Conference Transcript - KVYO 2026-05-28

Speaker 2

Great. Thank you, everybody. Good morning. Appreciate you joining. So with us, we have Ed Hallin, the co-founder of Klaviyo. And Ed, one, thank you for your time today. It's great to have you here, too. Just since I think we've had less exposure to you, maybe less interfacing, we'd love to maybe understand your background, what your role at Klaviyo is, and then we'll dive into some questions about the company.

Ed Hallen, Other

So Ed Hallin co-founded Klaviyo in 2012 for the first about five years of the business. We were co-CEOs. We'd both come out of product engineering at a company that was kind of a key part in the formation of what ultimately led to Klaviyo. But I'd been an engineer, been on the product side, had ultimately, at this startup we worked at, also kind of opened to their European presence. And so over time, I've done a ton of jobs across the company. Most recently was chief product officer, chief marketing officer, currently the chief strategy officer, which really means stretching across the business with probably a spike on the product engineering side.

Speaker 2

Gotcha. And then, you know, look, I'm happy to have you here because we're going through this transformative era in software and technology more broadly. So I'd love to, you know, given the different hats you've worn at the company, how are you thinking from a product and strategy perspective on what the company needs to do to embrace this new AI world that we're in? And what are the key focus areas right now for Klaviyo from that perspective?

Ed Hallen, Other

Yeah, so I think really from our perspective, it's, you know, this age is kind of the most exciting tailwind. And so when we started Klaviyo, before Klaviyo, we'd met at a company called Applied Predictive Technologies where we were early but junior employees. And fundamentally where we spent our time was building large-scale customer sources of record for people like Walmart, Bank of America, kind of very large organizations where we pulled together all of their data and then the sales, inventory, staffing in the stores, kind of like everything possible into a single system. singular customer view, and then enabled these organizations to run effectively large-scale analytics across it. So when we started Klaviyo, the basic idea was like, hey, if you look at all the different software categories that exist, at the time, largely they existed separately from data. So what if we built these customer sources of record for businesses of all sizes and all types? And through a set of kind of twists and turns, ended up saying, okay, we knew we were going to bootstrap. So the best way to go to market was actually somehow take that customer source of record and provide a way to drive outcomes atop it. So we stuck marketing atop that. And then of our first 10, 20 customers, looked at them and said, okay, we know we have to focus. We don't have infinite resources. And that's when we said, okay, hey, three of the 10 are e-commerce, leaned in hard to e-commerce. So through that lens, kind of the way we've always thought about ourselves in the platform is, you know, what's differentiated is this data platform underneath and our ability to provide that infrastructure in a way that makes it very usable in a very low-latency fashion, and then the ability to, as our customers take marketing actions, to understand exactly what happened, so a number that we call KAV, and then over time to add intelligence. So the more consumer profiles we have, the more company data, the more outcome variables that we have, the more we can understand, hey, when we do X, Y actually happens. So for many years, I think we've been thinking about ways that, okay, it's not just humans providing the intelligence atop our platform, but it's also AI or machine learning or other tools atop that. And so in the world of LLMs, it's really just another set of tools atop that infrastructure, both the data infrastructure, but also then the customer sending compliance and other infrastructure. So it really couldn't be more exciting. And what we've seen is kind of it's yet another way for our customers to drive more dollars of revenue using the infrastructure that we provide.

Speaker 2

So I think that's an important point where, you know, when we get asked the question about what the future of the application tech stack looks like, that there's a set of companies that are, in a way, the infrastructure of something, even if they're an infrastructure provider, per se. So as you think about that, you think about the argument that sometimes gets made that while the value may go into the agent or into the LLM, can you help us understand what the moat is for Klaviyo where it will continue to be actually the most relevant layer even as agents are built on top of it? I think double-clicking on that would be very helpful.

Ed Hallen, Other

So our end customers are effectively optimizing for their own growth. And the reason they rely on us, one, is it brings together, you know, all of their different data, you know, everything historically, but also we're pulling in, you know, 4 billion data points every single day across, you know, nearly every consumer profile in the United States, as well as, you know, a massive number globally. And then coupled with that, leveraging the infrastructure to understand, okay, who can we message and when, what happens when we've messaged this person or this type of people in the past, what are all the affinities for different types of messages, and a completely kind of unique set of data that exists atop that, but also then a set of pipes, things like deliverability that we've invested in for a very, very long time to actually drive outcomes from these customers. So what we see effectively our customers doing is they add in things like LMN as they use some of our new AI products, is effectively they're driving higher actual growth in their own business. And so it effectively lets them do more, but they're still taking advantage of the same underlying data, and they're taking advantage of the same underlying infrastructure, too, to provide the sending, but at a much faster pace, and they're doing more in ways they couldn't otherwise. So one thing we've seen is we've leaned into our MCP, and we've seen that actually customers who, you know, use the MCP heavily drive 16% more dollars of growth out of the product. And what we tend to see is it's not replacing usage of our product. It's actually they're running the MCP atop it. They're running, you know, our existing tools. They're also running some existing, you know, some of our other AI products atop, and kind of collectively it leads to more value for the customer.

Speaker 2

So I do want to pull on that thread, mentioning the MCP. I know that you rolled out the cloud integration recently, and that allows prompt-driven marketing workflows. But what are the puts and takes of opening up Klaviyo's data to external AI platforms, whether that's OpenAI, Anthropic, or others? I don't know if you're working with open source LLM providers as well. How do you balance that as a benefit versus the potential perceived risk around it?

Ed Hallen, Other

Yeah, I mean, I think first, philosophically, the way we think about it and what we've seen play out is the more that we enable our customers to use our platform, the more value we see them generate. And this is played on that, you know, seeing people who adopt the MCP actually drive that 16 percent higher KAB, kind of our Klaviyo attributed value. So we've seen that be true. And when we dive into the usage of exactly what people are doing is we tend to see that it's opening up Klaviyo to different personas and different use cases. And so that might be somebody in a different role in the team doing more analysis atop Klaviyo where they're pulling in both some of our customers' specific data and then also data across other tools. It might be that they're using it to quickly interact and set something up very quickly. But then we also see that it's not changing how much people are logging into the tool. And we're also seeing that as we launch new products, so we have a product called Composer in beta, which is effectively kind of the next-gen evolution of our marketing agent. And so it's a kind of end-to-end, effectively intelligent coworker that sits side-by-side with our users. And so they can do things like say, hey, I want to drive this outcome. What's the campaign I should build? And then this will actually go and provide that intelligence, build the campaign, set up all the content. Afterwards, it can go and say, hey, I want to understand, am I sending all the right emails, all the right SMSs, all the right WhatsApp, audit everything and figure out where there's additional opportunities, kind of that sort of intelligence. And built atop both our unique data and everything we have, but also, you know, highly leveraging the models. What we see is that opening the platform up is kind of additional usage atop these other things and just additional value. So I think the way we think about it is, you know, in the world where whoever's acting atop this customer source of record and atop this infrastructure, enabling them to do more and drive more growth, it's just a different portal and lens into doing that that we expect to only grow over time.

Speaker 2

so you mentioned composer and i want to understand more about how i know you mentioned an example of you can launch a marketing campaign or what type of campaign should i launch but what are the most common use cases of composer right because essentially it feels like a digital twin for a marketer right and so what are you observing and and how are they how are customers feeding back value in terms of the value that they're achieving out of composer to you

Ed Hallen, Other

yeah so you know when we tangibly think about how people drive value out of our um out of our product it's you know uh identifying a set of customers or a set of behaviors and then reaching out to those customers or changing their experience and now that could be outbound messaging things like email and sms and whatsapp it could be web personalization it could be you know more and more people using our service offering and our customer agent to actually change how they're they're interacting so so that's you know generally how um they drive value with our product now if you if we interview all the marketers user platform there tends to be no shortage of ideas and there tends to be things that they know are they probably should be doing sets of customers they should be treating differently uh where they're not and they're not because historically they just don't have the the human time and bandwidth to go and set that up but um what we see with composer is that they can actually do way more things way more quickly and kind of take the, you know, where previously they may have had a, you know, larger set of customers who they all treated the same. They can even further subdivide to personalize against those customers and to truly personalize those journeys across it. So we see that that's a very common use case where it's, you know, effectively, you know, giving these human superpowers where they can be two, three times as productive as they would have been the second uh very common and kind of very valuable use case we see is effectively understanding hey um based on a much broader purview of what people are doing am i doing the right things are there you know key ideas that i haven't thought of for my brand are there things uh that are sub-optimized because i you know have set them up one way but if i kind of take advantage of best practices they could be set up a different way And so we see that it's pretty common to go in and kind of continually tweak what they're doing currently to understand new opportunities or kind of missed opportunities as well.

Speaker 2

Great. You mentioned customer agent, and I know that's a part of the new service offering. You entered that vertical only last year. How does service fit naturally into the overall core marketing function, or why does it pair well with it? And how is adoption trended versus maybe your initial expectations?

Ed Hallen, Other

Yeah, I mean, we really think that the separation, the historical separation, it was never optimal, right? And so if you think about the digital relationship of a consumer, you know, they don't think about it as like, oh, this is a marketing interaction. This is a support interaction, right? And so what we've seen is, you know, when we thought about service, it was really how do we manage the entire digital relationship? And in any interaction, parts of that will be marketing. You know, I've bought things in the past. I'm thinking about what I might buy in the future. Parts will be service. Hey, I'm returning this item, and I want to, you know, either get a credit back or actually buy something as quickly as possible. So it fit very neatly into that, and this is effectively kind of what we've seen play out. And it's all based on, you know, the value and kind of the right to win is that everything is still based on this unique customer source of record and this unique source of customer understanding for a given consumer so we can actually base off a single unified profile, which is a unique position in our market. So in terms of adoption, I think we've been very excited about the progress so far. With the adoption we've seen, it has skewed larger, and I think we're seeing more and more over time that we're actually landing more and more people with a unified stack across the complete suite. But super excited. And then there's a clear roadmap of things I think we're really excited about, like agents building agents atop the infrastructure, more and more customization, multi-language that sits atop of it. But a set of things that we'll just keep pushing on to drive increased adoption.

Speaker 2

So before I switch gears, I want to ask another technology question, which is, as a technologist, as you think about the background of the company, what does AI inside of Klaviyo itself look like today? How are you guys utilizing it?

Ed Hallen, Other

Yeah, I mean, the way we've thought about it for our customers pretty similarly mimics how we think about it for ourselves, which is fundamentally it's a tremendous enabler to let us do more things more quickly and to a higher quality. And so as we think about it, there are obvious implications in engineering, and so that's been a bunch of time and effort invested in just complete change in how we work and massive changes in terms of just the amount of code that's coming out of models versus being written by humans themselves. So massive changes there. And then in terms of, you know, like one step away, how our design functions and product functions work where, you know, way more likely, you know, go from what may have been slide decks years ago to all of a sudden you're, you know, very frequently building prototypes and building those and throwing those away. But we've also just seen that, you know, kind of with time and attention, we've really been able to rally the whole company around how do we use AI to drive more efficiency but better results of everything. And so it's, you know, it's the people team, it's the finance team, it's across everyone. So we've built a kind of center of excellence effectively in the product team that's, you know, working across all those functions and actually launching features and functionality with them within every function, within every leader, also driving a bunch of change management of just how do we actually leverage tools and kind of revisit a lot of the actions we're taking from first principles.

Speaker 2

Gotcha. So let's maybe go in a slightly different direction. There's this technology transformation happening, but there's also been, I'd say, business transformation inside of Klaviyo, right? Late last year, Chano came on to the co-CEO role. I'm curious, what was the objective behind that, and what are the changes that are being implemented as a result of that move?

Ed Hallen, Other

yeah totally so i mean at first like we we'd done this before right so like andrew and i've been co-host for a long time we knew that he works extremely effectively in that relationship you know his in a world where he could spend more and more time leveraging new tools uh and more time on product engineering to do more and more um tremendously exciting thing for klavio tremendously exciting thing for him and so i'm very excited to kind of drive the pace and so had thought about this arrangement over time. And then there's a set of things, you know, we worked with Chano before on the board that we knew kind of what that partnership looked like, and we're excited for him to accelerate. And so, you know, if we think about Klaviyo, some of Klaviyo's key growth curves, we're early days on enterprise, we're early days on global. And so we've seen tremendous amounts of success on both of those, but, you know, big opportunities to further ramp. And what we've seen is Chano has done exactly that. So kind of building the, changing how we operate, getting us, you know, changing those sales, go-to-market motions to be in front of more CMOs and CTOs as we think about how we actually sell the product on the enterprise side. Bringing in leaders like our new chief revenue officer, Eric Fierde. So just a lot of discipline. We brought in a new APAC leader. We're seeing a significant expansion, a new, you know, really grown our Singapore hub. Just really a rigor across how we think about go-to-market that we've seen play out, and I think we're very excited to play out further

Speaker 2

with the partnership with Chano. And so as you think about that transfer, the leadership changes, does that change the profile of the sales rep that you're targeting or the type of person that you're helping on the front lines from a go-to-market perspective as well? How should we

Ed Hallen, Other

think about that? Yeah, I mean, at first, in terms of profile of sales rep, I mean, I think this is a just implication of how we think about every person at Klaviyo over time which is in the world of you know tremendous new tools and tremendous new capabilities like we really see it's more and more important um one that people are highly curious and able to learn fast uh we call this high slope and it's one of our kind of core hiring values um two is that you know that none of this has changed the value on the sales side of kind of like being great at the human aspects of sales so So, like, we can pull more and more of the sales ops. We can pull more and more of the admin work off someone, but it really lets the best salespeople be even better. And so those things have changed significantly over time. In terms of the profile of who we're selling to, I think the biggest thing is, you know, as we become more of a multiproduct company, at every level there are potentially more stakeholders as we think about service. But then also in terms of the, in the enterprise, I think we see more and more, you're just, it's a different skill sets of reps, different experience, different, you know, people that you're dealing with on the other side of the persona. And so it's also been building out those teams and thinking about also the leaders on that side that are, you know, truly excellent at building these enterprise relationships.

Speaker 2

Understood. And on the international side, another key focus for the organization and for China, the growth has been very good there. How do you unlock more success there? Is it about localizing the product in a way? Is it about getting more evangelism with the merchant customers in that region? What further unlocks growth outside of the U.S.?

Ed Hallen, Other

Yeah, so there's a set of pure execution things, things like, well, enter Japan, things like adding some of the leaders we've added in APAC, things, you know, like building out the capabilities of the Salesforce and I mean, so there's a set of things that we're very focused on on the go to market side. There's also a clear set of things on the product roadmap that are kind of pure unlocks to more growth. And so these are things like the multi-language support, increased multi-language support in the customer agent. It's data residency, so kind of like where our customer's data lives. Over the past year, we've made a big push into portfolio and how global brands operate across customer profiles in different languages and different countries. And so we'll keep, you know, pushing against those product and engineering areas. But it's kind of part of what has contributed to us being, you know, we've seen tremendous success growing internationally. But I think what makes us very excited is that there's a bunch of just untapped opportunities that we've, you know, now either executed against or need to execute against and need to drive the results against both on product engineering and on go-to-market.

Speaker 2

Great. So, you know, we were late into the conversation, but there's this little company that you guys work with on this Shopify. um so you know how do you think about what shopify is doing in agentic commerce and how does that inform maybe clavio's own work in that agentic commerce world and and how how are you thinking

Ed Hallen, Other

about that yeah it's exciting the um the way the way we thought about shopify initially when we were first getting started it was hey we can grow in a very capital efficient way if we find businesses we can partner with and we can drive even more value for them and so the setup for us has always been okay if you take a customer relationship so someone who's you know has as they bring a customer in the door uh and then they actually provide the infrastructure to provide that uh checkout or that transaction how do we ensure they can get more and more growth uh and deepen that relationship with that consumer over time and so that's kind of largely how the shop relationship has worked and why it's been so mutually beneficial historically and as we think about Agenda Commerce, I mean, it's a different way that consumers are entering the funnel. We've seen, if we look across our customers, we surveyed our almost 200,000 customers and saw that the average brand is seeing about a 2,000% increase in the number of customers coming to their store via an agent or via the models themselves. It's the same ultimate dynamic of once you've started to build that customer relationship, you really want to turn that into an owned relationship where you're building a long-term relationship to that customer over time and driving future transaction and future engagement with those consumers. And so that is effectively the same. And so we see that, yes, maybe a different proportion are coming from other platforms or places they may have historically. Maybe in some cases, it's just a net increase in consumers. But the number of relationships that are ultimately being further built with Klaviyo really is only increasing.

Speaker 2

Understood. and then maybe a couple of financial questions to close out just as you one of the questions we got a lot after the recent earnings was the decision to absorb some of the a to p fees help us understand what the strategic rationale behind that was and the decision going forward to now pass those back through and what the shape of that looks like yeah i mean the overarching landscape

Ed Hallen, Other

of like hey these fees are changing over time and will change um it has been is constant and will only continue to be constant. So we made a choice, um, originally kind of, uh, one of our core values being very customer first, um, positioning the pricing model very simply where we've kind of historically observed, uh, absorbed these fees. And so, um, that, uh, you know, I think for over time, we've kind of always kept an eye on, you know, with the thought that, Hey, in some customers, that's just going to drive more usage. And so kind of like, as we think about that, um, price point some customers consume more as you raise the price point customers consume less and so we've always you know had an eye on that as something that we might consider changing but I've recently just you know have kind of made the decision to start to pass more of those costs through and so you know I think we think about how customers think about that it's like I think we've as more and more customers have more and more experience in these types of messaging they understand how these work they understand the fee changes it's a much more established uh part of the market and so we won't go back and kind of recoup or change anything for if we've done historically um but going forward uh we'll build that in um and think that kind of like as people are more comfort in the channel um it's something that kind of people are very used to and used to you know how they'll they'll think about it going forward well we'll leave it there we appreciate

Speaker 2

you joining us today great to dig deeper into clavio and we look forward to talking to you you in a few months. Thanks for having me.