Why Businesses Are Rejecting the AI They’ve Asked For: Agency CEO Elias Torres

0:00In the past, I would be like, the minute I had something that kind of like loaded on your browser, like I wanted to charge you. you know it's like a dollar i was like yes i got a dollar this time i'm like i don't want your money it's like i want to know that you're obsessed and that is so sticky and i'm going to do everything at your company there's so many founders that they think that they just because they built something that they got it right people are delusional people have 50 million dollars in revenue they're delusional that that product works you know this time around i really want to do it right.

0:31I want to build something that people are throwing money at me and saying, this is really, there's nothing like it. This is my journey now.

0:56We're really excited to share today's episode of Training Data with you. Today, we have Elias Torres, someone we've known for more than a decade across three companies. We first met Elias when he was busy rebuilding the core platform for HubSpot many, many years ago. After that, we got into business with him with Drift, which is his second startup. And then more recently, we got into business with Elias on Agency, his third startup. Agency is in the midst of redefining customer experience. And so today we'll hear a bit about what that means and also how to build a company in a world of AI. We hope you enjoy.

1:36Elias, welcome to the show. Thank you. I've been waiting for this moment my whole life. I know you have. I know you have. You know, we had this wonderful script all planned, and then over the last few minutes, we got into some real hot takes. Why don't we just start with the hot takes? Tell us what's going on in the world of AI. I think that everybody's asking for AI. Everybody says they want it. And when you come and bring it to them, they just reject it. It's like the Messiah has arrived and everybody is like, no, we don't want it. And I think it's a super interesting time because we have the best technology mankind has ever created.

2:13It is so intelligent. It is so smart. It is so capable. But yet people are demanding this level of perfection when they're not even able to use the chat prompt to ask a basic question. And so I think that we are completely misunderstanding the technology and its capabilities. So it's an expectation mismatch, not necessarily a technological flaw. Well, I think in some ways we're used to pre-AI technology, right, that it was able to look up a string from a database and it was a perfect lookup and a perfect match. And so I think they're used to that level of perfection. And so when you bring any possibility of a different answer or a different solution, I think people are struggling with that imperfection.

3:01So we're used to narrow functionality, perfect accuracy. All of a sudden we have broad functionality, imperfect accuracy, and people are having a hard time with that transition. Yeah, I think I see a lot of customers being like half full, you know, half empty. yeah my approach to to ai is like if it's doing 10 more than i wasn't doing before if it's doing 20 30 i'm extremely happy like yeah i don't have to do that it saved me time but other people if it's like if it's not 100 perfect i'd rather have none yeah and i think there's a very dangerous take for people to take and actually the example that comes to mind is one that you shared with us before which is around how you manage your own email correct do you care to share that example Which one?

3:43The one that I, so let me see if I get this one right. So it was agency, right? Agency can like read all my email and creates drafts and automatically like I can reply to everybody. So usually what I'm doing is when I'm demoing the product, I let, I'm like, I open my entire inbox to the customers right now. So it's like, it really, not to worry about it yet, I guess. But I'm like, oh, I just had this meeting with this customer and we had this thing and I'm going to send this follow up. And I just hit the send button, you know? And is this the example? Yeah, because we were talking about how like the email deluge is just untenable at this point.

4:26And like people spend hours and hours a day managing their email, or at least a lot of people do. And like the AI product that I would love to pay for is one that can just take care of my email. We were having this conversation and you're like, I don't spend any time managing my email. I actually just let agency do it for me. Absolutely. Which is not the point of agency, but it's one of the things agency can do. And I think that's a great example. I think that narrows it, right? Is that we generate these emails for customers and follow-ups. And the thing is that if you're managing, if you're trying to manage 500 pipeline and you're trying to communicate to everybody, what's best, that you deliver two perfect emails or that you send something to all 500 prospects, right?

5:03Because they individually don't know how much time you're spending on it. But just say ping and send that email, right? Yeah. To follow up. And so what happens with my customers, right, is like I'm sending these messages and I kind of like almost don't. I look at it. I might cringe sometimes, but I send it because partly is this, I don't know, stage of my life. Maybe because I'm old, I'm like, I already know that I'm never going to say anything perfect. So if it goes out, it goes out. And like as long as, you know, it's going to be fine. But the problem is I see customers, I watch them on recordings, right, of using the product from a user experience perspective.

5:41And I'm like, wow, this person just spent 20 minutes and they really didn't edit the email. Sometimes they're just changing the salutation or like they didn't like how it was too aggressive to say, here's my calendar link. And they were like, and let me know times. And then they're like 20 minutes later and the email gets sent. And so I think that that's fundamentally why businesses can't scale today, because there's humans in the middle, you know, to add so much delay and obstacles and slowdowns in the pursuit of delivering a customer experience. So you're saying people are scared to let AI take the wheel and they should just let AI take the wheel?

6:20I think so. I think we need to choose what really matters, you know, like kind of one-way doors, two-way doors. We need to say, like, is this going to – like, we need to also have a little bit more leniency and forgiveness. Like, if an email goes out, you know, that didn't say exactly the right thing or hallucinated, I think we all should be a little bit more forgiven and be like, it's okay, don't worry. And remove that fear from people. I think both sides, the sending and the receiving, needs to be a little bit more chill. Yeah. I'm going to use an excuse next time I say some crazy shit that pisses off hat.

6:56Sorry. was the AI. But isn't that what we do normally? Yeah. We say crazy shit and then it's like the guy that stole the hat from the kid, you know, at the US Open. Yes, exactly. First says some crazy shit, then he says some other crazy shit. He could just throw an AI too, might as well, you know? It reminds me of... Although we might be sued by him right now. You didn't specify which guy, so I think we're good. Normally on training data, we don't really get into personal stories, but I actually think your personal story is pretty exceptional and pretty unique. And so could you maybe just say a couple words about how your childhood shaped the sort of entrepreneur that you have become?

7:36Yeah, absolutely. I think that I am an engineer, George, just for the sake of it. I've written COVID before. But let's talk about the personal stuff. Absolutely. I think I grew up in Nicaragua and I would say what we call a communist era, right? So very little third world country you know i i still have a shock i go into people's homes not that i go without like i do like they invite me you know just make sure i get we're not breaking in okay because you're not breaking in here uh but uh then um i go in and like i open the fridge and it's just like just full of food americans it's just like boxes and boxes and snacks and and more, every drawer you open.

8:22If you came to my house in Nicaragua, everything was empty. Like, the only things that would be in there is like a few pots and pans. Like, I literally remember this as a kid. We were like, there's absolutely nothing to eat. There would be like, you know, just the food that you were going to make for that meal kind of thing. It's like, just in time. And so that's just, it's a lot of scarcity, right? And so you grow up with, you know, I remember telling my mother, we'd be like, I would ask for things, and one time my mom said something like, I would give you anything I could if I'm not giving it to you because I can't.

8:58And so I learned to ask, like, Mom, if you can buy me this gift, if you can buy me this. So it's just like a completely different world than the world that we live in in a first-world country, America, you know, greatest country in the world. you know it's uh then uh but then it's like uh and then how we're living today right and a lot of people are like at least the world that i'm living in today it's just like the extreme opposite of that yeah what was your first job pre-ibm i mean your actual first job that you got paid any sort of money for for doing any sort of work i think there's the competition the one that sounds better is the one i was like cleaning the offices with my mother uh but i just we did both i was working at McDonald's and cleaning offices when we first came to this country that I got paid.

9:49I was 17 years old. And I remember you told me your mom had a laptop and you became tech support. And this is how you got introduced to technology. That was pre-United States. Well, I came, I spent two years with my father. I didn't grow up with my dad. And he bought this computer. I don't know. It's like, people would bring him stuff that I don't know where he came from. uh yeah it was stolen and so he would buy stuff and um and he would just bring it home and so the thing that caught my attention i have a half brother and and he just loved fixing cars and then my dad brought this computer and my my half brother did not look at it i don't know if it was a drone by it or drawn the fact that my brother wasn't using it and i just started using word perfect and like lotus one two three in the 80s i was like in sixth seventh grade i did junior high in la uh and uh i just love like like typing on that thing and trying to get the printer to work no internet no communication no user group i just me in the garage just trying to figure this thing out yeah and then when i went back to nicaragua my mother had a laptop i show up in nicaragua in the 80s and my mom has a laptop she's she's a professor she's a you know phd a veterinarian at the university and she has a laptop and i'm just like why do you have a lot this is nicaragua and and so i started helping her and being like her tech support at the university mostly i just broke the computer and then i would take it to it to get it fixed and then your first job kind of post university was ibm is that right absolutely yeah and um we don't need to talk about ibm necessarily but tell me about the moment that you met david cancel Yeah, I think I worked at IBM with an amazing group of people.

11:37I'll say that my first 1999, my first project at IBM, I was building a chatbot that you could look up people's phone numbers. There's a blue pages, like instead of yellow pages at IBM. And I learned so much. I built so much. It was an amazing thing. But I just got fed up. 400 ,000 people. You cannot make a huge impact in that company. It's just too political. I imagine me in a 400 ,000 person organization. And so I just kept trying to, I kept making connections in Boston in the tech, in the tech scene. It took me a long time. Then I finally met David. And first I'd never seen another, another Hispanic Latino in tech.

12:20You know, I was like, okay, like I liked him. I felt like I trusted him more to join his startup because a lot of people were asking me to join their startups and I did not know how to choose one. I chose him because I just felt comfortable you know I felt that he he understood me and that I could trust him and um and the first thing he did is like he offered me to take over his prior job at some other company and I was like uh what do you mean just be VP of engineering at your old company but in the end I really decided to join him uh in the in the in this company called Lookery. It was my first tech startup because I needed to try something outside of IBM.

13:02Yeah. What was it like going from 400 ,000 people to 40 people or whatever? No, no. It was like 10. There you go. I was working. I had a desk and I lived in Lowell, Massachusetts. I had a desk in my bedroom. So I would get up and sit down and I would just work 24-7. It was like that stage of my life was like three babies in diapers uh working 24 7 uh just it was so exhausting like literally it was like the main engineer in the company and i had to build everything so i went from building stuff that nobody cared nobody used at ibm and they're like to like i was the sole person responsible but it was it was the best not not i have so many best times sorry uh it was the it was when i I started using AWS and I started using the cloud and it was mind boggling from like ordering and buying blade servers and requesting stuff through IBM, you know, procurement systems to do anything to like pushing a button S3 and ECS, uh, EC2.

14:11And it was like, uh, I was just blown away that I could be this one person orchestrating and building everything without needing anybody. Yeah. So that was a huge unlock. And then you guys started performable. So that was your first company that you founded. Agency is your third company that you founded. You guys started Performable and after a few years joined HubSpot, which is where we intersected. Yeah. And for people's benefit, and I think Brian and Dharmesh should agree with this characterization, HubSpot in the early days had an amazing story and like an okay product. And then you and David joined with your team from Performable.

14:50And originally the mandate was to build out a particular piece of the product. but then you ended up with responsibility for the whole thing and rebuilt it from scratch. And sort of the second phase of HubSpot, thanks to you guys, was great story, great product. Can you say a couple words about what it was like joining HubSpot and then sort of how over the time you were there, you managed not only to scale with the organization, but to kind of like reinvent it in some ways? To me, professionally, it was a big breakout moment. You go from tinkering with computers and WordPerfect or launching a few EC2 instances and building a few web apps to really having to support 5 ,000 customers.

15:34I went from 20 customers that are performable to 5 ,000 customers immediately. And that was a shocker to me because, one, what I care more about is customer experience. right my customers are performable would text me and they would say this is broken and i would open my computer edit the code and say reload when you have 5 000 customers you can't do that so i had to learn how to scale in every sense of the word right we had we had a huge urgency we had major major churn uh the product did not work at all uh and the team did not function either so we had to like rebuild the team, rebuild the product and rebuild the trust with the customers, right?

16:18That this product was going to actually achieve, you know, uh, what, what it was going to do. And I also had to learn how to scale myself as a leader. And the most important thing I would say that I learned there was like hiring at scale. I was going to ask you about that actually, because you, I believe you hired Andrew Bilecki, um, before he started Klaviyo. I believe you hired Christopher O'Donnell, you know, before he went on to build HubSpot CRM and start a company of his own, I believe you had a handful of really exceptional hires. And it's not obvious that a mid-stage marketing software company in Boston would be able to attract such great people.

16:57And so I'm curious, like, what were you looking for in people that you hired? And then maybe what did you do to help them sort of have such growth in their careers? I think so many people are exceptional, and it's a combination of giving them a chance and also role modeling after them what becoming an outlier really means. And so I would say, like, am I as successful as I am because of who I was so early or is it because a lot of people also shaped me along the way to teach me what was possible, right, and made me want to go after and accomplish the same things, just like Brian and Darmesh, for example.

17:38right yeah and so i think all these people uh there's so many people there's there's whitney there's uh jared current evp at hubspot that is still there running the the entire system i forgot about whitney yeah good point yeah there's a few more right it's amazing not that i'm like keeping track of them but uh it just it just makes me really proud like to have people that have been able to influence their lives and their careers right uh but it was it was really um they were at the places where I was. I was in a garage just tinkering with Word Perfect. They were doing the crappiest jobs that you could possibly think of.

18:16And so my thing is I give people a shot, right? And I can test their intelligence from the conversation, see if they can keep up, see if they have hunger, they have grit, and then just bringing them along for the ride. and then they get to choose the path that they take after right yeah and so i think that i just i don't hire for credentials i don't hire for where you came from what you said you did and i actually like if you have all that stuff i'm kind of like rule you out immediately a little suspicious it's just it's sus totally sus let's talk about drift real quick just because so startup number one performable startup number two drift which again was you and david cancel and I know that your experience at Drift helped to shape the idea for agency.

19:06So can you just say a word about what was Drift and what aspects of Drift kind of gave you the insight for agency, which you're building now? I mean, I think that the thing that we learned at HubSpot was time to value, right? It's like how long does it take for the customer to experience the value in the product that you're building for them? And at HubSpot, it takes a long time. You have to build blogs. You have to build ranking in SEO and Google, and you have to get leads, and you have to become a brand. So you're coaching the customer from day one to like, you know, like we're in here for a journey and at a low price, which is an unbelievable achievement for HubSpot to be at the revenue that it is today, right, at the scale.

19:51But I would say that at Drift we were kind of like, that was almost something I always kept thinking with David, and we were like, how can we get time to value? And so we were patient in the beginning. We spent about two years wandering through the desert trying to figure out, like, what should we work on? Yeah, I remember it began as HR software. Oh, my God. Yeah, let's not talk about that.

20:14There's a bad joke in there. So we were trying to do, like, Glassdoor. It was like a secret app at that time. Remember Secret? People could say, like, secretly, like, anonymously what's going on at their company. because we were using, we were obsessed with team dynamics and culture at HubSpot. But then we kept pivoting and pivoting. Like we would pivot like every month. Every time Pat would stop by in Boston to see us, like, so what are you guys working on? Oh, a new Dropbox. It's like, what are you doing now? A new Pinterest. What about now? Survey Monkey. It's like literally every month I would just tell the team, that was not a good idea.

20:52We're going to try another one. So one, we spent two years being super patient and finding something we want. And the thing that I realized is like, you got to go back to what you know. Experience compounds and you got to just like stick with it. And so we went on a huge diversion and then came back to like closer and closer and closer to the app, to service, to customer. And we were like, we were next door to HubSpot. So we were not going to do marketing. And we were not going to, I was not going to build another CRM. And it was like, no. And so we started focusing from support, then we went in-app, and then we went back to leads.

21:30And the idea was to, if you could deploy this, that can immediately start getting you more leads without any human effort. That was the scaling point, right? And automation. So we had a chatbot that would be the receptionist, the welcome reception on your homepage. Instead of asking you to fill out a form, it could ask you questions. It could inform you, deliver you some value, book a calendar meeting, route it to the right rep, and send a notification to the cell phone of the rep, and just make connections faster and remove the friction. And that was fantastic, right? That worked, right? I think that that helped us take off.

22:09We did many things right. But the reality, this product was shallow, right? In that it wasn't too deeply penetrated because it was only solving one basic step in the customer journey. It only did like the first connection. But the problem that arose then after is like everybody would be like, well, I came back to the website. Why doesn't it recognize me? Why doesn't it pick up where it left off? I already had this conversation. I already explained this. how come when I'm inside the app, it doesn't know what I said before, my support tickets and my whatever, right? And so there was this dream I had of like, how could we always know everything about the customer?

22:54And how could we always apply that information in every exchange that we have? We should know our customer, right? And so it was a pain that we didn't have the technology to be able to deliver that. And so I think that was one struggle. The other struggle, I would say, was that we built quickly. We built brand. We built product. We have amazing speed to market. But then we didn't have the ability to scale. Here, we always think, well, just hire more bodies and just raise more money. Don't worry about spending. It'll resolve itself out. We can always scale it later. and I think that that's fundamentally flawed and I don't know if people still get that to tell you the truth in this age of AI.

23:47I think that is the whole point of AI is to prove that out but other people are like just hire it we'll worry about it later and I think that that was my biggest lesson at Drift that I always like talking to my customers. I always like to text me, call me. I'm an extrovert and I just thrive on that, on relationships. And when we got to the point when we started having thousands and thousands of customers at Drift, I just could no longer talk to them. I could not longer know them. And usually when a CSM calls you, because it's a churn of somebody that I might have emailed once, commonly hasn't saved this churn, it's just too late.

24:32You can't do that. I mean, I might have a success rate of like 20%, If I promise them the world and I'm going to be there for you, that's shallow. That's hypocritical. That's not the truth. And so I felt that pain intimately of what happens when you scale and what happens when you have 800 people, 600, I keep track. And it's just like you spend more time managing the people, their promotions, their growth, their onboarding, their recruiting, their entertainment, the town halls. And I think that just consumed us and realized that that took our eyes from the ball of the customer and the product.

25:15And I think that that's where we paid the price and not being able to build a legendary company as we dreamed to build from the beginning. And Drift was ultimately still worth more than a billion dollars. And so your second, first startup, success, joined HubSpot. Second startup, success of greater magnitude. And at that point, you're kind of like a walking example of the American dream. Like you came to this country with nothing and through smarts and hustle and sure force of will, you built these amazing things and put your life in a totally different position for you and your family. you could have ridden off into the sunset and just like called it a called it a career like why why do it all over again well i did i did ride into the sunset i did that for like seven months i think that people didn't travel the world did all this stuff but it's it's it's extremely empty and boring i would say uh but i was i was kite surfing in in in tata juva Jericho, Dakota in Brazil, you know, with some friends, majestic place.

26:19This is the first time I'm actually disconnecting. Like this is my first trip after I leave Drift. And I'm like, wow, I have no meetings. I have nothing to do. And I'm just like the whole morning we're just staring in this like cabana, just looking at this ocean, empty beaches. It's a very remote area in the northeast of Brazil. and I'm like wow I need to learn how to meditate and how to just be one with nature and in the afternoon we would go kite surfing and then chat GPT launches you know and I'm just like showing everybody and explaining I don't even know how to explain it like how does he know how to answer this and and and so the first day that I'm off really mentally is the day chat GPT launches and i'm just like this is the greatest moment in in mankind and i'm just like fuck i gotta go back in you know it's like i i feel like i worked all my life i always considered myself an imposter uh not anymore you know that's we we achieved that but the thing is like all my life i'm like i didn't go to this school i i didn't build in the valley i'm in boston this company fell it's only you know this all this stuff and like i didn't have enough because of this i didn't have this network i didn't know investors i didn't know this i didn't know english and now i'm like i i fucking know everything i know everybody i know i built the systems enough to prove to millions of users and this and that and revenue sales and i'm just gonna sit here when all these people that don't know anything are like building ai startups fuck no i'm just i'm jumping back in you know So it's like, I was like, this is the moment.

28:01And I will say that the cheesy, cringy answer to this is also, as a Latino, I feel an obligation. You know, it's like most people would die to be in the position that I am in right now. And to squander, going back to that day in my house in Nicaragua with no food, to squander resources and opportunity and just so like time earned work earned you know to just sit around and just kite surfing brazil you know or like surf in fiji or i just think it's a waste like while i'm on this earth i have to do something and going back to being a role model people want to see what what someone that looks like you is capable of achieving and I'm like, I can't sit this one out, right?

28:51And so that's when I called you and I'm like, hey, can I come to Basecamp? Can I get reconnected, fired up with this stuff? I think I came to AI Ascent and that's when the moment it was like, let's fucking go. Yeah. You know. Yeah, early 2023, I remember you came to AI Ascent and then you started talking with OpenAI. Yes. And one of the problems they were having was they had all these enterprises whose immediate thought was, Can we deploy this thing in a customer facing way? Kind of like the drift business in some ways. And so I remember you kind of jumped back in on that and then evolved the idea into what agency has become, which is very different.

29:30And can you just say a word? We kind of backed into this earlier talking about the email stuff. But can you just say a word like what is agency and like what problem does it solve for customers? Why is that problem important? Can you just say a few words about that? Yeah, the problem that everyone in the world has is that they struggle to deliver a great customer experience. And the only way that they can solve that problem today is not with technology, but is with humans. And so human-led deliver customer experience, it's almost an impossible thing. And so what agency is building is AI-led customer experience.