How to Rebuild a Company as AI-Native and Lessons from 2 Exits

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The founder and CEO of Electric, Ryan Denehy joins GTMnow to explain why and how he rebuilt Electric as an AI-native software company.

Ryan gets specific on why he split the business in half, how the pivot forced a total change in distribution (from direct sales to embedded channel partnerships with payroll platforms), and why a new product doesn’t just need a new channel, it can unlock ones that were impossible before. He also shares the ADP partnership that put Electric behind 1,700 reps, the near-death moments (including the night he almost wired his seed round back to investors), how to actually get acquired by a public company, and the cold-outreach framework he’s used since making extreme-sports videos at 17.

What you’ll learn:

Why he rebuilt a working company AI-native, and the five-step playbook for a “total reinvention”
Why product-market fit is as much about distribution as the product, and the Sirius XM lesson behind it
How going AI-native collapsed his unit price and made channel-led growth possible for the first time
Why the winner-take-all gap between AI companies is so much wider than in classic SaaS
The embedded-partnership motion behind ADP, Justworks, and TriNet deals (300+ customers onboarded in a day)
How to actually get acquired by a public company (hint: people buy companies, corp dev doesn’t)
Why the quietest near-death threat is a splashy senior mis-hire, not a market crash
The cold-outreach framework he’s run since cold-emailing pro athletes at 17

Episode highlights

01:04 – A 3x founder who sold two companies to public acquirers

01:33 – What Electric is, and why “AI” was in the name in 2016

04:40 – What a “wholesale rewrite” meant

06:38 – Why go AI-native

08:12 – The reinvention playbook

13:08 – Why they blew the whole thing up

13:48 – Distribution as product-market fit: the Sirius XM lesson

15:37 – How AI collapsed the price and unlocked channel sales

18:19 – The winner-take-all gap between AI companies

20:35 – From direct sales to channel

23:00 – The three-year channel payoff

25:17 – Rebuilding the product and signing the payroll platforms

26:27 – The new-category pitch

29:29 – Behind the scenes for ADP, Justworks, and TriNet

30:02 – Almost wiring the seed money back

32:00 – The day everything changed at once

33:52 – The quiet damage of a senior mis-hire

35:48 – Two prior companies: go-to-market above all

38:18 – How to get acquired by a public company

42:55 – Extreme-sports videos at 17, and the outreach framework

44:47 – Where to find Ryan and Electric

Key takeaways

1. Product market fit is as much about the channel as the customer.

Countless amazing products have been built that nobody has ever heard of, because they never found the right distribution channel. His example is Sirius XM, a business that only worked because they paid car companies to preinstall the hardware and gave away a free trial with the car. Acquiring those customers one at a time would never have worked in a million years.

2. A new product may mean you need new channels.

When Electric replaced an IT department, the price tag was high and the product was complex, so a consultative direct sales motion made sense and the economics supported it. The AI native suite has a much lower unit price, higher margins, and it implements instantly. That killed the direct sales math and simultaneously opened up channel and product led motions that were impossible before.

3. Acknowledge the problem while the numbers still look great.

In 2023 Electric had cash, category leadership and a long streak of not missing a quarter. That is exactly when they decided the model would not go the distance. His warning to founders whose businesses still work: you have to move with the urgency of a company that is terminally ill, because the old exits are gone.

4. The hardest part is that your old competencies stop helping.

Even without changing markets, customers or the core problem, they underestimated the task because it did not feel like a pivot. It was. The behaviors that make a company work at $10M, $50M or $100M in ARR are mostly not the behaviors that get a new product suite to market.

5. In a market with a dozen possible partners, partial success is failure.

The whole distribution strategy depended on landing most of the payroll and HCM platforms, not one or two, and there are only about a dozen worth having. So every pitch had to win three arguments at once: enter a category you are not in, enter it now, and enter it with Electric exclusively. On top of that, every partner had to fit the same prescribed motion, because a custom product and sales cycle for each one would have sunk the economics. It took 18 months of sequencing conversations so they would land together.

6. The mishire is the near death experience nobody tells stories about.

Big splashy senior hires that don’t work out damage the business. You wake up 6-8 months later, zoom out, and realize you went nowhere, and that the person has hired more people who are wrong for the same reasons. It’s dangerous because it’s harder to detect, and often more costly.

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GTM 203 Full Episode Transcript

00:00 – 00:04

Ryan Denehy: This is a generational shift in how technology is built and used and consumed.

00:04 – 00:10

Sophie Buonassisi: So when did you start making this pivot and where are we today? Who are you working with? How is it going? How is it impacted revenue?

00:10 – 00:21

Ryan Denehy: We had a huge, huge announcement recently with ADP largest payroll company in the world. They have a product ADP IT management, that is electric behind the scenes.

00:21 – 00:29

Sophie Buonassisi: Ryan Dennehy, founder and CEO of electric AI. Now two of your companies, Ryan, you sold them to public companies specifically, which is quite interesting.

00:29 – 00:33

Ryan Denehy: The reality is people buy companies. Companies don’t buy companies.

00:33 – 00:38

Sophie Buonassisi: I read this on your ex, but you had VC connections.

00:39 – 00:42

Ryan Denehy: I was making extreme sports videos. I had absolutely no connections.

00:42 – 01:05

Sophie Buonassisi: We need the details on electric because you just went through a really cool relaunch. Tell us about electric. Tell us about the relaunch.

01:05 – 01:08

Sophie Buonassisi: Ryan. Welcome to GTM now.

01:08 – 01:10

Ryan Denehy: Thanks for having me. It’s like to be here.

01:10 – 01:31

Sophie Buonassisi: Yes. Like to connect. And I mean Ryan, you found a multiple companies, sold them to public companies and currently lead the most recent one electric. We’ll cover lots of tips. Everything from selling companies, learnings from being a multi-time founder, and much more. But to start, we need the details on electric because you just went through a really cool relaunch.

01:31 – 01:33

Sophie Buonassisi: Tell us about electric. Tell us about the relaunch.

01:33 – 01:57

Ryan Denehy: Electric is my third venture back company, which makes me feel way older than I actually am. I’ll be 40 in October, but I’ve done this my entire my entire career. I like to tell people I’m unemployable, I think. But but yeah, it’s actually electric. Is the. Being the founder and CEO of electric is the one job I have had longer than any other job in my life, which is very, very proud of that.

01:57 – 02:17

Ryan Denehy: Started the company in we launched a company in 2017 here in New York City. And the vision then is pretty similar to what it is now. I wanted to come up with a way to automate it, support IT management for companies that didn’t have IT departments. When I was running my previous company in San Francisco, we had this problem.

02:17 – 02:39

Ryan Denehy: We were the customer. We went through, I think, 3 or 4 different local IT contractors. We paid them a fortune and could never find them, and we needed them. And I thought, this is the poster child for a problem that you can solve with software with with automation. So launch the company in 2017. Im very proud to say the AI has been in our name since the beginning.

02:39 – 03:04

Ryan Denehy: If you look at the filings in Delaware, electric AI Inc was registered, was registered in 2016, electric AI and yeah, but you know, classic case of being very, very early. Right. The pitch if you even go back to look at our seed round presentation, it was it was always, you know, use AI to build the most powerful automated IT management solution.

03:04 – 03:28

Ryan Denehy: But because the AI technology was not there in 2017, we did it kind of backwards. We built an IT services business, we wrapped it in software, and then we sold it like software. We were the first IT company to actually package up and sell IT management. IT services with a high velocity inside sales motion direct sales team. And that was that was hugely effective.

03:28 – 03:48

Ryan Denehy: So we kind of came up in a time sort of in the pre-COVID era where the classic triple, triple, double, double, double growth rate was considered top decile. Now that wouldn’t even get you a, you know, a meeting with a with with a VC. I think we we sent a million emails and made 100,000 cold calls or first year to get to the first million of RR.

03:48 – 04:11

Ryan Denehy: You know nothing about it, but it was great and then made the decision going into 2023 that the combination of software and services were beginning to be fundamentally at odds with one another, and that really started to become apparent once we got up to having thousands of customers and hundreds of employees. Also at a time where, if you remember, in 2023, the venture markets are pretty much frozen, IPO markets were pretty much frozen.

04:11 – 04:31

Ryan Denehy: And so we said, hey, if there was ever a time to rethink our business model, one of the best pieces of advice I got at the time was from from one of our investors, Jeff Richards at Notable Capital. He said, look, everyone is pulling back and and reevaluating their businesses. You have all the air cover in the world to do the same.

04:31 – 04:38

Ryan Denehy: It just so happened that what we were doing wasn’t just a little pullback, it was a wholesale rewrite of the whole company.

04:38 – 04:44

Sophie Buonassisi: Interesting. Okay, so when we say wholesale rewrite, what is that entail?

04:44 – 05:05

Ryan Denehy: What we did was we we got to this fork in the road where we said okay, we’ve got a great software. The underpinning of it is a big managed services organization. We have to pick a direction. Are we a software company or are we a services company? And when we looked at the market, what we realized was serving SMBs, middle market companies.

05:05 – 05:31

Ryan Denehy: What people wanted was automated solutions for IT management. They wanted easier and easier ways to buy and use their software. All points, all those things pointed to, we got to double down on the software and the automation. It also happened that by building one of the fastest growing IT services companies in America, we also had one of the largest and most modern, most relevant IT data sets in the world.

05:31 – 05:53

Ryan Denehy: And so if anybody was well positioned to, as we kind of entered the age of AI to take a really rich set of data and train models and build new software, it was us. It was kind of staring us right in the face. And it’s kind of one of those things where when you come to that conclusion, you’re like, oh my God, like the right answer has been under our nose for for years.

05:53 – 06:12

Ryan Denehy: And so what we did was we we split the business into two, separated the basically a team of people who were just going to work on the new software, just work on the new stuff. And then the kind of legacy it managed service business and all those customers, all of that. We just had a separate PNL and moved all the other employees over to there.

06:12 – 06:35

Ryan Denehy: And so we did that for for about 18 months. And then we ultimately made the conclusion, came to the conclusion that the best thing for the services business was to find a new owner who just wanted to invest and expand a services company. And then the best thing for us on the software side was just, you know, simplify, have one business to run and, and do that.

06:35 – 06:38

Ryan Denehy: And so that’s that’s ultimately where where we took the business.

06:38 – 07:01

Sophie Buonassisi: Love it. And I mean, the huge impetus for this that you shared previously was to relaunch AI native. Correct. Now curious about this because it’s almost now more than ever, it feels like software and services are converging. And a huge part of that is because of AI, native companies and just how they’re packaging the whole services, a software trend.

07:01 – 07:11

Sophie Buonassisi: And you’ve kind of gone the opposite way. What made you see that pattern and necessity to actually split the businesses, to go more AI native for anyone considering.

07:11 – 07:45

Ryan Denehy: Yeah. I’ll preface by saying there’s there’s no right answer. And like the best non-answer I can probably give is like, it depends. It’s highly situational, right? There are so many services businesses that today are going to be huge beneficiaries of all the efficiency and AI that you can introduce into a human powered business. For us, when we looked at it, what we realized was the market opportunity and what people really wanted and where there was the biggest gap in the market was a super powerful, fully automated, cost effective IT management solution.

07:45 – 08:05

Ryan Denehy: The services side of the equation. While there’s a lot of upside in making IT services business run better with AI, you know, we did the math on it and we just said like it’s a good not great business. And ultimately there’s two dozen other people doing that right now. And we would never willingly compete in a market that is already super crowded and saturated.

08:05 – 08:12

Ryan Denehy: We want to go compete in the market where the industry is headed and where we don’t have a ton of competition and where we have a unique advantage.

08:12 – 08:37

Sophie Buonassisi: Yeah, totally makes sense. So you relaunch as AI native, break the steps down for us, because I think a lot of people are trying to do the same, particularly I mean pre companies. There’s kind of two paths and it’s one you relaunch as AI native, just like you have just like other companies have successfully done, or you kind of get rolled up in general kind of the pre era because like you identified before the post, AI numbers look very different.

08:37 – 08:46

Sophie Buonassisi: And so the growth rate does the product evolve. So for anyone relaunching like what are the steps. What’s the playbook I’m asking you some very low to go.

08:46 – 09:14

Ryan Denehy: Yeah. No I mean the it’s going to be right because in our in our case we didn’t have a choice. It was we had to kind of go all in, burn the ships and fully commit, you know, fully commit to the new business. I actually think one of the disadvantages that some of the, you know, kind of like Covid era unicorns and just sort of like pre I, you know, B2B, SaaS companies, one of the challenges that a lot of them have is that the businesses are not terminally ill in the classic sense.

09:14 – 09:33

Ryan Denehy: Right? Like there’s definitely days where I would, you know, particularly throughout this transition where I probably would have told you I’d kill to be in that position. What I would say is, you know, for for the folks who are running companies where the existing business model is working, you still have to approach this with a level of urgency, as if it’s not.

09:33 – 09:52

Ryan Denehy: Because if you if you look look out there in the outside world, the days of Vista coming in and kind of buying your, you know, stalled out sub 100 million A or SaaS business for a real number. Those are kind of over are they over forever? I don’t know, but a lot of the traditional exits or recapitalization paths are are not there.

09:52 – 10:11

Ryan Denehy: And so if you’re lucky enough to have product market fit, you’re lucky enough to be an expert about what your your customers want. Now is definitely the time to get, if you haven’t already, to get really serious about what what a total reinvention looks like. And so to answer your question more directly, like what? What’s the playbook? I can tell you what what what what hours was.

10:11 – 10:36

Ryan Denehy: And you know, step one acknowledge you have a problem. That’s start. Start there. It would have been so easy for us in 2023 to sit there and pat ourselves on the back and say, wow, another huge year. We got plenty of cash. We’re number one in our category. You know, we we haven’t missed a quarter in ages. You know all of that.

10:36 – 10:55

Ryan Denehy: Fortunately we’ve got, you know, a smart team a really smart group of investors around the table. And we were like, hey, let’s like read the tea leaves here. This has worked really well. But from this point forward, this setup, this business model is not going to be what takes us the distance kind of in the next, you know, for the for the next go of it.

10:55 – 11:15

Ryan Denehy: So you know, acknowledging what the problem is and like what you’re trying to solve is, is often the hardest part. And so then the second one which, which again, I give a ton of credit to our team, is just deciding where you can win. You know, again, we realize that the IT market in the SMB in middle market segment was still not massively competitive.

11:15 – 11:34

Ryan Denehy: We had a huge data advantage. We knew the customer we had existing relationships with, you know, really important folks like Apple, who are very hard to establish new relationships with. Third was, you know, shore up the balance sheet, make sure that you can actually afford to commit to, you know, a big investment in an ambitious push into a new market.

11:34 – 11:54

Ryan Denehy: I would say the hardest days I’ve probably ever had running this company, or any company for that matter, or when we’ve had to let people go, you know, letting go of 60% of your company, that sucks. I don’t care. Like, you know, it’s the right thing to do. And, you know, ultimately it’s the best thing actually for everybody in the long run.

11:54 – 12:14

Ryan Denehy: But like anyone who tells you that that stuff’s easy, is is absolute lying to you or has no business running a company. So yeah, that I would probably put in the category of like necessary evil of doing these things. But but you just you have to, you know, and then kind of the last piece is like you just, you have to run like hell in the new direction.

12:14 – 12:37

Ryan Denehy: And I think even something that was challenging for me, something that was challenging for our team, is that the things that make your company work well at 50 million of or 100 million of a or even 10 million of RR, most of those are not behaviors that are going to make you successful. When you do a reset and you’re trying to bring an entirely new set of products to market.

12:37 – 12:56

Ryan Denehy: And I think we we maybe were overly confident that because we knew the market so well, you know, we weren’t we weren’t pivoting the market. We operated in the customer we sold to the problem we were solving. So I think there were definitely times where we we trivialized the task at hand because we’re like, hey, it’s not really a pivot.

12:56 – 13:08

Ryan Denehy: We’re just changing up sort of the product. Well, it’s like, okay, you’re completely rewriting the product and completely rewriting how you distribute it. Like that’s a pretty massive pivot, even if you’re not leaving the industry that you’re in.

13:08 – 13:12

Sophie Buonassisi: I think you use the term blow it all up. Earlier when we were chatting.

13:12 – 13:13

Ryan Denehy: Absolutely. What we did.

13:14 – 13:41

Sophie Buonassisi: Love it. I mean, okay, so we maybe for lack of a better term, but we blew the whole thing up because you identified and really early. Kudos to you for doing that early. We’re seeing now in 2026 the repercussions of companies that did not start early. And there’s kind of two well, I guess the recaps, those that did not pivot AI native, which are fewer and fewer, hopefully those that did it early and those that are currently doing it.

13:41 – 13:48

Sophie Buonassisi: And so you really see the stark difference in a matter of 2 or 3 years, depending on when a company took action.

13:48 – 14:12

Ryan Denehy: You know, maybe I’m showing my age a little bit, but like, you know, in the previous, you know, tech cycles, you had a lot of software companies that built their whole business on, on prem software, which like probably people listening to this that are like, what does that even mean? Yes, there were things that predated the cloud. You would buy software and run it on a server in your office or in your data center.

14:12 – 14:35

Ryan Denehy: What’s happening now with AI is is not dissimilar to the, you know, on prem, to cloud shift, but like orders of magnitude bigger in terms of the pace at which it’s moving and the implications that it has for businesses. And it’s just like an important thing for people to kind of understand, like this is, you know, you talk about kind of pivoting to to native.

14:35 – 14:58

Ryan Denehy: This is not about chasing some hype cycle. Right? Like this is not like, you know, some cornball thing like adding tokens or, you know, bitcoin to your business model, like comes and goes like this is like the world has changed again. I would probably even put it like in a similar camp is like the, you know, wide availability of broadband internet like literally changed everything and changed everything very quickly.

14:58 – 15:09

Ryan Denehy: It’s up there with that. So I think important thing if people listening to this like keep that in mind. Like this is not people chasing height. This is a generational shift in how technology is built and used and consumed.

15:09 – 15:34

Sophie Buonassisi: That’s a great, great call out. And now when we talk about making the shift because of that generational shift and large platform shift, you’ve done it. And so you took us through the steps. But when we zone in and actually say, okay, what did you change to make it AI native? I know you made big product changes, so maybe you help us identify what are the key things that changed and maybe even the byproducts of of changing things like the product.

15:34 – 15:37

Sophie Buonassisi: What does that do to actually the way you distribute and so forth?

15:37 – 16:01

Ryan Denehy: Yeah, well, distribution is is a great point because something that we spent a lot of time thinking about is the fact that product market fit has as much to do with finding the right distribution channel as it does with finding the right end customer, meaning many of the most successful products. The other success is much to identifying the right distribution channel as they do.

16:01 – 16:25

Ryan Denehy: Actually building the right widget for the right customer. And the inverse is also true. There have been countless amazing products built, but because they didn’t find the right distribution channel, you’ve never heard of them and the business has never succeeded. You know, like one one example I will often reference is, you know, consumer product Sirius XM Satellite Radio.

16:25 – 16:45

Ryan Denehy: That business only worked. It only worked because they went around and they paid car companies to install the thing, and they gave away a free trial. Anytime you bought a new car, the thing was just in there and you’d be like, wow, this is great. And then the trial would be up in 20% or whatever, some crazy tax rate they would, they would subscribe that business.

16:45 – 17:05

Ryan Denehy: Never in 1 million years would have worked if they had to go out one by one, acquire every single customer and get them to install this thing in their car. Never would have worked. We had a pretty big appreciation for because our our old products, where we were effectively replacing an IT department or, you know, replacing the need to hire IT staff.

17:05 – 17:37

Ryan Denehy: So this is a high priced product, but also very complex product, which meant we had to sell it with a direct sales motion where it could be a more concentrated sale, but it had a big price tag so we could afford to do it that way. Going to more of a of an AI native product suite meant that the actual unit price on what we were selling was way, way lower, which meant that the economics, even though the margins were higher, the economics didn’t support a direct sales motion, at least not one that we found would ever really get to a level of efficiency that would make sense.

17:37 – 18:14

Ryan Denehy: However, the instantaneous nature of the ability to implement and start using the product, the ease of use that didn’t necessitate the same size, you know, customer success team. All of that meant that we now had this wonderful world of channel sales, of product led growth that would have been completely impossible with the old product. So in in the same way that a new product may require a new distribution channel, a new product also may enable you to explore new distribution channels that weren’t possible at all with the prior product.

18:14 – 18:19

Sophie Buonassisi: Yeah, I mean, that’s super fascinating. I love the Sirius XM example.

18:19 – 18:47

Ryan Denehy: Absolutely. And I think the probably the thing that’s most jarring about the cycle we’re going through now with, with these native companies is the gap between the winners and losers is dramatic. You know, it used to be in, in B2B SaaS that you could have a bunch of players in a space and they, you know, you could have 4 or 5 people that were all kind of doing the same thing and could all build like pretty big businesses.

18:47 – 19:19

Ryan Denehy: What you’re finding now is the AI businesses, even vertical AI companies, your short circuiting a lot of the traditional bottlenecks in adoption of of new tools. And so what’s happening is it’s amplifying whatever the existing working go to market motion is if I can buy and implement your product in a matter of minutes rather than like, you know, ten years ago, a winning B2B SaaS company might still require that you have like a three month implementation with like a whole professional service.

19:19 – 19:33

Ryan Denehy: Yeah. And now that’s like completely unacceptable. I mean, I know we live in this age of like, the forward deployed engineer. The reality is, like most people do not want to spend three months deploying software. And so the company, some of the companies that are growing the fastest today is because you don’t have to spend three months deploying software.

19:33 – 19:53

Ryan Denehy: You don’t have to spend, you know, two months on endless calls with a bunch of enterprise ease. And so as a result, those who are finding a working, scalable, go to market motion quickly are able to to to grow so much faster than they ever could have before. Because all of the kind of pre and post sales bottlenecks are melting away.

19:53 – 20:14

Ryan Denehy: And then that means that there’s a lot less left over for the people who can’t catch up. And so, you know, a company that would have been in the last cycle, you know, you might have had $1 billion company leading the market and a couple of like, you know, 1 or $200 million companies over here. Now you’re just going to have like a $10 billion company who eats everything.

20:14 – 20:35

Sophie Buonassisi: Yeah, that’s an excellent point. The way we have pivoted product, the way we have pivoted distribution impacts, the way that you actually fundraising scale tremendously. And for yourself, you know, you meet these product changes, you shifted, you went all the way and went all in on AI native. Like, what did that do for your distribution and the way you go to market?

20:35 – 21:00

Ryan Denehy: It changed everything. You know, we my, my, my past two businesses went through a similar evolution of distribution where we would start with direct sales and then eventually find your way to a highly scalable, you know, partner led, kind of channel led distribution mechanism and basically what happened here. But it’s only because we had we have a product that can now support that.

21:00 – 21:22

Ryan Denehy: So we started getting requests from our customers even before we pivoted the business. They would say, the number one thing I want you to do is connect all the stuff I’m doing in electric to manage my it, connect it to my payroll system, because most of what I’m doing in it relates to hiring, firing, role changes, all that stuff.

21:23 – 21:43

Ryan Denehy: And so when we thought about rebuilding all these products from scratch, we thought about what would be a really natural distribution channel that would be complementary to things that the customer is already using. How can we how can we attach ourselves to systems that are already using in workflows that that they’re already engaging in, but that we can help make more efficient?

21:43 – 22:07

Ryan Denehy: And so we started started getting calls from different companies in the payroll space saying, hey, we’re looking at it. We’re seeing that companies like Rippling and in Deal are bundling and IT product with with their payroll and offerings. And so we said, you know what? That’s that’s an interesting channel to explore. And you know definitely took some time to get set up.

22:07 – 22:29

Ryan Denehy: But it’s one of those things where now that it’s working, it’s it’s magical because users are able to interact with our product right at the moment. They need it. When you’re hiring somebody and you’re setting up the new hire in your in your HR system, the time that you’re thinking about, hey, what software does the employee need? What computer day?

22:29 – 23:00

Ryan Denehy: It’s right then and there, the buttons right there. And then we can take you to a series of automated workflows where, you know, our software, our agents are running in the background and doing all these things. It normally would have taken hours and hours to do. So. I think the part that that for us, we get excited about where it’s such a home run is, it’s not just simply, hey, we found a skill distribution channel, but like it’s a distribution channel where it’s actually better for the customer and the user because we’re surfacing the product to the people who need it when they need it.

23:00 – 23:03

Sophie Buonassisi: And so that shift is going sales motion to channel sales.

23:03 – 23:29

Ryan Denehy: Yeah. Which was radical. And like I think it’s one of those things where if if we had known how challenging it was going to be to to build it from scratch. I mean, we probably we would have still done it, but I think we would have actually, I don’t know that it would have changed anything. I just I think knowing what we know now, as is often the case, you know, we, we do these things not because they are easy, but because we thought they were going to be easy.

23:29 – 23:30

Ryan Denehy: Right?

23:30 – 23:41

Sophie Buonassisi: 100% always. And channel sales is notoriously known to be incredibly beneficial in the long run, but also be kind of a slower process to build like we’ve had.

23:42 – 23:43

Ryan Denehy: Absolutely.

23:43 – 23:49

Sophie Buonassisi: Yeah. Reference like a three year timeline until you’re really seeing the fruit for all the fruit of your labor fruit.

23:49 – 24:19

Ryan Denehy: And it’s like, look, I’m not a historical. I’m not I’m not a technical founder, I my career has largely been defined by starting with things as a sales and a go to market problem. And I would say even even by my own standards, this has taken every ounce of my commercial being to bring it to life. So it’s definitely in the same way that if you were trying to solve a ridiculously complex technical problem like you would, you would need a very astute technical mind on it.

24:19 – 24:49

Ryan Denehy: Like, I have used just about every available brain cell to try to to try to figure this out. And so, yeah, it’s definitely the benefit that you have in good friend of mine, Dan Turan, who runs a VC fund called Gutter Capital Youth founder, managed by Q he he told me years ago when I was talking about some, some challenging aspects of our business, he was like, dude, if these things were as easy as connecting a few APIs, everybody would do it and it wouldn’t be special and like it wouldn’t be defensible.

24:49 – 25:07

Ryan Denehy: And so I think about that a lot through the lens of anything we’re doing that’s super challenging. For example, spending years wiring up a scalable, proprietary distribution channel. The benefit to that, in the long run is that it’s nearly impossible to replicate, and it’s highly defensible.

25:07 – 25:17

Sophie Buonassisi: Definitely. It’s always the unskilled things that that go far to or the things that take a long time. So when did you start making this pivot and where are we today? Who are you working with? How’s it going? How has it impacted revenue?

25:17 – 25:47

Ryan Denehy: 2024 was when we really started kind of rebuilding, rebuilding all the products. And then last year we basically had the products in market and kind of a semi semi-private beta and begun kicking off sort of these large scale pilots with a lot of our initial payroll partners. You got to imagine these are companies that have tens of thousands, hundreds of thousands, in some cases a million plus customers, and they’re handling very sensitive data.

25:47 – 26:07

Ryan Denehy: Everybody wants to use them as a distribution channel. So there are a couple challenging aspects of wiring all this up. One was the strategy wouldn’t work if we only landed 1 or 2 of these companies as a partner. Only really works if you can get like a lot of them. And like this is a market where there aren’t 20 or 30 people to partner with, there’s like a dozen.

26:07 – 26:32

Ryan Denehy: No. And so like, we had to we had to like run the table on at least half the market. In fact, I underappreciated when I started this, I just assumed that we would we would sign up everybody. So we had to do that and we had to we basically had to make it through, convince all of these companies that a you need to enter a new, an entirely new category B, you’re going to enter the new category, you’re going to do it soon, and you’re gonna do it with us and nobody else.

26:32 – 27:04

Ryan Denehy: And then and then three, the way that you’re going to do all this with us is going to fit within, like one of these prescribed motions, because we were like, this also isn’t going to work if we have to build completely different products and have completely different sales motions for every single partner that we’re working with. And so we basically spent the better part of a year and a half just trying to line up all of the conversations and all of the strategies in such a way where we could kind of get people to the same place at the same time, or at least enough of a, of a of a critical mass of them.

27:04 – 27:43

Ryan Denehy: Yeah. So we did that. And you know, the early results were, were really good. I mean, I think one of the first partnerships we launched, we, we onboarded more customers in one day than we did in our single biggest month ever with the old business. Wow. And it was like a huge, you know. And granted, the nature of what we were doing for them was was slightly different, but it was so telling as to the, the, the obvious benefits of going from tech enabled managed services to, you know, native AI and SaaS was like, wait, so we just we have 300 customers in a day, like that’s we can do that now.

27:43 – 28:06

Ryan Denehy: So yeah. And then we, you know, and so we as we, as we went on, we, you know, we staffed these teams up. We, you know, we added we added more and more people to really just support what we were doing with each partner. And effectively what we do is each partnership runs on its own PNL internally, and we’re keeping track of, you know, cackle TV, margin everything on a on a per partner basis.

28:06 – 28:29

Ryan Denehy: And then it all rolls up into sort of like writ large, you know, how does how does the business generate revenue. And so, yeah, we’re we’re psyched. We had a we had a huge, huge announcement recently with ADP, largest payroll company in the world. They have a product ADP IT management that’s electric. That is electric behind the scenes.

28:29 – 28:56

Ryan Denehy: And we’ve been just thrilled to partner with them. It’s amazing that a 75 year old company, with that level of market dominance, had the foresight to enter a category like it, put tons of people on it and really go all in. So we’re officially GA with them and 1700 sales reps out in the field selling the product. You know, as a as of July 1st, I’m not going to I’m not going to list off all of our partners.

28:56 – 29:17

Ryan Denehy: But like here in New York, partner that’s near dear to my heart just works. We were just works customer when we launched electric. You know huge fans of of them and their team. And so we just had a you know same deal. We’re fully GA fully embedded integration with them. So any just works customer you can access all this stuff right in the product.

29:17 – 29:29

Ryan Denehy: Try. Net is another one. You know they have a product now called tri net it. And we got a bunch more that we’ll be announcing soon. So it’s been a lot of fun.

29:29 – 29:58

Sophie Buonassisi: That’s a ton of fun. So you’re behind the scenes for a lot of incredibly well-known brands, and it took a lot of courage to get there. Like you said, all of I think you referenced all of your your commercial kind of might to get there. But what was the actual transition like? You know, I think every founder who has built something incredible and has made some really interesting pivots and adjustments to the market, like you have also have these stories almost the, if you will, near death experience.

29:58 – 29:58

Ryan Denehy: Sure. Yeah.

29:59 – 30:02

Sophie Buonassisi: I’m curious about yours, if you have any that you’re open to share.

30:02 – 30:26

Ryan Denehy: I mean, I almost killed the company before we started it like and and I say this because it’s like there is there is never a time like self-doubt is a totally normal thing. And like that, just like it’s it would be weird if you don’t doubt yourself at times. But like, I pulled the story a few times, but we I had raised our seed round.

30:26 – 30:48

Ryan Denehy: We had not launched the company yet, and I hadn’t really hired anybody yet. And there was one night where I was sitting at home thinking about all the ways that that the company wouldn’t work, and I’d pretty much convinced myself that it wouldn’t work. And then I spent about a half our thinking about the implications of wiring the money back to our investors, which I did not do.

30:48 – 31:17

Ryan Denehy: I’m very happy I did. Yeah. But, you know, I mean, you just managing your own psychology is probably one of the biggest parts of doing anything challenging being a founder, being being one of them. But like, I’ll give you I’ll give you a somewhat recent example. I mean, after we committed to the pivot and we had planned to spin off and sell our services business, and concurrently we were trying to land a number of big deals with these new distribution partners.

31:17 – 31:34

Ryan Denehy: Both of those things were taking longer than we had wanted, and it was like pretty important that we totally stick the landing on on, on, on both of them. But it was taken. It was just taken way too long. And I was on this flight into New York that gets diverted to Detroit, which was like super insulting to like, see the runway.

31:34 – 31:49

Ryan Denehy: And they’re like, just kidding, we’re going to Detroit. The airport’s closed. So I’m sitting in this like, just crappy hotel room next to the Detroit airport at 3:00 in the morning. I’ve got to be up in an hour and a half to, you know, for meeting in New York City that I have to fly to the next day.

31:49 – 32:06

Ryan Denehy: And my mind is racing, and I’m just thinking of all the ways that, you know, we’re just going to fly this thing this side of a mountain. I’m just like, oh my God. Like all the worst case scenarios like total, like mental tailspin. I think it was mostly the lack of sleep and the and the frustration from the flight.

32:06 – 32:26

Ryan Denehy: But like, you know, these things were just taking a while the next day and make it to New York City. We have a huge meeting with one of the first big partners that we signed. I go to the meeting and I’m thinking it’s just another corporate whatever meeting, to have a meeting with the gazillion people we got there, and these guys just knock our socks off.

32:26 – 32:43

Ryan Denehy: They’re like, we are all in. Here’s our research, here’s our rollout plan. Here are the teams we’re putting on it. Like like we’re good to go. And oh, by the way, here’s the legal team. We’re going to start working on the contract right now. So I’m like, I’m floored. I’m running. I’m literally an hour of sleep. And I’m just like, oh my God, it’s finally happening.

32:43 – 33:00

Ryan Denehy: And then I swear to you, literally, like, I don’t know, 15 minutes later, I’m in the back of this conference room, and I just glanced at my phone under the table. And it’s an it’s a DocuSign from Gunderson with the closing documents for the sale of the MSP.

33:00 – 33:01

Sophie Buonassisi: No way.

33:01 – 33:04

Ryan Denehy: I’m like, you can’t make this up.

33:04 – 33:06

Sophie Buonassisi: No.

33:06 – 33:26

Ryan Denehy: But as a founder, like those, in a weird way, those are kind of the days that you live for. Because then when when things get really slow, it stays like that to give you the motivation to keep pushing because you’re like when things get slow or when, when, when things get uncertain, put more work into it, put more effort into it, even though it feels like a grind.

33:26 – 33:33

Ryan Denehy: Because if you do that, what comes out the other side are these like incredible days like that where in one moment, basically everything changes.

33:33 – 33:52

Sophie Buonassisi: That’s incredible. I mean, what a story, what a day to. I’m sure that was just what you needed after one hour sleep to keep it going. Yeah. So no, no, you know, no shortage of of near-death stories. It sounds like whether it’s mental, whether it’s, you know, team, anything of the sort, but.

33:52 – 34:12

Ryan Denehy: Well, you know, I mean, with the team stuff that’s interesting though is and this one is important and I think a lot of people know this, but it sort of bears repeating. But when you have a bad hire, you know, you have like a senior person who is is not a good fit, the mis hires and that type of thing.

34:12 – 34:39

Ryan Denehy: They don’t seem like near-death experiences because it impacts your business very quietly, in very slowly over time. But when I think about things that have set us back the most or hurt the business the most, the years in any of my companies, it’s when you make a big, splashy hire and you wake up 6 or 8 months later and you zoom out and you go, oh my God, we have.

34:39 – 35:07

Ryan Denehy: We’ve gone absolutely nowhere. And this person has hired a ton of people who, you know, maybe are also not the right fit for the same reason. And so that’s that’s something where it’s a way less exciting story than, you know, closing a bunch of big deals right away and all of that. But like, I think any, any seasoned founder will tell you, like, those are the things that just like, under the hood can kind of cause the most damage.

35:07 – 35:19

Ryan Denehy: It’s like, hey, your business is a collection of people and it doesn’t take that many incorrect people decisions to, you know, really cause some problems. So yeah, that’s just something I think about fairly often.

35:20 – 35:48

Sophie Buonassisi: I bet. And I mean, it’s such a good point about the quietly too, because you often may not realize, but there’s that saying, what one bad apple if you, if you will, or bad actor can impact before electric. And maybe some of these experiences are from your past companies, but you founded two other companies. I’m curious what kind of learning do you have from those prior founding experiences that you either carried through to electric, or that you just overall just shout off the top of rooftops to founders?

35:48 – 36:16

Ryan Denehy: I mean, again, not having a technical background, all of my companies have have achieved some additional degree of success because of the focus we’ve always had on the go to market side of the equation. I mean, at the end of the day, you do need a great product. But as we talked about in the beginning of this conversation, a great product without the right distribution channel is of little use to a lot of people.

36:16 – 36:39

Ryan Denehy: There are absolutely plenty of cases where a product is so good and so unbelievable that it can make up for a lot of other things not being the way they should be. That’s that’s hyper rare. And you can’t you can’t bank on that. I mean, you even think about one of the stories that was was told to me when years ago, when when slack invested in our company.

36:39 – 36:59

Ryan Denehy: You know, one of the early stories about how how, you know, Stuart in the early team at slack actually got people using the slack product was like actually going around and just like haranguing CTOs at SF software companies being like, dude, install this. Start using it. So, you know, even great products like early on, you’ve got to kind of force your way into the market.

36:59 – 37:22

Ryan Denehy: I mean, my last company, it was a retail analytics business, so we had a device that would make it easy for retailers to measure foot traffic going into in and out of a retail store, and then they could pull in their point of sale date. So it’s kind of like Google Analytics for a physical store, right? We didn’t know how to sell it early on, and we needed to talk to customers.

37:22 – 37:47

Ryan Denehy: And my my co-founder and I were living in LA at the time. So like we had an intern in the intern, just like drove me around Los Angeles for like weeks and I would just go door to door talking to anybody who would listen. And like, the reality is, not only would most people not want to listen, but I found that there is a level of contempt that human beings have for door to door salespeople that is nearly unmatched in society.

37:47 – 37:48

Sophie Buonassisi: Not wrong.

37:48 – 38:07

Ryan Denehy: We were we were just run out of places. But I think my but my you know, my my my point in that is and I’ve taken this with, with every company that I’ve had is like, you just you have to get out there and just be relentless and knock down doors, and you have to do it with a level of discomfort.

38:07 – 38:18

Ryan Denehy: And it also just like do it at a volume where every single day, mathematically, you’re increasing your chances of success purely by the number of swings you’re taking every day.

38:18 – 38:39

Sophie Buonassisi: Now, two of your companies, right? And you sold them to public companies specifically, which is quite interesting because, I mean, a lot of founders aspire to sell their company overall, but public companies is like another kind of unique not to understand how to crack for anyone who wants to sell their company and are looking at public companies as a prospective buyer and acquirer.

38:39 – 38:43

Sophie Buonassisi: Like, what are some of the tips you have around public companies specifically?

38:43 – 39:03

Ryan Denehy: Yeah, I mean, I was in our case, I mean, both of them kind of came about, you know, less by design. That being said, one of the biggest patterns I’ve noticed, particularly once I got to those public companies and saw how they made acquisitions, it’s very rare that like, you’re just going to get somebody coming in off the street being like, hey, we heard what you’re doing.

39:03 – 39:29

Ryan Denehy: And like, we want to buy your company. The reality is people buy companies. Companies don’t buy companies, right? And even more to that point is that corp dev departments are not the ones driving the transaction. It’s usually a GM or an SVP or a Pal owner somewhere inside of a big public company who is saying, I’ve got a problem to solve.

39:29 – 39:49

Ryan Denehy: I either I have a market I want to enter, I have a missing part of my product roadmap I have. I have some challenging problem that I need to go solve, and I’ve determined that I can’t build it and I can’t partner my way out of it. Therefore, I’ve got to go find someone to buy to complete the picture.

39:49 – 40:10

Ryan Denehy: And that can range from, you know, a little aqua higher right where you’ve got, you know, an engineering team is like, we need a, you know, expert in whatever. Let’s just go find a company, acquire all the way on up to a company the size of SAP, saying we have an entirely new category we want to enter. We’re going to spend billions of dollars on a, on a standalone business to to go to go fill that out.

40:10 – 40:41

Ryan Denehy: Everything in between. You know, in our case, my, you know, the first company, we were an online ad network in the sports category. And USA today, at the time the nation’s largest newspaper, they were confronting the transition from print to digital. And they were like, we need, you know, we need some companies that we can that we can acquire, like cheaply, that can help us enter the digital advertising and digital publishing space.

40:41 – 41:05

Ryan Denehy: And, you know, we to our benefit like hadn’t raised a lot of money. We were growing pretty fast, you know. And you know, it just it it kind of worked when my previous company we sold it to to to group on similar sort of thing like they, they had actually made a shopping list and said, we’re building out an SMB facing suite of software.

41:05 – 41:25

Ryan Denehy: And there’s a couple key categories we’re missing. So we need to go into those categories and figure out if there’s somebody we can acquire at the right price. Generally, though, it doesn’t work that way. Again, like there’s a founder, you can’t sit around hoping that a corp dev department is going to reach out to you. Because here’s the thing corp dev departments will reach out to you, but that’s their job.

41:25 – 41:42

Ryan Denehy: That does not mean that they want to invest or they want to buy you in the same way that one thing I coach founders on all the time is that a VC reaching out to you, wanting to learn more about your company does not mean they are interested in investing. They’re simply doing their job to talk to every single company on earth.

41:42 – 42:02

Ryan Denehy: You know, the best way to do these things is if you have a reason to engage with a large public company for commercial purposes, not for M&A, but for commercial purposes, because you think that there’s a great, you know, sales or distribution opportunity, you think there’s a great product integration opportunity. You should go do that, but only do it on its own merit.

42:02 – 42:27

Ryan Denehy: And that is a phenomenal way to develop a relationship with a company who then at some point, if the relationship is successful enough, may decide that it makes more sense for you guys to come together more strategically. But I think the best thing for for founders to do is, is develop relationships with larger companies where there’s a very accretive commercial relationship to be had.

42:27 – 42:43

Ryan Denehy: And yeah, look, at some point it could turn into something more strategic. But you definitely don’t want to be burning cycles unless you absolutely have to. You don’t want to be burning cycles. You know, trying to gin up like likely acquires again unless you are. Absolutely, you know, in a situation where you need to.

42:43 – 43:02

Sophie Buonassisi: Totally makes sense. I’ve heard a very similar thing echoed before around try and find some kind of commercial relationship. Integration is a natural one, and that way it’s almost like a date before you marry situation to you can you and attract that interest? That’s fantastic vice. Thank you for sharing that. And Ryan, take us back to about 18 years ago.

43:02 – 43:06

Sophie Buonassisi: I read this on your ex, but you had VC connections.

43:06 – 43:10

Ryan Denehy: Yeah, I mean I yeah, I was making.

43:10 – 43:11

Sophie Buonassisi: Check with that.

43:12 – 43:36

Ryan Denehy: I was making extreme sports videos. I had absolutely no, no connections. But everything I learned doing that are still skills that I, that, that I use today. When I was 17 years old and wanted to make extreme sports videos, I really thought I could make some cool mountain bike videos. I just started cold emailing professional athletes saying that I wanted to, you know, film with them.

43:36 – 44:05

Ryan Denehy: And I had a cool idea for, for, for video. And then I went to Barnes and Noble. I bought a copy of Bike Magazine. I ripped out every full page ad in the magazine, and my perspective was, if they can afford a full page ad in Bike Magazine, they probably have a marketing budget. They probably have a marketing department, set sponsorship proposals to 50 of those companies, got five of them to give me some amount of money to buy plane tickets to fly around the world and make this thing, and we sold 5000 copies of the movie.

44:05 – 44:08

Sophie Buonassisi: So that’s amazing.

44:08 – 44:26

Ryan Denehy: And so like, that is the framework that to this day, I mean, even when we were when we were going out and trying to stand up this new distribution strategy, I knew nobody in the payroll space. I was still thinking back to sitting in my bedroom at my parents house in high school, you know, cold emailing marketing departments at bike companies.

44:26 – 44:39

Ryan Denehy: It’s it’s the same stuff. Just you just got to get out there and talk to you as many people as you can. And now, now more than ever, people are more accessible. And I also feel like at least intact people are very willing to help.

44:39 – 44:47

Sophie Buonassisi: Yeah, people definitely want to help I love that. What an incredible story. Well, Ryan, this has been fantastic. People want to follow along with you with electric work. Can they find.

44:47 – 45:10

Ryan Denehy: You electric dot AI? That’s the easiest place to find us. And on any of these social platforms where you might want to go look up a business electric AI, very easy to find. And then myself personally, I am back on Twitter. The algos have decided they like me again at Dennehy XXL on Twitter. So or X whatever.

45:10 – 45:15

Sophie Buonassisi: Amazing. Those will all be in the show notes. Ryan, thank you so much for joining us on GTM now.

45:15 – 45:16

Ryan Denehy: Thanks so much for having me.

Sophie Buonassisi

Sophie Buonassisi is the SVP of Marketing at media company GTMnow and its venture firm, GTMfund. She oversees all aspects of media, marketing, and community engagement. Sophie leads the GTMnow editorial team, producing content exploring the behind the scenes on the go-to-market strategies responsible for companies’ growth. GTMnow highlights the strategies, along with the stories from the top 1% of GTM executives, VCs, and founders behind the strategies and companies.