Wednesday, May 22, 2024

Irish tech company Intercom to invest extra $94m in artificial intelligence

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Irish tech company Intercom is to invest an extra $94 million (€87 million) in artificial intelligence (AI) as part of plans to become the biggest player in the market, the group’s chief executive Eoghan McCabe has told staff.

Mr McCabe, who made the announcement in a company-wide email to staff before sharing the news on his social media channels, called the move a “big new bet” designed to “maximise our chance of enjoying the giant opportunity in front of us”.

Intercom’s software platform brings messaging products for sales, marketing and customer support together. Its products allow companies communicate easily with customers through their own websites and apps, on social media and by email.

Mr McCabe told staff the targets would require more productivity from them, and that “plans are in motion” to address “mediocrity” in some aspects of the business.

“I want you to know how seriously we’re taking our ambition to win here,” he said. “And also to have context for the continued push on productivity and our talent bar that you will see from us over the next while.

“Winning in this game will require aggression on all fronts, not just with our capital. We have no room for comfort or complacency or mediocrity.

“We have some of these things in some areas of the company today. I want you to know we’re aware of this and that we already have plans in motion to address all of it.”

On the detail of the investment, Mr McCabe said he expects that, “in time”, AI will “do all knowledge work”, but that it will start by doing “the most repetitive knowledge work first”.

“Customer service is perhaps the best example of this – the majority of customer service work is highly repetitive and not a good use of a human’s life potential,” he said. “And so AI will do customer service work first.”

He said the money spent on customer service salaries per year is in excess of $350 billion. “The majority of this spend will eventually transfer to AI technologies,” he said.

“This is why there are many companies chasing this opportunity aggressively. From the biggest, like Salesforce and Zendesk, to the smaller companies like Ada, Forethought, and about 50 others.

“We are the early leader in this early space. The big guys and the little guys have their eyes on us and are following us. I know this because I meet with their CEOs. You can see it in their decisions too.”

He said many companies would share in the billions to be made in the AI market, and that Intercom would “lean in as hard as we can and deploy very large amounts of our cash reserves” to make it the biggest player.

This extra spend of $94 million will cover an increase in the group’s machine learning team headcount from 19 to 72 by the end of next year. “This will require an epic lift to make happen, but will dramatically increase our ability to ship great AI tech fast,” he said.

Furthermore, the group will add 22 staff across the rest of its research and development division. It will also add $13 million to its annual marketing spend, bringing it to a total of $37 million per year.

Mr McCabe said a “worst case” revenue growth scenario will see the group’s cash balance fall from $130 million today to $69 million at the end of 2027, at which point it will be “cash-flow positive again”.

“With stronger growth, which I expect and which we’re playing for, we’ll break even again much sooner or get even more aggressive with our investments,” he said.

Intercom was founded in Dublin in 2011 by Mr McCabe, Des Traynor, Ciarán Lee, and David Barrett, and has a presence here and in the US.

Customers include Microsoft, Amazon, Aer Lingus, Scottish Power, Eurotherm, Atlassian, Shopify and New Relic. The business became a tech unicorn in 2018 after raising $125 million in a fundraising that valued the business at $1.28 billion.

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