Nov 15, 2023 · 1h 32m · news
Des Traynor: How to Survive and Thrive in a World of OpenAI | E1082 · 20VC with Harry Stebbings
0:00 / 0:00
▶ Watch on YouTube →
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Des Traynor, co-founder of Intercom, joins Harry Stebbings to analyze how artificial intelligence is disrupting SaaS business models, product workflows, and market dynamics. He provides tactical advice on surviving platform risk, restructuring product teams, and shifting pricing models to thrive in an AI-first era.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 17.9% of the talking time here. How this is scored →
Harry as informed peer 4.3 Guest teaching 4.9 Guest disagreement 2.8 Harry pushing back 3.6
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 58:06 Calling out logical inconsistency on Synthesia
Des directly confronts Harry for holding contradicting positions—claiming Synthesia has no defensible advantage while simultaneously asking why no existing incumbents have built it yet.
Hardest push from Harry ▶ 28:48 Challenging ad optimization workflow defensibilityHarry directly confronts Des by applying Des's own 'thick wrapper' framework back against him, arguing that end-to-end ad optimization workflows should be defensible.
Biggest teaching moment ▶ 1:03:39 The three tests of effective product marketingDes educates Harry on why most B2B marketing fails, breaking down the essential framework that marketing communication must be simultaneously unique, simple, and valuable.
Harry holds his own ▶ 38:58 Calculating fund return multiples for OpenAIHarry demonstrates deep venture expertise by breaking down the math on OpenAI's $90B valuation, explaining why net new investors need to see a 5x return ($500B valuation) within the fund lifecycle.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| The Origin Story of Intercom: From Exceptional to AI-First | 1 | 2 | 1 | 1 | Harry asks standard conversational intro questions about Intercom's founding story. Des explains the origin story from Exceptional and the Dublin coffee shop analogy without any friction. | |
| Debunking the "AI-First" Hype: The "Salt and Pepper" Critique | 5 | 3 | 4 | 6 | Des criticizes shallow AI additions as salt and pepper bullshit. Harry offers informed pushback, citing Asana and Monday integrations as deep potential counterexamples, which Des reframes while accepting the hypothetical. | |
| Legacy Transition and the Three Generations of Chatbots | 3 | 5 | 2 | 4 | Harry asks whether Intercom's non-clean-slate stack makes AI transformation difficult, citing Zendesk. Des educates Harry on the three generational eras of chatbots and why messaging architecture gave Intercom an advantage. | |
| Thin Wrappers vs. Thick Wrappers in the LLM Era | 5 | 6 | 4 | 5 | Harry brings up the VC thesis that LLM wrappers lack value accrual. Des reframes the debate by distinguishing between thin science-fair tech demos and thick commercial wrappers that solve end-to-end workflows. | |
| OpenAI's Platform Expansion and the Threat of "Sherlocking" | 4 | 5 | 3 | 4 | Harry highlights OpenAI's platform expansion killing startups overnight. Des uses the train tracks metaphor to explain platform risk and outlines why commoditization benefits application builders like Intercom. | |
| Guardrails for Fin: Trustworthiness, Hallucinations, and Model Testing | 3 | 6 | 2 | 2 | Harry asks what Intercom learned from torture testing LLMs. Des details prompt guardrails, hallucination prevention, and strict constraints like ensuring Fin takes no political stances on customer sites. | |
| Model Agnosticism, Multi-LLM Routing, and the "Moving Target" Challenge | 3 | 5 | 3 | 3 | Harry cites NABLA's founder on LLM model switching, self-deprecatingly comparing himself to Joe Rogan. Des clarifies that winning requires far more than model agnosticism and discusses OpenAI's fast-moving target. | |
| Structuring Product Teams for the AI Era | 6 | 4 | 3 | 3 | Harry asks about AI organizational structure and cites exact venture startup failure rate statistics. Des outlines Intercom's central AI team structure and agrees that compute costs will raise startup mortality rates. | |
| The Disruption of Incumbents and the Re-build Test | 5 | 6 | 5 | 6 | Des claims ad optimization tools will be automated away by AI. Harry pushes back forcefully using Des's own thick wrapper logic, but Des rejects the premise by explaining that ad optimization lacks human creative intuition. | |
| Adoption Cycles and the Investment Horizon for AI | 4 | 4 | 2 | 3 | Harry brings up experimental enterprise budget evaporation. Des acknowledges slow enterprise adoption cycles but explains that products with proven, clear ROI like Fin will preserve and scale their budgets. | |
| Seat-Based vs. Consumption-Based Pricing in the AI Era | 5 | 5 | 2 | 3 | Harry cites Benchmark's Myles Grimshaw on consumption pricing replacing seat-based models. Des concurs, explaining that software value is shifting from selling seats to pricing completed outcomes. | |
| The Cost of Compute and Nvidia's Long-Term Moat | 6 | 6 | 4 | 6 | Harry calculates fund return math for OpenAI's valuation, pointing out a 5x return requires $500B. Des proposes a controversial Google CEO playbook of sponsored ad injections into LLM answers, which Harry challenges as moving a Titanic. | |
| Apple's AI Playbook: Siri, Hardware, and Consumer Interface Control | 5 | 5 | 2 | 2 | Harry presents the thesis that Apple wins AI by controlling consumer hardware endpoints. Des agrees and expands on Siri controlling the user intent layer, suggesting Google could give away free phones to capture intent economics. | |
| Adobe's Visual AI and Democratizing Creativity | 4 | 5 | 2 | 3 | Harry asks about Adobe's execution speed. Des explains how generative AI expands Adobe's total addressable market from skilled creative professionals to the general public who struggle to visualize ideas. | |
| Startups vs. Incumbents: Video AI and the Case of Synthesia | 5 | 5 | 6 | 6 | Harry challenges Synthesia's moat, arguing video AI belongs inside editing tools like Descript. Des points out Harry's logical contradiction in claiming Synthesia has no advantage while questioning why incumbents haven't done it. | |
| Angel Investing in B2B SaaS in the AI Era | 4 | 5 | 2 | 3 | Harry shares that 80% of his deal flow claims AI positioning. Des outlines his evaluation framework for angel investing in B2B SaaS, expecting natural language query interfaces in analytics pitch decks. | |
| Cutting Through the AI Hype: Feature Bullshitting vs. True Value | 4 | 6 | 3 | 3 | Harry asks why B2B marketing sucks. Des delivers a structured breakdown of the three criteria for effective product marketing: unique, simple, and valuable. Harry pushes back using Simon Sinek's Start With Why model. | |
| Retrospective on Intercom's Early Marketing Mistakes | 4 | 4 | 2 | 4 | Des candidly reflects on early Intercom marketing mistakes, admitting he prioritized blog audience size over buyer alignment. Harry pushes back, arguing broad reach creates word-of-mouth value and brand validity. | |
| Intercom's Product Strategy and Expiring Startup Advice | 4 | 6 | 3 | 3 | Harry asks what Des would change about product strategy. Des explains that startup advice expires every 5-6 years, citing how Dropbox, Atlassian, and Shopify disproved the traditional move upmarket playbook. | |
| Serial Entrepreneurship and Timeless Executive Skills | 4 | 5 | 3 | 4 | Harry argues serial entrepreneurs have a distinct edge from learning past mistakes. Des reframes this by distinguishing between transient go-to-market tactics and timeless executive skills like hiring and culture. | |
| Radical Candor, Leadership Feedback, and Layoffs (RIFs) | 5 | 5 | 2 | 4 | Harry and Des share personal leadership mistakes. Des reflects on avoiding radical candor and quotes Intercom's head of people that effective feedback must sting, while Harry challenges overhiring driven by VC cash. | |
| The Impact of Having Children on Leadership and Work Efficiency | 4 | 4 | 2 | 2 | Harry asks how parenthood affects leadership. Des explains it forced extreme work-hour efficiency. In the quick-fire round, Des explains viewing competitors with respect and deep operational comprehension. | |
| Intercom's Focus Reboot and the Importance of a Clear Launch | 4 | 5 | 3 | 3 | Harry asks about Owen's return to Intercom and Bobby's weekly blog posts at Equals. Des explains that startups frequently die because they forget to properly launch and repeatedly articulate their product vision. | |
| Hopin Lessons, Market Cycles, and a 10-Year Outlook | 5 | 5 | 2 | 3 | Harry asks for retrospective lessons from Hopin. Des reflects on adapting to post-pandemic realities, and Harry shares investor portfolio management insights on taking secondary liquidity during peak hype cycles. |
Statements from this episode (54)
Traynor: OpenAI will eventually reach 'good enough' capability for everyone
“OpenAI will hit some sort of minimum viable kind of what's good enough for everyone.”
Traynor: Startups will never make money filling platform gaps
“You're never gonna make money filling in the gaps in a platform.”
Traynor: AI transition will trigger major market share shifts and clear losers
“There's gonna be a lot of winners and losers, and there's gonna be a lot of market share up for grabs, and people are gonna be looking for who's got the good shit.”
Traynor: Exceptional had more customers on one SF street than all Ireland
“There was a single street in San Francisco where we had more customers than we did in all of Ireland, to give you an example of the gap.”
Traynor: Calling products 'AI-first' without changing workflows is bullshit
“I think it's bullshit when actually the job is identical and you're just sprinkling on like salt and pepper, a bit of AI here and there.”
Traynor: OpenAI will never solve end-to-end enterprise user workflows
“And the thick wrapper is, is like when you've actually solved the user's problem end to end fully in a way that OpenAI never will, you know.”
Traynor: Workflow depth, not technical novelty, wins B2B AI
“It's those who really understand the user workflow are the ones who actually win this, not those who kind of like, you know, straighten their glasses and say, academically, that's been possible for seven months now.”
Traynor: OpenAI Will Never Assign Engineers to Deep Vertical Banking Integrations
“However, I think if you find an area where they're not going to go that deep, OpenAI is never going to put like five of their engineers going hard on wealth management and like, you know, banking integrations, you know?”
Traynor: Intercom's AI agent Fin resolves over 50% of support tickets
“And we see staggering results for Fin. Some people are getting, like, very, very high percentage of total support volume resolved With satisfaction, like above 50% of times, right?”
Traynor: Large language models are not yet equal or commoditized
“And we actually torture test all of the LLMs. It's not yet the case that they're all equal.”
Traynor: The performance gap between OpenAI and competing LLMs is narrowing
“Close and narrowing, and like, it's also a work in progress. Like all of these things are moving targets, right?”
Traynor: Winning in AI software requires more than LLM agnosticism
“I think it's a really important attribute to be able to transition from one LLM to another. Because if somebody does unlock new power, you'll want to be able to use it very quickly. I just, I don't know. I think winning involves more than just simply being agn…”
Traynor: Thin-wrapper AI startups face higher mortality from platform updates
“I think it's reasonable to assume in this massive sea of uncertainty that we're in, you know, like the margins being, the compute being so expensive the margins being so thin, that a higher than normal amount of these startups will die for one of the following…”
Traynor: Expensive AI API calls compress traditional 80% SaaS gross margins
“I think a second one will just be margin compression. The B to B SaaS model, LTV, CAC dynamics, and all that sort of stuff, it does have some assumption in there of like, 80 to 90% margins. Maybe 70 to 90% margin is kind of what you expect if you're running li…”
Traynor: VC capital in AI startups mostly passes straight to OpenAI
“Giving a dollar to a startup is just a lossy way of giving it to OpenAI or Anthropic or whoever, because, you know, that's who they're basically taking it and shining it up and handing it onto.”
Traynor: AI will kill an above-average number of software incumbents
“I also think an above average number of existing incumbents are going to die too, because their world is going to get torn apart by AI.”
Traynor: Startups only displace incumbents if products need a complete rebuild
“If you were to rebuild it today and you'd build none of what's there and everything would look totally different, then yeah, like it's go time, right? If you actually wish you could borrow all their servers and their sender reputation and all that sort of shit…”
Traynor: Speculative enterprise AI budgets will hit zero
“Areas where it's very, how would you say, speculative and open-ended. We thought it would be cool if we could run a little bit of AI to generate ideas for a workshop or whatever, right? They're definitely going to get cut to zero, and they'll, they'll, somebod…”
Traynor: AI adopters keep human seats to boost support quality
“What we're seeing a lot is, like, businesses are choosing to keep the seats and keep the people, and, like, just turn the dial on quality, so they just get really good at support.”
Traynor: Consumption pricing will replace per-seat SaaS within five years
“I think his point about like consumption pricing outpacing, or like, you know, ultimately taking the place of seed pricing, I think is going to be true. I think a lot of work is going to get handed over to LLMs over the next Five years.”
Traynor: High-quality AI agents will command human-level service pricing
“When somebody actually does a good job of an AI coach or personal trainer or financial advisor, the person who does it really well will be able to justify pricing it similar to what the human costs because people have already been paying humans for this for a …”
Traynor: Nvidia won't be the sole GPU maker in five years
“I don't think NVIDIA in five years time will be sitting here proud as the only people who can do a GPU.”
Traynor claims OpenAI is generating $1 billion in annual revenue
“And I think they're doing a billion in revenue or something like that is what I've heard.”
Traynor predicts OpenAI valuation will surpass $90 billion
“I think on the whole, I'd make the bet that they'll pass 90 in value.”
Traynor: Amazon could acquire Anthropic and integrate it into AWS EC2
“I could see Amazon just like flat up like buying Anthropic and being like, let's just make this part of the EC two cluster. And that's just a very easy route to market.”
Traynor: Google squandered its early AI leadership despite inventing Transformers
“Feels like Google, who kind of owned all this at the start, bear in mind with the original paper on Transformers, feels like they have, like, rescued defeat from the jaw of victories, in a sense.”
Traynor: Conversational, action-taking AI will redefine desktop and iOS interaction models
“When Siri can be as conversational as ChatGPT and can take actions on the device, I actually think it'll change like the entire interaction model across desktop and iOS as well in huge ways.”
Traynor: AI intent-routing will give Apple Google-like dominance over app distribution
“If they become this really nice intermediary layer where you're You don't even pick the app you launch because that is a form of user selection we don't even want in our lives. You just say the thing you want to happen and leave it to Apple to work out what sh…”
Traynor: Apple will reject paid search monetization in voice assistants
“I think Apple will say absolutely no way. You know, that's not their shtick, right? Like, as in Apple have never been, Apple are always customer first.”
Traynor: Google could offer free Android phones funded by intent-layer bidding
“I could totally imagine Google doing a thing where they give away effectively free Android phones, powered by the fact That they now control the intent layer, which is when you say, okay, Google, call me a taxi. Google goes and they get you whatever taxi, whic…”
Traynor: AI will expand Adobe's market beyond creative professionals
“They could have a really significant expansion of people who could use Adobe software far beyond just creative geniuses.”
Des Traynor: AI infrastructure will consolidate into 3-4 price-competing providers
“They'll probably be three or four big providers is my guess. You'll be probably GCP, AWS, maybe OpenAI directly, and I'm sure Azure. That's how I think that layer will play out, and they'll end up in pretty direct price competition with each other.”
Des Traynor on why point solutions struggle against vendor bundling
“I generally think if you're playing in somebody else's playground and you're bringing in one little thing even if you do have a reason why your thing will be definitely better persistently and sustainably, it needs to overcome a lot just to be worth the cost o…”
Traynor: Incumbents will benefit more from AI than startups
“If you put a gun to my head, I'd say incumbents will probably do better out of AI than like startups thinking they can displace incumbents.”
Stebbings: AI Upside Is Already Priced Into Microsoft and Nvidia
“And my hard thing is like, as a general capital allocator and capitalist who wants to make money, I think the upside is already priced into Microsoft or Nvidia, where I'm not looking at them like, oh, there's a buying opportunity now because they're so richly …”
Des Traynor: 100% of startup deal flow mentions AI
“If the question was like, how much of it mentions AI in like sub bullet tree or whatever, then yeah, a hundred percent.”
Des Traynor: Scale-ups add superficial AI features primarily for marketing hype
“There's a lot of that type of bullshit in AI, which is people reaching for the easiest to use features and trying to, like, reverse engineer a demand for them inside their product. So, like, summarize this shopping cart in natural language, English. You're lik…”
Des Traynor's two-part test for evaluating genuine value in AI products
“What I look to sort of interrogate the value is just like, Is there something happening now that wasn't possible before? Or is there somebody who doesn't have to do something now that they had to do before? If the answer to either of those is yes, then I'm sor…”
Des Traynor: Startups shouldn't market themselves as new versions of incumbents
“Most startups with marketing with B to B or B to C, they forget to say the reason, they forget to say the thing that makes them unique, that's valuable. To the users. And if they're going up against an incumbent, the worst thing they can say is like, oh, we're…”
Traynor: Intercom's early blog prioritized general audience over buyer persona
“I think probably I prioritized growing an audience for the blog, overgrowing the right audience for the blog. And the net net is that we have a large audience for the blog. People who are like design or into product or even into engineering. People are maybe i…”
Traynor: Most startup best practice advice expires after five years
“I think there is very little best practices advice in startups that actually survives more than five or six years in my opinion.”
Des Traynor: AI will disrupt long-standing SaaS product strategies
“Like even like all this AI shit's gonna like upend a load of like product strategy advice that has been holding solid for 10 years, right?”
Traynor: HubSpot proves SaaS startups do not need enterprise upmarket focus
“HubSpot have proved exactly that there's massive businesses to be built without ever having to go, like, all the way up market, right?”
Des Traynor: Repeat founders bring executive leadership skills, not GTM tactics
“The stuff that I would definitely bring Into the next company is not specific, like go to market tactics or like bottoms up adoption versus like going into the top of the market. It's not like marketing channels or tactics or anything. I think what it would be…”
Des Traynor: Seasoned entrepreneurs do not treat headcount as a vanity metric
“Most seasoned entrepreneurs won't do a second time or third time, whatever. They won't see headcount as a vanity metric at all.”
Des Traynor: Scaling startups cannot rely exclusively on hiring top-tier talent
“You can't only hire like A++ superstars because we'll be waiting all year for our next engineer. So you start to work out ways to like scale and you say, you know what, how about the A++ person leads the team and they can hopefully drag the B person up to an A…”
Traynor: Startups should keep their physical office space slightly too small
“You always want your office to be a little bit too small, because it gets you this sort of vibrance and this kind of sense of hustle, like, this should always be a pile of work, and like, There should always be a sense of like, holy shit, we've got so much to …”
Traynor: Second-time founders hire slower to avoid eventual layoffs
“I would bet your second time founders don't they hire slower is my guess because I just think it's an easy way to like burn up opportunity and ultimately lead yourself in a position where you might have to riff.”
Traynor: Focusing on beating a declining competitor risks ruling over a graveyard
“Oftentimes you can find yourself ruling over a graveyard. Right. Like if we just beat Zendesk, but Zendesk is like in the current state it's in, that won't be the full realization of what Intercom can be.”
Des Traynor: Private equity software playbook increases prices and shrinks product roadmaps
“The PE cash cow playbook would look like raise prices, shrink roadmap, bring the register, package it up into a very efficient, like sort of cash producing machine and hand it over.”
Traynor: Many Startups That Failed in My Portfolio Never Really Launched
“When I'm looking through my own portfolio and I was like, huh, lot of these companies that died never really launched.”
Traynor: I Wrote 90 to 95 of Intercom's First 100 Blog Posts
“I wrote maybe, like, some, like, 90, or 95 of the first 100 blog posts on Intercom”
Des Traynor: Founders should avoid raising billions at astronomical valuations during market frenzies
“Here's a shit lesson that's just true, right? If you're in the weirdest capital market in history and everyone's telling you to, like, raise billions of dollars at, like, ridiculous valuations, don't do it.”
Stebbings: Early investors should take secondary liquidity when valuations peak
“Actually, regardless of how well the company's doing, regardless of trajectory, who's joining rounds, if you are in early enough, and the prices get high enough, just take some off the table. And actually be much more active around it. Like, you know, be a rea…”