1Mby1M Incubation Radar 2010: CrowdEngineering, Pisa/Silicon Valley

CrowdEngineering is the developer of CrowdForce, a “business process crowdsourcing” SaaS platform, and of solutions to enable companies to crowdsource customer service, with expert customers supporting others. One of the major aims is to cut the amount of money companies spend on customer service.

Gioacchino La Vecchia is one of CrowdEngineering’s founders and has been its CEO since 2009. He is the former director of Hutchison Whampoa Italy. He has more than fifteen years of experience leading telcos and earned an MSc in computer science from Italy’s Pisa University.

The market was in its infancy when CrowdEgingeering, which has offices in Pisa, Silicon Valley, and Boston, was founded at the end of 2008. Crowdsourcing was considered a tool only for creatives. Communities were starting to become popular, but with a limited population compared to the total customer base and with an insignificant diversion of requests from traditional customer care channels. Another popular trend was to build subject matter expert communities where customers could send their questions. But, not surprisingly, enterprises did not want to send their customers to solve problems in communities out of their control.

Now, says La Vecchia, “the market is huge.” The customer support market is around $500 billion, and the total addressable part of this market is growing. He believes that crowdsourcing can work well wherever the problem’s solution is something a crowd can know. So, with the exception of administrative claims and fault reporting, almost all other requests for information or technical or commercial support, a well-managed crowd could work on. The customer support crowdsourcing market has been estimated at $2 billion, but CrowdEngineering anticipates it will grow up to $50 billion in five to eight years. The top target is the customer service segment of large enterprises like telcos, banks and other financial services, media and publishing, and government. At present, the biggest customer is Wind, the Italian telco company of the Orascom group; several other companies are running internal trials or going to launch soon.

The CrowdForce platform combines the characteristics of a community management solution with workforce management. A skills database integrates with social networks, instant messengers, and Web and mobile devices. Combined with this platform is Crowd4Any, which enables clients to deploy and personalize out of-the-box crowdsourced industry specific processes; customize and integrate existing enterprise software applications built on top of other players’ product suites (e.g., Oracle, Siebel, SAP); create, deploy, and manage new business and consumer applications using workflow and application modeling tools starting from scratch or from pre-configured templates and services; and deploy several communication channels in order to enable application communication through different media. The platform is designed to address the elements that CrowdEgineering considers essential to the successful use of crowd-sourced labor: platform, pool, performance, product, promise, and payment. For more on how that works, click here.

Other third-party cloud-based or SaaS customer service companies include GetSatisfaction, which is used by more than 40,000 companies and last month got $6 million in funding, and ComplaintCommunity and Plebble for organizations in the UK.

CrowdEngineering generates revenues and is cash flow positive. Revenues for 2010 are estimated around $400,000 (80% of which is already committed). The company was funded by the founders in the earliest stages and then secured a seed round with DSeed, a European early-stage fund. CrowdEngineering is now working to a series A in order to accelerate the go-to-market and cover a larger number of countries. It is looking for institutional VC funds as well for corporate VCs. The plan is to close a series A in the first half of 2011.

Operations are at the moment limited to part of Europe and are starting in the United States. The primary growth strategy will be to cover the U.S. and main EU markets with dedicated sales people and to continue partnerships with SIs and CRM companies in order to accelerate penetration and shorten the sales cycle. The focus is on building a large and profitable company, and CrowdEngineering would seriously consider any offer it receives.

La Vecchia pitched at the roundtable on September 9, 2010; the recording is here. I advised him to not take on the whole of crowdsourced BPO and think he will have more success if he focuses simply on customer service as his core value proposition.

Recommended Readings
The Customer Knows Best (from Success magazine)
Should You Crowdsource Customer Service (from Sparkplugging)

This segment is a part in the series : 1Mby1M Incubation Radar 2010