Scaling Customer.io to $100M ARR: Colin Nederkoorn on AI, growth, & longevity

0:01There's not this division in the company of people over here working on AI and here's everyone just doing the normal roadmap. Those roadmaps really have converged already. The product we're building for the future is this AI enabled at the foundation level version of Customer.io. Welcome to the SaaS Revolution Show, a podcast by SaaS.com. Here we interview SaaS founders from around the world who've been there and done that. They share the ins and outs of how they built their businesses, their operations, their path for securing investment and more. Our mission with the podcast is to help you, the founder, learn how to scale your SaaS, maintain your well-being, and navigate the complexities of this ever-changing industry.

0:42I'm your host, Alex Dima, and together we'll explore the good, the bad, and the ugly in the journey to SaaS success. Hey there, it's Ken from Backfeature Ventures with a reminder about the SaaS.global pitch competition. Applications are closing in six days. Don't miss your chance to pitch in front of Europe's top PCs for our biggest investment package yet, to 1 million euros. If you're building the future of AR SaaS, this is your moment. You're ready to take the stage. We can't wait to see what you're building. Applications close September 17th and 2025. Apply now at sas.europe.com backslash global pitch.

1:16Thanks. Okay, welcome back to the SaaS Revolution Show. I am your host, Alex Theumer, CEO founder of SaaS, also general partner at BackFuture Ventures. Delighted to be joined today by Colin Nettekorn, who's the CEO at Customer.io. How are you doing, Colin. Hey Alex, great to be here. Good to have you on the podcast. First time, you've been running customer.io for 13 years. I've been doing this podcast for 10 years. We finally collided. So I'm very excited for that and for the conversation ahead, Colin. We always like to start getting to know our guests a little bit on a personal level. So we'd love to know and let the audience know, who is Colin Nettacorn?

2:02Yeah, so I'm a husband, father to two kids and a Labrador. And I'm someone who loves to understand things and tinker with things, always learning something new. I go through a lot of hobbies every year and go deep on things. Recently, I've been going deep on guitars, learning about different pickups, designs, and trying to understand the differences between the different guitar manufacturers. Like, what really is the difference between a Fender and a Gibson? And that's my latest hobby. But I was born in Singapore, spent a couple of years in the UK, and then have been in the US since I went to college or university, as you say, over there.

2:51Where do you reside in the US? I'm in Portland, Oregon. And my wife and I moved here before we were married. We moved here in 2014. Much of a startup scene there? I think when I moved here, it was probably a little stronger than it has been over the past few years. But from what I'm hearing from people, things are picking up again. awesome awesome and um so you've been running customer.io for the over 13 years now right is it your first SaaS business first company it's I think it's the first thing I've started that actually got off the ground and um hopefully my last but uh I I'm really enjoying it I I'm not looking to start another company after this one I think I've kind of been through the different stages of the business.

3:46And I don't know that I want to repeat them again. They're hard. It's nice to be on the other side. It is hard. Any thoughts? And I'm sure you're not, because the business is doing so well, looking to exit anytime soon. But in the longer term, if and when that opportunity arises. Have you any thoughts about like, what would be next? I mean, I think that there's so many things I'm curious about that I would, I would love to spend time a few months going and doing woodworking would be a fun thing to do. So I think just exploring some hobbies for a while. And I'm sure if I sat around long enough doing nothing, I would want to start another business.

4:37Yeah, it's very commonly, very commonly happens. And often we see people starting very similar businesses, even like almost competitors to what they previously started once the non-compete kind of goes away, which I find sort of quite interesting, not that I would necessarily personally do it. But some people are looking to really challenge themselves and go into, you know, something completely different as well. But But yeah, I mean, that time, I'm sure it's a long down the road. And yeah, at the moment, you've built an incredible business. Perhaps you share a little bit of data around that. So I would love to know how many people, part of the team at customer.io, maybe how many customers that you're quite open about the revenue, et cetera.

5:29Yeah, so we've been around for a little while now, founded the company in 2012. And today we have over 7 ,800 customers in 120 countries. And the customers that we have range in size. There's big SaaS businesses like Notion, and there are other types of businesses. Like we have Klar, which is like a Mexican neobank, and Pop, which connects people with vets or connects pets with vets. I think the people don't see the vets, the pets do. And then we have tons of really small startups as well. So those companies spread the gamut of different sizes. Revenue will probably, depending on how fast you publish this podcast.

6:26Quite fast. Quite fast. So maybe we're going to be crossing 100 million ARR soon. Okay. And maybe we'll have done it by the time you publish. Maybe not. Okay. Maybe we could sync up. And when the day you get hit 100 million, we will release this podcast. Company's been growing at 37 % year over year. So it's still pretty decent growth at this size. And we have about 280 employees across 30 countries, fully distributed team. And then on the customer side, for our customers, we sent 64 billion messages across email, push, SMS, all of these different channels where they're communicating with their audience.

7:18So we sent 64 billion messages in 2024. That's a lot. That's a lot. But yeah, congrats. I mean, you built an amazing business. and a business with real longevity. I think business that's well-known, certainly in the SaaS industry. And I guess what I'd love to sort of discuss, I mean, you're getting to this point, like hitting 100 million ARR, which is fantastic. Probably, I don't know what the percentage of companies that hit that, but it's probably 0.00 something. um uh it's a very very hard to do um i guess like what we you know we're in this era like i mean it's hard to ignore it of uh of ai and the impact of ai i think on on the world but also in this the sas industry and sas companies and uh um sas companies that are not ai native so i think anything that is probably like created you know starting up today will probably likely be an ai native SaaS company.

8:29But given that you've been around for all this time, and I'm sure I have many kind of products, iterations, at what point did you start to look at AI, think about AI, what you needed to do as a business to stay relevant? And I guess what was your thoughts like around it? When did you start thinking about it? And then maybe we can like look into where you are today with that and how you're thinking about the company for the future. Yeah. I mean, I think that the ideas started percolating the first time I saw ChatGPT. Um, and I thought it was, uh, it was just such a new experience in software and technology that, um, I, I, I knew, I just had the sense that it was going to be something big that we needed to respond to.

9:24And then over the next year, year and a half, I was struggling to sort of figure out how do we get experience in AI and then apply that to our product. And the first place that we tried to do that was in, we built like an internal chatbot, an internal Slack chatbot. And it was something that I worked on with my chief of staff. And it was just to understand the, or I mean, he did, I can't take any credit for it. My chief of staff worked on it while he was my chief of staff. And it was really just to get this exposure to all of the tools you need to do anything in AI. and our roadmap on the product side was at that point in time did not have any AI reflected in it and as that kind of continued to as the roadmap continued to sort of not reflect a meaningful change in response to AI I grew increasingly concerned and wanted to shift make a bigger shift in the company and make sure that we were being really responsive to what our customers were going to need in the future.

10:49Because my expectation, which we've sort of seen start, I would say, towards the end of last year and beginning of this year, is it went from people being curious about it to it being a requirement. And at first, it was a requirement that it existed on your roadmap, and then it became a requirement that you have features in the product. And then now it's a requirement that you're meaningfully transforming the way people do their work with AI in your product. And if that's not where you're going, I think as a SaaS business, you're probably in trouble. And so if you just responded to the market when the market said these things to you, you're late and it's so hard to catch up.

11:41And that was my big concern. So we created with my CTO late last year. So we were even late to be doing this around November last year, but we created an internal AI technology advancement group. And it was my CTO and one other person. And then we hired another person onto the team. And then they started experimenting with technology and building new features into the product. And then now we're sort of still in the middle, but we're folding the learning from the AI technology advancement group and then sort of making the rest of the product and engineering organization work that way. And so I think over time, there's not this division in the company of like, here's people over here working on AI and here's everyone just doing the normal roadmap.

12:37Those roadmaps really have converged already. And the product we're building in the future or the product we're building for the future is this AI enabled at the foundation level version of CustomerIO. And what has the response been within your customer base? And maybe even at the point when you're building this AI team, I'm sure you're obviously having conversations with the customers and were they at this curious stage and saying, well, we don't really care if you build this AI stuff. Or you actually really need to do this, right, if we're going to continue to use you. And I guess kind of fast forward to today and they have the AI features, right, and their kind of response in like, we love the product before, but like, you know, now it's even better or, you know, whatever the feedback is.

13:34Yeah, I mean, I think we've had a few customers be really, really forward and aggressive in their own adoption of AI. And it's been so helpful to have that pushed on to us. because they're the very, very early adopters of AI. And I think that I took that as the signal for everyone else is going to be here in 12 months. And so I think by and large, there are many customers today who aren't pushing us for AI features. They're happy with the product that they bought. But I think that the trend that I see in our customers' businesses is that when they look at their teams, they're looking for people who are specialized in one area.

14:35They're sort of like T-shaped people. They're specialized in one area, but they're responsible for a whole part of the company's business. And in this case, lifecycle emails or lifecycle messaging. And they might be the strategist, but now they're responsible for design and copywriting and all of these other things that you need to do that traditionally would be on a five-person team, but now there's one person responsible for it. And we've seen that with early stage companies where there's only three people in the company and someone has to be responsible for everything. But you're starting to see this in mid-stage companies as well, where the expectation from whoever's running the company is that people do more with less and they use AI to fill in the gaps in their knowledge and capabilities.

15:30And they're having pretty good success doing that. And so we're, I think we're, we're like reimagining the product for that world where it might be one person who has to be responsible for a really complex customer engagement program. um and it's it's just uh like things things are changing very very quickly and it's it's for for us to still be relevant in 12 24 months we have to we have to change for that we have to be ahead of where that is um and it's going so quickly so hard to stay ahead yeah it is going uh going ever so quickly and from um so what you said uh like in terms of like initially like bringing in these ai features to uh you know where it's going on it is now at where the the whole platform will be powered by ai like how do you thought or you know maybe perhaps still thinking uh given the you know the fast pace of how things are moving like uh even creating new ai products i mean similar like I guess if we look at the Intercom example, there is still Intercom, but then they've created Fin, which is almost like a new business, right?

16:54And that Fin on its own is doing 100 million ARR, right? Have you, as I'm sure a creative CEO, kind of like looked at that and also like thought and come up with some ideas and played with AI and just like, oh, like could we be creating this? And yeah, just like where do you stand around that? Yeah, I think our vision for Customer.io was this, at least the initial vision for Customer.io was this experimentation platform where you would see some customer behavior you were hoping to nudge in a different direction. Like someone signs up for your product, you want them to invite a friend as a simple example.

17:39And so what you're going to use Customer I.O. for is to send, this is like very early days, you send an email to the person with reasons why they should invite their friend, and then they click a button, go invite their friend, and you sort of complete this loop. and we never really in in the v1 pre-ai we never really got to the point where you just you could come to us with your hope right like hey i see that people are not inviting friends can you help me do everything i need to do to get them to be able to invite a friend and then like measure give me a measurable improvement on that conversion rate.

18:22And I think that we're now with LLMs, like are able to do the content generation. We're able to look at the data coming in and a set of customers and sort of say, well, we think that these are the things that correlate to driving that outcome that you want. And then we're able to like run experiments, interpret the experiments. And I think that that initial idea that we had, that initial vision is now possible. So in my mind, we're not building a new product. We're just finally able to build the vision of the product that we wanted to build back in 2012. And so I think that when we're applying AI, we're sort of looking at these core concepts and the product and figuring out what's the better version of that that we can use an LLM for.

19:20And working through, yeah, all of the different areas of the product to AI enable it. You've got pretty good growth, right? 37 % year over year. Do you think that by, you know, making this, you know, fully AI product, you might see some of this explosive growth that we're seeing in the market? Have you been thinking around that? We're making this, we've made this transition, this 37 % might become 100 % or so on and so forth. Or are you still looking like, okay, well, 37 % every year is pretty damn good? Yeah, I think it's great, would be great to maintain it. I would be really happy maintaining 37 % year over year.

20:08I think there's our core business, which is very much has SaaS characteristics. I think when we're seeing really explosive growth of AI companies, it's not at 80 % gross margin. it's at like 20 % or maybe less. And I think that we may ultimately have some features in the product that if a customer adopts them, they'll then be spending based on their usage of AI or LLM calls. And so in that case, you could imagine really high growth of usage on a large on a large customer and their bill might double. But the way that it doubles is not 80 % gross margin, it's 20 % gross margin. And so I think we'll probably, you know, I would expect we'll see some growth in that way.

21:10But my goal would be for that core business that we have today to continue growing as it is. So there's like that healthy base of 37 % year over year, 80 % gross margin. And then on top of that, we'll layer on some AI usage growth. What about maybe some of the internal tools that you're using for AI, maybe whether it's in the development team, things like Cursor, et cetera, obviously very popular and how you've adopted things like that, if you have, and perhaps even on the GTM side, obviously seeing a lot of, well, an explosion across all of these sectors, but, you know, perhaps things that you brought in that are working that you like, you know, as a business or personally?

21:57Yeah, on the, so on the internal tooling side, I mean, we've, we're using every, every development tool there is. So, you know, Cloud Code is widely used, Cursor is widely used, and we've had some good success. One of the things we did recently was a really small team built our internal admin tool using, you know, heavily assisted by, I think it was with Cloud Code. and so we've had some really really good success to just speed up especially either sort of throwaway or non-customer facing things as well as as well as customer facing things but i would say that you you really get a lot of pace going zero to one and it's a little slower going when you're iterating on an existing production feature.

23:04And then on the internal side, we've experimented a lot with Slack chatbots. We've got one now that we built in-house. I think there's this balance between figuring out how to use some of the LLMs directly versus using someone else's wrapper around the LL. And I think that that's the big question I have about a bunch of the tools out there are how durable are they really? You know, at what point does the LLM provider create their own wrapper that's good enough that they're giving to you to expect you to build something on top of that or they're just doing it as a demo? But it's good enough for most companies.

23:54And I think at our size and customer-based size, every time we update our subprocessor list, we have to go to our customers. And so there's some friction to add new tools. Not to say that we won't do it, but it has to be worth it. and um so i'd say we tend we'll we'll look externally and see if there's a great option and if there's not a great option or we think that the additional value on top of the llm is not is not big we might look at building ourselves what about your thoughts just in around uh let's say the SaaS market and the impact of AI in respect of when we spoke earlier, you mentioned that, you know, if SaaS companies are not already, you know, building AI or becoming AI first, then they're in trouble, right?

24:56I think those were the words that you sort of mentioned. But what are your thoughts around, like, is SaaS still going to be a category, you know, in a few years time? Are all those SaaS companies, if they've made that transition, just going to be AI companies? Will we just be saying AI? How do you think about that from a market? I go to your website. You can see SaaS is one of the categories of the markets that you serve. Do you think about is that still going to be the case? I mean, ultimately, the AI natives, they are SaaS companies, but they've just got the AI technology there. But any thoughts of how this is going to change within the market and how do you see that?

25:42Yeah, I mean, I think there's lots that I don't know. And there's definitely some pressure that I see. Like if you're a per seat SaaS product, there's pressure. And that comes from companies not expecting to keep growing their employee bases the way that they have in the past. and if you're um i i think there was sort of a an example that i saw on on twitter or on x where someone had like cloned docusign and docusign i i don't know what their market cap is but they're they're a very big successful sas company right and and i think that there's and and i don't think that their feature set and functionality was ever their value right so so being able to say oh look i have something identical to docusign that's not why you're buying docusign you're you're buying docusign because of the trust that it gives in and it gives both parties in this contract uh signing process that you're doing and sort of like you can question how valid that trust you know how much that's actually worth but i i don't think that someone being able to clone docusign with ai is going to displace docusign and their their customer base and their they probably have enough durability that whatever meaningful attack an AI native competitor can wield against them, they have enough time because they've got multi-year enterprise contracts.

27:29They have enough time to address that. So that's what I think. I could be wrong. I mean, in five years, DocuSign may not exist. But my sense is that a lot of the existing SaaS companies that the transformative nature of AI doesn't displace all existing SaaS companies. It gives them this incredible tool to adapt and change their business if they're willing and able to, to enter this new era where they're still relevant. They may not look identical to what they did before the proliferation of AI. But they'll still be there in some meaningful form. And just a couple of questions to sort of wrap up, maybe some more like quickish fire questions, Colin.

28:23So like every, let's say every SaaS CEO at the moment, how much time should they be thinking or spending on AI, would you say? I mean, I can, I don't, I think that you have to understand it. And what I do to try and understand it is I, I'll vibe code some things. I'll, I'll play around with every new model that comes out. But I definitely don't go as deep as other people on my team. And I don't go as deep as some people that I see on, on the internet. So a lot of my understanding of the sort of cutting edge of LLMs is like secondhand. So I'll read a lot and then I'll experiment some. But yeah, I'm not.

29:17So I think you have to know that because you have to know what's possible. and you have to be able to imagine, take what's possible and apply it to your business. And then that gap between what's possible and where you are now is really what you are trying to help the company understand so that you can fill that gap. But it's always moving as well. So it's a big, it's just such an interesting time. so I think if if you're a ceo you have to spend time on this how much and how deep probably depends a bit on your business and a bit on uh a bit on you as well and it's obviously creating uh you know huge amounts of opportunity what what do you think are like what what's one of the biggest challenges that it's it's also creating for a sas company ceo I think if if you're if you're someone who enjoyed the stability and predictability of the market pre-ai you're probably not sleeping well at night for for me personally i love i i had forgotten how much i love the uncertainty of the early days of trying to figure out how to break into the market and of get our product working and make sure we're delivering a great experience for customers.

30:47And so I'm really enjoying all of that uncertainty that AI has brought, because I feel like I can internalize the information and see a clear path. But if you spent 10 years studying the SaaS industry before you decided to take your leap and you felt like you understand it, understood it. Well, unfortunately, like things are so, like all of your assumptions or each assumption you have might have to be thrown out at some point over the next few years. And that can be very unsettling. Lastly, what's your personal favorite AI tool that you're using? And what's the one that you spend the most time in?

31:36Maybe they could be the same, but they might be different. Yeah. I mean, I think, um, I I've played around with, with a lot of them. Um, I, I think I spend like most people, I spend the most time in chat GPT. Um, but I, I also love Claude and Claude code and, um, and then lovable recently. I've been, I've been vibe coding some I made a Pokemon collection product for my son and so we were able to like add his Pokemon cards into that and and track prices and so I did that in lovable that was that was fun but I I think the I spend so much time asking asking questions for chat GP for uh from ChatGPT and then coming back a few minutes later once it's finally done.

32:32That's probably the one I use the most. Awesome. Well, Colin, really appreciate you coming on the SaaS Revolution show today. Good to see you again. And thank you for spending the time and sharing this with the SaaS.community. Really appreciate it. Yeah, thank you, Alex. Thanks for listening to the SaaS Revolution show. if you enjoyed this episode please leave a review and follow the show it helps more sass and ai founders to discover the podcast and keeps us bringing you the leaders who are shaping the future of the industry for more insights and to join the sas talk community head to sas talk.com