Why $300B of SaaS Revenue Is Trapped & How the $19.9T AI Agent Economy Unlocks It

I remember I talked to EQT and over one conversation they said, yeah, is something that we wanna do. They closed the doors and a turn sheet came out on the other end. You know, when we got money from Sequoia, I called Pat Grady and he said, call me when you land. And when we landed, said, yeah, this needs to exist. Let's talk.

We have a strong founder DNA. We are very high agency kind of company. When somebody joins, they are given a problem space to work into, and it's up to them to go figure out what to build. We still have to build the engine of growth for all the AI agent companies born right now and to be born.

Manny, welcome to Sorcery.

Thank you for having me.

Thank you for having me in London. Know. Yeah, is pretty great. This is an awesome space. How did you find this?

Thank you. We were homeless for a while and going from WeWork to WeWork and we needed a place. This place was just being built and my wife found it and she talked the guy who was mining the construction site into letting her check it out. And then she sent me photos and she said, I find your spot. And then we all moved in.

That was it.

And you're right next to Kings Cross and DeepMind and Facebook.

A 100%. They are inspired by the work we're doing.

What brought you to start paid after scaling Outreach to $4,400,000,000

Well, I've had a problem scaling my AI agent business at Outreach that the market hasn't solved. So if you look at all the monetization out there, it's built for what we had ten years ago. So there you either have seat based solutions or you have metering solutions that force you to meter the same thing over and over. Agents perform work. Agents deliver real outcomes.

Agents replace, you know, some of the human labor that we're seeing right now. And there was no solution for understanding what the agent is doing, helping you monetizing that and then watching your agent cost. So, you know, now we're finally coming out that agents are running on 30 to 40% gross margins, sometimes even lower, but when you have a business that is running on lower margins, you need to capture more revenue to ensure that you have a viable business. So there was no system for you to manage the entirety of the business and the entirety of the growth of an agentic company. So we set out to build that.

We set out to build the engine of growth for all the AI agent companies born right now and to be born tomorrow.

And why London? Why not Silicon Valley? I know you were in Seattle.

I was in Seattle, I was in Seattle. I think London is a cheat. I think London was what Seattle was ten years ago where nobody is thinking about building in London. So you have access to some of the top talented engineers in the planet. Just think about this.

So London has 12,000,000 people compared to Seattle that has barely a million and a half and San Francisco barely makes a million. Here you have 12,000,000. So like the likelihood of you finding great people is super high. Number two, immigration laws are easier so you can get people from Germany or Spain or whatever to just come work for you here. And number three, you have four top computer science schools in the planet, like right here in London or like in the area.

So I think it's telling wise, think it's unbeatable. We raised $21,000,000.

$21,000,000 to date?

Sorry. What was that? 31,000,000. 31,000,000. 31 Let's

just keep upping it.

How many? $31,000,000. 50. Is that? Oh, maybe it's just fine.

Exactly. We're in the bubble again. Let's go.

That's amazing. So what was the process for funding like in this new go around and who did you raise from?

It was a lot easier. I think I think for a second time job. I know. Yeah. Well, I raised almost $400,000,000 for my last company.

So, like, you know, when I was racing 10 or 11, it was kind of adorable. Like, I don't even remember last time I raised 10 or $11,000,000 I used to negotiate around 10 or $11,000,000 when it's a $100,000,000 round. So like, it was weird, to be frank, for me to raise that little of cash. But on the other hand, like, we don't need that much cash to get started and, you know, we're proving a lot of things. So it was fairly straightforward.

Just called a couple of people. I remember I talked to EQT and over one conversation they said, this is something that we want to do. They closed the doors and a term sheet came out on the other end. You know, when we got money from Sequoia, I called Pat Grady on my way back from Spain and he said, Call me when you land. And when we landed he's like, Yeah, this needs to exist, let's talk.

So like it was a lot faster, you know, based on my own conviction and based on what the market needs.

Yeah, and we got introduced by GTM Fund.

Max was my first call. Really? When I had the idea, yep.

Why?

Because Max is a very talented guy to know what's hot and what's not. And I needed to know the zeitgeist. You see what I mean? Like, I in the zeitgeist or am I out of the zeitgeist? Because I've been running a company for almost fifteen years and I haven't been out and about, talking like to VCs, trying to fundraise.

So I wanted to know, like I had this problem in my head that I had an outreach of like, how do I monetize agents and how do I manage the agentic business? And I was like, well, I'm thinking of building this. This is how I'm thinking of building. Do you think that people will be interested in it? I mean, the market is not quite there yet, but I believe the market will be.

And he's like, yeah, this is hot. And so we talked a little bit about like how we would build it. But yeah, he he's a friend and he used to work for me about his company. So we go way back. But I that is his his superpower, discerning hot versus not hot.

Yeah. And I watched this interview you did with Pat from Sequoia.

Yeah.

Yeah. What was that like for you, like working with them?

Well, I already worked with them at Outreach. Yeah. And we took money on the growth round and then they, you know, they were contestors for my C round. I got to know Pat, and I got to know Matt Miller, a bunch of people from the team. I got to meet Doug Leone, which is, it's kinda like meeting God a little I mean, such a legend, you know?

So I already knew the team and I already knew they were high quality individuals. So this is why he was one of the first calls.

Can you just break down the state of agents? Like, where are we? Because it is brand new territory.

A 100%. You're building

something that's pretty I mean, it's pretty advanced. Like, you're you're doing something that is in the infrastructure layer, essentially. Yeah. So could you just break this down and why you got that much conviction for it?

A lot is said about founders living the future and that you strive to bring it forward. I felt like I went to the future of work and I saw a world where, you know, half the employees are are agentic, you know, agentic beings, if you would. And, you know how do I make that future forward is has been my obsession since you know that idea came to my head. And right now we're in the early stages right like we don't like most people argue about what is an agent what isn't an agent. And but we also seen how you know the process of like you know we had agents that were fairly deterministic you know entities that will do one thing and then do the next and do the next and do the next and close the ticket down to like you know identity architectures where you have like a brain that calls tools and is very independent, you know, high autonomy, high attribution kind of work.

So I feel like if you look at the speed by which LLMs are advancing, you know, architecture of engines is not even catching up yet to the state of the art of LLM. And the state of the art of LLM's continue to get better. So I feel like we're going to be in this state for a while in which agents are just going to get smarter, they're to do more work, they're going to be able to survive more pilots, more companies are going to be born in the agentic world. If you look at the customer support alone has like five strong competitors that are all vying for the same business and they're all growing. So everywhere we're seeing agents being born and being built are in the same state.

They're all growing, they're all growing fast. There's like on bottomless demand for work that they do. Then it's mostly because, you know, they are doing real work. They're replacing real labor. They're, you know, avoiding you high, know, getting more headcount on.

So like it's, they're producing real benefits and real ROI, tangible ROI.

Where are you seeing the top use case for AI agents?

For anything that is sort of like rote work that is semi repetitive with some amount of imagination, AI agents are sticking and landing super well. So customer service, but not like customer service in terms of like reset my password or like how do I do x or do a y. They're resolving more complex problems. They're trying to figure out whether you think it's a warranty or not and upselling you something if it's not. We're seeing mortgages being created by agents.

We're seeing car dealers, you know, run by agents. We're seeing, you know, HR system, compensation systems that's starting to be run by agents. So they're they're just everywhere. And you're seeing a lot of green shoots. Like, we're in the world of green shoots right now.

And we you know, a lot of our customers are relatively early. And just like Stripe in the early days, a lot a lot of our customers haven't been born yet. So we're selling for the customers of the

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To learn more, visit turing.com/sorcery, spelled sourcery. That's turing.com/sorcery. So where does paid get in?

We get in in two places. We either get in so we're building a Salesforce product and we wanna get in as early as somebody has an idea. So if somebody has a weekend project, like Global, for instance, you've had a weekend project that they want to make sure that they get paid for, you know, you implement this cheap and cheering off you go. Or there's $300,000,000,000 of SaaS TAM out there that needs to move to agents. Like, we firmly believe the seed model is dead, and SaaS companies gotta move from seed model to agents.

And we're also building for them. Like we're trying to rescue SaaS out of like that cliff they're about to run into into back to growth so they can start selling agents. So those are our two models. Either we sell to them and we do, you know, we do a lot of consulting for them too, or it's free, cheap and cheery, go for it and high adoption.

Who are your customers so far?

So we have about 40 customers. We're super early, but the early ones are, we have about 80% of them in startups in terms of count of numbers. In terms of kind of revenue, the majority of revenue comes from like SaaS companies moving to moving to agents.

And then I'm curious, so Sorcery is sponsored by Brex and they're all about performance, spending smarter, moving faster. As you approach this new business in the AI era, how do you think about the balance, the trade off between spending on growth efficiencies? Like how are you feeling between that?

I already built a company that I made all the mistakes that I could put up made in the book. And one of the biggest mistakes people made or one misconception misconception people have is that you can grow out of inefficiencies. I think inefficiencies are set in stone in your DNA from the very beginning. So you if you're not efficient on how you build and how you spend your money and how you acquire customers from the go, you can scale into a massive exit. So for us, is something that we think a lot about in terms of efficiency of customer acquisition.

So for instance, right now it's just me and my co founder doing all the selling. Why? Because I wanna make sure that we have the playbook super aligned and super tight and it's repeatable where we can bring in one seller, two sellers, 20 sellers, a 100 sellers without having to reinvent the playbook or, you know, spend a lot of time sitting on sellers who are not getting productive. The same thing with self serve. We want to make sure that self serve is ready before we scale so that self serve, you know, is an engine of growth as opposed to we having to go hunt every single deal out there.

So efficiency in our mind is has to be baked in and and it's not because, you know, we don't have the cash, it's more because I've seen it that it doesn't scale. Like it it you you don't become efficient over time, you stay the way you that you started.

What's your go to market approach?

Right now, we cold call.

Cold call?

Cold call and sell.

You're not using agents for that?

We don't we don't have the capacity to take out ton of customers. We're only 14 people. So, like, we're, you know, making a list and cold calling.

What's the onboarding process like for them? How are you testing and implementing?

Before I answer that question, so we qualify them by saying, is agents a high priority item roadmap and your go to market and your strategy? If it's not, yes. If it's not like one or priority one or priority two, we hang up. We're like, thank you, know, we'll send you some material, but this is not, you're not the right fit. Once it's priority one, priority two, then we immediately engage with the CRO and the CTO.

Because two problems happens in SaaS, especially scale SaaS, is that the CTO is the one building the agents and the one that is understanding the technology behind it, but the Sears are the one who has to make money on them. So they have to understand how are they gonna sell that agent, what kind of value they're gonna capture because it's not the same proceed. So on a proceed basis you can go and count how many people you have and moondas your revenue. In agents you can count how many open headcount you have. In agents you can count what is your BPO contract that you're gonna cut in half so that you can pay your agents.

And in agents you can count how many resolutions do you wanna get or how many, how much of your stack you wanna consolidate. So there's all these other pockets of value that you can extract from when you're selling agents that go to market organizations don't understand. So like we spend quite a bit of time educating them of like, look, your contract used to be 50 because it used to be 50 seats. Your But contracts could be 500 ks because you're dipping into the headcount budget pool as opposed to the IT budget pool. So that reeducation we help with and we help make sure that the agent is instrumented in such a way that you can capture all the value and they can show the value to the customer.

So it's it's a little bit heavy in the in the consultancy in terms of like professional services. But when when when customers implement with us, they know they're gonna get a win.

This is like one of the hotly like most hot contested topics right now. But a lot of people want to know what's going to happen to the workforce and what's going happen to head counts. Like, what do you think is going to happen as you've become super ingrained and like understanding the exposure of AI agents and their impact on headcount?

I think you're gonna see a lot less backfill of the traditional open roles. I think like every single role is gonna be redefined to operate with agents. I think there's gonna be a whole category of jobs that are gonna go away and a whole category of jobs that are gonna be created. But I'm also excited that a whole new category of entrepreneurs are gonna be created. I will love to live in a world where capitalism wins and you don't need billionaires, but you have a lot of millionaires.

We have a lot of 100 thousandaires. You know, you don't have to, you know, go grind it in college or, like, follow a career path when you can, you know, just build an agent and go sell it and just create your own business and own your own destiny.

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Full disclosures in the description. How do you think about that with building your company out? We talked about talent a little bit in the beginning before we started. But how do you think about recruiting and getting people in that are maybe more AI native or like how you think the company will expand?

Yeah, so for us, I think you and I were talking about like how Palantir builds because we have a strong Palantir DNA. It has a little bit of the same sort of like ethos in that we are very high agency kind of company. So when somebody joins, they're given a problem space to work into and it's up to them to go figure out what to build. And the easiest way to figure out what to build is to go get forward deployed and talk to a customer, find out what is that they need and build that. Chances are you're gonna be correct because if there's one person out there that needs it, there's gonna be a lot more who need it.

So like, there's a lot of like bad advice out there who's like, don't build things for one customer because you may not find others. If there is one, chances are there's two. You see what I mean? And you're gonna be less wrong than not talking to a customer. You see I mean?

So like there is a lot of that here in that, you know, a lot of everyone here is is somewhat an AI native. Like, we don't have to teach them how to use cursor or clock code. They immediately just pick it up and go. And, you know, we we feel like the iterative nature of using AI, it just helps with the speed.

Lastly, what are you most looking forward to in the next twelve months?

I'm excited for our self-service launch. We are still in soft launch. So, you know, we're putting a little bit of people through the pipeline. There's a lot to iron out in terms of like people getting through it. I am I am super excited about, you know, I was I just got out of a meeting with the CEO of one of the largest private equity firms.

And I'm telling him what pay does. And he's like, look, man, I'm deploying agents in all my holding companies and they're shit, they're not working, I'm not getting the return, all I hear is complaints, the numbers are wrong and blah blah blah blah. It's early days, right, like so that we're getting through all the hard miles of like ironing out the issues of you know hallucination and bad you know tests and all these other things. I'm excited for a world in which this becomes more the norm as opposed to the exception. Right now we're treating identity deployments as the exception just to see if it works.

In one or two years it's gonna be more than norm and it's gonna be more like, you know, what kind of agent are you and what is your performance? I can't wait for that.

Agents are gonna take over the world?

Pretty much. It's gonna be great.

It's gonna be great. Yeah. Thank you, Manny. Thank you. Hey.

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