SmoothSpan Blog

For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

Helpstream: Focused on a Market Primed for Speed

Posted by Bob Warfield on June 9, 2008

I loved Carleen Hawn’s recent post on GigaOm: How to ID a Market Primed for Speed.  There is a lot of wisdom there, courtesy of serial entrepreneur Ash Munshi.  Munshi lists Four Steps to identifying a market primed for speed:

1. Identify an inefficient market.

2. Identify a market in which VC money is already being spent. “This means others believe there is a transformation about to a happen,” he says. “What transformation are they betting on?”

3. Identify the part of that market that has not been “staked out.” And be a friend to the constituency that isn’t being served.

4. Look for an external catalyst that could act as a change accelerant. “The question is, if something breaks (like regulation, a rate hike), can you capitalize on [the change] in a way no one else can?”

You could not ask for a better definition of what we’re doing at Helpstream for Customer Service.  Let’s take a look:

Identify an Inefficient Market

Is there anything more inefficient than the way most companies approach Customer Service?  When was the last time you had a good experience at the hands of Customer Service?  Is it common?  Is it the majority of times when you need Customer Service?  Most people would say “no”.  Yet, when we put the shoe on the other foot, and look at the cost to deliver Customer Service and the headaches associated with it, we see that vendors are no happier than their customers.  This has to be the very picture of inefficiency.  A lose-lose proposition pitting “us” the customers against “them” the vendors.  The goal of these systems and organizations is simply to get us off the phone as quickly as possible–what’s called “deflection” in the trade.  Why else are we immediately told to reboot and call back?  Then when that doesn’t work it’s “reinstall and call back?”  This isn’t help, it’s deflection.

There are varying degrees of the inefficiency.  The worst is the old-school On-premises systems.  These are systems like the old Remedy.  A step up would be SaaS delivery, such as we see from RightNow, but so far these companies are delivering on the web, but they are not very web savvy.  They somewhat reduce the cost of the software, but this pales in comparison to the costs of Customer Service.  Both Good Customer Service (focused on increasing customer satisfaction) and Bad Customer Service (focused on deflection) are extremely expensive, even with SaaS.

Identify a Market in Which VC Money is Already Being Spent

Bingo!  Parature, for example, has received a recent large round from Accel.  There are actually quite a few companies in this space.  As Munshi says, “This means others believe there is a transformation about to a happen,” he says. “What transformation are they betting on?”

Identify the Part of that Market that has not been “Staked Out”

Once again we have a Bingo!  These other guys in this market all seem to be focused on SaaS versions of Remedy.  RightNow was the first, and we can regard Parature as attempting to be a fast-follower for that vision.  But despite a few token offerings, these companies are missing the bigger point.  What is that point?  The web fundamentally changes almost everything about how companies do business.  Many companies haven’t figured that out yet, but for those that have, and those that want to, they have to ask how it changes Customer Service.  We’re focused on providing a solution for those companies at Helpstream, and it’s a pretty darned good one at that.

See Helpstream CEO Tony Nemelka’s recent post on the Abundance of Help for more on this.

Look for an External Catalyst that could act as a Change Accelerant

What better accelerant can there be than the massive changes the web is wreaking on almost every part of the Business Fabric that is our economy?  Whether we’re talking about the new generation coming up through the ranks that expects business to be done on the web and in a web-savvy way, or the tremendous economic advantage that the web can bring your company, there has never been a more powerful catalyst out there.

And, it applies directly to the Customer Service world.  As Tony points out in his post:

Young people today are beginning to wonder why you should do things yourself when you can get help from others to get things done more efficiently and effectively.  They’re wondering why they shouldn’t share their woes and frustrations when there are so many people willing to listen, respond, and help make things better.  Web communities and collaboration technologies have justifiable caused many people—particularly those who have spent most of their lives in a Web-enabled world—to question whether relying on others is really a bad thing after all.

This is just another example of how the Web is fundamentally changing things.

Ash Munshi’s Four Steps are an excellent way to analyze your idea for a venture.  How does it stack up against these criteria?

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