Is it pure greed? Alan Trefler founded Pega at 26 and he's still running it 40 years later. He's a chess master and billionaire who built a quiet empire in enterprise software. This is going to be ugly. Software running inside the banks you use, the airlines you fly, and the insurance companies you call when something goes wrong. Most people have never heard his name.
Checkmate. He built Pega from scratch, never stepped aside, and he's still the largest shareholder. You're a billionaire. You know how much I like hearing that. That's what I want to ask him about. What it takes to build something that consequential and stay at the helm of it for 43 years.
People use these words like AI, agentic, and agents. The way it's discussed is mostly gibberish.
He's not Musk. He's not Bezos. I want to know what he sees from across the board.
Using some of these labels, frankly, it's sort of demeaning.
My name is William Salvi and this is the CEO series. Let's go talk to Alan.
All right, we're with Alan Trefler, the CEO of Pega. Alan.
Yeah, thanks for joining. I appreciate it. So, you're actually one of the longest-serving CEOs of a public company that I've ever... I think you're the number one. So, I don't want to... but tell me, when did you start the company?
I started the company in 1983.
Yeah. Why did you start this company? So can you walk me through the origin story a little bit?
Well, you know, I think the inception came when I was working as a consultant for some large New York banks and I saw the way we wrote software for our customers and I thought it was, you know, kind of clumsy. We would have customers write document specifications. They would give it to us. We would, you know, program it, give back to them the things we thought they wanted and they would explain why they wouldn't. And I went and saw some friends who were in the CAD CAM business who were doing computer-aided design for manufacturing. And they were doing this thing where they would have pictures, wireframes, diagrams that defined what they wanted to build and then somebody could go and play with it in the software and get it exactly right. Get the piece part right, get the car to look right. Then you could attach it to a milling machine and actually create it. And I went to my boss. I said, 'Why don't we do this for business software?' And he told me, 'No.'
Yeah. Well, a couple years later, he came back and he said, 'You know, we really should have done that.' But he sold the company and I had to decide what to do next and decided I would try to follow that vision.
Walk me through your journey a little bit. Like, I mean, truly, you have to be one of the top, the longest-serving CEOs of public companies over a billion dollars in revenue. You have to be number one. I mean, I assume...
The interesting thing about when I started is that I think in some ways the stress was different because there was nobody to do anything for you. There were no venture capitalists available at the time. There was no cloud. We had to go buy a computer, right? And somehow find the financing for that. And we knew from the inception that we were going to bootstrap this and make it so that it could be a viable company worthwhile of our clients and our staff, but that we were going to have to do it with our own hands. And I think, you know, in recent decades, there's been so much of an influx of capital availability, other types of things, and candidly expectations of doing things overnight that I think that on one hand that maybe provides less stress because you have more resources, but on the other hand, there's a certain focus to the mind in knowing that the really important thing is making payroll at the end of the week. And having gone through a number of years of that where the thing we were proud of because we always made payroll, that gives you a certain perspective on business that we've really tried to live through.
This is going to be ugly. So, you've got 10 minutes.
How much time was that?
When did you start playing chess?
When you were six. Who taught you it?
Um, no. But he played and he would play with friends and I would watch them play and I learned from that.
How does chess relate to technology and AI and what you're doing?
Well, I worked on teaching computers to play chess, and so that's a really good use of AI technology. Back then, we weren't very good at it. So, we could only teach a computer at that era to play kind of a mediocre level. Today, of course, they can beat the world champion easily.
How easily can it beat Magnus Carlsen?
So, what is this... So, I just watched that documentary. The scoring system, what's Magnus? Is that like 2,800 or something?
What would yours be at your prime? At your prime.
Uh, it was about... I got to about 2,300.
How are you kind of taking in everything with AI right now?
Well, having been involved and steeped in it for four decades and seen it go through a variety of transitions, it's, you know, not scary at all, but it is pretty exciting in terms of the pace and the types of things that are now feasible and now being considered. It really does, I think, portend a massive change in the way we think of running our lives and running our businesses.
What's something that frustrates you about mainstream AI knowledge culture? How people are taking it in? How people are talking about it?
The way it's described, the way it's discussed is mostly gibberish. People use these words like AI, agentic, and agents and it means in some cases all things to all people. You know, I also think there's a question as to whether the artificial in AI is really the right way to think about it. I've always thought of it as augmented intelligence. How do you take the intelligence of people and use technology to augment it and make them better? That's really how we viewed it right from the very inception.
Do you ever get frustrated with business leaders and how they talk about it, like some of the top business leaders?
I think there are business leaders who should know better who sometimes talk about it in a way that just encourages that confusion. And there is so much confusion now about AI and what it's going to mean that it's, I think, a risky enough and challenging enough environment without the confusion. I think that a lot of the pundits and the leaders who speak sometimes very provocatively are doing it because it's in their interest. It gets people talking about them. It gets their products and their companies more attention and, you know, they're trying to almost be self-influencers.
How do you think AI will like benefit me? I'm 34. I have a daughter. She's 19 months old. How will she be benefited from all this? Because right now it's kind of like social media. It's kind of like, oh, when it was first coming out I was excited about it. Oh, there's Alan on Facebook. Good to see you. Picture of his friends. Now it's like poison. It's quite a clear net negative to me. Social media. And now you have all these tech people who do have extreme wealth and power and influence and they're telling me that this will be good again. And so far I think they've been full of... So I'm wondering like at what point is it like, no, this will be good?
So look, the technology and lots of the generations of this technology have been used for ridiculous things. I don't think when people envisioned the idea of social networks in the original sense that they thought that it would become a fast lane for advertising and TikTok. I mean, that which I view to be...
Yeah. It's like literally just an ad machine.
And I'll tell you the truth. I've been wrong in my prognostications before. I thought that the internet would actually serve to open people's minds. The fact that it has created lots of little bubbles that people live in is an example of both a great disappointment and where, you know, my prognostications on this stuff should really be taken with a great...
Why do you think that is though? Like, it's really interesting specifically from you, like seeing the technology over the years. Like, if you, when the internet comes out or when AI starts to get better and better and you're thinking to yourself, oh, this will make life better. It should, like, I hope it does and then it kind of turns into a different direction. Like, why do you think that is?
You know, it's always the nature of things that some people will find ways to turn them into negatives. And is it pure greed? I think lots of the stuff that happens on the internet is ego and insecurity and, yeah, people trying to belittle other people and other things of that time that have nothing to do with greed but have a lot to do with other of the deadly sins.
That was quick. Um, it was also illegal.
Because I have no knight in the way.
Oh, you just... So, okay. Explain the significance of this. We got a ton of bobbleheads here.
Well, after 15 years of tenure, we give each of our staff members two bobbleheads. One of which they get to take home and share and enjoy on their mantle and we also give them a certificate for dinner and one ends up in this hall of fame and we all get to enjoy their bobbleheads in perpetuity.
Does anyone get mad at their bobblehead portrayal?
Um, if you do not like your bobblehead, you can have your bobblehead remade.
Yes. Yes. Yes. Um, how many are here roughly?
Yeah. So, it's pretty cool. Goes around the side.
How many employees did you have when you first started?
When did it start to really grow?
Oh, it has grown gradually throughout, actually. So, you know, by the end of the first year, we were a solid six people.
Did you ever worry about growing too fast ever or you wanted to kind of keep that steady ship and keep...
Well, at one point we did raise some capital and we did grow faster. That's when we went public.
And after that we worried a lot because we didn't do a good job of it.
Yeah. So, how... true honesty here. How is it being a public company CEO?
Uh, it's hard. There's a lot of distractions. We're fortunate in that we're able to stay really focused and we've got a really stable business and that's good. But you have a lot of people with a lot of opinions.
And you just have to be able to deal with it.
What about today in the stock market where it's like we're waiting on a tweet? So it's like company... you're just literally waiting on news and speculation.
Look, you know, we've been public since 1996. So we've seen it all and I don't obsess or worry about a quarter. I don't worry about a tweet. You know, at the end of the day, it's what we do that is going to happen over years.
Do too many companies worry about the next quarter?
Absolutely. I think there's way too much of a short-term focus in America. And you've got to be able to do okay for the short term, but you also have to really make sure you're thinking about what's a year or two out.
There's a concept in chess called candidate moves. When a chess master looks at a position, they don't just think about it to figure out what to do. They usually try to come up with a couple of candidates. I would look and say, 'Well, I recognize this pattern. This is actually a well-known pattern. And what do I want to do? Do I want to play peacefully? Do I want to make the king escape? Do I want to do something called the gambit in which I attack you, give up a pawn, but try to distract you?' And then having come up with those candidates, I would think about each one and then make the choice. They are very different than the way a weaker player plays in which they just tend to look at the position and try to come up with the right answer. I actually think this idea of candidates is very applicable to business. It really helps people understand that there are choices. The choice to be more aggressive, the choice to be more safe, more passive, and having thought of those choices just makes you tremendously more effective at being able to do the right thing over and over again.
