What’s 🔥 in Enterprise IT/VC #418
Who wins in AI? The Incumbent, the AI Native Startup, or...the Goldilocks Startup? The future is here: WORK BASED PRICING! No MORE SEATS - anatomy of the Kustomer relaunch
🤯 so much happened this past week! We had new product announcements from GitHub Universe, cloud earnings from the Big 3 (demand outstripping supply, reacceleration and AI demand is strong), and something near and dear to my ❤️, the relaunch of Kustomer and its new agentic platform with 100% work-based pricing!!!
Given that Kustomer is company that I’ve had the pleasure to work with twice, first from Inception to $1B+ exit to Meta, and post-Meta spinout, I wanted to share the anatomy of its relaunch. In particular, I want to use this as an example of what startups must do to break above the noise when they’re not the Incumbent 🦍 like Salesforce, the fast-moving AI native hot startup from YC, but that company which was a market leader but folks kind of forgot about. This is what I call the Goldilocks startup, not too big, not born today, but just right - usually 5+ years old, have a sizable customer base with a substantive data moat, and still has the tenacity and product vision to ship something beautiful fast - companies like Kustomer.
These companies also face an interesting challenge - how aggressive should one be when relaunching - product, brand, and pricing? One wrong misstep can lead to a death spiral, especially with pricing. At the same time if you’re a Goldilocks startup and just choose one vector to relaunch or just ship incremental features, then you’re also dead in the long run. Let’s break it down!
First, here’s the new brand - gets me 🔥 up!
The new tagline also plays to Kustomer’s strengths:
Unleash the power of data + AI + humans
Unlimited seats. Unlimited AI. Unlimited platform. One simple price per conversation.Second, it created a mission - #EndBadService. The company gathered stories from frustrated users and posted it on the Nasdaq billboard in Times Square and all over social.
I forgot to mention that Kustomer also brought in new talent for the next phase, leaders like Doug Hanna as President and who previously helped scale Grafana to hundreds of millions of revenue as COO.
On pricing, it commissioned the State of Pricing in Customer Service report which you can find here.
Customer wise, it got several testimonials including this one from Vuori on the power of its agentic platform - 40% of all conversations are fully automated!!!
Product wise, Kustomer made the hard decision 6 months ago to have one of its key founders Jeremy Suriel create a small team to reimagine the future of customer support which you now see unveiled below. Leveraging its strengths, the Goldilocks advantage with a sizable customer base and massive data moat, Jeremy and team created the new agent-based Kustomer offering its customers a team of AI agents each with specific roles coordinating work for you. Automations are no longer rules based but agent-based, and if that wasn’t enough, it added native voice agents. Take a look 🤯
All of this was unveiled in a livestream on LinkedIn where over 1,100 folks were watching at one point in time.
Finally, the biggest unveil was in pricing. Kustomer just went for it - NO MORE SEAT BASED PRICING - WORK-BASED PRICING IS FINALLY HERE - no platform fees, just conversations!
Let’s go!
BTW, I can’t tell you how energizing it is when founders like Brad Birnbaum and Jeremy Suriel are on customer support startup #4 (if u include the spinout from Meta) with the energy and passion from startup #1! 👏🏼 to the entire Kustomer team and Gabe Larsen CMO for this incredible relaunch.
And by the way, did I mention agents?
And yes, Silicon Valley loves agents 🤣 but who else is going to join the movement on work-based pricing!
And if you are a Goldilocks startup, you can’t just do the below 🤣
You have to go ALL-IN like Kustomer, reimagine what’s possible, rethink the product, leverage your data moat and go deeper than having bolt-on AI. You also can’t be afraid to completely disrupt your own business model and also that of others - the future of work-based pricing is here and super pumped 💪🏼 to watch Kustomer roll this out. Don’t be afraid to price the way the world will eventually move towards - work to be done!
As always, 🙏🏼 and please share with friends and colleagues!
Scaling Startups
#So where’s boldstart investing in the AI Stack? Listen in to this 1 minute clip as it's been shifting over the last few years from super heavy enterprise infra to more balanced with app layer
#Suhail who has a much wider following than myself 🤣 nails the app layer point home
#Vision or data round?
#great advice as budget season rolls around for 2025 planning
Enterprise Tech
#from GitHub universe this week comes GitHub Spark - just tell it what you want, i.e., “create a flash card app to help me learn Spanish” - build apps in natural language, nice abstraction layer over code but still requires lots of thinking, clickthrough to watch
#speaking of AI code assistants, super cool 🧵 on what hackers built in 24 hours 👇🏼 - also cool to see some of the hackers use portfolio co CrewAI
#2nd order effects - more code generated by AI, more code to review - check out Baz, AI-assisted code review (full disclosure - a boldstart investment) - from one of co-founders of BridgeCrew, sold to Palo Alto Networks
#AWS - more demand than supply - click and listen
#AWS AI business 📈
#Microsoft AI business - ouch that hurts - real demand from enterprises and not just VC 💰 🤣
with this growth
#🤯 225x trailing ARR and $4.5B valuation for Sierra, Brett Taylor’s AI agent customer support startup (Reuters)
OpenAI chair's AI startup Sierra gets $4.5 bln valuation in latest funding round
Sierra, a software startup co-founded by former Salesforce (CRM.N), opens new tab co-CEO Bret Taylor, has raised $175 million in a new funding round led by Greenoaks Capital that gave it a $4.5 billion valuation, the company said on Monday.
The funding has established Sierra as one of the most highly valued AI startups, despite growing concerns around AI bubbles. The company has crossed $20 million in annualized revenue, sources familiar with the matter told Reuters.#Python rides rise of AI and hits #1 for first time over Javascript as most used language on GitHub
#your first deepfake security market map is here from Norwest Venture Partners - more from blog
with coverage from Axios Codebook
Driving the news: Norwest Venture Partners published a market map today of deepfake and brand security vendors that attempts to organize the growing number of companies operating in this space.
The market map, first shared with Axios, divides the ecosystem into six buckets: image and video detection, audio detection, content watermarking, identity verification, brand protection, and narrative attack protection.
The intrigue: Investors see deepfake detection becoming just as necessary as email and application security tools, and startups are primed to lead in this space.
Model makers like OpenAI and Anthropic are mostly focused on building new consumer and enterprise products for their large language models.
And traditional cybersecurity vendors would have to build an entirely new tool with biometric data to detect deepfakes, Dave Zilberman, a general partner at Norwest, told Axios.#GenAI usage in the workplace survey from Wharton and GBK - “Growing Up: Navigating Generative AI’s Early Years – AI Adoption Report” - up across the board!
#Gartner IT spending forecast - AI, AI, AI as software poised to cross $1.2 Trillion in spend in 2025 growing >14% YoY - accelerating!!!
Spending on software is expected to increase 14% to $1.23 trillion in 2025, up from 11.7% growth in 2024. Meanwhile, IT services is expected to grow 9.4% to $1.73 trillion in 2025, up from 5.6% in 2024.
“Software and IT services are a large driver of IT growth,” said Lovelock. “Spending on these segments is expected to be on AI-related projects, including email and authoring. This was a market that, despite its age and having been consolidated down to a small number of players, will add $6.6 billion to global spending in 2024 and $7.4 billion 2025 due in part to GenAI products and services.
“Our forecast projects that $500 billion will be added in spending every year in terms of growth rates. With this in mind, IT spending should cross the $7 trillion mark in 2028.”#Cost is as big an AI risk as security - Gartner Analyst (CIO Dive)
“Cost is as big an AI risk as security,” Mary Mesaglio, distinguished VP analyst at Gartner, said during the keynote. “With generative AI, it’s really easy to waste money.”
CIOs could miscalculate AI costs by as much as 1,000% as they scale AI plans, Gartner research suggests. Generative AI deployments rack up a hefty price tag from inference, grounding and incorporating data. In 2023, organizations that deployed AI spent between $300,000 to $2.9 million just in the proof of concept phase, according to Gartner. #More from Gartner’s IT CIO Symposium - agentic workflows!
By 2028, at least 15% of day-to-day work decisions will be made autonomously through agentic AI, up from 0% in 2024.
Markets
#great 🧵 on why Nvidia will keep going 📈 - inference compute and continuous learning…
#General Catalyst closes an $8B venture fund 🤯 and this is in line with a tweet I sent out on X a couple weeks ago - will do buyouts and then use AI to change cost structure
