Transcript: Andrew Bialecki, Chief Executive Officer, Co-Founder, and Chairperson of Klaviyo | Startup Project

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Nataraj (00:03.73) Hello everyone, welcome to Startup Project. Today we have an incredible guest who's not only built a multi-billion dollar company, but also fundamentally reshaped how businesses will connect to their customers. My guest is Andrew Bulecki, co-founder and CEO of Clavio, an AI for CRM platform that has become indispensable for B2C brands worldwide. Whether it's Liquid Death or Skims or Mattel.

all use Klaviyo to stay in touch with their customers and market to their customers. Klaviyo initially started as an email marketing company in 2013 and later integrated advanced marketing attribution, optimization, SMS marketing, and recently cutting-edge AI capabilities with the launch of Klaviyo AI. Klaviyo's impact has been undeniable. They are a public company worth around $9 billion, about 180,000 brands globally use them.

as of Q3 2025, that is an impressive $300 million in revenue and expected to reach $1.2 billion in revenue for this fiscal year and have impressive 32 % year-over-year growth rate. So we'll talk about Andrew's entrepreneur journey, the decisions that change gave his growth trajectory, his perspectives on the evolving landscape of data and AI.

and how they're approaching building products using AI. So get ready for an interesting and high value conversation. With that, Andrew, welcome to the show.

Andrew BIalecki (01:34.328) Yeah, thanks for having me.

Nataraj (01:36.05) So I want to set the stage for the audience. Anyone who is in e-commerce or anyone who's selling something on the internet, I think is familiar with Klaviyo. But if the audience is not familiar with Klaviyo, can you just give a brief description of what Klaviyo does and what are the products that you have?

Andrew BIalecki (01:55.182) Yeah, well, that was a good description upfront. man, so we started Clivia 13 years ago. And our dream was whether you were an entrepreneur just starting out, or you're an iconic, know, multinational business, we felt like you ought to be able to treat every single one of your customers like they were the most important only customer in the world. And, you know, we found that like a lot of businesses

when they really want deliver an exceptional experience, like just a stunning customer experience, they really relied on people to do that. And our feeling was, like, well, in the future, it's going to be less, you know, like white glove through, you know, you or I getting on the phone with somebody. And it's going be much more delivered through software. I think that's probably a take that's, I don't know, guess feels like it's aging pretty well, given all the stuff that's, you know, happening with AI and LLMs these days. But anyways, we wanted to make that

possible. so we actually, we actually started out as a, you know, as a database business. You know, because we felt like, if you're going to do that, then you're gonna have to replicate the way a human thinks and stores information. And then we actually, after we built that kind of brain, this kind of like, you know, very low latency, you know, database, but that could handle some like deep analytical queries.

You know, we gave that to a bunch of customers and they, you know, they said, okay, this is awesome. And we asked them like what they were hooking it up to or what they were doing with the results. And a lot of them said, Hey, we're plugging that into our marketing system. And so we actually, for a while, trust hard, tried to partner up with a bunch of those other marketing, you know, software's platforms. And then we just pretty quickly realized that, you know, it's a little bit like, you know, if took a human brain and you sort of like, without being connected to like, I don't know, some arms, some legs, like a voice is like, just actually not that useful.

we realized it was actually pretty hard to integrate this with some of the older tech that was out there. And that got us into marketing, like you mentioned, and then this past, you know, a couple months ago, we expanded the surfaces, as we say, the Clavio supports to go from marketing to now customer service. We have our customer agent as well extend onto people's websites and their mobile apps with our customer hub products. And yeah, I mean, ultimately for the 180,000 brands that we serve.

Andrew BIalecki (04:16.118) Our goal is that if you want to treat every single one of your customers like the only one that matters and you want to be yourself as an entrepreneur or like at that business, your best sales rep, product expert, you can do that at scale and you can do all that through technology.

Nataraj (04:31.516) What was that, maybe initially like what was that year or moment when you felt like, okay, we hit some kind of product market fit here.

Andrew BIalecki (04:41.442) Yeah, so, well, I knew we were on the right track when, know, so we started out and I had this experience, before Klaviyo where I had all these little side projects. And, you know, remember building this, race search engine, like road race search engine. Cause I ran a lot of like five Ks and half marathons and things like that. And I remember, you know, I would, you know, the business there was like, was go talk to these race organizers, right? And I keep, I'd pitch, you know, this like search engine that we built.

And I remember doing that over and over over again. I was like, man, this is really repetitive. It'd be awesome if there was like software that could do this for me, but do it the same way I was doing it. The same enthusiasm, right? The same like, you know, level of depth of like what a product could do. And so anyways, we built this. I remember one of our first customer was this haberdashery. So for folks that don't know haberdashery, means they make, you know, kind of these bespoke, you know, custom tailored suits. You know, in their case, most of their clients are men, but some women as well. And,

I remember talking to that business and they're like, yeah, yeah, this personal touch really matters. And we built this kind of database engine that just knew everything about every single one of those that, that customer, that business's clientele. And I remember talking to them and saying like, you know, Hey, we're thinking about getting into marketing and messaging and not just being this database and source for analytics. What do you think? And they said, man, if you do that,

we'll triple the amount we spend with you. And I remember calling my co-founder after that and saying, hey, Ed, I think we're onto something here. Like this idea of being the brain of a business and being the way that they actually like talk to their customers. Like, you know, for this company that really, really cared about every little detail of the customer experience, you know, that's, think when we knew we onto something. I think after that, you know, I had a friend probably maybe six months after that that had,

you know, had just started his own business. Uh, and he was selling, uh, you know, quilts, um, you know, selling quilts online, doing e-commerce and he just spun up. He's like, Hey, there's this thing called Shopify. Have you ever heard of it? And I said, no, but I looked at it I was like, Oh, I was really impressed by, know, their APIs and the product itself. said, Hey, you know, I think we could probably integrate with this both to like kind of, you know, be this, you know, like pull in all this information into our kind of brain that we built. Um,

Andrew BIalecki (07:06.158) And then also to like, you know, integrate, you know, onto their website, and help helps off them. And anyways, I remember he's like, Yeah, I would use Klaviyo if you guys could support them. And man, I remember we built that, you know, we were connecting with a lot of different SaaS products in like 2012 2013. But I remember that just took off like crazy within like, you know, six months, 12 months. And then we're like, Okay, I think we found, you know, this really good use case. And

retail and commerce and that became, you know, kind of where we started.

Nataraj (07:39.842) Were you an app on Shopify marketplace at that point of time or how did the integration look like at that point?

Andrew BIalecki (07:46.479) Yeah, it's one of the really interesting things like I you know, I you know, this this idea that platforms have kind of an app store, you know, a little bit modeled off off of Apple and I remember, you know, Toby and the Shopify team were really early into thinking about this. Like the funny part was, I don't think it was I mean, they might have called it an app store, but it was I mean, there weren't, you know, hundreds of, you know, apps or integrations in there at the time. And so one of the things actually, I we're very strong believers.

about when you're building a business is we really like this partner model of how do customers find you? And we have this thesis that, hey, look, there's really like three things that you should aim at if you want to get discovered. there three ways to think about like, know, normally like marketing and doing demand generation. And those three are like peers. like word of mouth, like you want people to talk about you. So if your product's so good that people are like, our limousine test was always like.

Hey, if people are at like a cocktail party or they're hanging out with their friends and you know, maybe they all do something similar and somebody says, Oh, hey, like what's interesting. You want to build products that are still good. People just can't help but talk about, right. So, you know, rely on like word of mouth and peers and then, you know, partners for us. You know, we work with over 3000, you know, marketing agencies and we kind of felt like they were the experts that everybody's turning to. So if they were recommending us, it great. And then the third was platforms.

And we had this thesis that when people were building businesses, everybody obviously wants to know their crew their customers are and wants to treat them well. But we could get to a lot of those businesses faster if we could partner up with some of the platforms. And so we thought about what are the platforms that people are building businesses on? And this is around 2010, 2012. We thought that a lot more of that would be software as a service. I mean, think that's also like as I think

come to be true. But at the time, there was a lot of people that were building things on their own, or they were self-hosting, using open source. And we kind of felt like more and more businesses were just going to say, no, no, I don't want to deal with any of that. Just point me to the platform. That's a winner. you know, I, we, so we talked to dozens of these platforms and Shopify was just so forward thinking about this. You know, they had this approach. They're like, look, you know, we're going to be great at this part of the entrepreneurial journey.

Andrew BIalecki (10:09.202) And, you know, we cared a lot about, you know, entrepreneurs and folks just starting out too. Because it was in my co-founder and I's, you kind of background and roots. And, you know, we said, Hey, look, we can, I think we can help solve some of like, you know, these businesses, not just, you know, you know, setting up a website, and, you know, actually transacting on the internet, doing all the hard things that resolve around payments and fraud. I think we can be that source of truth of who your customers are and then help.

you help them do better marketing, better experiences, which will in turn will drive, you know, more growth for them. You know, we should partner up. And yeah, they were just, they were awesome. And I think back then, I've talked to bunch of folks that have talked about, how to think about these like app stores and platforms. Now, it's gotten a lot more maybe competitive or little more crowded. But back then, there actually weren't a lot of folks thinking about this way. And there were very few, like Shopify that were actively trying to curate, you know, you know, developers and software companies.

to kind of help them, you know, flesh out or, you know, make their overall product better.

Nataraj (11:10.108) Yeah, one of the things that I always think about Shopify is as it's sort of like they've looked at WordPress and removed all the complexity for e-commerce.

And you basically copy what WordPress can do and used to do, but remove all the complex part of WordPress and make it more easy to do this for an entrepreneur to not think about hosting WordPress, to not deal with plugins. Plugins evolved into App Store and Shopify, but it's a much better marketplace. It's much better integration. It's such a simple idea of abstracting away things, but it became sort of like this big opportunity when you just focus on e-commerce.

In the internet stack of things, we have these broad use cases. One is if you wanted to get customers, you use Facebook or Google Ads. So they found their product market fit there. If you want to just host anything, then you have the three clouds. And I feel like there's a small space where if you want to talk to your customers consistently once you know who your customer is, then you need to have Klaviyo or Klaviyo Live product. I feel like in that map of internet tech stack, then Klaviyo has its base, soft drama.

Andrew BIalecki (12:21.55) Yeah, like our so yeah, I totally agree. You know, some product principle we have is you can learn a lot from the folks that are maybe the early adopters, the most advanced users. Yes, we have this product principle that's like, hey, first build things to make it possible so that the folks that are pushing the limits, they can at least accomplish what they want to accomplish. So I remember for us, it was interesting when we first started. Yeah, we built this database. We built all these APIs.

And we pretty quickly realized there are a whole bunch of, you know, we actually expand our reach if we would just build some of these like connectors, these data connectors, because there were so many folks are like, I'm either technical, but I don't have time to build integration into this. And so we sort of a bunch of like, libraries, Ruby, Python, Node, PHP, et cetera. Then we realized it's like, if we actually just connect to some of these platforms, it actually would take a lot of the cognitive load and a lot of the work off for folks.

And then obviously you got a whole bunch of people that just were not technical at all. And they were like, why, by the time I go find a developer and build this thing, like I'll have already given up. So this idea of like, make it possible first, like maybe with those APIs and then make it really easy. So then you add the kind of the, know, the almost like the sugar layer on top, right? That makes it fast is the thing. And then, yeah, I think any, any great product company, know, you look at, Hey, what is the abstraction or we use this, you engineering term, what's the primitive, what's this like Lego block that you're putting out in the world?

Because you're right. Because then, people when they're, you know, when they're building any project, right, whether it's a business or startup, or maybe they're, you know, they just think about like, who has the best, you know, infrastructure and kind of building blocks. And, you know, there's really powerful thing when you start to become almost like a default, right, folks, you know, one the the crazier things that's happened at Klaviyo as we've grown is, I used to talk to our customers, and I'd ask them, you know, you hey, why did you pick us? And they'd had these very technical reasons. I tried you, I baked you off against these other products.

And increasingly, it's a little jarring. They're just like, well, why would I start anywhere else? mean, know, Klaviyo is just the best. I think about that, I'm like, man, that's like not founded in any kind of logic. I mean, that's great, but it's become almost like a brand identity of what you're good at. So we have to work to keep that. And then also, think for some of the things we're building now is like we have to basically, we have to become the building block or the primitive for those other use cases.

Nataraj (14:45.138) One of the headlines that really struck me when Cliveo went public was this, how capital efficient you were. I think you raised around $400 plus million, but you only spent like a fraction of it by the time you went public. Talk a little bit about your fundraising journey and the approach to being capital efficient, which seems to be a little bit of a rare thing in startups these days.

Andrew BIalecki (15:12.494) Yeah, it's interesting people talk now about this. Hey, you know, when were the first company with maybe, you know, I don't know, 10 folks, even a single folk, you know, achieve, I don't know, a million dollars, right, 10 million or 100 million in revenue. That was kind of our method, our thinking from the start. So my belief, my advice to founders is, especially if you're technical is you actually don't need as much capital as you think. mean, it depends a little bit on, you know, what the, you know, what

what industry or problem you're after. But in general, think people overweight, you know, how much fundraising and sort of the boost that, you know, gives you and really just boils down to like, you just got to build and you just got to, you know, you got to go nail it for some customers. And the interesting part is, once you do that, I found a lot of the best investors, the best VCs, they're sort of following, you know, customers and markets anyways. I mean, a lot of our investors over the years have told me they're like, the reason they know about Klaviyo is because they were just going in

They looked at what they felt were large market opportunities. They then went and go talk to those customers. They did their own primary research and they said like, what products do you love? And that's how, you know, we get on their radar. And I always thought that was like a wonderful way to go about it is because you're really building it up from first principles. So the trick for us was, you know, when we started, said, we just want to aim at markets that are really big. And, you know, this idea of like, hey, we can deliver, you know, if you're a business, it doesn't matter whether you have

thousand or a hundred million and consumers we can deliver every part of the customer experience You know as if you know was the founder or you know the you know the best product person the best salesperson talking to them That we just felt like you know not only we thought of that as like the CRM market But that we just felt like is a massive opportunity And then you know when we when we even looked at that and this actually was a big thing of sorts of confusion for a lot of folks that you know not our customers But really like maybe some investors

which people said like, has the CRM been done? mean, isn't that, know, what HubSpot or Salesforce and you know, what we said is like, no, no, no, we were gonna do it in a very automated way. So we're gonna aim at businesses that frankly need to use software to connect with their customers. That's why we talked about building a B2C CRM. And we said, look, like we think in the future, more and more of the customer experience is going to be more autonomous. Like software is gonna decide what experience to deliver to which person.

Andrew BIalecki (17:33.231) It's not going to be like you're setting up a human to have a conversation. So that's what we're going to go after. And we think this is going to be a monster category because if you look at like just world GDP, two thirds of it is consumers interacting with, you know, small and large businesses. And yet they sort of don't have the tools to do it. So we're to build the data infrastructure where we started and then we're going to build the marketing infrastructure. And then, hey, by the way, there's these adjacencies, you know, we're going to get into customer service and our customer agent product. And we're just going to we're going to build the entire stack.

that allows these businesses to operate and because they need software to do this, to drive customer engagement and therefore revenue, we're gonna become very sticky and a must have. when we showed that vision, along with some of the early traction we had, I think that frankly made our experience with fundraising was actually quite pleasant, right? I we mostly got to spend time talking to folks that we felt like would really add value to our thinking, would level us up.

And yeah, so it's my advice to any founders is always I think you should try to delay fundraising as much as you can You know, not everybody can do that But in general, you know two things two rules we had a clear view is we would never celebrate Fundraising milestones like we looked at those like those are non events. We'd celebrate a lot of customer milestones Maybe revenue milestones, but we never celebrate fundraising milestones. And the other thing is we never celebrated You know how many people worked at Clevio? I talked to some other founders and they celebrate. Yeah, I've got a hundred people

or I've got a thousand people. And we always looked at that as like, well, that's, I that's cool, but wouldn't it be better if you were like a smaller team? Like, wouldn't it feel more intimate? You know, people bet, you know, people like the communication tax would be less. So I think that's something we've tried to, even as now we're a public company, we really try to stick to is, you know, we don't celebrate fundraising milestones, which to me is like, you don't stare at the stock price. And then we also, we just don't look at like, hey, how many people work at Klaviyo? We think about like, hey, smaller is better. And that's why we really believe in like, you know, the power of small teams.

Nataraj (19:33.299) I mean, you said you wanted to delay fundraising, which is a little bit counterintuitive to the idea of going public, because most companies go public to fundraise. Obviously, that might not be the reason for you. So talk to me about that position, because I used to work for this company called Epic Systems. don't know if you know about it. It's the health care software company.

Andrew BIalecki (19:51.085) Yeah.

It's an incredible company, incredible business.

Nataraj (19:56.243) Incredible business, pretty much 70 to 80 % of US individuals, healthcare records are managed by that company. The founder, Judy Faulkner, still runs the company. It started in 1979.

So incredible company, but she had this thesis of like never to go public. And I think she also ensured that the company will not go public posthumously also. So she had a very strong point of view. And now we are seeing like Stripe doesn't go public. There's some other crazy, good companies that don't go public for different reasons. What was your thought process when the time came to decide whether you should go public or not?

Andrew BIalecki (20:35.064) Yeah, did. I had studied all of the, we felt like all time great companies, software companies, technology companies. And the vast majority of them, but not 100%, because your point, Epic was one of the examples there. There's a couple of others. We look at these very large private technology companies, but most of them went public. And I kind of looked at that as like, OK, it's a bit of a rite of passage.

There's some other things like it gives liquidity to investors and obviously like folks at Clivia that have worked very hard for many years. This is before the private markets were maybe a little more liquid. So I also think that public markets give you a chance to just tell your story more directly. I guess there's nothing stopping a private company from doing press releases or sharing their numbers, which I know a bunch do. But I also felt it's like there's a bit of trust you can build up when you say like, here, just look at our books. You can tell how healthy our business is.

there's going be some accountability every quarter, every year. So it's interesting, like now that the private markets have gotten, I think it's they're almost operating as these like pseudo public markets. I think, you know, I don't think it changes our calculus, but I think it sort of it makes things things are almost merging a little bit. But for us, the most important thing was when we knew I felt like we would go public at some point for all those reasons.

We just didn't want to change the way we were going to operate. And that meant, you know, having a real strong, like long-term point of view, being very like product and customer focused. And, you know, I don't know, frankly, we just felt like because of the strength of our culture, like there just wasn't a lot of risk, you know, in doing that. You know, had a saying back in 2020 when we were thinking about like, Hey, when we would go public and, you know, would we and all this stuff. We said like, look, there's some all time great companies. Like if you'll get like Microsoft or Apple and you know, these companies is like,

I think everybody knows them as these like, you know, kind of standard candles for tech. And yet if you said like, hey, what year do they go public? Everybody probably has a vague sense of when it was, but nobody knows the date and nobody really cares because a lot of their best work has come since. So clearly they have like, you know, cultures and a way of working that just has stood the test of time.

Nataraj (22:53.2) I mean, yeah, from perspective of retail investor, think it makes more sense for more companies to go early public. Like, you could invest in Amazon so early, but you couldn't do that now with OpenAI or like Anthropic, right? Which probably will never go public.

Can you talk a little bit about, I think we are now in December, which is like, we just passed probably the biggest holiday cycle. We often call it as BFCM, Black Friday, Cyber Monday. Can you talk a little bit about how have things been this BMCM for Clavio and in general, any trends that you notice in e-commerce or in generally broad economy?

Andrew BIalecki (23:34.169) Yeah, yeah. So yeah, we just had a great, you know, so for folks that don't know in, you know, retail and e commerce, you know, the reason they call it, you know, Black Friday is there's a whole bunch of retail businesses that literally go into the black like this is the time of year where they turn profitable for the full year, because sales really ramp up, you know, in October, in November, and then, you know, a lot of businesses then, you know, run promotions leading up into the holidays at the end of the year.

So it's like a critical, it's a critical moment. think there's something like, it's like 10 or 10 or 20 % of our customers will do, you know, something like 30 or 40 % of their total annual revenue, like in these like, you know, eight weeks. So it's a crazy high percentage. So it's very, you know, it's a little bit like a, we talk about it's like a little bit like a Super Bowl moment for our customers and therefore, you know, for us. So we had a great holiday season, you know, our database, I think, you know, our stats were

You know at peak we were ingesting more than you know 10 billion These like consumer touch points data points into our database in real time You know, think I was over the course like that was our peak like, you know on a given day And then over the whole holiday weekend, you know, we sent more than 20 billion messages or power more than 20 billion experiences And so that you know ranges from our marketing products. It's now our customer customer service our customer agent products. That's you know on fuels websites

or that you can email or text with that will give you advice or help you like, you know, troubleshoot problems. So we're really proud of that. And then most importantly, like we've always looked at, know, Klaviyo is like a revenue engine for both small businesses and you know, some of the world's leading brands and you know, across five day stretch, we generated, I think the number was $3.8 billion in sales that were like directly tied back to experiences that Klaviyo powered, you know, that either AI or our users defined.

And that's like an incredible number. think it's about, you 5 % of like all retail sales, you know, that happened, you know, in the US, you know, globally is because we kind of cut that. That's a global number, but we cut that down. So you think about it, like, I mean, that's a huge chunk of, you know, of revenue that your business otherwise just wouldn't have. And one of the things we love is that it's like, it's highly profitable revenue because it's from businesses and their relationships with consumers. So it was a really great,

Andrew BIalecki (25:58.607) you know, weak, you know, brands did a great job, our partners, our customers, our team did a great job. I think the most exciting trend, though, to your question is really the rise of the retail brand as not just, you know, place to go buy products, or in some cases to buy services, but really those companies evolving into value add because of the expertise and services that they offer around their products.

So I'll give you like a couple of examples of things we've seen in the last couple of weeks. So we work with a lot of apparel brands and there's a swimwear brand that I was talking with and they're saying like, yeah, now's the time of year, this and the summer are of, they're two busiest times of year. And they were telling me how they were using our customer agent. So this chat agent that you can put on your website and customers were conversing with it, not just about which swimsuits to buy.

but literally having conversations about how to plan a great vacation. Because there were a of folks that were buying for the holidays and maybe, you know, if you're here in the U S for like, you know, a kind of spring break trip they were going to take. And they were asking questions like, okay, great. Well, I'm into these patterns, you know, what swimwear do you think I should buy? And by the way, I'm going away for a week. Should I buy one swimsuit or two swimsuits? And by the way, you know, here's a couple of locations I'm going, you know,

Do you have a perspective on the style of kind of, whether I'm going to Florida, the Caribbean or Hawaii? I mean, it's crazy, but like people were having real conversations, you know, with these agents that these businesses are providing. And all of a sudden now the experience or the value add these brands are, you know, are offering is not just, Hey, we make really high quality products. They look great. But it's literally not just, Hey, what's a great swimsuit to buy? It's how do I have a great vacation? So we're seeing this like,

everywhere. There's a you know, education company, you know, that I've known for a long time that used to use Klaviyo, you know, kind of caters to helping kids learn like reading and math. And one of the things they built in Klaviyo was this like, awesome sequence of like, almost like worksheets and coloring pages for kids and say maybe between the ages of like five and 10. And I remember they build these in Klaviyo and they generate all this content, you know, by hands.

Andrew BIalecki (28:20.908) And then they'd sort of set it up in Klaviyo to automatically go to folks, you know, as they became customers or consume products or maybe when they subscribed. And now they're doing the same thing, but it's all personalized based on context they have inside of Klaviyo. And then using our marketing agent, I mean, literally we'll send different content to each person based on, you know, I don't know if you're like my kids, like, Hey, are you into Paw Patrol? Are you into like, you know, the K-pop demon hunters that are really popular right now?

And all of a sudden, these like themed and even like at the level of what that individual like student wants. I mean, they've transformed themselves from being just purely like, hey, we'll help provide workbooks for your kids to practice into literally we're acting almost as a pseudo teacher and like lesson planner. So I think it's a really interesting thing is the first year that we've seen a lot more of that show up. And obviously one of the cool things for us is we think increasingly those experiences

rather than our customers, whether they're marketers, or they're product folks, or they're folks in operations, rather than them having to point and click through software to define those experiences, increasingly folks are saying, hey, look, I have a goal, right? My goal is to delight my customers, to have them be engaged. I know that translates with how much time they spend with my products or maybe how much they buy. They're giving that goal to AI and just saying, hey, why don't you come up with the ideas?

And then letting AI, with some of the brand controls and checks that we have, just test that stuff out. And it's just, I think it's a total mindset shift, right? In terms of, one, how businesses work, in terms of how much autonomy or agency they're giving to these algorithms. But then also this idea that like, it's not enough to just be products on a shelf. You need to be value add in and around the products and services that you offer.

Nataraj (30:16.218) It almost, that idea can even extend that even the idea is also coming from AI after a point of file based on years of data that a brand has of Gravia. You can just say, at this point of the year, this might work for you. And you basically come up with an idea and suggest the customer that.

for this idea, these campaigns will work. So you can almost say that the customer doesn't actually have to come up with ideas and Cravia AI will come up with those ideas. I think that's a good segue to talk about more about what you guys are doing with Cravia AI. I think you also launched a marketing agent. Can you talk a little bit about that?

Andrew BIalecki (30:51.106) Yeah, sure. Yeah, so it's a great example. So when we think about artificial intelligence and machine learning inside of Klaviyo, we have these two agents that we've launched. So we launched back in September. One is our marketing agent, which will help you do marketing. But I think critically for us, we think about our marketing agent is so good that for some use cases, it can just do the entire process of marketing for you. So I'll talk about that a bit in a second.

And our second is our customer agent, is, you know, hey, it uses all of the context you have about each of your individual customers. So that, you know, when you are not you or I land on the website and we know it's you, that customer agent is ready and primed to answer questions that you have based on your own personal context. You know, in retail, it might be things like product recommendations. Hey, you've seen my past purchase history. What would you recommend for me? Or it might be things as you know, helping with some things operationally.

Hey, I ordered something, but I actually got the address wrong. you know, it's actually, it's a gift for somebody. So I need to change it from my address to somebody else's and our agent can handle those types of queries. So for our marketing agent, you know, one thing, if you're building agents, I think that we really lean on is this idea of mapping out the actual process of, whatever task you're doing. So one thing that I think we have sort of a unique advantage on is we've been studying how people think about marketing and marketing is this

It's this great mix of like, it's brand, it's feel, it's also just creativity and the kinds of campaigns you run, but it's also just pure math and performance. Hey, what do people actually, you know, how do I know whether somebody likes this? I can run qualitative surveys, but also just how do I actually see what people are, you know, kind of voting with their feet or their clicks? So what our marketing agent does is it breaks down the process of marketing into a couple of steps. First, it'll go through all the information that's stored in Klaviyo and even some external sources and

Figure out trends and patterns, we call them data insights, where there's something interesting that might be happening. So I'll give you a couple of examples. It could be things like, hey, we noticed that you just added a bunch of new products, say, into inventory. We should generate a campaign around that. OK, that's probably pretty obvious. People would know that anyways. We're also good at finding things like, hey, here's a bunch of products that aren't selling through. Maybe you should try to clear that inventory because it's taking up space in your warehouse or you're paying for it.

Andrew BIalecki (33:14.494) And hey, the seasons are shifting, and it's time to move that inventory along. Or we can find things like, hey, here's customers that they loved the starter version of your product. For example, take our educational company. Hey, you sold them a workbook about math that's maybe geared towards first or second graders. But hey, we actually found an opportunity where those kids have probably grown up. It might be time to offer them some of your content that's geared towards older kids.

So it'll go through and find all of those insights. We then convert those into what we call marketing briefs. So this idea then of like, how would you actually build a campaign around this? And it almost like writes, it's a little bit like a product requirements doc. It kind of writes down what it thinks it should do. And then we have this really great set of algorithms and agents that will then do the actual creative generation. So you can think about we're used to AI these days. It can generate copy, can generate imagery.

But we do way more than that. We help define larger structure, like, hey, what does it mean to design, say, a whole email or email plus a text message plus a WhatsApp message. And WhatsApp, you can have all these cool carousels. So it's like it can do some of these higher order objects. It'll also go do incremental research, right, where it needs to create content so it's smart about what it's offering. And then finally, we actually use AI to play a little bit, be a little adversarial and say, OK, now that we've created all this content,

hey, rank it and also make sure that it passes all these brand guidelines that we have. And some of these are basic checks around like kind of content safety and toxicity, but also just correctness. And then like we can actually, we can actually pull together a kind of brand, a brand guide for every business just based on things like their website, internal documentation they have. And you can imagine all of that's happening. And literally what we present to our users is, okay, here's all the ideas we came up with.

Which of these, you like you get, now get the chance to like go approve them. You know, are these ready to go? And literally in a couple of clicks, have customers are saying, wow, you create a full launch, you know, campaign for me. Like, Hey, I might make a couple of tweaks, but then yes, go schedule that and let's see what happens. And then, you know, using reinforcement learning, we go watch, you know, Hey, which campaigns, which of these, you know, marketing experiences pervert, convert best. And then can feed that back into our algorithms. So I think this is kind of

Andrew BIalecki (35:37.571) you this is really like the future and it solves one of the number one pain points I hear from our customers. Hey, you know, I feel like, you know, Klaviyo is really great software, but I just don't know what to do with it. Right. I have some ideas, but I wish I had more ideas. And now I think with, you know, LLMs, we're able to basically automate the entire process. And then our customers can kind of decide, I think today they want, you know, a high degree of agency, a lot of checking of the content we're creating.

But what we're finding is as the quality gets better and better and as they build trust, we're starting to see them almost like auto-approve. We have some campaigns we see users, they'll look at for maybe 10, 15 seconds, and then they'll send out to hundreds of thousands of people. So there's a lot of trust being built up quickly. And I think this is, frankly, it's not just the future of our category in this kind of consumer CRM space, but think all software, a lot more software is just gonna be able to run itself. And then you can choose how much you wanna be in the flow.

Nataraj (36:34.098) Is there any particular metrics that are interesting or that tell whether all these initiatives are successful? in the case, in the example that you gave, it could be just how much time it took for creating new campaigns. Do you guys track specifically some measurements, like how successful have been these, either the agents or other AI products that we're launching are successful for customers? What is the way you think about that?

Andrew BIalecki (37:01.272) Yeah, I'll give you two examples. So, first is on the quality. One thing we're just obsessive about is, and we know this, is when we first built our marketing agent, we kind of said, it's okay, it's like good marketing intern. And that's, no disrespect to all the very highly motivated folks that are breaking into marketing, but we just felt like, okay, it's not that knowledgeable about best practices. We're still building that in. And what we feel like is, hey, it's going to go from that of intern level to, you

Maybe like a senior marketer to like a really advanced marketer and eventually if you think about you know Some of the media types that we're working with but you know text messaging email mobile Social I mean not all these are only like 20 years old We think it's soon gonna be able to beat you somebody who's been spent. know the last two decades Doing nothing even this so in the way we measure quality there is it really does you know we do one is evaluate like hey how much do the folks that were effectively pitching our ideas to so our customers do they like them how much are they adopting them

But then how are they performing? And what's really cool is we're seeing, you know, in a bunch of cases, our content that we generate is outperforming in terms of engagements. You can think about like click rate, but also just literally then in terms of downstream engagement, in terms of like purchase rate or conversion to customer. So that quality metric is something that we really obsess about. And then we want to show to folks so they can feel confident that like they're not losing anything. They're actually gaining things by sharing their ideas with us or adopting some of the ideas that our AI is producing.

And then the other part is straight up, how much do people are starting to use our marketing agent and our customer agent as part of their everyday workflow? So the analogy we make is when mobile phones, starting with the iPhone, really got real web browsers, Safari for the iPhone came out. There was really interesting charts. They said, OK, let's look at internet usage and how much of it is coming from desktop, or we think traditional desktop versus mobile.

And if you look at those graphs, something really interesting is it wasn't, you know, it wasn't that desktop usage, you know, went away. I it's probably declined a little bit since, but it really that was that mobile usage exploded. internet usage went up. So the other thing that we measure is, hey, when you look at the number of ideas, marketing, you know, campaigns that people are running, or the case of our customer agent, hey, how many conversations is this business having with its customers? We track both of those and how much of those are say,

Andrew BIalecki (39:27.596) human generated, human powered or human initiated versus how many are AI initiated. And what we're finding is actually the exact same thing. Like it actually turns out that when you introduce AI, it's increasing the overall amount of marketing or the number of customer service and number of conversations that businesses are having with consumers. And it actually has this interesting thing where because you can kind of, you can do this hybrid model where you use, know, AI to either make your idea better.

Or you use AI as maybe the starting point and then you know and then the actual human, know can kind of go edit from there, right? We're seeing that both with marketing and with customer service customer service We these great things where I can do the first bit of like kind of collecting all the information that's maybe relevant to helping solve somebody's problem and rather than that kind of back and forth of like, okay Can you remind me your email address and can remind me what you're talking about like all that just gets automated? We're finding that's driving up the quantity

of both marketing experiences and customer service experiences. And that's another one that we're really bullish on is that over time, we do think that, know, not like it replaces, displaces what, you know, human thinking is doing. It's actually just, it's literally just growing the overall pie and then the amount of, you know, the amount of engagement that, you know, brands get with their end consumers.

Nataraj (40:46.066) It's almost, I think there's a term for this, it's called Javan's paradox, when you make things cheaper, the overall usage goes up. And I think you're basically making it less costly in terms of how much time I spent to create.

campaign so I can quickly create cameras and just verify, okay, this campaign looks I want to experiment and just giving more time to the customer and that's how they're using it more. The other question I had about AI is did anything in terms of how you organize the company or what types of roles you're hiring or how you're managing people change because of AI and because pretty much every startup founder says we are either hiring less people or

We are doing things differently or we are hiring for a different set of people. We want more generalists, we want specialists. How has CREMEA changed? Or it hasn't changed, basically for AI.

Andrew BIalecki (41:44.271) Yeah, so it's really interesting. it's fine because we so we bootstrapped our business. Like we're talking about when we started, which meant we didn't raise any capital until we were already profitable. like, again, I would just you know, not every business can do that. But I'd say like, oh, man, you should really try to run lean. And why do that? It's not just a financial construct. We found embedded in our DNA a couple of really great attributes. One, everybody had to be a bit of a generalist. You had to be broad. you know, I

There's a saying that you kind of look for when you're hiring people, look for people that have this kind of T shapes, you know, kind of skill set. Hey, they're really good at something. They're kind of okay at others. We tell people that we like people that are like, you know, sort of have a very wide T, right? They're almost like a fat T shape. They're like, they're really good at a bunch of things, right? They're not sort of a superstar at one and then okay at others. They're like, they're actually pretty good or great at a couple of skills. And that intersection makes you like even more dangerous. So when it comes to, you know, let's say engineering, you know,

when I talk to engineers, say, look, you know, I want, it's important to me that you care about design, that you think about the products you're building, by the way, that's way more interesting way to live life. Like if you just want to build really scalable systems, like that's sort of like not interesting all the way, right? So our, you know, all of our engineering team, like, Hey, we're just into, you know, talking to customers and nerding out of that. And actually I think you build better products that way. So generalists matter. And then two is, you know, the constraint we had for bootstrapping was, you know, a job was expensive. Like I remember in the early days,

My workflow was I'd wake up in the morning, I'd spend anywhere from 30 minutes to a few hours in our help desk, just our inbox, like answering customer questions. And I wasn't allowed to start building, as I thought, making real progress forward work, until we had finished helping all of our customers. And that really forced you to focus on like, okay, what are the real pain points that…

users are having and how can I automate? In a lot of cases, people were just looking for better documentation. So it got us to write better documentation. So just force this idea of like, how do you automate yourself? How do you automate yourself? How can you give yourself more scale, more leverage so you can not spend your time on tasks that are very repetitive and get to like, know, higher order bits? I think AI is just another, you know, incantation of this. So well, those two attributes have stayed very true to how we work and felt very natural with AI. And we do a little bit to like, you know, we oftentimes will force constraint.

Andrew BIalecki (44:04.802) you know, on teams and projects will say, look, we're going to ask the small team to do something really big. And it feels hard. And think a lot of other companies may say, well, that's impossible. But for us, it's like, we just have this track record of we've seen it work. Right. So we're like more willing to do that. You know, the one thing that with AI, I think we had to do is we sort of had to force ourselves, say like, OK, we've been pretty successful as this, you know, software as a service, Internet, you technology company. But

AI is just going to change a lot of workflows. if you sort of feel like, I I'll take myself, I just got so used to it. like, I mean, I love building, love programming. But if I like writing the code so much that I'm sort of not willing to try my hand at letting an AI do that, that's probably a mistake. And, you know, and hey, we really need to lean into that. one of the things that we'd obviously say, hey, look, everybody just needs to be, you need to sort of force using LLMs into your life. And

This is actually, it's kind of annoying because, you know, as we've seen, like, LMs are not great at everything. You know, they make mistakes, you know, they used to hallucinate a lot. They still do in some cases. And I think there's just, you know, I remember in the early days of the, you know, the internet when I was building websites and web apps, like there was a lot of things where it was hard to do things on the internet, you know, building a highly responsive, you know, website, whether it's cause you're using Ajax, right, or using modern CSS, like it was hard, but these were just men, but we had to figure out some of the frameworks and build some of the tooling.

I think AI is the same way. So we sort of forced everybody to say like, hey, look, if you're just not naturally the kind of person that wants to go after, you know, building LLMs into your life, then like, hey, that's probably not a good fit. And the analogy we use is like, imagine that, you know, it's the mid 90s, and you're Amazon and you're hiring people to join Amazon. And imagine they said like, yeah, I don't really use the internet. I don't really know what a browser is. You're like, probably the wrong company, right? And

I'd say even if you're just like, well, somebody showed up to an Amazon interview and said, well, yeah, I use Amazon because I heard about it on the news. You'd probably say, okay, but like a lot of people use Amazon. So the analogy for us is like, well, a of people use chat GPT. Like that's, actually not that novel. What we want is the nineties example would be somebody that built their own website, you know, even maybe a personal website. That was like hard to do back then. I mean, now it's like, Hey, are you building LLM applications? You know, and by the way, you don't even need to be an engineer to do that anymore. You can just go sign up for

Andrew BIalecki (46:25.038) one of the many, many, many tools out there that allow you to like basically, you know, WYSIWYG, you know, vibe code something. If you're the kind of person that does that naturally, awesome, can't wait to work with you. We're have a great time. If you're not the kind of person that does that, then like, hey, you know, maybe you're not really into, you know, you're not really ready to give this a go. So I think that that's been important, is having density of like this kind of curiosity and, you know, thinking, you know, AI first.

Nataraj (46:50.172) think the point you made about automating yourself, I think that really hit the nail for me because that's sort of like the most obsession I have right now is…

How do I automate things? do repeatedly. And AI is sort of like open up and you sort of 10x the amount of automation that you could do as an individual. And that's really amazing. Like how many things you can, it's literally that code of like, give me a lever and give me a truck to place so I can move the earth kind of scenario right now. Because like you can do so many things.

just one person because of so many tools or you can just, if you don't know a little bit of coding, then you become so much more powerful than you ever were. regarding the, you know, going general this way, one of the things I found out is like, create a really courageous people to have their own sidekicks and hiding people who are like, you know, either influencers or, you know, have their own small business. Tell me about the like logic of that.

Andrew BIalecki (47:51.407) Yeah, well, I think, so this founder mentality or entrepreneur mentality, first of all, I don't think you have to literally have gone and started your own business to earn that credibility, to earn that title. It's really a mindset. It's certainly a great, I mean, if you do strike it out on your own, and by the way, I think a lot of folks, if you're gonna start something, my big recommendation is do it nights and weekends, because then it's hard, right? It's like extra time.

tired, you maybe have other things you want to do in your life. And like if you really want it, like, and you put in the hours then then you sort of know that you're ready to do it full time kind of thing.

Nataraj (48:28.09) Michael Lewis, the author of all the famous finance books said the same thing about becoming an author. You should write it on vegans and see if it actually works. But good.

Andrew BIalecki (48:40.974) Totally. mean, before we started Klaviyo, mean, one the things I did to kind of steel myself was I was like, okay, I'm going to try building these, you know, little side projects and like, look, I mean, it's no sweat, right? I'm still, you know, I'm still getting paid at my current job. But if I can't find, you know, the 10, 20 hours a week that I'm and I'm not so excited about it, then like, that's probably not a good sign because it's, it's only gonna be harder, right? When you know, that's the only thing. So it is we look for folks that have these entrepreneurial like tendencies.

And anyways, it's great signal if you know, you've actually you I mean, oftentimes you will show me a side project, you know, hey, here's a GitHub, something I'm working on. Hey, here's this thing I'm doing in my community that I didn't necessarily have to take on. I think entrepreneurial density is really, really important. You know, it offers tend to take high degree of ownership. You know, there's there is nobody else to help them because it's like their thing, right? If they don't solve it, nobody's going to come solve it for them. Yeah. And so we've extended that like so one, mean, we try to make

Klaviyo a great place for entrepreneurs, either aspiring or folks that have been entrepreneurs in the past. I was talking to the head of our customer agent products, the guy that leads all of product development for that, who is himself a multiple time successful entrepreneur. And he said, he's like, yeah, one of his favorite kind of recruiting pitches is like, hey, Klaviyo is a great place for aspiring or former entrepreneurs that just want to do the same thing.

but hey, they just want to do it inside of another company, right? And so we've then tried to architect Klaviyo where I think at its best, I was a physics and astronomy major, so I've always liked this analogy of the best companies as they scale, they feel like a constellation of smaller companies, which means a lot of autonomy for teams, right? So it's a big responsibility, but also it means you give them room to, maybe we're all bound by the same kind of gravitational field, so we're all generally going in the same direction, but it's okay, some stars maybe moving in slightly different,

orbits and that's okay. So we give teams like a lot of autonomy. And then like, you know, we just say like, Hey, like, let's agree on like, sort of what the goal is and where we're aiming. But after that, like you be the entrepreneur. And then, yeah, I think this surprises some folks, but like, you know, I've had over the course of Klaviyo, probably, you know, maybe a dozen, two dozen folks, you know, come to my desk, right? And say, Hey, Andrew, I have some bad news. Like I'm quitting, because I'm just gonna, I really want to go try, you know, building this product, starting this company.

Andrew BIalecki (51:06.19) And a lot of those are software technology companies, but like we had a couple years ago, we had somebody that like was early at Klaviyo and he said, hey, I really want to try my hand at running a cranberry bog. I said, wow, that's crazy. You want to run a farm and like, you know, specifically for like cranberries, that's, that's like awesome. He's like, yes, I just have this passion. I really want to try it. Right. And of course he was like super entrepreneurial. Right.

And every time I think, you some folks are like, man, I can't believe it. You know, why would you do that? But I have a hard time feeling that way because I I literally worked at other companies and then eventually left those to go start something. Right. And I think frankly, in the world, we just need more entrepreneurs. You know, we talk about creators, people that are just creating products, services, content. We literally need more people that are right. You're Michael Lewis are willing to are willing to put in that hard work. Like we need more people that want to take those shots.

And so we think about Klaviyo as a culture, as like, okay, we want to help develop those future entrepreneurs, founders, leaders that think very independently. And then obviously our product mission is, yeah, literally our mission statement is to empower more creators to own their destiny. We literally want to give more businesses the tools to be independently successful. So this idea of like entrepreneurs, it's just like everywhere throughout our culture.

Nataraj (52:23.826) I think that's a good note to end the conversation. think, know, Klaviyo has been, you know, anyone I ask about Klaviyo when I was researching this, you know, everyone has good things to say and I think your NPS scores must be really high. But, know, Andrew, thanks for coming on the show and sharing audio, all the interesting things about Klaviyo and I'm looking forward to see, you know, where Klaviyo goes next.

Andrew BIalecki (52:49.176) Cheers, thanks for having me.