“You need to pick which way you want to die. Fast or slow.” Alan Black, former Zendesk CFO and legendary CEO whisperer said to me as he scanned our latest P&L.

It was Q4 2022, venture and IPO markets were shut and most ZIRP-era unicorns were retrenching, “getting fit” (layoffs) and trying to figure out what came next amidst a hangover from the free-money frenzy that was 2018 through the COVID era.

I’ll come back to the conversation with Alan in a second, but first some history for anyone who doesn’t know who we are.

I launched Electric in 2017 with a vision for automating IT services for small businesses using AI. The AI technology didn’t really exist yet, but the market was huge and SMBs were begging for an alternative to local IT service providers. I scored our AI domain name for $17, hired some IT support folks, built a rudimentary Slackbot to answer support tickets and we got to work.

That first year we sent over 1M emails, made 100,000 cold calls and grew from zero to $1M in ARR in under 12 months. After running two prior startups that struggled to find product market fit the first year of Electric was unreal. Right product, right time, the right sales motion.

Over the next five years we grew to $50M of ARR, signed thousands of customers, acquired multiple companies and solved millions of IT support tickets. We raised $200M from some of the best investors on the planet.

On the surface everything was working great. Five years of triple digit growth, clear market leader, fresh cash pile, great team. At that level of growth people laugh at your jokes even when you are not funny. This is dangerous!

James Althucher has a great trick to avoid cognitive bias as an entrepreneur; ask yourself every day, “am I smoking crack?” Not literally of course, but cheap money and huge topline growth is a dangerous drug. Constant fundraising and net new ARR papers over a lot of sins.

Back to my conversation with Alan. It was essentially a one man intervention in which he knew that I already knew the answer and it was time to get real. Put the crack down.

The existential issue was that the managed services and software combination, in practice, gave you none of the profitability or stickiness of a true services business and none of the margins or scalability of a software company. Even with AI this combination does not necessarily work! But that’s a separate topic. The point is that the model didn’t make sense anymore and we had to pick a better direction.

Burning the ships: how hard could it be?

In hindsight the task in front of us was a lot to bite off. Rebuild the entire company from scratch as native AI and SaaS products. Spin off and sell our services assets. Land massive distribution deals with publicly traded companies. Retain our best people.

Fortunately we had the cash, the data, the category expertise as well as incredible support from our board and investors to take a huge swing.

The next 18 months sucked in ways I had not experienced before, even as a three-time founder.

We laid off over 60% of the company. We spun off and sold a division of the company that contained nearly all of our revenue. I spent a lot of time on airplanes visiting customers, and potential partners to round up support for “Electric 2.0”. My life felt like the movie Tommy Boy where Chris Farley and David Spade canvas the midwest trying to sell brake pads. Our sales roadtrip wasn’t as funny but I did manage to quote the line about the butcher more than once.

We knew the rebuild was going to be brutal and take a long time. It had to because our new AI capabilities and mass distribution model would be so powerful and so defensible. There is just no free lunch with these things.

We also knew that once we got to the top of the mountain with our products and distribution channels we’d have something that was unstoppable.

Today we are on the top of that mountain.

The relaunched Electric of today is a completely rebuilt company, product and expanded vision based on our work of the past 2 ⅓ years, and the data and expertise from the 6 years prior to that:

1. Product – We are the easiest and most cost effective way for businesses to automate all of the annoying and time consuming tasks related to IT. Take for example a new hire, in a few clicks you can have email and apps created, laptop ordered and provisioned, data secured, support tickets answered and so on. Our AI and automation takes multiple hours of work and compresses it to 60 seconds.
    
   

 

2. Distribution – We’ve created one of the largest proprietary distribution networks in any category in vertical AI. Customers of ADP, Paychex, UKG, Justworks, Trinet, iSolved and more can find and access Electric in their payroll or HCM system. The best way to discover and use powerful capabilities like ours is when they are embedded in the tools your company already uses.
    
   

 

3. Capabilities – I personally join calls with customers every week and our product and engineering teams ship new features at an unreal pace. Our work is not done until all the back office stuff that HR, IT and ops leaders shouldn’t be spending time on is handled by AI. This is one of the most fun aspects of doing what we do.

What we’re doing here is not just about automating stuff like creating an email address for a new employee, we’re democratizing AI at scale for over 1M businesses globally. What you can expect from us soon:

• • Deploy AI across your whole organization using all of our existing HR and IT data, system access and governance capabilities.
  • Identify and automate time-intensive tasks across your organization without it turning into a project that needs to be managed, Electric will autogenerate time saving automation recommendations
  • Track, manage and optimize technology and AI spending across your organization. At the org level, at the employee level. Everything in between.

The businesses we serve, mostly companies under 1,000 employees, are the ones who stand to gain the most from AI but are also the least-resourced to take advantage of AI. That’s not an acceptable paradigm and that changes today. Our embedded offerings inside major HCM providers isn’t just a distribution play, it’s the easiest and most powerful way for a business to leverage their most powerful data, existing systems and technology to create a functioning AI strategy in a matter of minutes.

As an industry we’re at the front end of the biggest shift in how companies buy, use and manage their technology, as well as the impact that technology can have on the productivity of their people. As a company, we’re grateful that we had an opportunity to pivot into this opportunity.

All of it took longer than I wanted. It cost more than I expected. My beard is now mostly gray.

Most things worth building are that way. Creating the future takes time.

We’re building the AI operating layer for the global workforce and today is the beginning of that future.

Let’s get it!