift, right? And so that, and I always stayed in touch with Andrew, right? And so we were always together, you know, comparing notes. And he, you know, it's just an amazing journey that I got to see him grow this business to amazing heights. You know, it's just unbelievable. And I've had Lookery, I have Performable, sold it to HubSpot, HubSpot IPO. Then I started Drift. Eight years later, sold it to private equity. And then I started Agency, which was before coming here, right?

6:02Elias Torres: That was my first AI native company. Tell us more about Agency. What opportunity did you see or problem you wanted to solve with agency? So it was Brian Halligan, the founder of HubSpot, was on my board. And he goes, it's time for you to, are you going to start something, you know, after selling Drift? And I said, yeah, I'm ready. And he was like, why don't we disrupt the CRM? And I was like, Brian Halligan wants me to disrupt the CRM. And the idea was that, you know, a lot of what we see in the world of AI is no longer about, you know, where we store the work or the data, but is how this AI does the work, right?

6:34Elias Torres: And so that was the genesis of it. And there's a lot of options when you have the CRM because there's so much work being done by different roles. It was a matter of like picking a role, I thought. And I picked post sales. And you know why? Why? Because I was doing a consulting project for Klaviyo at the time. I was helping him because it's like, how do we give a better customer experience when you have hundreds of thousands of customers? And you cannot dedicate human time to each one of them. And so I was doing a project here. And when I finished it, I was so excited because I said, wow, AI, we can do that because we're always limited by how many human CSMs.

7:16Elias Torres: And so that kind of made the whole genesis of my company agency to be focusing on the post sales because I was like so passionate about, you know, that experience that I would give my customers early on in my startups. But the reality was that, you know, they would text me and they would ask for fixes and they can hang out and everything. But once you start getting hundreds of customers or thousands of customers, I can no longer talk to them. Right. And my passion was like, how can we build a product that helps me maintain more relationships? Right. And understand what's really going on with the customer and maybe take the heavy lifting and only let me focus on building a better relationship with them.

7:54Elias Torres: and know who's doing well and who's not doing well. So that was what agency was, right? It's like building AI agents to help you manage your relationship with your customers, right? Like if it was like your only one. So to me, the conversations around AI have really shifted this year. We've gone from, wow, look at all the possibilities to really seeing some interesting implementation and even ROI and measurable results. How did you know it was time for agency to be acquired? How did Klaviyo know that agency was the right fit for it? I think that going back to relationships, right? I think him and I, he saw the thing that became the genesis of agency.

8:41Elias Torres: And Klaviyo had just bought agency as a product. So we stayed in touch. So then it was like one of those meetings, Andrew and I were like, you know, having drinks. And he's like, show me the product. I want to see what you're building, right? And so I showed him and he was like, this is crazy. We have the same vision, right? And I was like, oh, really? You're building like a customer agent? It's like, yeah, I'm building a customer agent. So I hadn't even paid attention, right? And so, and he's like, I'm building this and you have a great team. And he's, if you know Andrew, right, he's just so intense and so fired up.

9:13Elias Torres: He's so focused, right? And he's just full of energy. And I'm the same way. We're both like right now, like we're like Tasmanian devils just running around. the company and he's like, come, right? And it didn't take me long to realize, I feel like right now we're at a very difficult time, like you said, in what is the value that we're generating? First, what is the value of tokens themselves to the business, right? Are we spending all these tokens? Is it generating an ROI in the business, right? Maybe in coding, but not even, because you could write code, it doesn't mean that people are going to pay you for it.

9:47Elias Torres: And so there's a lot of questions that people are not asking, everybody's spending a lot of money. but not really measuring the ROI. So one is at the token level, we do not know the ROI and then much worse at a company level. And where do you have a moat or not, right? Where do you have defensibility or where do you have a profitable or an enjoying business? And so I wasn't, you know, there's a lot of companies that are blowing up, but even those were unsure of what is their holding power with their customer is, right? Those things, I'm honest to myself because of the experience that I have and not necessarily ignore those signals.

10:23Elias Torres: But what was most important really is the ask from AB to be like, let's work together. I mean, we've known each other for 15 years, right? And, you know, in some ways we wanted to try, maybe try to do this at the very beginning of agency, but he wasn't sure, right? And so when the timing of something like this comes to work with a friend, you just say, yes, you know, I don't know when this was going to happen ever again, right? And so I thought that it's just, you got to have that humility and be honest and say, is this really exciting? And this opportunity calls me more. And I had the amazing supporters in my board and my investors to say, this is what you want to do.

10:58Elias Torres: Go for it. You know, a lot of founders, I just talked to a VC today for breakfast and a lot of the VCs, here's a message, right? The VCs sees when a founder might not be doing the right thing and a founder wants to communicate this, but they don't talk to each other because they're afraid, right? I'm a little bit more confident in saying I'm willing to go have those conversations. And so I think, you know, my advice to founders is like, you just be honest and don't be afraid, right, of making the call that is best for you, best for your team, best for the investors, right? And the VCs need to call it what it is.

11:36Elias Torres: But there's a tension there, right? Because if not, you might miss a humongous opportunity, either way. You have to be smart. It's hard. It's hard to make that decision. How do you and Andrew work together? It sounds like you both have used the word intense to describe your personalities. How are you different and sort of complementing each other? First of all, it's like seeing him run a public company and how knowledgeable he's become. And when it comes to P &Ls, when it comes to Gap, when it comes to, you know, international expansion and everything else is amazing, amazing. And seeing him from that angle, I've grown in many ways, but not exactly in that direction.

12:17Elias Torres: I've stayed the scrappy startup, early startup energy, like you go fast, you ship, you don't slow down, right? And you don't ask too many questions. So I would say that overall, we're very similar, right? And just every day, you're more evident. Like we just text, start texting in the morning. We're calling it the honeymoon phase, whatever. I'm, you know, it's like incredible, right? He's like so fired up. And I'm like, if I say, should we do this? And he's like, are you sure? I was like, no, yes, absolutely. Okay. And then it's like, we just push each other right now. And I think one of the most important things with relationships is like, do you have that person that you say a little bit and you completely understand what they meant?

12:58Elias Torres: So in a way, I'm like helping him spread his ideas and his vision in just such a short amount of time to the rest of the organization, because communication and alignment is extremely vital to the speed and the direction of the company. And so having more voices that can explain and educate the team of what we're building, why we're building it, it's extremely helpful. So I think we see eye to eye on many things, on our principles, our culture, our engineering, our product building. I would say where we're different, I think I'm a recruiter, I'm a people person. And so I think I shine in that and attracting talent.

13:35Elias Torres: and a lot of people are coming out of the woodwork. They want to join us. They're excited about what they see. I think he's really good at pushing, at giving direction, right? At having a vision. And so I think, I don't know, I would say, where are the differences? You know what the difference is? I'm older. I'm 10 years older than him. So I think I'm a little bit wiser when it comes to life, I would say. And so I can apply some of those learnings. I'm a little bit more maybe on the emotional side. I'm a little bit more like attuned and listen to people and be willing to work in different ways.

14:12Elias Torres: And Andrew is like just constantly going at just one speed or faster, right? Well, let's talk a little bit more about the shopping journey and how AI is mediating it. I feel like every day I get another study telling me about how many more people are using ChatGPT and Gemini and Perplexity to shop rather than going to a brand's site. When AI becomes that sort of front door or that portal to commerce, what's changing for the brands? Yeah, I mean, I think that there's two things. One, this is the same. Remember, my experience is more B2B, right? But it's the same thing, right? Before, we used to go to Google to search for a brand for a business, and then we'd go to their website and we would read what the website said.

15:03Elias Torres: And that was the front door, just like in retail, right? You have a store, right? And so now, just in the same way that we're going to chat GPT to say, what's the best database product that I can purchase in the vendor of some kind? We're going there to shop, right? To find the items that we need and the schedules. And it's just so much more exciting, right, when you can get ideas and brainstorm and research much faster than you would before by hand. Right. So I think that we all are now understanding as businesses that you have to understand how you show up in this new interface, which is gaining a lot of traction, right, in terms of eyeballs and time spent across the world.

15:45Elias Torres: But it's still very early in reality. Right. It's like a lot of people still don't even use ChatGPT. but the point is that you have to know your presence and how you show up there but i think the most important thing is that it's not just how they found you but it's how do you develop a relationship back again to that right is like do you have the mechanism to understand what this person bought right what they were looking for and how do you engage with them at the right time at the right place to the right channel if you just wait for purchases you can optimize geo aeo whatever. But that gives you the first time purchase.

16:21Elias Torres: But what you need to be investing is where do you store all the information necessary about this buyer? How often they're coming? What are you communicating to them? What do you know about them? What are their interests? If you don't have a strategy to do that, you're going to be in double the trouble. So I'll break it down into two. One is what's the top of the funnel? How do you acquire new customers? And the other one is how do you maintain them? How do you increase the lifetime value of each customer?

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17:28Okay, so tell me more about managing those customer relationships and some of the way that AI is powering that at Klaviyo.

17:38Elias Torres: Well, I think that what's important is that right now, we're still all in like the early stages of how we run businesses, right? I mean, you know, I think at the most basic, you need a CRM. And so that's why, you know, Clavier is key to everything is where is the place where you're storing your data, right? And so the problem is that large businesses and small businesses, the data is stored in separate places. My experience at agency is like some of the information would be in your CRM. Some of the information would be in the marketing automation system. Some information would be in Shopify. Some information would be in your support desk, you know, and so forth, so forth.

18:17Elias Torres: So you need a place where you can aggregate all this data in the first place, right? And so you want that. Second is to have the right platform that has access to that data for you to be able to create your strategy for communicating with them. The more interesting thing about B2C versus B2B for me coming into this world is that the lines are blurred and there's less people directly involved. You can be through marketing, be communicating directly to all your shoppers directly. There's less support and customer success like it is in B2B, right? And so you have this ability to create the direct relationship through SMS, through WhatsApp, through email and choose the best channel that the customer wants to talk to.

18:59Elias Torres: So you need a place where you can actually action, right? The ideas and the strategy that you have. And so how do you manage all those channels, all those action, all those segments? You need that. Again, this is the old world. What now comes, right, is to know who, what, and when, right? To be able to understand that person more, right? To be able to know that I prefer text over email. I'm not going to open my email. I want you to talk to me via Instagram, right? So you want to be able to have the intelligence to do that. And you cannot do that just by having disparate data. In the systems that are able to create the right models to understand those communications.

19:38Elias Torres: So you can really make the customer feel like you know that. You're not sending repetitive stuff. You're not sending emails that they don't care. They never bought anything from you in one year. Why are you going to email them every day? But a person that buys from you all the time, you want to be able to message them as often as they're usually are buying and what they need and the products that they want to see. It's so interesting to me how people focused you are, like whether we're talking about your professional relationships or your talent for recruiting or growing customer relationships with your clients.

20:13And when often when we talk about AI, you know, in the mainstream media or whatever else, it seems to be the chief concern is that we will lose that, that people will be replaced or relationships will be replaced by, you know, agents. From your perspective, do you think brands are doing a good job right now at deepening those customer relationships with AI agents?

20:40Elias Torres: You hit the nail on the head, right? I think as humans, our job is to improve ourselves at what we are naturally good at right i think we're good at human interaction we want to see each other we want to talk we want to tell stories to one another we want to we want to have a purpose right and so i think that that is the most important thing in our lives right and so you need to understand that and be good at it i think sometimes people be like sales people are the last people that are going to ever be replaced like why would i want like when i'm making a considerate purchase right why would i want to have an agent do it for me right and so you want to talk to that person.

21:15Elias Torres: It's like, I feel like the job of humans is to make another human feel comfortable. The agent, she just do a whole bunch of the research and the work and so forth. Right. But at the end of the day, we good. Do you want to buy a house through an agent? You know, you want to buy a brand new car? Do you, you know, you want to like, am I going to sell my business or buy a business through an agent? No, it's Andrew and I over text and conversations and constant communication, agreeing on what we want, we want to do. I didn't even read the contract, you know, what the lawyers, we spend hundreds of thousands of dollars writing, right?

21:47Elias Torres: Because it's my relationship with him, right? And so I think that what makes a brand different is what the founders, what the leaders write, how they care about relationships, and then how that manifests through what the company is doing for their customers. So then that will come through whether an agent is doing it or not, because we are guiding the agents. We are the ones who have the agency to let them know what we want to do or not. But what the agents are good at is how do you do it at scale, right? And so it's like, you know, what kind of products, what kind of feedback, what kind of customer service experience, what kind of returns you're going to allow support?

22:23Elias Torres: How do you treat them? How quickly you respond? That's really what matters, right? So I think that's never going to go away. It's just we get to do, I want everything to know me and have things tailored the way I don't want to ask for things. I like that experience. But yet, when I'm here meeting face-to-face with people, with the team, with customers, today I met some new partners. We had customers come in during the first week of onboarding. That's what we're here for, is to get to know one another and tell the stories like I told you at the beginning of the podcast. You're now leading Klaviyo's full AI agent product line, including composer and customer agent.

23:08Where do you think autonomous customer experiences are genuinely ready for prime time today? And where are we still kind of over-promising in the retail industry?

23:18Elias Torres: I think customer agents are ready now, right? In terms of a little bit of that support experience, right? Where it's like, you know, what's the refund policy? What do I need? How does this product work? Who do I contact? What are your hours? So forth. Can you look at my tracking? All that stuff has been solved, right? And so you can come to Clavio and just buy that product right now and use it. And so I think that that was the first leg of this journey, right, where we wanted to automate that because we had built bots in the past that were just quirky, right? Just quite not like finish the job, right?

23:52Elias Torres: What's more interesting is what I call, I would say that that's the reactive. The reactive has been solved. What hasn't been solved is the proactive, right? It's like, how are we going to trust an agent, be proactive, but not too proactive just the right amount for every single business? It's something that is never going to be quite done because the human is never satisfied, right? So I think it's the mission of every customer, of every business, really to delight their customers. And that's never going to end. You can always do better. So how proactive you are, how respectful, how friendly, how intelligent, how, you know, knowing of that customer is really what's going to set you apart from every other business.

24:33Do you feel that that's sort of the most important thing that will separate the winning brands from those that fall behind in this AI race?

24:42Elias Torres: Well, yes. I mean, I think obviously end their products. Right. It's a little bit of everything, right? It's going to be product, price and experience, right? And it's like some customers would want lowest price and don't care about the experience, but others will care about the experience more about than the product. Right. But it's going to be about connecting with the customer is more than just what emails you send them, but is is your brand and how it communicates and tells a story that connects you with the brand. So I'm a big believer in marketing and storytelling that goes beyond just the communication, but it's how it threads through every way you interface with the customer, how they see you, whether it be the ads, whether it be the homepage, whether it be the product, the packaging.

25:28Elias Torres: So all those things are going to have an effect. The idea is for us to be able to give you all the information for you to be able to understand how well you're doing and what you could be doing better. So when we first started recording this podcast, you told me a story about meeting with an old friend's 25-year-old son to offer him some advice getting into tech, I'm assuming. Can you share what the advice was that you... I'm meeting him on Friday, tomorrow. Oh, you haven't met him yet. Okay. This morning. Fair enough. Do you have any advice you would share young people trying to get into, particularly AI?

26:07Elias Torres: I mean, I think that I'll steal some of other people's quotes, but this is the greatest time to build, right? Because this thing that I had an advantage, you know, 10 years ago, which is I knew how to write code, made me, you know, special. So I thought I was, you know, a unique snowflake, right? I was like, look at me, I know how to code and I can talk to customers and so forth. That actually has in many ways has gone away. And if not, it'll completely go away in like six months. Right. And so now everybody can build. People text me all the time. I just build an app and I just did this. I just build a database and so forth.

26:47Elias Torres: I just build a driver for an emulated video card for a game from an old Mac game that I can run on my new Mac. It is absolutely incredible, right, what you can do. And so everybody should be building. It's like, this is the time to build. I think where we get confused is the scale of the businesses that people want to build, right? To me, to the newer generation, the main thing is that look for that passion, for that desire to work, to build something. Because not everybody has it, right? And so I think if you're hungry, build. And it doesn't matter what you build, but you need to go work with entrepreneurs that know the customers, that know how to solve, look for problems, right, that need solutions.

27:30Elias Torres: And just rinse and repeat, right? I think is when we put this crazy goals in our mind of like, I want to be a trillion dollar company or something like that. And that's what I'm building. No, it's like the journey, the relationships that are going to keep coming back for the rest of your life. If you're honest, if you're a good business person, if you really are authentic in the way you operate, if you try to solve your problems, that's the best part of life. Right. And so I think, yeah, people should build. I think people should find ways to learn how to build, be surrounded by great talent around them, really always be looking for people that are better than you.

28:09Elias Torres: Right. Take risks. Say yes. I always I always say yes. When opportunities come to me, I say yes. I think a lot of people think about it for too long. Think about it really too hard. And they're like, I'm sure should I do this? Andrew came and says, let's do it. And I'm like, yes. You know, Brian Halligan said, you should start a company. I said, yes. David said, let's start a drift. I said, yes. Brian Halligan came before and says, join HubSpot. I said, yes. I just hear because I've said yes to opportunities that came in front of me. And so if you don't know how to read or see those opportunities, you got to think about how many times have I said no when I should have said yes.

28:46Elias Torres: And I think that that will take you far. Elias, thank you so much for joining us today. It was so nice talking to you. Thank you for having me. Thanks for joining us for another episode of Retail Remix. Be sure to subscribe so you don't miss a future episode. You can find us on Spotify, Apple Podcasts, YouTube, or your favorite podcast app. Until next time, keep mixing it up.