Adrian Weckler speaks to the CEO of Ireland’s first $1bn firm
After landing the biggest ever funding round in Ireland, software company Intercom is now one of Silicon Valley’s billion-dollar ‘unicorn’ companies. Co-founder and chief executive Eoghan McCabe talks about cash, IPOs and Intercom’s future.
WHAT do you do when you’ve just raised $125m (€101m) in a funding round, leaving your seven-year-old tech firm valued at $1.28bn (€1.03bn)?
It’s a scenario that few of us will ever encounter.
But it’s one facing Intercom chief executive Eoghan McCabe. Last week, the software company he co-founded raised just over €100m in a single funding round, officially marking Intercom’s entry into the Silicon Valley ‘unicorn’ club.
As such, Intercom not only becomes Ireland’s biggest tech company but is now getting closer in status to companies like Airbnb, Stripe and Uber.
But with great cash comes great expectations, both from investors and the wider industry.
As the tech industry’s IPO market gets back on track, does the huge injection of capital create a new timeline expectation for a market ‘exit’ of some sort, such as an Intercom flotation?
“The answer is yes and no,” says McCabe. “When people invest in a round like this, there’s rarely an explicit conversation about an outcome or a timeline or the terms in which we get there. Honestly, you’d be surprised. The reason is that the best companies and best investors know that as long things continue to do well, their interests will generally be aligned. Look at Airbnb. Sure, some of the early investors might have wished earlier that they had liquidity for their stock. But did they ever initially think it could be worth so much? Probably not. But yes, it’s fair to say that there’s an understood or unsaid set of shared expectations that includes liquidity for shareholders at some point, as well as employees and management.”
But those expectations, he says, don’t necessarily mean any kind of pointed focus on an IPO in the short term.
“No, the focus is on very rapidly shipping a ton of software and continuing to expand. Because those who focus too much on the outcome tend to do the poorest long term.” In terms of expansion, Intercom appears to be doing alright. The company currently has more than 25,000 paying customers in sales, marketing and customer support sectors. It also claims to “power” 500m conversations a month, saying that its conversation count is doubling every year.
There are some Silicon Valley A-listers starting to join the company too.
After the €100m funding round, the celebrity Internet analyst Mary Meeker is now on the board. Meeker, a general partner at US venture capital firm Kleiner Perkins (the lead investor in the €100m round), is noted for her globally reported annual reports on tech trends to watch.
Intercom’s main business is giving other companies the online tools to talk to customers themselves. Typically, this can be through dialogue boxes and pop-up customer service chat bubbles on websites. These are fairly ubiquitous now for customer-facing companies online. In Intercom’s case, many Irish and international companies use its services because they’re seen as quick and easy to set up and run for anyone who wants to deal online with customer queries or sales.
The company was founded in 2011 by McCabe, Ciaran Lee, David Barrett and Des Traynor.
With the funding round under their belts, the four young Dubliners may own up to half the company, possibly giving them each a nine-figure valuation and instantly catapulting them into the realms of Ireland’s richest people.
(Stripe, the online payments firm created and run by twentysomething Limerick brothers Patrick and John Collision, has been a ‘unicorn’ for several years but it is not classed as an Irish company, as the two siblings started and operate it primarily from San Francisco.)
For those who follow the tech industry in Ireland, Intercom has always been an interesting company in the way it approached its own development.
The products are designed and developed in Dublin, not Silicon Valley. This is the direct opposite to how international tech firms usually operate in Ireland, with the brains trust being reserved for California and other business development or tech support happening in Ireland.
The company now has almost 500 employees divided between offices in Dublin, San Francisco, London, Chicago and Sydney. However, its headquarters is technically placed in San Francisco, where its sales and marketing base is.
“We’re Irish-ish,” says McCabe. “We’re a dual nationality company and have been from the get-go.”
Doesn’t he realise that the more successful they become, the more they’ll be claimed as Irish?
“To be fair, Ireland is an incredible place to start and develop software,” he says. “The technology community and the business environment in Dublin is maturing substantially. When you and I first spoke about Intercom a few years ago, it was still kind of magical that there was a company building tech in Dublin for a Valley firm that would raise as much money as we did. It was a novelty then, but it’s not any more. Now there is a real industry. There are a whole bunch of indigenous or semi-indigenous companies doing this here. And then there are all these public companies that have set up research and development facilities in Dublin, too. There’s finally an ecosystem, people who might leave Intercom and start a new successful firm or people who might leave Google and join Intercom or whatever.”
Its €1bn unicorn status makes Intercom the most valuable tech company in Ireland. It’s a vindication for the company’s previous financial backers, including the likes of Twitter co-founder Biz Stone, the Collison brothers and other top tech entrepreneurs, either through investment firms or through social capital.
With the cash injection, Intercom will “invest aggressively” in deepening its existing product lines and coming up with some new ones.
McCabe says that this will include a degree of artificial intelligence and machine learning for greater automation.
He also says the company is close to launching a completely different type of product that “came out of nowhere”.
“Sometimes successful creativity comes from a different industry or just an experiment,” McCabe says of the new product, which he says won’t be unveiled for a few weeks.
“This one was an idea we came across late last year and we’ve been working on it among a very small group of people. We’re about to bring it to market.”
AS to the future for Intercom, one of the company’s long held mantras is that”all businesses are becoming internet businesses”. Subscriptions will have an increasingly substantial part to play in that ecosystem, according to McCabe’s Intercom co-founder, Des Traynor.
“We believe it will affect most businesses,” he says. “So rather than buy a few CDs at a time, you might now pay a tenner a month. In a lot of cases, you can subscribe to razor blades or boxer shorts. What we’re going to see, then, is the customer relationship becoming the most important thing. So that means that businesses will want to talk to their customers. Intercom’s belief is that you probably want to talk to these people. So we’ll see a lot more conversations.”
How far will Intercom go? So far, there’s little sign of any let up in growth or ambition among the founders. And Eoghan McCabe believes that more Irish tech companies are figuring out how to scale their ideas globally.
“We couldn’t have done all these things if we weren’t also an American company,” he says. “For anyone who wants to learn from our company, there’s a whole other world out there.”
‘To be fair, Ireland is an incredible place to start and develop software’