Libby McIlhany on Automation & AI in ITs (EP 845)

Hello friends, Uncle Marv here with another episode of the IIT Business Podcast, recording live in Denver, Colorado, at PAX 8 Beyond, outside the Vendor Hall, and we are coming up to, I don't know if lunchtime is soon, I'm losing track of time, I've been doing these interviews back to back, but if it gets loud folks, that is why. Right now, I am joined by my first member of the PAX 8 family, and I think this is going to be a fantastic interview because she is smart. Libby McIlhany is joining me here, Chief Product Officer. 

Why do you laugh when I say that? I don't know. I'm not, I don't know. I mean, yeah. 

So, I was struggling with how I was going to phrase that and say that because I didn't want it to sound, you know, weird or condescending, but you're smart. I don't know where that's coming from. I, you know, I do okay. 

I mean, listen, so I, you know, saw you and heard you on stage last year and you were just talking high level with all the stuff, and again, last night at the press conference, you were talking high level and stating all those acronyms and names and press people are like, what? What is this lady talking about? What are the words and what do they mean? And I mean, I'm a little technical and I was like, wow, that sounds way above my pay grade. It's probably above my pay grade. I started out as an engineer. 

My dad actually was a software engineer back in the day, starting in the mid-60s. That explains some of it. Uh huh. 

He worked on like big mainframes and, you know, all the old equipment. We had a modem that had the like rubber cups on it. Do you know what I'm talking about? Where you put the phone? Oh, yeah. 

Oh, that modem. Yeah, yeah. We had one of those. 

Before U.S. Robotics. Oh, like, yes. And we also had eight inch disk drives, eight inch floppy disks. 

Remember that? Oh, yeah. I remember those. I never used them, but I remember seeing them. 

Yeah. I mean, consider yourself lucky because actually they were quite floppy. But yeah, so I grew up in with a very technical dad doing technical stuff. 

And after I graduated from college, I like managed to land. I still liked it. And I started as an engineer and I realized that that was not my destiny. 

I like engineering, but now let me ask specifically what type of engineering? Yeah. I was a front end engineer. So building the front end of software.

Okay. So software. Yeah. 

Software engineering. And then I decided that I like talking to people and the business side of it a little more and then ended up more on the business side. Okay. 

I'm sorry. I'm stuck on your dad and you growing up. Was he one of those strict types of people where it's just as easy to be wrong as it is to be right? No, he was pretty. 

Actually, he was a wonderful teacher. So he could take things that I think would be very hard to understand otherwise. And he could say them in ways that were very easy to understand, which I think is a real gift.

Some people would say you have that gift. Actually, my husband has that gift even better than I do. Yeah. 

It's amazing. But I feel as though he was somebody who definitely had decided ways to do things. There was a way to load the dishwasher. 

Do you know what I mean? No, there wasn't a way. There was the way. The way. 

Uh-huh. The way. And one time my mom was out of town for a while and I wrote up documentation for him on how to do the laundry. 

And then he came back and gave me some constructive criticism on how I had organized. The process was wrong. So that kind of dad. 

Wow. Very nice. Okay.

So let me. Wow. Yeah.

So let me go back to before you came to Pax8. Yeah. Because obviously there was a path that led you here.

And what you've done here in the last three years, phenomenal. Let me just say that. Let's go back before. 

And what was the path? Because yes, you talked about doing, you know, front-end software engineering. But what was your goal? What did you really want to do? Yeah. I love to learn. 

And I get bored if I'm not learning. And so one of the wonderful things about product management is that it's a skill that you can take to a bunch of different industries. And I imagine it's kind of similar. 

Like I know many of our MSPs focus on specific verticals, right? Like they focus on law firms or they focus on firms of a certain type. But actually for me, it's the diversity of like getting to learn, like kind of open the hood on different kinds of businesses. So I worked in gaming. 

So I worked for LeapFrog. They make educational games and toys for kids. I remember that.

Yeah. Like we'll teach you your letters. And that was like proprietary hardware and that was gaming, which I'd never done before. 

And then I worked in marketing as a product person. And that was totally new. I have a very vivid memory of going to my first meeting when I was getting up to speed on joining this company. 

And I didn't understand any of the words that anyone was using in the meeting. I was like, what are the words? What is media? What are we talking about? But for me, it's that pleasure of really learning so much about new stuff. I just love to learn.

And so product management for me was a really good fit because it's kind of like software engineering, but I like the talking part better than the coding part. And the vision and the strategy and the idea creation part. But being able to do that in a bunch of different industries for me was the real pleasure. 

So let me then ask this question, because product management, if you're talking to most companies, some of the vendors or whatever, there's usually a handful of products or one product with a few different features and stuff. That's not PAX 8. So what does product management mean to a company like PAX 8 that you got to come in and a whole new world? One of the things that took me the longest to learn, but one of the things that I think is the coolest about the channel is that you have so many users. You have the vendors who are coming in and the supply side are coming in and bringing their products to the table. 

You've got the partners who are obviously the core of our product. And then you have their customers, their downstream customers. So it's so complex, right? I mean, you have just so many different users that you need to think about. 

And the product itself then has to have a really wide wingspan because your users are so many different types of users with so many different needs and so many different personas. And we have MSPs of all different shapes and sizes. So what a Lyra needs might not be the same as what a five-person shop needs. 

And we need to think about all of that whole span of how can we make products that work for all of them. So as a consequence, we have a UX research team that's run by the inimitable Sueann Hall, who is wonderful and is world-class. We're lucky to have her.

And we spend a lot of time talking to partners. And we spend a lot of time talking to our sales team and our support team and getting candid, very, very candid about our products. But the answer is the product is multifold. 

I mean, you're right, right? So it's not just what our partners log in and see. It's also the experience of our vendors kind of trying to bring their products into our marketplace. And then it's now with Storefronts and with Bill on Behalf, it's also the experience of the downstream clients that our partners are serving every day. 

So it's a lot. It's exciting because it's a lot. It's also just kind of a lot. 

So it's a lot. And marketplace itself is a lot. And now let me ask this. 

So since you pushed the big button last year, I mean, let me first ask, how was it pushing the big button? I'll say it this way. I don't know if it's going to be polite or not. That looked stressful. 

It was. So they told me that something was going to happen. But they didn't tell you what? And I pushed the button and our team is so amazing. 

And they had to figure out how to make a button. And it was like slightly duct tape and bailing wired. So it was like a slightly wobbly button. 

So I pushed the button and then it was amazing. It even just being on the stage and seeing all the people in the audience, like there's such amazing energy. It's like really good energy.

All right. So where I was going was since pushing the button last year to coming to this year. Now, granted, we knew that marketplace wasn't 100 percent done then.

No. Yeah. Never. 

Will never be done. Yeah. But I couldn't. 

I'm imagining that even you didn't think that it would be this much of a migration to this year with all of the changes. Yeah. Yeah. 

I mean, if you ever want to live and sit and change all the time, my strong recommendation is that you work for Paxi because we just are always trying to push the boundaries of what we're doing. And, you know, it's a balance for my teams because we want to make sure that we care and feed and nurture all the products that we have already put in market and not ignore them or walk away from them. But at the same time, we also have to push the balance, I'll be honest. 

We I'm excited that part of what we're presenting is the new public storefronts, which is an evolution of what we brought in market last year and feels like a really good, smart way to move that product. And that feels really good. And then layering that in with integrations hub, which is like the maturation of some public APIs that we threw out into the market several years ago and like didn't really love and nurture and snuggle the way we should have. 

It feels good to me. It feels like they're both iterative and innovative all at the same time. Was the public marketplace on the original blueprint? We had talked about it, but we wanted to. 

One of the things that I like to do with my team is make sure that they have the space to, I'm not going to say experiment necessarily, but to shape what it is that they're building. And I like to put something on it to market and then see how it goes. Are people using it? Do they like it? If they're not using it, what can we do to make sure that they're using it? If they are using it, what can we do then to make it even more valuable for them? And we got a lot of feedback upfront, lots of feedback, which we love feedback, that it would be so helpful for our partners to have a storefront that they could use for prospecting. 

And the tech was halfway there, so we were like, that sounds great. But we have so many other ideas too and what we could do with storefronts. You're never sitting around thinking, what should we do next? There's always a sense for things that we could build. 

I'm sure there's a list somewhere. There's a very, very long list. And it's always, again, a balance between how can we do little incremental improvements to make our partner's lives easier? And then how can we do big things that are strategic and do a stepwise change in our partner's experience over the marketplace? So let me ask this question. 

How do you do the balancing act of what's good for the vendors in the space and what's good for the MSP partners in the space? That is such a great question. You weren't ready for it. Well, no. 

I think what we try to do most, because we've had conversations as a team about carving off completely separate teams that do vendor work and completely separate teams that do partner work. And every time we go down that road and give it really deep thought, we realize that actually a lot of the functionality that our partners need and a lot of the functionality that our vendors need, there's enough overlap. For instance, we need our vendors to be able to create products. 

But actually we also, our partners want to create products too, because they create custom products. They want to represent their products that are not in the Pax8 catalog in our marketplace. And so when we thought about a product creation flow, we're thinking both about our vendors. 

What is our vendor experience for creating a product? It's more complex. There's more complexity. But we're also thinking about what's the easier, more straightforward version of this that we can build for our partners. 

So about 80%, I would say, there's about 80% overlap, mostly, between our vendors. Is it kind of like a linear thing where it's not two sides, but it's more linear where everybody's on the path? And I don't know, for some reason, I keep thinking that it's really a circle where it just keeps going around and around. I think that's right. 

And what's interesting is a lot of the things that we have built for our partners, like let's say our billing and invoicing system, our vendors benefit from consolidated billing. And we have to pull the data from our vendors and represent that data in an invoice. And so when we're improving our billing and invoicing system, everyone is benefiting. 

And now it is a lot of complexity for my teams to bear in mind all the time. It's like a lot to hold in their heads, right? Yeah. And I'll be honest, that can't be easy. 

Listen, there have been rumblings with every partner's billing and complexity, and the marketplaces are really no different. So I'm sure there's been some setbacks and stuff like that. Absolutely. 

And actually, we rolled some new work out late last year, so late December of 2024. Actually, November. It doesn't matter. 

It's not a quiz. And we have been working through the impact of those changes over the last several months, and it's been rough. We are now at a place where we've had a lot of improvement. 

But every time we roll out a new system where we try to really holistically improve our systems for our partners, the system itself is so complex that much as we try, and we try really hard, we do miss some use cases. We do miss some features that we need to make sure are locked tight. And then we have to apologize and ask for grace. 

And unfortunately, that's a part of what it means to continuously make improvements. And what our partners have been seeing is the result of that, right? Is that we actually made massive upgrades to our system? Listen, I get it. 

It's a lot. And I mean, if you guys got even close to 98%, that would be huge. Just all of the nuances, it's all of the partners, all of the vendors. 

I mean, it's got to be a lot. Well, and I'm not trying to throw anyone under the bus here. So I'm going to be real careful.

Oh, no. You can throw somebody. But we truly are automation first.

Okay. My understanding is that many of our competitors are doing a lot of it with humans. There's a lot of Mechanical Turk under the covers. 

And our goal here is- Humans are mucking up the system. Can I say that? I mean, and we truly are trying to be automation first. We want to have an automated system because we think it creates more accuracy. 

It closes those windows for human error. But it's a really hard problem space. So speaking of automation, AI has come up. 

You guys are huge in the AI. And there's this report coming out that a lot of us are having trouble pronouncing. The agentic inflection point.

Yes. Many big words. Why? Why those words? Why the report? Let's talk about why that name. Why that name? You know, agents are so much about where we're going to go, we think, with AI, and where we're actually going to get value out of it. 

It's funny because I mentioned earlier that my dad, so I've been in tech since in utero, basically. And I've seen many different rollouts of new technology. I mean, I remember logging into my college email on using Pine and Emacs. 

We're on a terminal window. I thought you were going to say the BBS system. Yeah. 

Not that, but close. And so I was here for the internet. I started working in tech in the late 90s.

And I think it took us a while to figure out how to make money out of the internet. You know, like that took a hot second. I remember the first dot-com crash and all of the like large companies that had been valued really high kind of strewn about the place because they couldn't make it.

And then we saw Amazon and we saw all these other new players who actually knew how to monetize. And it's interesting to watch AI because I think that that, I'd say it was like 10, 15 years maybe from the start of the internet to when we started to figure out how to monetize it and actually make it useful, not just monetize it, but make it useful. And I think that the AI, the change that we're seeing with AI feels similarly impactful, but I think it's going to be much more compacted.

It's much faster. Much faster. And, you know, if you had asked me two years ago what an agent was, I would have given you a blank stare, or like, maybe we would have started talking about the FBI.

Within the last year, you know, agents have really come to the fore. And I think that by pointing to the fact that this is an inflection point, that this is a moment, trying to be really clear and honest, that this is a moment of massive change. And I think what our goal with this is, with this whole report and with these crazy words that we're using, is to underscore the fact that this is a, that we all need to sit up and listen.

Yeah. What is, I guess, what is the thinking in terms of Pax8 feeling like you not only need to understand it, but also get ahead of it and make sure it's in a position of helping the MSP community? Is it something that weighs on you guys? Is it, does it feel like it might be an impossible task? It's funny, I've worked at a lot of different companies. I mentioned that before. 

And all of them, to a company says, oh, we care about our customers. But I don't think I've ever worked at a place that actually really, that's not fair. Some of the other places I worked at did care about their customers.

Well, I mean, you have to care to some degree. Yeah. But I don't like companies that say our first priority is our customer.

And you're like, really though? Really though? Um, and I think Pax8, we really, I mean, it is in our DNA and from John Street to Scott to, you know, it's just a part of who we are. And I think when we are looking at, especially in my teams, you know, where we're with in lockstep with Scott at the forefront of what we're doing here. I mean, the teams that are using AI most are my teams. 

That's probably no longer true, but that was certainly true four months ago. Um, and we're the ones who are needing to help explain this stuff. We're the ones who, to ourselves, right? Like to, to internally in the, in, in, in the org, you know, this is what, this is what an agent is. 

This is how we're using AI, like, and encouraging our own employees to get in there and not sit on the sidelines and jump in and figure it out. Cause I think it's intimidating. I think it can be intimidating. 

It's a lot of new. Um, and I think we feel a responsibility because enablement is so deep in our DNA. I think we do feel a responsibility to try to help as much as we possibly can, not only to explain like, what the heck is all this stuff, but how on earth are we going to use it and use it in our businesses? Right? Cause it's not just about, Oh, it's like fun and you can play with it and it's cool. 

And it can like, I mean, you know, I was using it the other day to like make a meal plan and that's great, but Oh, wait, wait, wait, wait. So you, you asked AI to create a seven day meal plan that is healthy and reusing. So I was like, okay, if I roast a chicken, like I want to use it the next day for chicken salad or whatever. 

So I asked it to help me reuse so I don't waste food because I'm very cheap. So I'm going to see how quickly I can scroll through and find this because I did that a while back. Yes. 

Was it helpful? No. It was food you would never eat. Yes. 

Yes. Well, let me rephrase that. So there were some foods that I was already eating and you can make it work, but there were some foods that I'm like, no, not a chance. 

But every plan does that. They give you food that you're like, no, I would not eat that. What I did is I fed in recipes that I've been making for the last couple of months. 

So I was like, this is the kind of food I want to eat. Okay. You gave it the prompts. 

Yeah. I gave it links too. I gave it data.

Gave it context. So there, let me go back so you can see the picture. So this is very bad for an audio podcast. 

We're scrolling through a phone. But there's a show and I did my AI generated seven day meal plan. Okay. 

So you got to give it context. To who? To the AI. So you have to tell it the food that you want to eat. 

Yeah. But see, I didn't do that. I did try to give it some guardrails and say, Hey, I want to create, you know, seven day meal plan that is healthy, that uses, I gave it some parameters on the types of food. 

So I use a food app that, you know, has the red, yellow, green and stuff. And I wanted it to be non-processed, blah, blah, blah. So I gave it those guardrails. 

I did not give it all the guardrails that you gave it. So we're going to have to chat more. Okay. 

We can do that for sure. I just gave it links to recipes I've made because I use it and I like to find recipes. I don't have recipes. 

I don't cook. I'm not sure why you made a meal plan. My wife cooks. 

I found a problem. My wife cooks. And I just thought, here's a meal plan. 

I'd hand it to her. I think I've discovered a problem. Okay. 

Let's, um, but going back, what I was saying is that I think we can find fun ways to use AI today, but the rubber hits the road when we find ways that actually impact our business, impact our business and is done in a responsible, a hundred percent, a hundred percent. And so I think we just see it as our responsibility. Like we're paying attention to these things.

We're doing a huge amount of experimentation, research, play, and discovery. We are thinking about it across the whole organization. I don't think anyone, I mean, if you get, if you saw Scott's team, I don't have to ask him. 

Um, but I mean, if you can imagine a leader, who's going to push the organization more than Scott Chasen, like, I don't know who that is. He is pushing and pushing. He is a beast. 

He's a beast. Um, and he pushes us all out of our comfort zone. And so I think, I think we just felt like we were doing this anyway.

We would love to talk about it and make sure that we're helping our MSPs in the process. Maybe we are going to have to do another show. If they let me have access about meal planning, yeah, that too. 

But, um, uh, but we're going to run out of time here. I do want to say thank you for, uh, making the time to stop by, um, not just here, but, you know, come to the press meeting. Um, you guys are doing a lot of stuff and, um, it's, it's nice to hear from the people that are making it happen. 

Um, the stuff that's in your minds and what keeps you up at night and all that sort of stuff as well. So much keeps me up at night. Yeah. 

Yeah. It's a lot. It's a lot, but it's exciting. 

The agentic inflection, the words, agentic inflection point, keep me up at night. No, no. I mean, honestly, it is, it is, it is a lot. 

It's moving fast and it's a lot to run through your brain. It is. It is. 

Well, I look forward to seeing what, uh, comes out next and, uh, the expansion of the marketplace, uh, everything that's going. Um, you don't have any part in the commercials that they put out on the thing, do you? No. Aren't they beautiful though? They're interesting.

Okay. That wasn't how we wanted to end. Uh, ladies and gentlemen, uh, Libby McIlhany, chief product officer. 

Um, I'm going to nickname her Libby Mac. Okay. I'll take it. 

And, um, and then if you have me on again, we can play return of the Mac. We can play what? Return of the Mac. Return of the Mac.

I just can't play the music and I'll get sued. But surely you won't get sued if we sing it. You know what? That would make a good menu item for AI generated menu.

The Libby Mac. The Libby Mac. It can be like, have a little bit of spice in it. 

It'll be a, um, farm fresh hamburger. With some spice. All right, folks. 

We've, uh, we've strayed a bit. Uh, Libby, thank you very much for coming on. Ladies and gentlemen, thank you for listening to this episode.

We'll be back with more from PAX 8 Beyond. And, uh, I'm sorry. It's all good here, folks. 

All professional. Yes. Yeah. 

Now, uh, go get that earworm out of your ear. Return of the Mac. Libby McIlhany, folks. 

Chief product officer at PAX 8. Thank you so much. We'll see you soon.