Katera's initial traction trapped them in a "local maxima." The revenue made it emotionally difficult to pivot from their consulting-heavy model, even though they knew it wasn't a scalable software business due to low product engagement.
Katera competes with giants like Zapier not by adding AI features, but by building on a fundamentally different, prompt-based architecture. Incumbents are stuck with legacy workflow infrastructure, making it difficult for them to truly embrace a native, agentic approach.
The founder predicts that hyper-specific vertical AI solutions are too easy to replicate. While they may find initial traction, they lack a durable moat. The stronger, long-term business is building horizontal tools that empower users to solve their own complex problems.
Initially, being the "AI guys" led to endless custom requests across departments. The scalable breakthrough was shifting their model from doing the work to teaching customers how to use their platform to build agents, empowering them to solve their own problems.
A key differentiator is that Katera's AI agents operate directly on a company's existing data infrastructure (Snowflake, Redshift). Enterprises prefer this model because it avoids the security risks and complexities of sending sensitive data to a third-party platform for processing.
Before LinkedIn was saturated with bots, the founders achieved an 8-10% response rate by being direct and vulnerable. They dropped the YC name for credibility but framed their ask as "we're two guys who need help," appealing to prospects' desire to be part of building something new.
The turning point came when a simple OpenAI API call solved a customer's problem more effectively than their complex, slow data science script. This stark contrast revealed the massive opportunity in leveraging modern AI and triggered their pivot.
Instead of pitching features, Katera builds AI agents that find sales opportunities for their prospects (e.g., relevant Reddit threads) and sends those leads directly. This "show, don't tell" approach provides immediate value and dramatically increases response rates.