Rethinking Digital Products in the AI Era | Itay Kahana of Watchful

What we talked about.

In this episode, Sunny Ray talks with Itay Kahana of Watchful about how AI is changing the way teams think about digital products. Kahana explains that Watchful analyzes digital applications to see features, campaigns, price changes and expansions, sometimes before they launch. He traces the idea to a painful quarterly review at his previous app, where a 5% retention gain looked weak next to a competitor's 25%. He shares a discipline of predicting a feature's measurable impact before release and comparing it with reality, arguing that speed of learning matters more than speed of shipping. He describes landing his first enterprise customer with only data and a pitch, and how free press coverage later drove inbound interest from a Fortune 500 company. He also covers how cybersecurity techniques inspired the product, the challenge of building a repeatable sales playbook, and the lessons of building in Israel while selling abroad. Finally, he looks ahead to a future where agents handle development and QA while humans steer strategy with better competitive insight.

A founder who watched a rival grow retention 5x faster built a product to see what competitors ship before they launch it.

The questions, and the answers.

What is Watchful and what problem are you solving?

We analyze digital applications and see what is happening inside them: features, campaigns, price changes, expansions, and sometimes things before they launch. That speaks to product management, which is changing with AI. Product teams focus on their own product, but they also need to understand the industry and learn from the competition.

What pain did you feel from the inside that nobody outside could see?

My team worked hard, even on weekends, to improve retention and engagement. In my quarterly review we had about a 5% improvement, while our direct competitor had 25%. I felt frustrated, but more importantly I wanted to know what they did and could not see it. That is why I started Watchful.

What did building your previous app teach you about shipping?

The biggest risk is spending months building something nobody needs. Before a release, ask each key employee to write down the measurable impact they expect, then compare it with the real result after an A/B test. You will be surprised how wrong you are. That builds discipline, and the speed of learning matters more than speed.

How did you convince your first enterprise customer when you only had a pitch?

I led with data instead of a generic pitch. I showed them things about their competition they did not know, and there was an aha moment, almost fear, of wait a minute, this is what they are doing. It became a sale based on not knowing what you don't know.

How did cybersecurity influence the product?

Security researchers hunt for vulnerabilities everywhere. We found a byproduct that nobody looks at today: how an app is built and how it is personalized across locations or user behavior. We used technologies from the cyber world to crack that open and analyze digital applications.

How did you get your early enterprise customers after the first one?

Outreach brought some leads, but it gets harder when inboxes are full. Since we have a unique data set, we packaged insights into stories and linked them to press like TechCrunch and Business Insider. That gave us free PR, which drove inbound, and closing a Fortune 500 customer through inbound is a masterpiece.

How has the AI era changed what customers ask for?

Building features is easy now, so companies overdo it and I see a lot of competitive noise. Customers need trends, strategic direction and big moves like expansions to new demographics, not just one small feature. Budgets are also tighter, and everyone wants more while paying less.

What does a product team look like in five years?

I think agents will monitor products, develop them, do QA, write PRDs, test and even handle analytics. Humans at headquarters will set direction and make final decisions. What is missing is a clearer understanding of competitors and the market, so decisions improve. That is our vision.