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Speaking for myself, interacting with any merchant’s AI-powered chatbot on their website is often an exercise in frustration. Phone trees with robot voices are typically worse. I’d wager I’m hardly alone in my assessment. Who amongst us hasn’t experienced long hold times, slow responses, lack of updated information and awareness of the customer’s own account history, a granting faux politeness and a host of other inefficiencies?
A new startup called Palona debuted last week that aims to fix this sorry state of affairs. It equips direct-to-consumer enterprises — think pizza shops and electronics vendors — with live, 24/7 customer support sales agents that are uniquely reflective of each business’s brand personality, voice, inventory stock and value proposition. The electronics vendor has a “wizard” agent made by Palona, while the pizza shop gets a surfer dude agent personality — naturally.
In all cases, Palona focuses on creating AI agents that have high “EQ,” or “emotional intelligence/emotional quotient,” building them from a combination of open source and proprietary AI models and training some of their own using human sociology research.
“A kind of fundamental thesis is that we can create an experience that is delightful and feels genuine, like a real human conversation,” Palona co-founder and CTO Tim Howes, said in an in-person interview with VentureBeat. “ChatGPT is a hugely useful tool, but it does not feel like a human conversation.”
Palona claims its system can be easily implemented by a non-techie brand on their website, mobile app or phone lines — with responses uniquely tailored to each brand and each communications environment. And, in fact, its agents are already at work handling orders, answering questions and complaints and suggesting products and upsells to customers.
Strong founding background
In addition to Howes, Palona was co-founded and is led by a team of engineers from some of the top tech companies in the world, among them: Maria Zhang, Palona’s CEO, is a former VP of engineering at Google, VP/GM of AI for products at Meta and CTO of Tinder. She also founded Alike, which was acquired by Yahoo in 2013.
Palona’s chief scientist Steve Liu was formerly chief scientist at Samsung AI Center and Tinder. A tenured professor at McGill University, Liu is also a Fellow of IEEE and the Canadian Academy of Engineering, with more than 390 research papers to his name.
And, Howes himself is the co-inventor of the industry-standard, open source Lightweight Directory Access Protocol (LDAP) online data storage system, as well as co-founder of LoudCloud and OpsWare (the latter was acquired by HP for $1.65 billion). He was also previously the CTO at Netscape, HP Software and led developer productivity at Meta’s AI infrastructure business.
“We’re building fully autonomous sales agents — not tools for salespeople, but actual AI salespeople,” said Zhang, adding that AI will be “the employee of the century.”
24/7 polite, distinct, personable sales agents
Palona AI positions itself as a solution for companies looking to improve their sales performance, customer engagement and brand loyalty.
The Palona agents act as customized virtual sales employees, combining soft sales skills with 24/7 availability, unlimited capacity and advanced memory recall, and can interact with customers in an online chatbot, an SMS/text or AI-powered voices.
“100% — we support voice,” Zhang explained. “For example, in pizza ordering, voice is still a major user pattern. In the Midwest, about 50% of people still call to order. On the east and west coasts, it’s around 20%, but it’s still significant.”
Palona’s voices are licensed, but the company has the ability to train and deploy custom ones — even voice clones of authorized customer reps or a CEO.
The company realized through testing that the voice version of Palona’s AI sales agents would need to have distinctly different interaction styles from the text chatbot.
“We tested different voice interactions, and for pizza ordering, for example, customers wanted efficiency,” Zhang related. “They didn’t want a chatty AI — they just wanted to get their order done as fast as possible. So we optimized for that, making it have less personality, less verbosity, more efficiency.”
Unlike traditional chatbots that serve as assistants to human representatives, Palona AI is designed to handle entire sales cycles without human intervention.
“There’s a big gap between lifelike AI models like ChatGPT and what businesses actually need — an AI agent that can fully sell, convert, and upsell,” Zhang explained.
Palona claims to minimize errors and reduces AI hallucinations by up to 98%, ensuring reliable interactions.
Zhang and Howes said that for even the most analog businesses, it takes just a short lead team to get going, and only several days for a simple implementation. Customers provide Palona with “FAQs, employee training manuals, policies and procedures,” said Howes. Then, they define what actions the agent should take — be it processing orders, answering inquiries or handling support issues.
One of the biggest factors affecting setup time: How much integration is required with the customer’s existing systems (point of sale, customer reltionship management, ordering platforms). If we already support their system, it’s plug-and-play,” Howes explained. “The agent can be ready in a couple of days. If they’re using a new, unfamiliar system, that requires additional engineering work, which could take longer.”
In addition, Zhang said that Palona was “actually in the process of automating agent setup. Eventually, businesses will be able to use a Palona agent to configure their own Palona agent.”
Three language models are better than one
Palona achieves all this by combining three different models. The first is a custom, fine-tuned large language model (LLM) that serves as the basis for every distinct business sales agent — the pizza shop gets a different tone and personality from the electronics vendor, and each one is customized out of the box.
There’s also a supervisory model that detects, catches and removes hallucinations from the main model before it outputs them to the customer. Finally, the system incorporates a real-time memory tracking small language model (SLM), allowing it to build deep customer profiles based on previous interactions — leading to personalized conversations and stronger customer relationships.
“AI is very good at either remembering absolutely everything, which leads to a terrible experience” (because it brings up unimportant details) said Howes. “Or, it remembers nothing, which, again, creates a terrible experience” (because it won’t know what happened previously in the conversation).
To get around this, Palona trained its own small model to help its base LLM manage its memory.
It’s that small model’s job to figure out, “Okay, what’s important here, what’s not important” in every conversation, Howes explained.
Overall, the company included an interesting dataset for all its models that reflects the wide range of human emotional responses all sales and customer-facing humans (and agents) have to deal with on a regular basis.
“We trained our models to have higher EQ by surveying the literature in psychology, and identifying what actually makes someone emotionally intelligent,” Howes told me. “It turns out there’s an eight-dimensional definition of EQ, and we trained our AI against those benchmarks.”
Palona also trained its models to perform “gentle persuasion,” and reply to customers with humor, emoji and sensitivity.
Early customer testimonials: Wyze, Mindzero, and Pizza My Heart
Palona AI is already working with several consumer brands, including Wyze, Mindzero and Pizza My Heart, to enhance customer interactions and increase sales conversions.
Wyze, a smart home camera company, has integrated Palona-powered AI sales assistants to personalize customer support. Wyze CEO Yun Zhang said in a statement: “I’ve always wished that I could personally connect with every customer to share why they should choose our camera and CamPlus plan. Palona has made that possible with the Wyze wizard AI agent, delivering the curated, personalized buying journey I wish I could give every customer myself.”
Mindzero, a wellness studio specializing in contrast therapy, uses Palona AI Agents to answer customer questions naturally and engagingly. Mindzero CEO David Semerad highlighted the impact of the technology: “Our Palona agent, Jen, has become our new best friend — she’s able to answer customer questions in such an authentic, kind and helpful way, it really blows our minds.”
Pizza My Heart, a well-known West Coast pizza chain, has transformed its brand persona into an AI-powered interactive experience. The company’s Palona AI agent, “Jimmy the Surfer” allows customers to order pizza through voice or text while engaging in lighthearted conversations.
Chuck Hammers, CEO of Pizza My Heart, commented: “Palona AI brought Jimmy to life in a way that just makes me smile — which I never expected from an AI. Now, Jimmy helps my customers order pizza by talking to them directly — via voice or text.”
Three pillars of Palona’s success
Palona’s AI solutions are built on three core principles:
1. Brand Consistency: AI agents are trained on a company’s knowledge base to ensure conversations remain true to the brand’s voice and identity.
2. High EQ: Palona agents dynamically adapt to conversations and outperform both human representatives and competing AI models in emotional engagement.
3. Persuasiveness: Their AI identifies key sales opportunities, proactively recommending upsells and cross-sells at the right moments to increase revenue and customer lifetime value (LTV).
I saw all these in action in a short demo of a “Wizard” customer sales chatbot agent. Even when I complained to the agent about my dogs barking at my neighbors (sorry guys!), it managed to smoothly redirect the conversation to a home camera I could buy to help keep an eye on them.
What’s next for Palona?
“We intentionally went after the hardest problem first— sales and conversion,” Zhang noted. “It requires more technical sophistication, but if you can solve that, expanding into other areas like customer support and loyalty programs is easier.”
As AI continues to shape the future of commerce, Palona’s approach suggests that customer relationships don’t have to be sacrificed for automation — instead, AI can enhance personalization, drive conversions and build lasting brand loyalty.
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