It was as their last company flirted with bankruptcy that Mike Murchison and David Hariri came up with the idea for Toronto-based chatbot provider Ada Support Inc.
The entrepreneurs saw an opportunity in the problem that plagued their previous startup, Volley Industries, which was an inability to respond quickly enough to a rapidly increasing customer base.
“With Volley, the quality started to deteriorate as it grew, which is not what you want to see,” Mr. Murchison says of the former social network aimed at entrepreneurs.
“It exposed us to this problem, which is: ‘How do you scale customer service operations? How do you provide as good an experience to your first 10 customers as you do to your next million?’”
The duo made the difficult decision to drop Volley at the end of 2015, but ran with the lesson of better serving customers.
Mr. Murchison and Mr. Hariri immediately rolled up their sleeves and began calling customer service managers at other rapidly scaling internet companies.
“I asked them, ‘how are you keeping wait times low and customer satisfaction really high as you’re growing,’” Mr. Murchison says. “Everyone laughed. Everyone said, ‘well, we’re not.’”
The pair then began working as frontline customer service agents for seven different teams, getting paid per call. They resisted the urge to start writing code for their own startup before fully understanding the scope of the customer service problem.
Over the coming months, they answered tens of thousands of customer calls and learned that 30 per cent or more of inquiries are repetitive and mundane, such as resetting a password.
They also discovered that most customer service agents were frustrated with the software tools available. The tools seemed to be designed more to sell more licences and not to make workflow easier and agents more productive.
Customers also said they wanted to use text and online chats to resolve issues. When inquiries were answered quickly, the entrepreneurs saw how customer loyalty improved. What’s more, live agents reported higher job satisfaction when easy calls were handled by the frontlines, leaving them with more complex calls, which is important considering the annual average staff turnover rate at customer service departments is around 45 per cent.
The entrepreneurs also noticed how beneficial the feedback and data were coming from customers in these conversations.
“Customer service conversations are such an incredibly valuable resource for businesses. There are so many powerful insights that come from these conversations,” Mr. Murchison says, adding that much of the information can get lost in the corporate hierarchy.
These first-hand findings motivated Mr. Murchison and Mr. Hariri to build their own, easy-to-use, automated customer service software to integrate with live agents. Chatbots handle initial calls, responding to simple inquiries and escalating more complex calls to human responders.
Over time, they quietly began testing their software in the work they were doing for other companies.
“The way that we knew Ada was really working was because we actually didn’t tell our employers that we had stopped doing the work manually and they kept paying us,” says Mr. Murchison, Ada Support's chief executive officer.
In late 2016, the founders launched the Ada Support automated chat platform.
And, in just over three years, the company has hired more than 100 employees and raised several rounds of venture capital, most recently a US$44-million Series B offering.
Today the company responds to 100 million customer service inquiries a day for companies like Telus, Air Asia, Shopify, Rogers Bank and the Boston Globe.
It wasn’t a quick shift from Volley to Ada Support but instead a tedious, risky, hands-on effort to bounce back from an idea that couldn't scale.
Drastic pivots like Ada Support’s often don’t work out, says Boris Wertz, founding partner of Vancouver-based Version One Ventures.
“Finding the energy to start something new is tough,” says Mr. Wertz, whose company was an early investor in Volley, and then Ada Support
It was Mr. Murchison and Mr. Hariri’s dedication to their startup ideas that attracted Version One to invest in each company, Mr. Wertz says.
The work the pair put in to understand the problem – then fix it – paid off, Mr. Wertz says. He also believed Ada Support had a good shot at success.
“The product just works really, really well,” says Mr. Wertz, who also helped bring other investors on board with Ada Support. “A lot of care and diligence went into creating the product.”
The successful pivot has taught Mr. Murchison the difference between commitment and attachment – a lesson many entrepreneurs learn the hard way.
Mr. Murchison says: “It’s really important to a business’s success, or any project’s success, that you are committed to success but not attached to how you get there.”