Quick summary: ChurnZero CEO YouMon Tsang thought that AI could make the company’s CSP obsolete – but soon realized that any AI agent needs a solid customer success foundation to deliver meaningful results. In a recent episode of podcast Binary to Billions, the startup founder discussed what brought him to customer success, and what its future looks like with AI.

In November 2022, ChurnZero CEO and co-founder YouMon Tsang tried out the newly launched ChatGPT and thought it spelled doom for his company. The tool’s adaptability and fast-thinking capabilities, he initially thought, would quickly make any customer success platform (CSP) obsolete.

But instead of throwing in the towel, YouMon considered what it might take for an AI customer success solution to work. He realized that the CSP his company had built provides the necessary foundation that any AI tool would need before it could deliver meaningful results.

YouMon discussed his AI “oh no” moment recently on the Binary to Billions podcast with Rob Scott, along with the founder lessons he brought to ChurnZero, and how he identified the gap that ChurnZero was able to address.

A serial startup founder

YouMon came from a background in urban planning, but ended up leaving because years could go by before he might see any results. Software moved much faster. He’s now founded multiple tech companies – and if he ever left ChurnZero, he’d be starting another one.

“Something that [urban planners] do happens a decade, two decades from now. And I just didn’t … feel like I had the patience to wait that long … and so I went to business school in California and that’s when I was exposed to software and it was the exact opposite.” – YouMon Tsang

YouMon founded three software companies before coming to ChurnZero, and learned some important lessons at each:

- MilkTruck: A great product can still lose to a better business model.

- Biz360: Being first-to-market is incredibly challenging and requires deep pockets.

- Engine140: After an acquisition, founders should see where they fit in and provide spark to the existing culture, not try to take it over.

The customer growth gap that sparked ChurnZero

YouMon’s third company, Engine140, eventually got acquired by Vocus, with Tsang staying on as CMO. At Vocus, he had access to sophisticated tools for scoring marketing leads and sales prospects that enabled business growth.

But the customer success teams did not have the same level of analysis that sales and marketing did. In fact, they had next to nothing – just Salesforce and contact information for the customer. YouMon quickly identified a major gap in how customer success – which was integral to retaining and expanding customers – was treated.

“They had the worst technology in the whole go-to-market stack, and they really should have had the best, and I saw that as the gap … the technology we were building on the marketing side … transfers really well to really understanding customers and that was the origin of ChurnZero.” – YouMon Tsang

In 2015, YouMon and co-founder Mark Heys started ChurnZero in Washington, D.C. to bring SaaS companies the technology needed to drive better customer relationships. Since then, ChurnZero has never pivoted, and according to YouMon, the company’s initial pitch deck still holds up.

How ChurnZero can evolve and adapt with AI technology

Fast forward to November 2022: OpenAI released an early demo of ChatGPT to the public. YouMon started experimenting with the tool, and his immediate reaction was that ChurnZero would become obsolete and he’d have to go back to the drawing board.

“My first reaction was, ‘Oh, no. Oh, no.’ … I started the wrong company at the wrong time with the wrong people … it was just so obvious to me that this thing was going to change everything.” – YouMon Tsang

But then YouMon tried a thought experiment: he imagined that he was going to build an AI-based CSP to compete directly with ChurnZero. What would it need to have to put other CSPs out of business?

“I came to the realization that we would have to build at least 60% of what we’ve built today, which is the data integrations, the health scoring, surveying the customers. All those things would have to be built and then you would … apply AI on top of it.” – YouMon Tsang

In short, ChurnZero already had everything that a new AI solution would need to compete in the customer success market. The real shift, YouMon says, is that AI will take over busywork like taking notes and scheduling follow-ups, so that the CSM can act as a trusted guide and advisor for the customer. Eventually, this may lead to a smaller CS team managing a larger book of business.

Final lessons for tech startups

The podcast closed with some final lessons for tech startup founders:

You can’t predict every new development or tech disruption that comes along.

- First-time founders spend a lot of time on the fun work of building, but they also need to look at more of the mundane work that builds a long-term successful company.

- Founders should ask themselves once a month: does your company deserve to exist? The answer to that question can shape your future direction.

- For customer success leaders, the key question is: are your customers happy and getting good use out of your product? The answer must be yes for your company to survive.

Want to listen to the full podcast and learn more about the ins and outs of tech startups? Check out the full episode of Binary to Billions.