With today’s Deal Radar installment we bring our focus back to web startups. UserVoice offers customer support service for any website and allows users to give votes to their favorite suggestions. Founders Richard White, Marcus Nelson and Scott Rutherford—all serial entrepreneurs—modified Digg’s principles of crowdsourced news, or social news to come up with UserVoice. The idea was simple: take some of the crowdsourcing principles that worked for news and apply an added constraint (a voting limit) to help limit the vocal minority, a bane of customer feedback.
As entrepreneurs themselves, the founders realized the frustrations entrepreneurs face with the time and effort they spend listening to users, even if there are only a few thousand of them. Though customers’ ideas are good, they are often fragmented across blog comments, emails and discussion boards. The founders understood how hard it was for companies to aggregate all feedback into one place, respond to everyone and keep them updated on progress. Quite often, this results in a vocal minority wherein the squeakiest wheel gets the grease, something the founders sought to rectify.
When they started, there were a lot of companies using crowdsourcing for news gathering like Digg and Reddit, but there were limited options if one wanted to roll outside of bulky open source offerings. Although there were a number of enterprise options, they required hefty up-front costs in terms of money and deployment time. Around the same time, the founders also saw Web 2.0 go corporate and the rise of SaaS for hosted tools. Further, Salesforce had deployed a similar product to UserVoice for Dell with ideastorm.com, which helped the company validate the market.
So they focused on staying true to their Web 2.0 roots and making UserVoice easy to use. UserVoice says that compared to enterprise incumbents, they are much easier to get up and running, as their deployment times are measured in hours, not weeks, and they are hosted in the cloud that helps customer contacts avoid IT hold-ups. UserVoice allows users to express opinions, suggestions and complaints. Users can choose to contribute anonymously and search if their suggestion is a duplicate. Companies can use UserVoice to find out directly from users, through options like polling, about whether they like a new feature or idea.
The Santa Cruz, California-based company follows the ‘freemium’ model. They offer a free account that allows you to have one forum and up to 500 votes/month. They also have tiers that range from $19/month to $2,000/month depending on level of usage (voters per month) and premium features that give companies more control. The company allows a 15-day free trial on all accounts, irrespective of the price band the customer opts for.
UserVoice feels that with 26 million businesses in the US and the EU, half of which already have an online presence, getting feedback from customers, both existing and prospective, is perhaps as important for a successful virtual presence as traffic analytics. The company has more than 13,000 customers and boasts of 150 million widget views a month. Further, they are growing their customer base across a number of verticals outside their core business customers with startups like TweetDeck, political parties like the Liberal Party of Canada, universities like the University of Wisconsin; and even singers and rock bands like Mike Shinoda and Linkin Park, among others.
UserVoice has remained funded with investments from friends and family. The company will raise its first VC/angel round soon to keep up with the amount of inbound interest in their product. When asked about their profitability, they quoted Paul Graham and called themselves “ramen profitable”.
This segment is a part in the series : Deal Radar 2009