Inside Electric's AI Relaunch, from a 3X Founder | Ryan Denehy (Founder & CEO, Electric)

This is a generational shift in how technology is built and used in. So when did you start making this pivot and where are we today? Like who are you working with? How's it going?

How's it impacting revenue? We had a huge, huge announcement recently with ADP, largest payroll company in the world. They have a product, ADT IT management that is electric behind the scenes. Ryan Denegee, founder and CEO of Electric AI.

Now turn your companies around. You sold them to public companies specifically, which is quite interesting. The reality is people buy companies, companies don't buy companies. I read this on your axe, but you had zero VC connections.

We need the details on electric because you just went through a really cool relaunch. Tell us about electric. Tell us about the relaunch. Yes, psych to connect.

And I mean, Ryan, you founded multiple companies, sold them to public companies, and currently lead the most recent one, Electric. We'll cover lots of tips, everything from selling companies, learnings from being a multi-time founder, and much more. But to start, we need the details on Electric. Because you just went through a really cool relaunch.

Tell us about Electric. Tell us about the relaunch. Electric's my third uh venture back company, which makes me feel way older than I actually am. I'll be 40 in October, but I've done this my entire, my entire career.

I like to tell people I'm I'm unemployable, I think. Um but uh but yeah, it's actually Electric is the being the founder and CEO of Electric is the one job I have had longer than any other job in my life, which is very, very proud of that. Started the company in uh we launched a company in 2017 here in New York City. And the vision then is pretty similar to what it is now.

I wanted to come up with a way to automate IT support, IT management for companies that didn't have IT departments. When I was running my previous company in San Francisco, we had this problem. We were the customer. We went through, I think, three or four different local IT contractors.

We paid them a fortune and could never find them and we needed them. And I thought this is the poster child for a problem that you can solve with software with with automation. So uh launched a company in in 2017. I'm very proud to say the AI has been in our name since the beginning.

If you look at the filings in Delaware, Electric AI Inc. That is a lot of actually was registered in 2016, electric.ai. And yeah, but you know, the classic case of being very, very early, right?

The the the pitch, if you even go back, look at our our our seed round uh presentation, it was it was always, you know, use AI to build the most powerful automated IT management solution. Um, but because the AI technology was not there in 2017, we did it kind of backwards. We built an IT services business, we wrapped it in software, and then we sold it like software. We were the first IT company to actually package up and sell IT management, uh IT services with a high velocity inside sales motion direct sales team.

And that was that was hugely effective. So we kind of came up in a time sort of in the pre-COVID era where the classic triple, triple, double, double, double growth rate was considered top decile. Now that wouldn't even get you a you know a meeting with a with a VC. I think we we sent a million emails and made a hundred thousand cold calls our our first year to get to the first million of of ARR.

You know, nothing pretty about it, but it was great. And then made the decision going into 2023 that the combination of software and services were beginning to be fundamentally at odds with one another. And that really started to become apparent once we got up to having thousands of customers and hundreds of employees. It was also at a time where, if you remember in in 2023, the venture markets were pretty much frozen, IPO markets were pretty much frozen.

And so we said, Hey, if there was ever a time to rethink our business model, one of the best pieces of advice I got at the time was from one of our investors, Jeff Richards, at Notable Capital. He said, Look, everyone is pulling back and and reevaluating their businesses. You have all the air cover in the world to do the same. It just so happened that what we were doing wasn't just uh a little pullback, it was a wholesale rewrite uh of the whole company.

Interesting. Okay, so when we say wholesale rewrite, what does that entail? Well, what we did was we we got to this fork in the road where we said, okay, we've got a great software. The underpinning of it is a big managed services organization.

We have to pick a direction. Are we a software company or are we a services company? And when we looked at the market, what we realized was serving SMBs, middle market companies, what people wanted was automated solutions for IT management. They wanted easier and easier ways to buy user software.

All points, you know, all those things pointed to we got to double down on the software and the automation. It also happened that by building one of the fastest growing IT services companies in America, we also had one of the largest and most modern, most relevant IT data sets in the world. And so if anybody was well positioned to, as we kind of entered the age of AI, to take a really rich set of data and train models and build new software, it was us. It was kind of staring us right in the face.

And it's kind of one of those things where when you come to that conclusion, you're like, oh my God, like the right answer has been under our nose for years. And so what we did was we we split the business into two, separated the you basically a team of people who were just going to work on the new software, just work on the new stuff. And then the kind of legacy IT managed service business and all those customers, all that, we just had a separate PL and moved all the other employees over to there.

And so we did that for about 18 months, and then we ultimately made the conclusion, uh, came to the conclusion that the best thing for the services business was to find a new owner who just wanted to invest and expand a services company. And then the best thing for us on the software side was just, you know, simplify, have one business to run and uh and and do that. And so that's that's ultimately where where we took the business. Love it.

And I mean, the the huge impetus for this that you shared previously was to relaunch us an AI native. Correct? Now I'm curious about this because it's almost now more than ever, it feels like software and services are converging. And a huge part of that is because of AI native for the companies and just how they're packaging the whole services, a software uh trend.

And you've kind of gone the opposite way. Yeah. What made you see that pattern and necessity to actually split the businesses to go more AI native for anyone considering that? Yeah, I'll I'll preface by saying there's there's there's no right answer.

And like the best non-answer I can probably give is like it depends. It's highly situational, right? There are so many services businesses that today are gonna be huge beneficiaries of all the efficiency and AI that you can introduce into a human-powered business. For us, when we looked at it, what we realized was the market opportunity and what people really wanted, um, and where there was the biggest gap in the market was a super powerful, fully automated, cost-effective IT management solution.

The services side of the equation, while there's a lot of upside in making an IT services business run better with AI, you know, we we did the math on it and we just said, like, and it's a good, not great business. And ultimately there's two dozen other people doing that right now, and we would never willingly compete in a market that is already super crowded and saturated. We want to go compete in the market where the industry is headed and where we don't have a ton of competition and where we have a unique advantage.

Yeah, totally makes sense. So you relaunch as AI native, break the steps down for us because I think a lot of people are trying to do the same, particularly. I mean, pre-AI companies. There's kind of two paths, and it's one you relaunch as AI native just like you have, just like other companies have successfully done, or you kind of get rolled up in general, kind of the the pre-AI era, because like you identified before, the post-AI numbers look very different.

And so the growth rate can be death, the product to evolve. So for anyone relaunching, like what are the steps? What's the playbook? I'm asking you some very low degree questions.

Yeah, no, I mean the it's it's gonna be right, because in our in our case, we didn't have a choice. It was we had to kind of go all in, burn the ships, and and and fully commit, you know, full, fully commit to the new business. I actually think one of the disadvantages that some of the, you know, kind of like COVID-era unicorns and just sort of like pre-AI, you know, B2B SaaS companies, one of the challenges that a lot of them have is that the businesses are not terminally ill in the classic sense, right?

Like there's definitely days where I would, you know, particularly throughout this transition, where I probably would have told you I'd kill to be in that position. What I would say is, you know, for for the folks who are running companies where the existing business model is working, you still have to approach this with a level of urgency as if it's not. Um, because if you if you look look out there in the outside world, the days of Vista coming in and kind of buying your you know stalled out sub 100 million ARSAS business for a real number, those are kind of over.

Are they over forever? I don't know. But a lot of the traditional exits or recapitalization paths are are not there. And so if you're lucky enough to have product market fit, you're lucky enough to be an expert about what your your customers want.

Now is definitely the time to get, if you haven't already, to get really serious about what it what a total reinvention looks like. And so to answer your question more directly, like what's the playbook? I can tell you what what what ours was. And you know, step one, acknowledge you have a problem.

Start this start there. It would have been so easy for us in 2023 to sit there and pat ourselves on the back and say, wow, another huge year. We got plenty of cash. We're number one in our category.

You know, we we haven't missed a quarter in ages, you know, all of that. Fortunately, we've got a you know, a smart team, a really smart group of investors around the table. And we were like, hey, let's like read the tea leaves here. This has worked really well, but from this point forward, this setup, this business model is not going to be what takes us the distance kind of in the next, you know, for the for the next go of it.

So, you know, acknowledging what the problem is and like what you're trying to solve is is often the hardest part. And so then the second one, which which again, I give a ton of credit to our team, is just deciding where you can win. You know, again, we realized that the IT market in the SMB uh and middle market segment was still not massively competitive. We had a huge data advantage.

We knew the customer, we had existing relationships with, you know, really important folks like Apple, who are very hard to establish new relationships with. Third was, you know, shore up the balance sheet, make sure that you can actually afford to commit to a big investment and an ambitious push into a new market. I would say the hardest days I've probably ever had running this company or any company for that matter, are when we've had to let people go, you know, letting go of 60% of your company, that sucks.

I don't care. Like, you know, you it's the right thing to do, and you know ultimately it's the best thing, actually, for everybody in the long run. But like any anyone who tells you that stuff's easy is is absolute lying to you or has no business running a company. So yeah, that I would probably put in the category of like necessary evil of doing these things.

Um but but you just you have to. Uh, you know, and then kind of the last piece is like you just you have to run like hell in the new direction. And I think even something that was challenging for me, something that was challenging for our team, is that the things that make your company work well at 50 million of ARR, 100 million of ARR, even 10 million of ARR, most of those are not behaviors that are going to make you successful when you do a reset and you're trying to bring an entirely new set of products to market.

And I think we we maybe were overly confident that because we knew the market so well, you know, we weren't we weren't pivoting the market we operated in, the customer we sold to, or the problem we were solving. So I think there were definitely times where we we trivialized the task at hand because we're like, hey, it's not really a pivot. We're just changing up sort of the product. Well, it's like, okay, you're completely rewriting the product and completely rewriting how you distribute it.

Like that's a pretty massive pivot, even if you're not leaving the industry that you're in. I think you used the term blow it all up earlier when we were chatting. Absolutely what we did. Love it.

I mean, okay, so we maybe for lack of a better term, but we blew the whole thing out because you identified and really early. Kudos to you for doing that early. We're seeing now in 2026 the reproductions of companies that did not start early. Um and there's kind of two camps.

Well, I guess three camps, those that did not pivot AI native, which are fewer and fewer, hopefully. Those that did it early, and those that are currently doing it. And so you really see the stark difference in a matter of two, three years, depending on when a company took action. You know, uh maybe I'm showing my age a little bit, but like, you know, in the previous, you know, tech cycles, you had a lot of software companies that built their whole business on on-prem software.

Which like probably people listening to this that are like, what does that even mean? Yes, there were things that predated the cloud. You would buy software and run it on a server in your office or in your data center. What's happening now with AI is not dissimilar to the on-prem to cloud shift, but like orders of magnitude bigger in terms of the pace at which it's moving and the implications that it has for businesses.

And it's just like an important thing for people to kind of understand, like this is, you know, you talk about kind of you know pivoting to AI native. This is not about chasing some hype cycle, right? Like this is not like, you know, some cornball thing like adding tokens or you know, Bitcoin to your business model that like comes and goes. Like this is like the world has changed.

Again, I would probably even put it like in a in a similar camp is like the you know, wide availability of broadband internet, like literally changed everything and changed everything very quickly. It's up there with that. So I think important thing for people listening to this, like to keep that in mind. Like, this is not people chasing height, this is a generational shift in how technology is built and used and consumed.

That's a great, great call-out. And now when we talk about making the shift because of that generational shift and large platform shift, you've done it. And so you took us through the steps, but when we zone in and actually say, okay, what did you change to make it AI native? I know you made big product changes, to maybe help us identify what are the key things that changed and maybe even the byproducts of changing things like the product.

What does that do to actually the way you distribute and so forth? Yeah, well, distribution is is is a great point because something that we spent a lot of time thinking about is the fact that product market fit has as much to do with finding the right distribution channel as it does with finding the right end customer. Meaning many of the most successful products that owe their success as much to identifying the right distribution channel as they do actually building the right widget for the right customer.

Um, and the inverse is also true. Um, there have been countless amazing products built, but because they didn't find the right distribution channel, you've never heard of them, and the business has never succeeded. You know, like one example I I will often reference is you know, consumer product, Sirius XM satellite radio. That business only worked.

It only worked because they went around and they paid car companies to install the thing and they gave away a free trial. Anytime you bought a new car, the thing was just in there and you'd be like, wow, this is great. And then the trial would be up in 20% or whatever, some crazy attach rate. They would, they would subscribe.

Um, that business never in one million years would have worked if they had to go out one by one, acquire every single customer, and get them to install this thing in their car. Never would have worked. We had a pretty big appreciation for because our our old products where we were effectively replacing an IT department or you know, replacing the need to hire IT staff. This is a high-priced product, but also a very complex product, which meant we had to sell it with a direct sales motion where it could be a more consultative sale.

But it had a big price tag, so we could afford to do it that way. Going to more of an of an AI native product suite meant that the actual unit price on what we were selling was way, way lower, which meant that the economics, even though the margins were higher, the economics didn't support a direct sales motion, at least not one that we found would ever really get to a level of efficiency that would make sense. However, the instantaneous nature of the ability to implement and start using the product, the uh ease of use that didn't necessitate the same-sized, you know, customer success team, all of that, meant that we now had this wonderful world of uh channel sales, of product-led growth that would have been completely impossible with the old product.

So in in the same way that a new product may require a new distribution channel, a new product also may enable you to explore new distribution channels that weren't possible at all with the prior product. Yeah, that I mean that that's super fascinating. I love the Sirius XM example. Absolutely.

And and I think the the probably the thing that's most jarring about the cycle we're going through now with with these AI native companies is the gap between the winners and losers is dramatic. You know, it used to be in you know in B2B SaaS that you could have a bunch of players in a space and they, you know, you could have four or five people that were all kind of doing the same thing and could all build like pretty big businesses. What you're finding now is the AI businesses, even you know, vertical AI companies, you're short circuiting a lot of the traditional uh bottlenecks in adoption of new tools.

And so what's happening is it's amplifying whatever the existing working go-to-market motion is. If I can buy and implement your product in a matter of minutes rather than like, you know, 10 years ago, a winning B2B SaaS company might still require that you have like a three-month implementation with like a whole professional service. Yeah, and now that's like completely unacceptable. I mean, I know we live in this age of like the forward-deployed engineer.

The reality is like most people do not want to spend three months deploying software. And so the companies, some of the companies that are growing the fastest today, it's because you you don't have to spend three months deploying software. You don't have to spend, you know, two months on endless calls with a bunch of you know, enterprise AEs. And so as a result, those who are finding a working scalable go-to-market motion quickly are able to grow so much faster than they ever could have before because all of the kind of pre and post-sales bottlenecks are melting away.

And then that means that there's a lot less left over for the people who can't catch up. And so, you know, a company that, you know, would have been in the last cycle, you know, you might have had a billion dollar company leading the market and a couple of like, you know, one or two hundred million dollar companies over here. Now you're just gonna have like a $10 billion company who eats everything. Yeah, I think that's an excellent point.

But the way we have pivoted product, the way we have pivoted distribution impacts the way that you actually fundraise and scale tremendously. And for yourself, like you know, you made these product changes, you shifted, you went all in, went all in on AI native. Like, what did that do for your distribution and the way you go to market? It it changed everything.

Um, you know, we my my my past two businesses went through a similar evolution of distribution where we would start with direct sales and then eventually find our way to a highly scalable, uh, you know, partner-led, kind of channel-led distribution mechanism. And basically what happened here, um, but it's only because we had we have a product that can now support that. Um, so we started getting requests from our customers even before we pivoted the business. They would say, the number one thing I want you to do is connect all the stuff I'm doing in Electric to manage my IT, connect it to my payroll system, because most of what I'm doing in IT relates to hiring, firing, role changes, all that stuff.

Um, and so when we thought about rebuilding all these products from scratch, we thought about what would be a really natural distribution channel that would be complementary to things that the customers are already using. How can we how can we attach ourselves to systems that are already using and workflows that that they're already engaging in, but that we can help make more efficient? And so we started getting calls from different companies in in the payroll space saying, hey, we're we're looking at IT.

We're seeing that companies like Rippling and Deal are bundling an IT product with with their payroll and HCM offer. And so we said, you know what, that's that's an interesting channel to explore. And you know, definitely took some time to get set up, but it's one of those things where now that it's working, it's it's magical because users are able to interact with our product right at the moment they need it. When you're hiring somebody and you're you know setting up the new hire in your in your HR system, the time that you're thinking about, hey, what software does the employee need?

What you know computer do they need all, it's right then and there, the buttons right there. And then we can take you to a series of automated workflows where you know our software, our agents are running in the background and and doing all these things that normally would have taken hours and hours to do. So I think the part that that for us we get excited about where it's such a home run is it's not just simply, hey, we found a scale distribution channel, but like it's a distribution channel where it's actually better for the customer and the user because we're surfacing the product to the people who need it when they need it.

And so that shift is going sales motion to channel sales. Yeah, which was radical. And like I think it's one of those things where if if we had known how challenging it was gonna be to build it from scratch, I mean we probably we would have still done it, but I think we would have actually I don't know that it would have changed anything. It's just I think knowing what we know now, as is often the case, you know, we uh we do these things not because they are easy, but because we thought they were gonna be easy, right?

Um 100% always. And and channel sales is notoriously known to be incredibly beneficial in the long run, but also be kind of a slower process to build. Like we've had extra beam burger, yeah, reference like a three-year timeline until you're really seeing all the fruit, yeah, all the fruit of your labor. And it's like, look, I'm I'm not a historic, like I'm not a I'm not a technical founder.

I've my career has largely been defined by starting with things as a sales and a go-to-market problem. And I would say, even by my own standards, this has taken every ounce of my commercial being uh to bring it to life. So it's definitely in the same way that if you were trying to solve a ridiculously complex technical problem, like you would you would you know need a very astute technical mind on it. Like I have used just about every available brain cell to try to try to figure this out.

And so yeah, it's definitely the the benefit that you have in and a good friend of mine, Dan Turan, who runs a VC fund called uh gutter capital. He was founder and managed by Q. He he told me years ago when uh I was talking about some some challenging aspects of our business, he was like, dude, if if these things were as easy as connecting a few APIs, everybody would do it and it wouldn't be special and it like it wouldn't be defensible. And so I think about that a lot through the lens of anything we're doing that's super challenging.

For example, spending years wiring up a scalable proprietary distribution channel. The benefit to that in the long run is that it's nearly impossible to replicate and it's highly defensible. Definitely. It's always the unscalable things that that go far too, or the things that take a long time.

So, when did you start making this pivot? And where are we today? Like who are you working with? How's it going?

How's it impacting revenue? 2024 was when we really started kind of rebuilding, um, rebuilding all the products. And then last year we basically had the products in market in kind of a semi, semi-private beta and begun kicking off sort of these large-scale pilots with a lot of our initial uh payroll partners. You gotta imagine these are companies that have tens of thousands, hundreds of thousands, um, in some cases a million plus customers, and they're handling very sensitive data.

Everybody wants to use them as a distribution channel. So there are a couple challenging aspects of wiring all this up. One was the strategy wouldn't work if we only landed one or two of these companies as a partner. It only really works if you can get like a lot of them.

And like this is a market where there aren't 20 or 30 people to partner with. There's like a dozen. No. Uh and so like we had to, we had to like run the table on at least half the market.

A fact I underappreciated when I started this. Uh, I just assumed that we would we would sign up everybody. So we had to do that. And we had to, we, we basically had to make it through, convince all of these companies that A, you need to enter a new an entirely new category.

Uh B, you're gonna enter the new category, you're gonna do it soon, and you can do it with us and nobody else. And then, and then three, the way that you're gonna do all this with us is gonna fit within like one of these prescribed motions because we were like, this also isn't gonna work if we have to build completely different products and have completely different sales motions for every single uh partner that we're working with. And so we basically spent the better part of a year and a half just trying to line up all of the conversations and all of the strategies in such a way where we could kind of get people to the same place at the same time, or at least enough of a of a of a critical mass of them.

Yeah, so we did that. And uh, you know, the early results were were really good. I mean, I think one of the first partnerships we launched, we we onboarded more customers in one day than we did in our single biggest month ever with the old business. Wow.

Uh and it was like a huge, you know, and granted, the nature of what we were doing for them was was slightly different, but it was so telling as to the the the obvious benefits of going from you know tech-enabled managed services to you know native AI and SaaS was like, wait, so we just we have the 300 customers in in a day? Like that's we can do that now. Um so yeah, and then we you know, and so we as as we as we went on, we you know, we staffed these teams up, we you know, we added we added more and more people to really just support what we were doing with each partner.

And effectively what we do is each partnership runs on its own PL internally, and we're keeping track of you know CAC LTV, uh margin, everything on a on a per partner basis. And then it all rolls up into sort of like writ large, you know, how does how does the business generate revenue? And so yeah, we're we're we're psyched. Um we had a we had a huge, huge announcement recently uh with ADP, largest uh payroll company uh in the world.

They have a product, ADP IT management. That's electric. That is electric behind the scenes. Um and we've been just thrilled to partner with them.

It's amazing that a 75-year-old company with that level of market dominance had the foresight to you know enter a category like IT, put tons of people on it and and and really go all in. So we're you know officially GA with them and got 1,700 sales reps out in the field selling the product um you know, as of as of July 1. I'm not gonna I'm not gonna list off all of our partners, but like here in New York, uh partner that's near and dear to my heart, JustWorks. Uh, we were a JustWorks customer when we when we launched Electric, um, you know, huge fans of uh of them and their team.

And so we just had a you know, same deal. We're fully GA, fully embedded, you know, integration with them. So any Just Works customer, you can access all this stuff right in the product. TriNet is another one.

Um, you know, they have a product now called TriNet IT. It's electric. Um, and we got a bunch more uh that we'll we'll be announcing soon. So it's been a lot of fun.

Yeah, it's a ton of fun. So you're behind the scenes for a lot of incredibly well-known brands, and it took a lot of courage to get there, like you said. All of I think you reverenced all of your your commercial kind of might to get there. But what was the actual transition like?

You know, I think every founder who has built something incredible and has made some really interesting pivots and adjustments to the market, like you have, also have these stories, almost the if you will, near-death experience. Sure. Yeah. I'm curious about yours if you have any that you're open to sharing.

I mean, I almost killed the company before we started it. Like and I say this because it's like there is there is never a time, like self-doubt is a totally normal thing. And and like the just like it's it would be weird if you don't doubt yourself uh at times. But like I've told this story a few times, but we um I'd raised our seat around, we had not launched the company yet, and I hadn't really hired anybody yet.

And there was one night where I was sitting at home thinking about all the ways that that the company wouldn't work, and I'd pretty much convinced myself that it wouldn't work, and then I spent about a half hour thinking about the implications of wiring the money back to our investors, which I did not do, and I'm very happy I didn't. Yeah, but you know, I mean, you just managing your own psychology is probably one of the biggest parts of doing anything challenging, being a founder, uh being being one of them.

But like I'll give you I'll give you a somewhat recent example. I mean, after we committed to the pivot and we had planned to spin off and sell our services business, and concurrently we were trying to land a number of big deals with these new distribution partners, both of those things were taking longer than we had wanted. And it was like pretty important that we totally stick the landing on on both of them. But it was taking, it was just taking way too long.

And I was on this flight into New York that gets diverted to Detroit, which was like super insulting to like see the runway, and they're like, just kidding, we're going to Detroit, the airport's closed. So I'm sitting in this like just crappy hotel room next to the Detroit airport at three in the morning. I've got to be up in an hour and a half to, you know, for a meeting in New York City that I have to fly to the next day. And I my mind is racing, and I'm just thinking of all the ways that, you know, we're just gonna fly this thing to the side of a mountain.

I'm just like, oh my God, like all the worst case scenarios, like total like mental tailspin. Um, I think it was mostly the lack of sleep and the and the frustration from the flight, but like, you know, these things were just taking a while. The next day, I make it to New York City. We have a huge meeting with one of the first big partners that we sign.

I go to the meeting, and I'm thinking it's just another corporate, whatever, meeting to have a meeting with a gazillion people. We get there, and these guys just knock our socks off. They're like, we are all in. Here's our research, here's our rollout plan, here are the teams we're putting on it.

Like, like, we're good to go. And oh, by the way, here's the legal team. We're gonna start working on the contract right now. So I'm like, I'm floored.

I'm running on literally an hour of sleep, and I'm just like, oh my God, it's finally happening. And then I swear to you, literally, like, I don't know, 15 minutes later, I'm in the back of this conference room, and I just glance at my phone under the table, and it's an it's a docusign from Gunderson with the closing documents for the sale of the MSP. No way. I'm like, you can't make this up.

No. But as a founder, like those in a weird way, those are kind of the days that you live for. Because then when when things get really slow, it's days like that that give you the motivation to keep pushing because you're like, when when things get slow or when when when things get uncertain, put more work into it, put more effort into it, even though it feels like a grind. Because if you do that, what comes out the other side are these like incredible days like that, where in one moment basically everything changes.

That that's incredible. I mean, what a story. What a day too. I'm sure that was just what you need after one hour's sleep to keep it going.

Dang. Yeah, so no, no, uh, you know, no shortage of of near death stories, it sounds like, whether it's mental, whether it's, you know, team, anything of the sort. But you know, I mean, with the the the team stuff that's interesting though is, and this one is important, and I think m a lot of people know this, but it it sort of bears repeating. But when you have a a bad hire, you know, or you have like a senior person who is is not a good fit, the mishires and and that type of thing, they don't seem like near-death experiences because it impacts your business very quietly and very slowly over time.

But when I think about things that have set us back the most or hurt the business the most over the years in any of my companies, it's when you make a big splashy hire and you wake up six, eight months later and you zoom out, and you go, Oh my God, we have we've gone absolutely nowhere. And this person has hired a ton of people who, you know, maybe are also not the right fit for the same reason. And so that's that's something where um it's a way less exciting story than you know, closing a bunch of big deals right away and and and and all of that.

But like I think any any seasoned founder will tell you like those are the things that just like under the hood can kind of cause the most damage. It's like, hey, your business is a collection of people, and it doesn't take that many incorrect people decisions to you know really cause some problems. So yeah, that's just something I think about fairly often. Oh, I bet.

And I mean it's such a good point about the quietly, too, because you often may not realize, but there's that saying what one bad apple, if you uh, if you will, or bad actor can impact. Before electric, and maybe some of these experiencers are from your past companies, but you founded two other companies. I'm curious what kind of learnings you had from those prior founding experiences that you either carried through to electric or that you just overall just shout off the top of rooftops to founders.

I mean, I again, not having a technical background, all of my companies have have achieved some additional degree of success because of the focus we've always had on the go-to-market side of the equation. I mean, at the end of the day, you do need a great product, but as we talked about in the beginning of this conversation, a great product without the right distribution channel is of little use to a lot of people. Um, there are absolutely plenty of cases where a product is so good and so unbelievable that it can make up for a lot of other things uh not being you know the way they should be.

That's that's hyper rare and you can't you can't bank on that. I mean, you even think about one of the stories that was was told to me when um years ago when uh when Slack invested in our company, you know, one of the early stories about how how um you know Stuart and the early team at Slack actually got people using the Slack product was like actually going around and just like haranguing CTOs at SF software companies, being like, dude, install this, start using it. So, you know, even great products like early on, you've got to kind of force force your way into the market.

I mean, my last company, it was a retail analytics business. So we we had a device that would make it easy for retailers to measure foot traffic going into and and out of a retail store, and then they could pull in their point of sale day. So it's kind of like Google Analytics for a physical store, right? We didn't know how to sell it early on, and we needed to talk to customers.

And my my co-founder and I were living in LA at the time. So, like, we had an intern, and the intern just like drove me around Los Angeles for like weeks, and I would just go door to door talking to anybody who would listen. And like the reality is not only would most people not want to listen, but I found that there is a level of contempt that human beings have for door-to-door salespeople that is nearly unmatched in society. No wrong.

We were we were just run out of places. Um but I think my but my you know, my my my point in that is, and I've taken this with every company that I've had, is like you just you have to get out there and just be relentless and and knock down doors. And you have to do it with a level of discomfort and and also just like do it at a volume where every single day mathematically you're increasing your chances of success purely by the number of swings you're taking every day. Now, two of your companies, Ryan, you sold them to big public companies specifically, which is quite interesting because I mean a lot of founders aspire to sell their company overall, but public companies is like another kind of unique not to understand how to create for anyone who wants to sell their company and are looking at public companies as a prospective buyer and acquirer, like what are some of the tips you have around public companies specifically?

Yeah, I mean, I was in in our case, I mean, both of them kind of came about, you know, less by design. Um, that being said, one of the biggest patterns I've noticed, particularly once I got to those public companies and saw how they made acquisitions, it's very rare that like you're just gonna get somebody coming in off the street being like, hey, we heard what you're doing and like we you know, want to buy your company. The reality is people buy companies, companies don't buy companies, right?

And even more to that point, is that corp dev departments uh often are not the ones driving the transaction. It's usually a GM or an SVP or a PL owner somewhere inside of a big public company who is saying, I've got a problem to solve. I either I have a market I want to enter, I have a missing part of my product roadmap, I have I have some challenging problem that I need to go solve. And I've determined that I can't build it and I can't partner my way out of it.

Therefore, I've got to go find someone to buy to complete the picture. And that can range from, you know, a little Aquahire, right? Where you've got, you know, an engineering team is like, we need a you know, expert in whatever, let's just go find a company Aqua Hire, all the way on up to you know, a company the size of SAP saying, we we have an entirely new category we want to enter, we're gonna go spend billions of dollars on a on a standalone business to go to go fill that out.

Everything in between. You know, in our case, my you know, the first company, we were an online ad network in the sports category. And USA Today, at the time, the nation's largest newspaper, they were confronting the transition from print to digital. And they were like, we need, you know, we need some companies that we can that we can acquire like cheaply that can help us enter the digital advertising and digital publishing space.

And, you know, we to our benefit, like hadn't raised a lot of money. We were growing pretty fast. Um, you know, and you know, it just it it kind of worked when my previous company, when we sold it to, to, to Groupon, similar sort of thing, like they they had actually made a shopping list and said, we're building out uh an SMB-facing suite of software, and there's a couple key categories we're missing. So we need to go into those categories and figure out if there's somebody we can acquire at the right price.

Generally, though, it doesn't work that way. Again, like as a founder, you can't sit around hoping that a corp dev department's gonna reach out to you. Because here's the thing corp dev departments will reach out to you, but that's their job. That does not mean that they want to invest or they want to buy you in the same way that I one thing I coach founders on all the time is that a VC reaching out to you, wanting to learn more about your company, does not mean they are interested in investing.

They're simply doing their job to talk to every single company on earth. You know, the best way to do these things is if you have a reason to engage with a large public company for commercial purposes, not for MA, but for commercial purposes, because you think that there's a great sales or distribution opportunity, you think there's a great product integration opportunity, you should go do that, but only do it on its own merit. And that is a phenomenal way to develop a relationship with a company who then at some point, if the relationship is successful enough, may decide that it makes more sense for you guys to come together more strategically.

But I think the bet the best thing for founders to do is develop relationships with larger companies where there's a very accretive commercial relationship to be had. And yeah, look, at some point it could turn into something more strategic, but you definitely don't want to be burning cycles unless you absolutely have to. You don't want to be burning cycles, you know, trying to gin up like likely acquirers again, unless you are absolutely um, you know, in a situation where you need to.

Totally makes sense. I've heard a very similar thing echoed before around try and find some kind of commercial relationship. Integration is a natural one. And that way it's almost like a date before you marry situation too.

You can require value and attract that interest. That's fantastic of advice. Thank you for sharing that. And Ryan, take us back to about 18 years ago.

I read this on your ex, but you had zero VC connections. Yeah, I mean I'm Yeah. I was making first check with that. I I was making extreme sports videos.

I I had absolutely no connections. Um, but everything I learned doing that are still skills that I that I that I use today. When I was 17 years old and wanted to make extreme sports videos, I really thought I could make some cool mountain bike videos. Uh I just started cold emailing uh professional athletes saying that I wanted to film with them and I had a cool idea for for video.

And then I went to Barnes Noble, I bought a copy of Bike Magazine, I ripped out every full page ad in the magazine. And my perspective was if they can afford a full-page ad in Bike magazine, they probably have a marketing budget, they probably have a marketing department, sent sponsorship proposals to 50 of those companies, got five of them to give me some amount of money to buy plane tickets to fly around the world and make this thing. And we sold 5,000 copies of the movies.

That's amazing. And so, like that is the framework that to this day, I mean, even when we were when we were going out and trying to stand up this new distribution strategy, I knew nobody in the payroll space. I was still thinking back to sitting in my bedroom at my parents' house uh in high school, uh, you know, cold emailing marketing departments at bike companies. It's it's it's the same stuff.

Just you just got to get out there and talk to as many people as you can. And now it now more than ever, people are more accessible. And I also feel like, at least in tech, people are very willing to help. Yeah, people definitely want to help.

I love that. What an incredible story. Well, Ryan, this has been fantastic. People want to follow along with you with Electric.

Where can they find you? Electric.ai. That's the easiest place to find us.

And on any of these social platforms where you might want to go look up a business, electric AI, very easy to find. And then myself personally, I am uh back on Twitter. Uh the the algos have decided they like me again uh at Denahee XXL on Twitter. So or X, whatever.

Amazing. Those will all be in the show notes. Ryan, thank you so much for joining us on GTM now. Thanks so much for having me.