In this episode of the AI + a16z podcast, Decagon cofounder and CEO Jesse Zhang, and a16z partner Kimberly Tan, discuss how LLMs are reshaping customer support, the strong market demand for AI agents, and how AI agents give startups a a new pricing model to help disrupt incumbents.
Here’s an excerpt of Jesse explaining how conversation-based pricing can win over customers who are used to traditional seat-based pricing:
“Our view on this is that, in the past, software is based per seat because it’s roughly scaled based on the number of people that can take advantage of the software.
“With most AI agents, the value . . . doesn’t really scale in terms of the number of people that are maintaining it; it’s just the amount of work output. . . . The pricing that you want to provide has to be a model where the more work you do, the more that gets paid.
“So for us, there’s two obvious ways to do that: you can pay per conversation, or you can pay per resolution. One fun learning for us has been that most people have opted into the per-conversation model . . . It just creates a lot more simplicity and predictability.
. . .
“It’s a little bit tricky for incumbents if they’re trying to launch agents because it cannibalizes their seat-based model. . . . Incumbents [also] have less risk tolerance, naturally, because they have a ton of customers. And if they’re iterating quickly and something doesn’t go well, that’s a big loss for them. Whereas, younger companies can always iterate a lot faster, and the iteration process just inherently leads to better product. . .
“We always want to pride ourselves on shipping speed, quality of the product, and just how hardcore our team is in terms of delivering things.”
More About This Podcast
Artificial intelligence is changing everything from art to enterprise IT, and a16z is watching all of it with a close eye. This podcast features discussions with leading AI engineers, founders, and experts, as well as our general partners, about where the technology and industry are heading.