Deal Radar 2009: uTest, Massachusetts

This blog has covered various aspects of outsourcing in some depth; today we turn to a business model that is at the crossroads of the older outsourcing model and the growing preference for on-demand and SaaS services. uTest uses crowdsourcing for its customers to test their Web, desktop, and mobile applications through a large community of software testers worldwide. Through uTest, companies can get their apps tested across location, language, operating system, browser, phone maker, model, and wireless carrier (for mobile apps).

“Crowdsourcing,” coined by author Jeff Howe, is simply defined as “…the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.” This method of testing could be better suited to software testing than other outsourcing models as the crowd reflects the diversity of the end users of the product being tested.

The Massachusetts-based company was launched in August 2008 by Doron Reuveni, CEO. Rueveni has over 20 years of experience in the software industry, delivering solutions to both Fortune 500 companies and startups in Massachusetts. As a software executive, Reuveni found it a challenge to launch a Web or mobile application in a cost-effective and timely manner, to work in real-world conditions. Since testing and launching fully-tested apps proved difficult and prohibitively expensive, he was on the lookout for an easier solution, and the concept of tapping into a diverse global community of professional testers set the idea of uTest in motion. The company was also founded by Roy Solomon, VP of Product & Project Management.

The company has raised $7.5 million so far: a $2.3 million Series A from Mesco Ltd. and MTDC (Massachusetts Technology Development Corporation) in December 2007, and a $5.2 million Series B led by new investors Longworth Venture Partners and Egan-Managed Capital as well as their previous investors in December 2008.

Today, with the Web and mobile applications market becoming so competitive, getting high-quality apps to market quickly can make or break the success of a product or company. Companies are under constant pressure to get apps built, tested, and launched as quickly as possible. In the past, traditional methods such as in-house testing, outsourcing, testing using emulators/simulators or beta testing have worked, but they don’t meet the quality assurance (QA) needs of most applications today, especially mobile apps. Software apps testing has become a very complex process, and companies are on the lookout for a fresh approach like crowdsourcing.

In just over a year, uTest has acquired over 150 customers and built a community of 20,000 professional testers. By tapping into this large bank of testers, companies can complement in-house QA departments to build, test, and launch desktop, Web and mobile apps. The uTest community can be used as a virtual testing team for start-ups or as an on-demand extension for in-house QA departments of large corporations. Web, desktop and mobile apps can be tested by the uTest community in as little as 48 hours, for a fraction of the cost of traditional outsourced testing, thereby maintaining application quality, achieving broad testing coverage, meeting launch dates and staying within ever-shrinking budgets.

The process is as follows: Customers specify their testing requirements and uTest identifies which testers are the best fit for each project. Test scripts and user cases are uploaded through the secure uTest platform. The testers report bugs in real-time, which the customers can subsequently review, approve or reject. Once the test cycle is completed, the customer pays uTest, who in turn pays its testers. Using an on-demand business model, customers purchase only the number of test cycles they need so there is no waste. Prices for test cycles depend on how many tests customers buy. For example, if a customer buys two test cycles, the price for each is $2,000 and they have four months to use them. If they buy eight cycles, the cost per test cycle is only $1,250 and they have a whole year to use them. For agile companies that may have a new product every month, uTest also offers monthly, quarterly, and annual subscription plans. Subscriptions start at $1,500 per month and cover a test a month. Since the company company’s launch, it has completed more than 700 test cycles and testers have reported over 30,000 bugs.

By 2013, the software testing services market is expected to become a $56 billion industry, according to a software consulting firm Ovum’s March 2009 report. A Gartner report says that 50% of the software testing services market is outsourced. Because uTest is highly complementary to in-house QA teams, the company generally finds itself competing against status quo solutions such as offshore and outsourced testing shops.

uTest’s customers range from startups to Fortune 500 enterprises that need a fast, cost-effective way to get their Web, desktop and mobile applications tested. Some of its customers include Google, Intuit, Nivio, icq, Babylon, and Smartlogic. The tester audience includes software testing professionals of all experience levels across Web, mobile, gaming and desktop applications, from testers who are between jobs, to VPs of engineering who manage large teams, to computer science students to 10-year QA veterans.

uTest has been successful in reaching out to both, their customers and testers, through social media efforts on Twitter, LinkedIn and Facebook, as well as traditional PR. Their biggest source of growth, however, has been through word-of-mouth.

The company also introduced the ‘Bug Battle’ – a quarterly competition that rewards testers with cash prizes for finding bugs in selected applications. A recent Bug Battle resulted in over 1,100 testers from 50 countries testing the top three search engines (Google, Bing and Yahoo!) for bugs as well as comparing them for overall accuracy, speed, real-time relevance, and usability. CNET has reported the results of the ‘Battle’ in detail.

During Q1 2009, uTest grew 300% in quarter-over-quarter revenues. It also acquired 36 new customers, added 3,000 testers to its team of QA professionals and grew its employees by 40%. uTest’s testers and number of customers expanded by 30% quarter-over-quarter in Q2 2009. Thus far in 2009, the company has acquired more than 100 new customers. According to Compete, the site had approximately 11,000 unique visitors in August 2009. uTest has also been named to the ‘2009 Gartner Cool Vendor’ list, ‘InformationWeek’s Startup 50’ list, and the ‘Stevie Award for Top New Company in 2009’.

Aside from software testing, uTest sees four major areas of growth: mobile app testing, gaming app testing, usability testing, services and load and performance testing services. In terms of an exit strategy, Reuveni said, “Our philosophy is that companies and management teams that take their eye off of precise execution generally don’t need to worry about positive exits. So our focus is 100% on delighting our customers and the uTest community.”

Recommended Reading:

The Apps Store Wars

Deal Radar 2009: UserVoice

Deal Radar 2009: Collaborative Software Initiative

This segment is a part in the series : Deal Radar 2009