From Unicorn to AI-First Company: How Daniel Khachab Transformed Choco in 16 Months

About this episode

Less than 16 months after their first internal AI experiment, unicorn company Choco generates 100% of its new revenue through its own AI product. An impressive transformation that demonstrates: if you don't disrupt yourself, others will disrupt you. Founder Daniel Khachab shares his AI playbook and explains how to successfully manage a complete company transformation.

Disrupt yourself – before others do

Daniel Khachab recognized early on: Choco had to change radically to remain relevant. "Every company must choose an AI-first approach to stay viable," explains the founder. But how does a founder recognize when it's time for such a transformation?

For Daniel, it was clear: the new AI product would cannibalize the existing product. A difficult decision, but necessary to remain competitive in the long term. The challenge was to get teams excited about this radical change and increase internal adoption.

From first experiments to full rollout

The transformation began with internal AI experiments. Daniel used hackathons, incentives, and transparent communication to introduce his employees to the new technology. This experimental phase was crucial for gaining team trust and demonstrating initial successes.

The AI hackathons at Choco served not only for technical exploration but also as a catalyst for cultural change. Teams could playfully experiment with the new technology while developing their own ideas. This bottom-up approach proved much more effective than top-down directives.

The Speedboat Playbook: Agile teams outside the core organization

A central building block of the transformation was the "Speedboat" concept – agile teams operating outside the core organization. These teams could iterate quickly and test new approaches without being slowed down by existing structures.

Daniel emphasizes the importance of managing such teams correctly: they need autonomy, but also clear goals and regular alignment with the main organization. The balance between freedom and control is crucial for success.

AI Products vs. SaaS: A different mindset

An important point in Daniel's playbook: AI products require completely different thinking about product management and pricing. While SaaS products often rely on fixed subscription models, AI products frequently work better with consumption-based pricing models.

Daniel shares his thoughts on AI pricing: "Consumption-based vs. flat fee" – a decision that influences the entire business model. The challenge lies in finding a pricing model that works for both customers and the company.

Winning the first pilot customer

When searching for the first pilot customer for the new AI product, Choco relied on existing customer relationships. Trust was key – existing customers were more willing to test a new product, even if it would replace the old one.

The go-to-market process for AI products differs significantly from traditional SaaS approaches. Daniel explains how important it is to define and measure product-market fit differently for AI products.

Transformational leadership in practice

Daniel speaks openly about the challenges of transformational leadership. Not every employee can or wants to join the journey toward AI-first. The difficult decision to part ways with people who don't fit the new direction is part of the transformation process.

At the same time, he shares what he looks for in new hires: AI affinity, willingness to learn, and the ability to work in uncertain environments are more crucial than ever today.

Productivity gains through AI

Daniel uses AI not only for the product but also to increase his own productivity. This personal experience helps him speak authentically about AI and inspire his teams.

Where do you start as a founder?

For founders considering a similar transformation, Daniel has clear recommendations: start with internal experiments, create psychological safety for your teams, and be prepared to question existing business models.

Choco's transformation shows: it's possible to successfully transform an established unicorn into an AI-first company. But it requires courage, persistence, and the willingness to disrupt yourself before others do it for you.