How Klaviyo Went From Email Tool to “1% Done” B2C CRM
Most software founders would call $1.2 billion in revenue and 196,000 brands a finished story. Ed Hallen calls it 1% done.
Ed co-founded Klaviyo in 2012 with Andrew Bialecki, built it from a data layer they were trying to sell to customer success teams, and stayed the course through a 2023 IPO and the company’s expansion well beyond email. He is now Chief Strategy Officer, which makes him the person inside Klaviyo thinking hardest about where it goes next. Nathan Bush caught him live at K:SYD in Sydney, fresh off a keynote where he had just walked 600-plus people through a wall of new features.
What makes this one worth your time is that nothing was off the table. Klaviyo is one of Add To Cart’s two major sponsors, and the conversation still went straight at the hard stuff: the pricing change that rattled the industry, how a platform should honestly attribute its own value, the so-called SaaSpocalypse, and what an autonomous CRM actually means for the marketer doing the work.
“People aren’t looking for playbooks anymore. They’re looking for ideas.”
“There’s no brand who said, oh, I’m leaving Klaviyo because I built Klaviyo.”
In this episode, with Ed Hallen, co-founder and Chief Strategy Officer of Klaviyo, we cover three things worth taking into your own business:
- Why your disengaged list is a segment to talk to differently, not a cost to delete
- How connecting your stack through tools like MCP gets more value out of software you already pay for
- Why flows remain the single biggest untapped opportunity for most brands on the platform
The Idea Hasn’t Changed Since a Dinner in Boston
The origin story is a useful reset on what Klaviyo actually is. Ed and Andrew set out to find a problem someone would pay to solve, and after a few failed attempts landed on a customer data layer. The version that stuck came together at a dinner in Boston with an Australian entrepreneur selling suits online, who was spending one night a week, three hours at a time, manually working through his customer list to write people emails based on when they last bought.
That was the unlock. Take the data platform, let people take action on top of it, then measure whether it actually worked. Thirteen years on, Ed argues the core is identical. The difference is that the action is no longer just email, and the thing taking the action is no longer just a human.
“If you look back to the vision now, it’s the exact same thing. Build this database platform, let people take action atop it. Now it’s not just email, now it’s not just humans atop it, it can be agents too. And then measure the impact of what you’re doing.”
For operators, the takeaway is less about Klaviyo’s roadmap and more about the framing. The moat Ed describes is not the data alone. It is the data plus the outcome history sitting on top of it, the record of which flow worked for which customer and which campaign fell flat. That outcome data is what makes the platform smarter, and it is the reason he keeps pushing brands toward measurement they can actually trust.
Your Disengaged List Is Not a Problem to Delete
The pricing change is the part of this conversation a lot of operators will skip to, so Ed met it head on. Just over a year ago, Klaviyo moved its billing from contacts emailed to active profiles in the database. His honest read is that the platform had always said it charged on profiles, but never actually enforced it, so the change closed a gap between the stated model and the real one.
“There was a gap between the way we said the pricing worked and the way the pricing actually worked.”
The criticism is obvious, and Nathan put it to him: if you pay for everyone in the database either way, where’s the incentive to keep your list clean? Ed’s answer is that Klaviyo still has to deliver tooling to identify the profiles you genuinely shouldn’t be paying for, the people who no longer want a relationship with the brand. But the more interesting point came from the other direction. A disengaged customer is not automatically a dead one.
Nathan referenced two operators making exactly that case. One fashion founder’s single best-performing send goes to customers who look like they have completely opted out, a “here’s what you’ve missed” message that consistently outperforms. The lesson is not to slash your database the moment platform costs climb. It is to build a genuinely different journey for the customer who has gone quiet, because the flow that wins them back looks nothing like the one serving your most engaged buyers. Ed’s view is that this is precisely where AI should help, by making that one-to-one reactivation journey easy enough to actually build.
Build More Flows. Yes, Really.
Asked for the hidden gem most brands underuse, Ed didn’t reach for the newest release. He went straight to flows.
“There’s still a big unlock in more flows, more personalised flows. There’s more opportunity to reach out to customers in closer to one-to-one ways.”
It is not the most thrilling tip in ecommerce, and he knows it. But his point is that the average brand is still leaving attributed revenue on the table by not building enough of them, and not personalising the ones they have. The future he describes is more one-to-one across the board, not just in message content but in send timing, message frequency, and channel. Klaviyo’s individual send-time feature is an early version of that, using the full spread of customer data to land each message when a given person is most likely to act.
The tension Ed is honest about is complexity. One-to-one means more flows, more content, more to manage and maintain, and that complexity is real. His bet is that AI tools like Composer make building and analysing those flows easy enough that the complexity becomes worth carrying, because the complexity is usually what the customer actually wants. People want to be treated like humans, and treating them like humans is, by definition, not simple.
He also made a related point worth holding onto. As service and marketing increasingly run through the same platform, the old line between them blurs. A service conversation, handled well, is also a revenue moment. The brands that stop treating those as separate relationships will find new value in the touchpoints they used to think of as pure support.
The Takeaway
Ed Hallen’s “1% done” line is either delusional or instructive depending on how you read it. The instructive read is that the job was never email, or even ecommerce. It was customer understanding, the action you take on it, and the honesty to measure whether that action worked. The tools change. Agents arrive. The pricing model shifts. But the question Klaviyo started with at a dinner in Boston is the same one operators should be asking of their own stack: do you actually understand your customer, are you doing something useful with that, and can you prove it moved the needle?
Frequently Asked Questions
What is Klaviyo’s autonomous B2C CRM? It is Klaviyo’s positioning shift from an email and SMS marketing tool to a full customer data platform that spans marketing, customer service, and analytics, with AI agents able to execute work on top of it. The stated vision is a world where brands define outcomes and agents execute them. The underlying engine is the same one Klaviyo launched with in 2012: a customer data layer that lets brands take action and then measure the result.
Why did Klaviyo change its pricing to active profiles? In early 2025 Klaviyo moved from billing on contacts emailed to billing on all active profiles in the database. Co-founder Ed Hallen describes the change as closing a gap between the way the pricing was always described and the way it actually worked. The practical effect was a price increase for brands with large databases and disciplined sending, with Klaviyo capping increases to limit the impact on existing customers.
Should you delete disengaged contacts to save on Klaviyo costs? Not automatically. While Klaviyo offers tooling to identify profiles you genuinely shouldn’t pay for, a disengaged customer is not the same as a lost one. Some brands report that their best-performing sends go to customers who appear to have opted out. The better move is often to build a separate, more one-to-one reactivation flow for quiet customers rather than removing them.
What is the most underused feature in Klaviyo? According to Ed Hallen, it is flows. He argues most brands are leaving attributed revenue on the table by not building enough flows and not making the ones they have personalised enough. The opportunity is to move closer to one-to-one messaging across content, send time, frequency, and channel, with AI tools like Composer lowering the effort required to build and analyse them.
Based on Episode #635 of the Add To Cart podcast with Ed Hallen, co-founder and Chief Strategy Officer of Klaviyo, recorded live at K:SYD in Sydney. Join the Add To Cart community for free.
Join us!
Come behind the scenes with Add To Cart Community: Join our crew of ecommerce operators chasing growth, sharing wins, and staying sharp with deep dives, live events and no-BS inspiration.
