He Lost Everything Twice…But Didn’t Stop Building - Rob LoCacsio - LivePerson - Episode #96

He says, "Well, you're fucked." I lost everything. Then I was in debt. I had nothing. I had $5,000 in my bank account and I had this couch.

The company went from a $900 million company to a $4 billion company in 12 months during COVID, and the company unfortunately has, like, since I left, it's lost 90% of its market cap. And I was losing the company I built. I knew all the energy I put into it and I knew it was in risk. That's why I fought very hard. That was the hardest thing because I wasn't yet prepared for that type of action.

They don't quit. Like, nobody can take your ideas. They can take your company. They can take a lot from you. They can take even your money, but they can't take your creativity, your ability to take that creativity and put it into reality, and your ability to build businesses. Nobody can take that from you. You know, that's the gift. You have that gift. The people watching have the gift. So, whatever happens in the world, nobody can take your gift. There's only one common thing we have is being born and being dead. And everything in between is your own individual little world. But the buried part is like when they bury you, you know, what's that day about?

Wow, David, with that introduction, it's like you're like the clapping or something. My mom would be proud.

Oh, I have a great affinity for your father who's an amazing entrepreneur and he's got this great poem that he gave me as a gift. Ithaca, which I've given, I've read it to employees. I've sent it out to employees. When I was leaving LivePerson, I sent that out as the goodbye. I'm like, this is what it's all about. So, yeah, your father is a gift. So, thank you.

Yeah, it's a simple question. It's about people. It's like, building a company is a team sport and hiring the best people at the right time is the hardest thing. And then, you know, I've gone through, like I said, three decades at one company. I saw also there are times where you need to replace people and upskill people and upskill yourself and that's hard. Now I'm in startup land. So I can tell you, like, it's really, you have to be very disciplined with building a core team. Very rarely does it happen on the first shot. It's like you get all 20 people in. You're going to have a few that you need to cycle in and out. But it's all about getting the right team. It's a people business. You know, it's an idea business driven by humans.

It's the same attribute that I've looked for my whole life which is skill and will. I have a quick story about it but I went public during the dot-com boom and then the entire industry was imploded and I was in the middle of that and I had to make a decision with my team to lay off about 90% of the entire employee base. So we went from like 180 people down to 40. And I remember sitting in a bar in New York City with two other guys, my CFO and my head of customer, three of us. And we made a list of everyone's names and we put two columns, skill and will. And I made three copies to each of them. And I said, "Don't let's not talk. Let's just spend the next couple minutes, half an hour, hour checking the box." And the people who stay would have to be in both categories. And that's where I learned about skill and will because a lot of times we let people in, we keep people who don't seem to have the full skill or don't have the will 100%. And when you're building a startup, those columns have to be 100%. And I find people who are not a good fit, the first thing they do is blame the environment, you know, oh, it's too hard here. Oh, it's too this. I'm under stress. I'm working too much. I don't know that it's confusing to me. Whatever it is, they always have a reason for not understanding why they're a misfit. And that's what they are. They're misfits. And so, you have to be disciplined. But it starts with skill. When I meet people, I talk to them. Do they have the skill and do they have the will to do this?

Well, I'll tell you, the skills is, it's two vectors for me. There's skills of like, let's say they're an engineer and you want them to do a certain thing. So you need to understand enough about the task at hand on the engineering side to be able to talk to them and understand what they've done in their past. That's one part of skill. The other part of skill which is really fascinating to me is when I'm in an interview, if I start generating ideas with this person, I'm literally in the interview where I love that. And that's where I find if it's like, right? So the best people you're working with is like I can sit with them and like my idea with their idea becomes a whole another idea which is bigger or better. And I'm like, so when I'm in an interview and all of a sudden I get that vibe, I'm like, wow. When I walk out of an interview and I said, wow, I've now got something in my head I had no idea about before I walked in that interview, I want to hire the person because they've connected the skill knowledge, right, the skill and their knowledge about a platform, a marketing effort, whatever it is, but they've opened my mind and they've opened my mind in an area I had no clue about and which I could think could exponentially open the business to being something quite larger than what I even envisioned. That's what I look for.

Thousand people. Yeah. 3,000.

There's, I used to tell this story at the company, but there's, you kind of know when something's wrong. Like when you're the founder, you kind of know there's something's wrong with the way I'm doing things and I'm not getting the results and we're not growing the way I think we should grow, you know? So whatever it is, there's usually a moment in time where you have to look in the mirror and take a hard look. And so when I've hit those times, I basically then, it's a lot of self-reflection and a lot of meeting with people and trying to understand what don't I know about what's going on. As in, I'll meet with people who have larger companies or things, right, who have been more successful or who have done things and I'm like trying to understand like, what am I missing? And then I had this formula for many years where you fire yourself on a Friday. Now this would be after like six months of really understanding. What it would do is it kick off a strategy meeting for myself. Like I'm kicking off strategic thinking about the business and where the business needs to go. But then I also think like what kind of CEO would run this business and what kind of leadership team would be needed. And a lot of times it looks very different than the way I did. So, one of the things I say is you got to fire yourself, which means you have to literally say, "I'm no longer the CEO of the business. I don't know these people." Like, I've been brought in by the board to figure this place out because it's not growing the way it should. And you basically, you have to release yourself that this is you, that the things you created are yours. You got to almost trick your mind to think like, I didn't create any of this. Because what happens is that you tend to hold on to the things you create. You tend to hold on to the people, the processes, the products because you're like the guy who you evolved it. You built, right? You got to let it go and then you have to go come back in with fresh eyes and then you have to make a real assessment. Then what I would do is I come in on a Monday and literally the first thing I do is run. Now, they didn't know it. I wouldn't announce anything. I'm not announcing any of this because I thought it'd be too weird. But I would run my leadership meeting differently. I change the structure of the leadership meeting so that now there's a change that they're aware of and then now I start working with the team on the strategy which I think the business should be and how would they connect with that strategy. So there's a lot that's going on with them and you at the same time and you have to kind of say, can I be the person to do it and then you have to say what do I need to do, skill and will, or skill, will to do it and do I want to do it because there were times in the company after where there were times I like, this is going to be hard. Like we did a replatforming back in like 2016 because I knew AI...

And I was like, and I knew, I literally sat there and I said, I think AI is going to be big, we have this great data set but we don't have the platform for it. Am I willing to go through a dark time, a very risky time, or should I cash out and leave? And I felt like I could do it, that the team could do it, that I could hire the right people. And we did it. We migrated everyone. We ended up doing it. Took three years to do it, but we did it. And I'm just saying like, you got to kind of decide, do you want to do it? Do you have the energy to do it? Are you the person to do it? And then do you have the team to do it? And that takes, by the way, in a company of LivePerson size, it would take somewhere around eight months or so for me to get to a place to make that decision. It was not a one-month decision. We were never under the gun. We were never defending our territory a lot of times because we were being proactive. So, I had some time to think because we were always an innovator in our space. If you're being attacked and your business is getting attacked and being eroded, then you've got to move at some speed. That's defensive, which is hard.

Yeah. Yeah. And ultimately, you know, I can tell you those times where we had these, I'd go to the board and I'd be like, we have a new plan and this is what I see. And, you know, I'd talk through what I think we have challenges with and holes in our people, areas that we need new people, why I have doubts about some of the people we have, and why I think some of the way, there's also a group of people I would move up. There was a group of people who really I felt connected to the vision and they could be moved up. The one thing I'm really proud about there was we bought a lot of companies and we kept the founders and there were times where I would bring a founder up and have that person, I would have them lead a product strategy. Like I had a guy, he was Israeli, Avi Kedem, and he's running now, he's CEO of a company now in Israel, but we bought his company which was a small company but then I brought him up to run product during the transformation and he drove the whole business. I put the whole business in his hands because he was ready for it and he, you know, at one point he was just a product guy on his own product line of this business we bought in the corner of Israel. But I could tell that guy, he had what it would take. So I moved him up into the scene. He became, he ended up in the leadership team and he ended up becoming, now he's CEO of his own company. So I'm proud of those moments, but there are people in the team sometimes that you can bring also forward to help.

I've had a coach since 2000, since the dot-com bust. I had the same coach up until three years ago and she retired. Picked up a new coach. Yeah. I picked up a new coach. So I had the same coach who followed me all the way through when I went public. And then, yeah, after I went public, it was very stressful and I needed someone to talk to and so I picked up this coach and we were together all the way through. I think so it's important to have someone who you can have, first of all, there's a lot of impromptu conversations we would have because something was happening in a day. There was some, we would do our planning at the beginning of the year and then review at the end of the year to kind of keep it all like, and then there's this, there's people I met through my journeys who, you know, had ideas and skills and built companies and they were just there for me and I would ask them to help me on certain things. And then, and actually the biggest part was recruiting, then I need to find a recruiter who I could partner with. I always found a recruiter I could partner with to help me bring in a new crew of people and that was really key to also, like, if you find a good recruiter, not like your recruiter trying to, but a real strategic one who wants to help you build your business, there's a lot you can do there because they're out kind of identifying those people you want to go after. Today it's a little bit easier anyway, we use LinkedIn and all that but I'm saying it's still good to have like someone who could evaluate people who could be in your corner, you know what I'm saying, because now you need to recruit and bring...

Yeah. It could be an independent one. I use search firms but I would find someone who understood what I was trying to do who had a network in my space that I was going, I would like, when we went into AI, I identified the, I wanted someone out of Alexa or I wanted someone out of Google Home. And I basically met with the heads of engineering for both companies and then other senior people. And then I ended up hiring a head of engineering out of Amazon. And then, but that recruiter helped me kind of look at the lay of the land. I could have done on my own but it's better to have someone there as I'm saying as a partner to understand like, because they're assessing a person for you also. And then obviously I would have one board member with me. I would take a board member in that area and then they would help me. So there's like three of us that would work on recruiting. So I'm just giving you, sorry, that's a very tactical thing but yeah, my different people help me. But you got to have a coach. Either get a coach or a religious figure, you know, whatever you want to do to be in your life, whether it's a priest or rabbi or whatever it is, you need something in your life to talk to and someone who can be there because I found it also, it's just wearing on the people who are in your life, the people who are your friends, your family and stuff, they just get tired of your conversation. Like, nobody wants to talk about your business with you 10,000 times.

Yeah. Yeah. Wife's like, enough is enough. Like, I got two people like you, you know, how much can you talk about a business when you come home? It's like, it's interesting to us, it's kind of not interesting to most people.

Yeah. Then I also lived through like financial crisis and COVID and like so I had these macro, I mean like I remember these macro events and then you had your business and strategy. Like so this is a very extraordinary time. It's one of the reasons I wanted to do startups because the pace of how you can bring your ideas to market is, I've never seen it. Like what we're producing on the code-wise and product-wise and with a very small team, like, you know, it would take what we've done in months, it would take, you know, a couple of years. And I'm not just saying that, it's true. And what's happening now is because, like, you know, take Claude, Claude Code, they're using their own AI, like, their tools get better now much. And so that's what's happening, you understand? Like, what's happening is they're using their tools, imagine what's going on there, and so their tools, then we're getting the benefit and then it's like a flywheel that's so extraordinary. With a small group of people, like my goal is with like 20 people I want to build a multi-billion dollar business which I think is possible. And yesterday we were wiring up, now that our new platform's coming up in a few weeks and now we're wiring up the operations and we're using Claude and Notion and some other technologies but we're wiring the whole business together with, like, I use this thing called a MAP which is a Massive Action Plan, it's the way you organize getting like the operations of a business and I've had this for many years. We can generate a MAP out of the operation, then we can look at the MAP and then we're looking at everything that's being done now, like all the engineering tasks, everything in Jira, how are they rolling up to MAPs, but also we can look at the code and actually go down a level below and say like, is the code at a level that should allow this task to be checked off. And then we're going to marketing. So all I'm saying is like, it's extraordinary and that's why I just say it's like, I'm thankful I'm not where I was at LivePerson in many ways or Salesforce or ServiceNow and all these companies because running a public company in this day and age with the amount of overhead and all the bureaucracy that goes with just running these companies of that size, by the way, because we were a pioneering SaaS company, but so our whole entire infrastructure is about SaaS and we're not trying to, AI natives here are AI first. That's, I don't tell my guys, hey, I didn't send a memo, you got to use AI. Like if I was at LivePerson, I'd send a memo, we got to use AI in our operation here. These guys do it on their own. These are young guys, young engineers, and they're just rocking. And so those companies are so susceptible right now to getting tagged because a company like ours can move at a pace, it's true, that I've never seen. I had to adjust my own mind of what can be done in a day. Sometimes things are being done in a day that I knew would take months in my, because I've done these tasks and it takes a week and it took a year in the past. So I can't explain it but David, it's, and if you're an entrepreneur, it's like this is a renaissance that's so exciting because I saw the dot-com and that laid the infrastructure for what we have today. We couldn't do without the dot-com but this is a whole other level of output and build that we can do.

Well, but it was the same thing during the dot-com. I mean, I even, I invented chat in '97 and then there was like, let's say, 50 companies who copied.

Right. Yeah. I had, oh my god. It was like crazy and I got public and survived. That was the only task during survival. And what'll happen here? You're going to see the same thing. It's the same thing because there was a lot of money going in, like we know the capital right now is extraordinary. Wild. And so you have like that and so what'll happen eventually is that there's going to be a survival of the fittest and that's going to come in two different ways. One is, you know, is your idea unique enough but the other part is can you execute it because it could be a very unique idea and you can't execute it or you don't have a very good idea but you could actually fuck it out of it. And so, you know, I do think you have to have something unique. That's why I don't believe in chatbots. Like the whole chatbot, like even what we were doing, the whole chatbot enterprise thing is you're asking for trouble. The reason is the IT groups in enterprise, I spent my whole life with these guys. They were dying to get rid of everybody.

You know, you were, every renewal they were like, "We can build a chat system. We can build a call center. We can build..." I mean, literally every renewal I would hear the same talk. We would laugh. We'd be like, "We got these guys. We set up a group that will, you know, we're going to keep you guys. We're going to sign this contract, but I want you to be aware we're going to build what you're built." They told us they could build everything you're building for like $50,000 and be up and running in the next year or whatever, you know, and we're going to have to get rid of you. And I'm like, we would be like, cool, let's just sign the contract because I'll be here next to sign. But these guys now, they have the models, the same models that everyone else has. They have, if they're even not that skilled, they can vibe code. So that's a huge problem. By the way, we show up so many times, even the small businesses, and they'll be like, "We got a guy who's vibe coding." And like I know a guy who's a CEO, he's vibe coding his own platform right now. It's crazy.

I so I understand but what I'm trying to say that empowers the enterprise, those IT guys to be engineers and the CIOs of these businesses are going to give these guys an opportunity. So what it's going to create is a disruption in buying because it'll just slow down buying. They're going to come up with things that are pretty good. These tools are getting better. They can use Claude Code and they can get pretty far and they may be able to get to as far as to replace you, you know, and that's where it's very dangerous right now. And so well I think what you're going to see is there's going to be some unique products but a lot of internal building and then there'll be those builds, whatever they're building has to connect with these unique tools beyond the models themselves.

I saw those dumb memos. Everyone put those memos out and they all went public. We got to start using, we're going to use AI. And I'm like, I've never had that conversation because the guys actually, they're native to it. They're young engineers. They're young marketers and that's all they know and they want to have an edge in the world. And the thing is I interview people from some of these companies, you know, I moved to Silicon Valley. I was from, you know, New York. I moved here so I could hire good talent. And I've interviewed people from some of these bigger companies like you can't hire them because they're not doing anything with the tools. They're not using, they're all like sampling and we mess with it, but they're not actually using it to run a business. So I just think there's going to be trouble there, you know, and that's why the stock market's like playing against SaaS right now because, no, it's not going to happen tomorrow. It'll take a couple years, but it's on its way, you know. And here's the thing, David, and maybe my company can produce it, I don't know. But like, we're all, if you're in AI, we're all after the golden ring which is what is the new interface for the enterprise. What is the new structure in which when we see it we go, ah, okay, you understand? Like when Google search came out it was like, okay, I've been waiting for that thing, you understand that, right? So some, it's the same old ugly SaaS interfaces, the same old web, it's just with a little AI plugged in but when that thing happens the race goes and now everyone's aligning to the new thing, the new paradigm.

Some CEO the other day pulled up, he vibe coded for his company, he showed me, he said, I'm not going to use Salesforce, I'm not, he showed me what he built, pulls it up, he's got his ICP list of customers, every one of the customers has been, deep research is being done behind the scene constantly on each one of the ABM, each one of the target customers that shows up in the, then he has another tab that creates content for every single one of the ABM customers based on the deep research which then actually pushes to, you know, the salesperson to push and he basically had this whole thing and I was like, holy shit, this is why, like, this is the future, you should just shut down your company and do this as the company because this is what everyone needs. But it's what you said where to him his view was, I don't need all the features of Salesforce or HubSpot or whatever and he's like, I just need, this is my set customers. This is my content. This is, that's all I literally need. I'm just going to build that.

So, I'm in the same boat. That's why I believe that the interfaces will be, they'll be all based on the individual and not any, I think the problem with SaaS is we did it too. We made a one-size-fits-all and suck it up.

Yeah. Yeah. I don't need to go into an interface anymore, you know.

Yeah. So I got Kid out, they both started at the same time about a little over a year ago, year and a half. One is a children's device to bring AI safely into the home for kids. We got that one out the door and it's a hardware device and software we got out the door in Christmas. Now I'm hiring a CEO for it because you really can't run two companies and I wanted to get it to a place. I also have young kids, so I really believe in the product. Like there's something good for the world there. And I want to get that out. And now I'm hiring someone who can scale it and run it because it's really hard to context switch. Although I ran a company that's like a thousand, really literally it's like almost a thousand times the size of what I have today. And so the two companies combined, but reality is, you know, you got to be focused. And so I'm very focused on URAI. We just launched, did a round of financing there a couple months ago. So I'm very focused in that area and then I'm finding someone to run the other one because I want them both to be successful and I want them to have someone who's every day on it because they're companies. They need, you know, they zig and they zag. And so majority of my time is on the URAI today and I'm just focused on recruiting right now. So I'm going to run that company.

Right. Yeah. And it's like, you know, kids and devices today, it's so bad and, you know, they're creating a world we all know, I don't need to, you know, talk about, like, there was Jonathan Haidt put his book out, The Anxious Generation, like between the physical device, the iPhone or Android devices and the content, social media and stuff, it's all like a marriage in hell. And like Jonathan Haidt, the guy who wrote that book last year, you know, a year and a half ago, when iPhone put a camera in, the suicide and depression in teenage kids went up like a hockey stick globally. And so they're creating, so things are being created with hardware devices and then married to social media and I'm taking pictures of myself and all that doing is creating bad things for our kids. And then the biggest thing is our kids are being assaulted with values with people, I don't want to, this is going to, I'm going to say something but I'm going to live with it. There are people out there on social media and they're not influencers. There's people just make content for a living and they're like borderline homeless and need to get clicks and stuff and they'll make content for you, they'll make content for anyone. They're...

Just like content and they need to make money doing this and they don't care what's in front of your kids. If they put that, you know, there's a cartoon and the head gets cut off and everyone's laughing and blood squirting and your kid because it touches their reptile brain and they love to look at that stuff. They don't care about kids. They don't have kids. They don't care about kids. They just got to pay the rent. And on the side here, our number one job as family, as parents, have only one job. We know they have many jobs, but the basic one is make sure your kids don't get hurt.

Don't get sick.

Right. The universally everything else is how you educate them and how you take them somewhere. But you don't want them to be hurt. And we're allowing people to hurt our children mentally. And that's why it drove me to say like, I'm gonna try this. I'm gonna get out there and put something in the world and see where it goes. And so that's really what and I got there. I fulfilled that part of my mission and I need someone to run it and grow it.

And you do you wonder on the other side who's creating the content who's thinking to themselves this is good content to create and put out there you know and and so anyway I love that I love that device

Some crazy some crazy stuff

Yeah. Yeah.

I you know I got lucky not lucky but I I went back to my original first vest investor at LivePerson which is Ed Sim from Boldstart and Ed

Okay. But Ed when Ed was like I was 20 some years old. I was like