The following is an interview conducted with x.ai CEO Dennis Mortensen by Jay Block. As the CEO of the Small Business Journal, Jay creates wicked good content for small businesses and consults with them on PR strategy. He is also a long-time user of x.ai, and you may have even seen him as a guest sender of one of the emails in our new user education series!
Jay interviewed Dennis to chat about the x.ai journey and the lessons we’ve learned along the road to creating a free version of x.ai. You can catch video clips and interview excerpts when you follow Jay on LinkedIn.
Jay Block: X.ai is making its way into the news because of the great updates you’ve made. Give me some basic background to what X.ai offers:
Dennis Mortensen: For decades we’ve been plagued with the terrible chore of scheduling meetings with outdated methods with whatever tools are available.
Those tools, certainly in the last three decades, rhymed with email and the calendar. You shoot me some sort of text; I read it; I reply back; we do a little bit of ping pong; and, at some point, we agree, and one of us will take up the chore of actually adding the event onto the calendar – find the title, location, and link. And the whole thing is set up.
Then, if something happens – one of your kids get sick – we have to reschedule. The whole thing starts over. It’s just a chore that you and me have done over and over and over again.
Now, the dream for most is one of escaping that chore altogether. That is obviously some sort of utopia where, “I actually want to wake up Monday morning, and my calendar is laid up perfectly, and I didn’t have to do any work to get those 14 things on my calendar.”
Jay: This is definitely something I can relate as I’m sure so many in the audience can as well. How does X.ai alleviate that pain?
Dennis: For us, we think about it in terms of, how can I remove or at least alleviate some of the pain? And the pain really comes in three parts.
It comes in the initial request – “I want to chat with Dennis at some point next week for about an hour on Zoom.”
The request then turns into a negotiation – “How do we make that happen?”
And then upon concluding on the negotiation, there’s some sort of insert for where you want an insert with a proper title – if it’s Zoom, with a dynamic link; if it’s physical location, with a mapable address, so I can figure out how long it takes to get there and so on, and so forth.
If I have multiple calendars, I want to make sure it’s synchronized etc. But those are the three parts.
What we spent an unfair amount of time on initially was to make sure that the initial request from Jay, if he was a customer, becomes easier; that he doesn’t have to deal with this itself.
And, then, you can package that request in a way so simple within the existing channels where he received it – say in his inbox or Slack – so that he doesn’t have to deal with it. And the negotiation is then left to an agent, such as Amy @ x.ai. And if the agent is any good, it will bring it to conclusion and then do the insert.
Now, that helps Jay. You don’t have to do this chore now.
But then the guest, obviously, is still on the hook. He’s going to participate in some negotiation. If we are any good, then it should be, at least, no worse than dealing with Jay. Hopefully a little bit better. We believe it’s better because the agent will happily reply back at 3 am if you choose to interact at that time. It’ll be super swift.
Now, the most magical outcome is obviously one where as I cc Amy @ x.ai, you do the same. So you and me have the same assistant, and neither you nor me need to speak to the assistant. And things just happen instantly.
I can write an email right now and say, “Hey, Amy, can you get me and Steph together for 15 minutes tomorrow afternoon on Skype, please.” As I click return, we receive the request. We understand what we are being asked to do. We see that we work for both parties. We look at both calendars; we look at both preferences; we then immediately figure out where the best overlap is – where I can make Steph the happiest and me the happiest – and I insert it directly on the calendar.
And in a split second,a meeting was set up without any emails going back and forth. It just happened.
Jay: Sounds like a dream come true to me, Dennis. What has been the initial feedback to x.ai and what have you learned most recently?
Dennis: I think we’ve certainly latched onto a real problem that so many suffer with but weren’t able to capture the market because if everyone in my network needs to be a paying customer, then there’s too much friction. Even though I could financially succeed on N number of customers who are individually happy, even though their guests can’t fully escape the pain, I could run a good SaaS business on that. But I couldn’t make a dent in the universe on that.
But if I can start to give it away for free, then we can perhaps make a small dent in the universe. Then whoever you meet with the most often, you should just say, “Hey, guys, you should actually just go sign up.” If there’s five people you meet with and you’re in a trusted, “Just go sign up. Hell, I’ll sign up for you because whenever we need to meet, it becomes instant. We can sit and talk on the phone, and we can make it happen before we hang up with ever having to look at our calendars.”
So that’s what we’ve just launched- an absolutely free x.ai model! And that’s certainly what excites me – what could this turn into?
Even if you could afford a human assistant, sure, you could remove the pain, but the human assistant cannot do network optimization. They can only do optimization for the individual, trying to make Dennis’ calendar look not overly crazy. But you can’t look into other people’s calendars.
Jay: Sounds extraordinary, Dennis. Give me a live example of how you can optimize your schedule with X.ai.
Dennis: Absolutely, and right now I have a perfect example – and it’s a real one. So I have three meetings in Midtown next week – Monday, Thursday, and Friday. Why are they not on Wednesday at 1:00, 3:00, and 5:00? If they are, I’m meeting the same people in the same locations, but with two hours less commute, so I don’t have to go to Midtown that many times.
But I can’t because I’m at the mercy of their calendars. So even if I have Amy negotiating this, she can’t move things around in their calendar. She can only extract time from them and make sure it lines up with Dennis.
But if she did also run their calendars, then you flip things around for everybody and make sure I’ll be in Midtown one day only.
Jay Block: What drove you to this realization to be able to practically “give away” your service that has such great value?
Dennis Mortensen: Of the many mistakes that we’ve made, there was certainly one which was not immediately obvious, which is that in x.ai’s relationship with Jay, we focused too much on making you happy.
Hear me out here. Let’s use the eBay analogy because they figured it out very early on, 15 years back, where they ran a network of buyers and sellers. That network doesn’t work if you don’t have people on either side.
And in that network, they make all of their revenue on the sellers. You need to pay a few dollars to promote a product on eBay. And you pay a few extra dollars to put it at the top and add a highlight to it. That is the vast majority of their revenue.
Now, it is very easy to try to satisfy the very people who send you money. But eBay figured out very early on that they shouldn’t make their sellers happy. they should make the buyers happy. Because if you make the buyers happy, do you know who’s happy? The sellers. Because if there’s people buying hey, I don’t care about the interface, the obstacles, and all sorts of other things. You just need to make sure that those who come to your store to buy things, then they are happy.
If I translate that to our business. It’s not that I shouldn’t make Jay happy. But if I should make Jay really happy, I just spend all my time in making sure that your guests are extremely happy, extremely well treated, that it feels even faster to do things with Jay if you use this tool called x.ai.
But somehow, we didn’t immediately lean into the guest optimization on day one. We probably spent too much time on host optimization, on removing little obstacles for you.
Jay: Wow. That’s an incredible realization and congrats to you for doing the internal research and capitalizing on that! Can you give me an example of what you’ve done to optimize the experience for the guest side as well?
Dennis: Sure! I’ll just give you a good example here of late that came as a little bit of friction on the host end. So, now, if you ask Amy to set up a meeting for half an hour, first week of December on 200 Broadway, she’ll ping you back and say, “Hey, is this what you asked me to do? If it is, just give me a thumbs up. Reply yes or click a button, and then I’ll go out to your guests.”
But what that does is, it makes sure that whenever we go to a guest, it’s always right. You get that confidence knowing when we communicate with the guest, it’s within the right construct.
Some hosts moan and say, “Urgh, why do I have to say yes?” Because if you do, we’ll never waste any time on the guest end.
I’ll send you a little chart on how we’ve been able to improve our guest rating, then you can see how obsessed we’ve been with that. And it’s just so funny that we spend so much time making the world better for people who neither pay us any money or have any relationship with us. But it worked very well in that regard.
Jay: What you’ve done is incredible, especially because even after developing the software you were able to dig deep and be really honest with yourself to find out how can I change what I’ve already done to truly make this work!
Dennis: Absolutely, Jay and there was a staggering amount of work on getting this into a real profitable service. And on June 1 this year, four and a half years after we started, we crossed that inflection point where we landed in dramatic positive margins. Not as if we are dramatically profitable just yet, but the unit economics means that I can give it to all of your guests and be okay with it.
That was a difficult journey to get to that state.
There’s nothing nicer than finally being able to send an email to your investors, where if you’ve sent the same email or a version of it for four years straight up of, “Yeah, we’re running at a negative margin, but “Trust me one day we’ll cross over.”
That “trust me” part, that runs a little tired if you do it for four and a half years.
Jay Block: So many times you become so consumed with what you’re doing and the vision that you have of how it will be successful.
But in your case, you dug so deep and restructured, not only to upgrade the vision but to change the vision and reroute it, and understood that you shouldn’t only focus on your paying customers, but focus on the non-paying guests who may not have even signed up to use x.ai.
How were you able to do that, and how did you even figure that out?
Dennis Mortensen: That is very tough.
I don’t think there’s any particular moment in time where you wake up with some sort of epiphany of “I now know what the world looks like, and it doesn’t look like what it looked like yesterday.”
But if you keep upright on both feet, fighting the good fight, at least you allow yourself to stumble into – sometimes through good planning and good insights and being a little bit clever – new information.
And what I certainly like about our journey is one where we’ve done a ton of experiments. But since you and I talked from day one, it’s not like our story has changed. Our mission has always stayed the same. We’ve been hunting the same idea, and that, I think, at least makes you rooted to the extent where it’s worth fighting.
If you’re fighting multiple different battles, it’s much easier to get tired because, “Hey, last year, we fought this battle, which we lost. Now we fighting on another front.”
No, we are still invading whatever other territory that we were attacking. And every day, we are clawing ourselves a few inches forward, but it’s the same place which we’re headed towards. As in, I want, one day, for you to wake up and say, “Ha, yeah, I remember between 20 and 40 years old, I did email ping pong every day for two decades straight. And then it disappeared.”
Jay Block: Who’s your inspiration? Who’s that person that you said, “You know what? They did that. I’m going to figure my way.” Was there somebody or was it completely just inside you?
Dennis Mortensen: That’s a good question.
I’d like to believe I have a strong network of people which I can speak to, who can tell me, “That doesn’t make sense,” or, “That sounds a little crazy, but potentially plausible,” and so forth.
I think if I was going to pick people I do not know but I can extract something from their commentary, I tend to have three books that are not on most people’s shelves. One is The Narrow Road by Felix Dennis. He’s got a very strong set of stories about how to value your equity and how to love your company. That is certainly a source of inspiration. He was not, in his early life, a good human being in any way, shape, or form, but the message is strong.
This is another potentially flawed human being (in their early life), but a few years back, I read the autobiography of Mike Tyson. And in that setting for where you extract a teenage boy from his environment and turn him into whatever they turned him into and then he ends up making hundreds of millions of dollars, everybody wants to take something from you. There’s certainly some good learnings on whom you’re supposed to trust and whom you cannot trust. That is a solid book on trust.
And then lastly, Shoe Dog by Phil Knight, the founder of Nike. The whole book is just fun and games. It’s a single sitting for where you’ll just read the whole book. But the last 5, 10 pages, that’s the real story. Everything’s just a lead-up because his son dies. Obviously, he already passed when he started writing page one. But the whole thing comes to an end where he, at least not outright but certainly in between the lines as I read it, tries to suggest, “Make sure you are aware of what you’re chasing here because it might not be worth it, or you might be chasing the wrong thing.”
Sure. Being the founder of Nike and getting to his level of wealth is some accomplishment, but could imagine that he would easily most if he could revisit that whole family setting. It’s a good book on purpose.
Jay Block: So many times, giving up is easy. It’s easier than trying and you not knowing what the outcome will be.
What would be your inspiration to someone working hard to get and accomplish their dreams?
Dennis Mortensen: I’m not sure I’m a fan of the kind of Airbnb lottery where you max out your credit cards and gamble everything. Because what you hear about in the press are those who won, not all those who lost.
That seems like a silly lottery to play, at least to me. So not that.
What I do think is honest and honourable is if you have a pain which cannot be debated and you can latch onto that. Then you can do it at different scales. You can scale it all the way back to you doing it on the weekends or scale it all the way up to you raising millions of dollars in venture capital. That doesn’t really matter.
But if you can find a pain which is true and honest, as in if I ask you, your sister, one of your colleagues, your dad, “Hey, do you schedule meetings?” they would say yes. “Do you like it?” “No, I fucking hate it.”
That is true for everybody working in an office, and it’s so true that nobody ever pushed back on that. They might push back on, “Hey, is your particular attack angle the right one?” or, “Is your particular product of a quality that it should be allowed in the market?” Hey, all of that, I’ll take that critique and go back and work on it.
But they will not come back and say, “I’m not sure why you’re solving this. Is that even a pain? Do we need that?” No. “We do need it. And I hope you solve it, Dennis. I’m rooting for you.”
That provides a lot of fuel in the darkest hour where plenty of your prior experiments didn’t play out as you had hoped for or aren’t running to the degree of accuracy that you at least dreamed of. But, at least, there’s fuel there where “Dennis, don’t give up.” You have all these users, market, just people in general saying, “Please solve it. No, I want you to solve it. Hell, I’ll stay a paying customer for longer just to see us solve this together.”
That certainly is one way to make sure that you don’t give up. Because if everybody’s against you, it’s is hard.
Certainly, there’s some things where you’re the only one seeing it. That is rarely true. If nobody in the market is seeing what you’re seeing, even just a few, perhaps what you are seeing is not true.