Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy, David George
[00:00:00] S0: Why don't you buy whole companies? [00:00:00] S1: One of our folks in IR asked me yesterday, "Why haven't we done a buyout fund?" I think culturally, it's totally different than what we do. All that we want to do and all that we stand for is helping the next generation of companies go beat the incumbents. So culturally, buying the incumbent and trying to make them last as long as possible and squeeze as much as they can out of their customers or whatever it may be, it's just culturally antithetical to what we do. [00:00:00] S0: What are the most interesting strategies or things that upstarts do to beat incumbents? What are your favorite ways that companies beat incumbents?
· David George
[00:00:00] S1: Business model shift is a super powerful thing that's very hard for incumbents to react to. That's part of what is so exciting about the customer support industry and Decagon, the odds are so stacked in their favor because the business model's going to be very hard for incumbents to react to. And it's, on the customer side, better, faster, cheaper, fully better, faster, cheaper, by a lot, by an order of magnitude in each case. So business model shift is one. The two simple components that I'm looking for, which generally we're not really seeing yet, is completely reimagined UI and then completely new sources of data. So we're large investors in Databricks, we're very optimistic about the data layer, I think they'll have some success in enabling applications built on top. But the UI/UX thing and the data thing, paired with a business model shift, I think are what are going to give the startups the best chance against the incumbents. And the more dramatic the shift in those, the harder it's going to be for the incumbents. So take salesforce.com, I use this as an example. It's a good company. I never would've thought it would be as big as it is. It's a good company, so maybe they'll be one of the incumbents that survives and reacts. What do people do in salesforce.com? It's basically like a sophisticated form checker with some analysis and it's brutal, it's painful to use. The future with AI is not going to be anything like that. It's just going to be, to my point earlier about proactive versus reactive, it's just going to be a proactive thing. You, a salesperson, you're going to log into your Salesforce and it's going to be like, "Hey, these are the five customers that you have business that you should be doing. Oh, by the way, I've been monitoring what they've been doing online, there's a shift in this group, you've got to be aware of it. I've drafted a call script. This person actually likes to be talked to on the phone. This person wants just to engage via your AI email. I've drafted one for you. I've already taken a bunch of action on your behalf. Here's what you need to do." That's going to be the future, I think. And then, the data that goes into informing that is no longer the database that makes Salesforce so powerful. It's all the unstructured data that's getting pulled from every interaction that everyone has everywhere.
· David George, Patrick O'Shaughnessy
So my hope is that the fullness of the new product has that entirely re-imagined UI/UX. The fact that it's pulling all this new data from different places is an advantage to incumbents because Salesforce is so sticky because of the column or database that they have. And then, if you, on top of it, have a new business model that's attached to it, I think that's a really good shot for a startup to be able to finally go rip Salesforce out. If you look at the SaaS and Cloud wave, basically, the whole story was a 7x-ing in the amount of revenue in the market. There's this question of who wins, the incumbents versus startups, it basically split 50/50. So 7x more revenue, incumbents grew a bunch, they took half of the new share, startups took half the new share. I think the more dramatic the shift, especially the more dramatic the shift in potential business model, the more likely it favors the startups. That's the bets we make. My hope is that's what happens, but we'll see. [00:00:00] S0: It's incredibly fun to explore all this with you in a formal way, having done it so informally for 20 years or whatever it is. I think you might know my traditional closing question, what is the kindest thing that anyone's ever done for you?
· Patrick O'Shaughnessy, David George
[00:00:00] S0: It's incredibly fun to explore all this with you in a formal way, having done it so informally for 20 years or whatever it is. I think you might know my traditional closing question, what is the kindest thing that anyone's ever done for you? [00:00:00] S1: I do know that question and I've thought a lot about it, because there's a lot of things that I consider in my life that have broken my way. I grew up in Kentucky far away from this world and a lot of lucky breaks went my way. The thing that I reflect on the most is we spent the whole time talking about work. The other thing that I do in my life is my kids, and something has become really clear to me with my kids' age that they are now, which is the sacrifices my parents made for me are extraordinary, they're incredible. And my dad always brings up, "Oh, I was on the sidelines in the rain watching you and driving you from soccer to baseball to basketball." Sports and all the activities that I was able to participate in as a kid, I think, made me into the person I am in a lot of ways. And now I see it with my kids, because I have to do that work, and I have such a greater appreciation for what my parents gave to me and the sacrifices they made. [00:00:00] S0: Amazing, simple thought. Thanks for your time, man. [00:00:00] S1: Great to be with you.