Dear Startup Investor:
I don’t know anyone who likes to talk with a call center. The most frustrating part? Wading through a slew of choices a pre-recorded voice puts to you before you reach a real honest-to-goodness human. Then that person asks for your name and membership (or credit card) number for the umpteenth time.
My HMO is the worst offender. I listen to about five minutes of qualifications and conditional instructions, as in:
If I am experiencing an emergency, dial this number.
If I want to cancel or confirm an appointment, dial this number.
If I want to make an appointment, dial this number.
If I want to speak to a nurse, dial this number.
On and on the voice drones. Then, when I’ve finally reached a nurse to see if I have to come in, she once again asks me for my medical number.
I’m thinking… Please shoot me now. There’s gotta be something better than this.
Well, I’m happy to report, now there is.
An Idea That “Makes the Most Money”
It’s such an easy and practical fix, too. I wonder why it has taken so long for a company to offer it.
Yet, a part of me is very excited by this very thought. The best ideas – and very often the ones that make the most money – are the obvious “why didn’t I think of this” kind of ideas.
The person who came up with this after-the-fact “obvious” concept is Ian Roncoroni. He says it came from one bad experience after another. He describes one particularly bad one this way…
I was talking to a car rental place. Had to spell out my name a half a dozen times, got transferred, got disconnected and had to repeat the entire process. By the time I reached an agent who could help me, I had to turn off the phone because I was boarding a plane. I thought to myself, there’s got to be an easier way to do this.
So what if, he thought, the call center had his name, phone number and billing information in front of them before they connected to him?
Sounds so obvious, right?
When Roncoroni realized businesses spend $15 billion a year to get this information, he knew he was on to something. So he quit his job and started Next Caller.
Presto! $60 Billion a Year of Potential Savings
They accessed a few key data sources and, lo and behold, their system had more than 220 million people on file. Roncoroni and his co-founder, Gianni Martire, a computer science graduate, say it’s the “largest, most complete caller database in the world.”
For consumers it’s a huge headache reducer. And companies that buy the system save 30 to 40 seconds spent on the phone with each customer calling in. Saving time means saving money. How much?
Try about two dollars off the average cost of $7.76 each phone call costs. This is the way those costs break down, if you’re curious…
Now $2 a call doesn’t seem like much but multiply that by more than a billion calls every month and the savings quickly add up.
Let’s just take a thin wedge of the circle chart above, the purple slice, “obtaining the caller’s name.” Last year 29.4 billion calls to customer service required a human to manually identify the caller and get the spelling of their name. That little bit of information costs an average of $0.52 for each call.
So, in 2013, just to get the name right, businesses spent $14.9 billion! And that’s just in the U.S.
The system also allows caller profiles to be shared automatically between call centers, even when they’re located in different countries. So you’re not giving the agent you’ve just been transferred to your personal information for a second or third time.
The system comes with a three-level fraud detector flashing green, yellow and red alerts. Perhaps you’ve noticed that most current ID systems don’t work well with cell numbers. Next Caller ties in with not only landline numbers but also cell numbers.
And it works with several existing systems, including Cisco, Avaya, Salesforce, Genesys, Five9, SAP, Zendesk and, most recently, with Nextiva’s 80,000 business users (all they have to do is check a box to access Next Caller).
So, let’s now move on to some key questions.
How well does Next Caller address the problem/solution equation? Very well. Amazingly, 61% of inbound calls to companies today are considered “unknown,” many presumably from cell phones. Even the “known” calls do not provide call center operators with basic contact information. Next Caller solves this problem. It saves time and eases frustration on the part of both parties.
Is the company showing above-average traction? The company was founded a little more than a year ago. It’s very new, having just graduated from Y Combinator (a top three U.S. tech accelerator program). Since graduating, it has had to spend a major portion of its time raising funds.
Even so, the company has accumulated 240 paying customers, has grown revenue by 25% a month and has signed several distribution deals. So far, its traction is very impressive.
Is the leadership/team up to the task of building a successful company? Ian Roncoroni graduated from Princeton University and founded Soho Energy Corp. before co-founding Next Caller. Fellow co-founder Gianni Martire co-founded Hotlist before Next Caller. He’s a computer science graduate with several startups under his belt. In terms of skill set, the founders form a nice combination.
A Sturdy Three-Legged Stool
First Leg: Funding. Last Call is listed on the reliable Wefunder site. It graduated from its Y Combinator class a few weeks ago and is already nearing its target funding of $2 million. It gets high marks for funding progress.
Second Leg: Product development. The technology represents a near-finished product. The Next Caller team is already expanding its application to make “commerce by phone” as easy as it is online. And it’s beginning to move from small business clients to much bigger ones. For example, it’s currently working on getting contracts with seven of the Fortune 50. Just one of these global companies would generate revenue amounting to several hundred of what a typical small business would generate. Its product development is outstanding to date.
Third Leg: Customer development. Just scratching the surface but a good start. The $2 million it’s raising in this round will be used to strengthen the development and sales team. That’s when marketing traction should accelerate. But, so far so good.
The Investment Terms
You’d be putting money in a convertible note, which is a debt instrument that would be converted to shares at the next round. So, at this point, you’re lending to the company. The minimum amount you can lend is $2,000. When your loan converts to shares at the next round, the price of those shares will be $10 million max divided by the total number of shares offered to date. The interest earned on the debt instrument is 2%.
To invest, go to wefunder.com and register as soon as possible. The fundraising should be finished any day now. You should register as an accredited investor. So be prepared to answer a few very simple questions to let the Wefunder site know you qualify as an accredited investor. Then click on the green box with the words “Apply to Invest in Next Caller” and follow the instructions. You will be charged a $75 fee. Wefunder will also take 10% of the profits if and when Next Caller is bought out or undertakes an IPO.
It’s really important that you take the following very seriously. We recommend that you not invest more than 5% to 10% of your investible savings in startups. We also suggest you not invest if you can’t afford to lose the money put up. Keep in mind that you should refrain from investing if you need that money in fewer than five years.
It’s also a good idea to invest in the expectation of not getting any returns for at least three years (and possibly up to eight years or more).
Your money will go into a fund called “Wefunds Next Caller,” managed by a Wefunder affiliate. By investing, you agree, “to be bound by all provisions of the LLC Agreement and the applicable Series Appendix.”
Sincerely,
Andy Gordon
Startup Investor Portfolio
