Episode Details

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Alan Trefler, Founder and CEO of Pegasystems, joins us to unpack how a 40-year-old, $6 billion public company is thinking about AI, why he refuses to charge customers for tokens, and what it actually takes to survive five generational shifts in technology without losing your edge.

You might not know this about Alan, but Pega’s first two clients, Citibank and Bank of America, signed on in 1984 and are still customers today. He shared why he thinks the real risk in enterprise AI isn’t the technology, it’s the incentive: “These guys are a little bit like drug dealers… passing out packets of tokens and getting people hooked.”

About PegasystemsPega is an enterprise workflow automation company Alan founded in 1983 on the tagline “build for change.” The company has been public for 30 years, does close to $2 billion in annual revenue with over 5,000 employees, and serves roughly 800 of the world’s largest enterprises, including four decades of continuous relationships with the same banks it started with.

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Throughout this episode, we also cover why Pega put a literal “no token cost” badge on stage at Pega World and how it can actually afford that promise, the vector database strategy Pega chose over building its own foundation model so it can move freely between OpenAI, Claude, and Gemini, why Alan thinks the “cost cap on tokens” debate misses the point because competition, not government, is what brings prices down, and the math behind why a workflow running on a CPU is thousands of times cheaper than a reasoning session on a GPU.

As the SaaS apocalypse debate rages on, we asked Alan directly whether AI coding tools are about to eat Pega’s forty-year business. We learn why he thinks the real moat was never the code, “they can compete on code, but they can’t compete on trust” - why his succession plan is basically “I’m not leaving” (his words: “my exit strategy is going to be a pine box”), and much more.

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Timestamps

(0:00) Meet Alan Trefler(2:23) What Is Pegasystems?(5:26) How to Build Trust Today?(6:32) Being Public for 30 Years(7:59) The First Year of Going Public(11:56) Navigating the Frothy AI Market (?)(14:00) Stock Price Ups and Downs(20:00) Measuring the Cost of AI Compute(22:30) Why Absorb the Cost o