Embracing Change and Ai With Yotpo CEO and Co-founder Tomer Tagrin

Thank you for having us. By the way, big fan of your voice and your important voice in e-com. So thank you, very excited to be here.

Probably for Tobi everything is planned. He has his crystal ball. So definitely not Tobi. But yes, I think that's the entrepreneur side of me. I think definitely when something big like AI is coming, the only way to make sure that companies like Yotpo that were pre-AI, we need to reset. We need to reset culture. We need to reset strategy. We need to reset how we build products. And that's what we've been trying to do. I think life is too short not to try to go after opportunities that you strongly believe can make a difference. That also means having a lot of humility and saying where we were wrong and where we need to adapt and where we need to change in order to be again a company of tomorrow. So definitely a hell of a ride. Not everything is planned, doing a lot of mistakes, doing some things right. But I can tell you, Yotpo, at least as long as I'm here and since I've been here, will be a company that will always be willing to change versus reality in the future.

Yeah, there is. I don't think AI changes that people are people. People problems are usually the toughest problem. I do think in the companies of the future you need less people. You have much more automation. We now have teams that are building agents from go-to-market to engineering. The job of an engineer is changing dramatically. In culture for us, Yotpo, and again very openly, was a company that got too big. There was COVID, the zero interest rate. I think coming back to the offices, coming back to more startup mode or founder mode as some call it, has been really crucial to transform. The biggest transformation is culture and how we build products because that matters the most. It also means I need to change, our leadership needs to change. It's a lot, but that's what gets me excited: building a culture that is humble enough to understand where we made mistakes and have the courage to actually make the changes, not just cruise very slowly because we're already a big company.

100%. If you look, there are bigger companies in the world. Yes. 100%. I think we are lucky, as I told my leadership, to lead a business in the biggest transformation of our lifetime. No one knows, no one has a playbook. We just need to be humble, as close to the customers and as close to the technology as we can.

Definitely. We weren't able to execute on multiple products. We had email and SMS that we decided to sell to partners. There were a few forces happening simultaneously. One, we couldn't execute at the level we wanted, and that affected our reviews and loyalty business, which is the core where Yotpo is truly best-in-class. Second force is AI. We really think AI is changing reviews. You're going to see us continually developing more capabilities because the way people write reviews, the way they consume reviews, the importance of reviews in an AI-first world where everything is fake. What does authenticity mean? In loyalty, we've seen a lot of success from bigger merchants going all-in on omni-channel. With tariffs being introduced, loyalty is becoming more top of mind. Lastly, AI and agent commerce. Users are already doing discovery on LLMs. With recent ChatGPT and Google's protocol, it's insane. I don't know if it's going to be 30%, but definitely it's not going to be 0.5% of commerce moving to LLMs. That's a massive opportunity and challenge for brands. We found that our return on investment can be much more impactful on new markets and opportunities versus trying to innovate in existing markets where we weren't successful.

I had a few health issues. When I came back to the company, it was very clear that we need to change. I changed as a human being and said we're stopping. That was almost three years ago when we started what we call Yotpo 2.0, a shift in everything. Part of that was being more founder-led on social, which I'm still not comfortable doing, but you're doing a great job. I think it's important to put people out there because we are people trying to do our best. Authenticity for us as a company has always been uber important. Authenticity in today's world is a superpower. I feel not many people are really authentic. We try to be the most authentic company we can, where we get things right and where we get things wrong. In our product reviews, it's about how we bring authenticity. When you think about agents and LLMs, how do you get an agent to trust a brand? If I say my brand has the best running shoes for men over 50 with flat feet, why should they believe me? Everyone says the same thing. One thing that doesn't lie is what customers are saying at scale. So we ask how we can leverage GenAI and LLM to increase authenticity, write more quality content, and distribute it, but always make sure the content is authenticated.

Billions of people. Every company has an army of agents trying to do that. We spend a lot of time thinking about how to help brands be unique and authentic. There are two worries on LLMs: how to be discoverable and how to control what the LLM says about you. That requires context and trust. That's the mental framework we're using to help brands with both context and trust.

I don't think I said we're going to make it. I said, look, we did a deep process of analysis, saying where we got things wrong. We collectively agreed on them. It wasn't easy discussions. Then we said, if that's the case, we need to change, and this is our new plan. For certain people, it was too much, and that's fine. Part of that process was saying goodbye to many people who had been with us a long time. Trust is built when you're truly vulnerable and authentic. I think Yotpo was a company that grew too fast, chasing short-term growth and compromising long-term growth. We wanted to turn it around and say we'd rather compromise short-term growth for long-term growth. We want to build a profitable, growing business. That takes time and being authentic about it. Once people connected to that and saw we truly understand the challenges and are willing to change, it worked. For example, on product, I read Marty Cagan's book 'Transformed' and couldn't put it down. It was like he was writing about Yotpo. I spammed him, got on the phone, and he became our coach. He's coming to Israel to do a workshop. We're flying everyone from across the world to transform how we build products. We're bringing outside help from the best in the world. If we become the best product company, that's it. I don't know what the business outcome will be, but I'm sure if we do that, all the ducks will align. Tobi and Shopify are a great example of that.

AI can speed up certain things and not others. Code generation: writing code today is not a job anymore. Agents can do that. An engineer or architect now—that's a big statement, but I don't think writing code will be a job if that's your entire role. You'll need great PLDs and just write the code, but there won't be much room. The job of an engineer or architect will be like a squad. The designer writes the best design and design system. The PM writes the best PLD saying what the product should do and the value to the customer. The engineer or architect says what's the best architecture and design, then lets agents build 80-90% and do code reviews. The craftsmanship of product is changing. We're heavy users of Cursor. The amount of code in production written by AI is significant. If a designer can finish with Figma and build directly into the design system and front-end code, or if you want to analyze customer feedback at scale, it's really easy. AI won't replace you; people leveraging AI will replace you. You need to know how to use the technology. Prototyping is the easiest use case. The question is how to do user research and ensure you're building something that adds value. There's a great book, 'Good Strategy Bad Strategy,' which says in a world where AI software is easy to build, you need to keep building, fall in love with the problem again and again. For example, in loyalty, the big question is incrementality: did you buy because of loyalty? Are you incenting the wrong behavior? That's a tough problem. We're working on analytics to show true incrementality. In reviews, it's different. Getting the most reviews is valuable, but in an agent-first world, 'great product' or 'loved it' is not so useful. We go deep on generating quality content and knowing what quality is. We also have a team working on a new product geared towards agents driving commerce, which I'm very excited about. It will launch in the next few months.

Yes. We try to leverage our data. We have 350-400 million loyalty members. AI can give recommendations based on our customer base. Loyalty is a lot of experimentation, trial and error. It's a breathing organism, not set it and forget it. We're trying to take it to an agent-first world and get to one-to-one loyalty, which may be the end state, but we're not there yet.

From an engineer standpoint, it depends on your flavor. Code assistants are really important. In engineering interviews, we used to ask which language you write code in. Today, it's which code assistant do you use. Then you have Figma and Lovable for mockups. In go-to-market, we have a product and engineering team trying to engineer go-to-market with AI. Some is internal build, some are tools like Clay for enrichment. In support, we built our own system using a model called Quark AI for deflection. We try to build and leverage. In the next three years, I hope much of our software spend will move towards tailor-made agents. We have a team that can do that. There's a lot of efficiency gain and actual throughput and growth. We have a team listening to what CSMs are doing and building agents for them, from QBR preparation to replying to emails. We automate to leave people to do more strategic work.

No, that's reality. It's coming. The best thing I can do is adopt and make sure we keep adding value and building next-gen products. I don't know if we're entering a world where H1 can type 'CHD' and have their own stack of software. Maybe to some extent. But no, it gets me excited. Maybe that's the psychotic entrepreneur in me.

I go back to authenticity. That's unique. Brand and distribution. If you have gazillion softwares and agents, whoever wins usually owns distribution. That's why the first cycle is being won by big tech. They have distribution. It's hard to compete with that. I don't know how it will play out. I just try to make sure Yotpo is a company that can lead, take bold moves, get some right, and keep evolving.

Support. The entire notion of opening a ticket and replying with a set of rules is an LLM problem to solve. Content creation in terms of videos and creative: we have an amazing design studio, but we've taken down cost by 10x and production time by 5x. Outbound will change in terms of sales motion. Demos and note-taking with tools like Granola are helpful. The entire stack is about to be disrupted.

We've talked about culture, strategy, product, go-to-market. But the company is made up of people who are used to doing things a certain way for years. How do you judge how well you're doing changing people's habits?

We try in Slack channels, weekly all-hands between teams, and celebrate as much as possible for others to see. Knowledge sharing is important.

Two examples. Our finance team, the FP&A team, built something to show budget owners how to work with the budget and get data to speed up plan versus actual. It will save tons of time. Another is a solutions engineer who is like a solo entrepreneur building his own things. He built a lot on top of Slack, from feature requests to listening to calls and automatically driving feature requests into product. The product manager might not love that, but it gets the voice of the customer. Another example is content and video creation. Today, if you're doing ads or content marketing and not 80-90% AI, you're probably behind.

It's multiple models combined. Together, it speeds up dramatically.

I have a 9-year-old son. A few months ago, he came to me and said, 'Dad, I want Nike shoes.' I told him, 'There's no way you're getting Nike shoes. You're getting shoes.' He insisted. I said, 'Let's do an entrepreneurial moment. Build anything you want, open a Shopify store, and sell it.' So he made a book and arts and crafts. We set up the store. He had a laptop with Shopify onboarding. I opened another laptop with ChatGPT to help with product descriptions and headlines. It was insane. He didn't type a letter. His entire interface was voice. He dictated everything. He set up a Shopify store without pressing a letter. I asked why he wasn't typing. He said, 'No, why do you need to type? You're too old, Dad.' Voice is an interface that's going to be really important because it's more intuitive. With language barriers being overcome, voice will be big. Consumers are going to buy from LLMs, TikTok shops, marketplaces, storefronts, retail. It's going to get more complicated and more omni-channel.

10 years ago, I said retail is not dead. It's still waiting because it's fun to go to the store and buy stuff. Maybe we'll have Mark Zuckerberg's glasses. I played with the Meta glasses. It's uber cool, but I love that he's taking a massive bet on an unrealized category. I'm not sure if it will be a flop. The experience was a bit underwhelming at the beginning.

Don't give up. Changes are tough. When interest rates were zero, everything was easier. Now every business is having a tougher time unless you're an AI high-flyer. For the rest of us, it's tougher than you think. Hang in there. Always come with first principles. Don't be afraid of changing. You don't have a lot to lose. Even if you think you have a lot to lose, you don't because reality is going to be reality. Change is going to happen. Markets are going to be markets.

Thank you for inviting me here to Yotpo headquarters. Thank you again.