Fixing the Contact Center: Menlo’s Series B Investment in Observe.AI
At Menlo, we’re focused on investing in companies that use technology to automate previously painful, manual processes. That’s why we are excited to announce our Series B lead investment in Observe.AI, a leading Contact Center AI platform that helps top brands streamline their call analysis, quality assurance, and coaching workflows while transcribing every call with high accuracy.
We’ve certainly all heard that “this call may be monitored or recorded for quality assurance purposes.” However, what does this mean in practice? For many companies, contact center leaders randomly sample about 2% of calls to understand how their agents are performing and whether there are any trends worth addressing. This process is slow, inefficient, and leaves enormous gaps in the ability to understand and improve customer service operations.
Observe.AI revolutionizes this manual and incomplete process by providing full visibility into every customer call. Observe.AI’s proprietary technology delivers industry-leading transcription accuracy and preserves the sentiment of each interaction. Managers can use Observe.AI’s intuitive dashboards and reports to understand trends across their entire base of calls, quality check individual calls, drill down into specific exchanges, and surface meaningful business metrics and opportunities in real-time. Once managers have enriched their understanding, the system allows them to take action by running personalized coaching sessions to improve agents and replicate what top performers do best.
Our investment in Observe.AI follows a multi-year exploration of the customer service landscape. In 2017, we wrote about the Power of AI in Customer Service and posited that AI-powered software companies would play an influential role in revolutionizing customer service experiences. Not only were increasingly demanding customers reaching out across a variety of channels, but companies realized that traditional human-intensive service methods would result in skyrocketing costs. At the time, AI/NLP technologies were beginning to advance to the point where they showed promise in limiting the burden of interactions and enhancing the ability to meaningfully understand customers. The founders at Observe.AI saw the same trends that we did and coincidentally founded the company just months after we published our research.
Fast-forward three years from Observe.AI’s founding, and the company has delivered on much of what we were excited about when we first began looking for an investment in AI-powered customer service software. As we became more familiar with the Observe.AI story, we identified a unique combination of a powerful product, capable team, and a large and rapidly transforming market— and knew we had to invest.
- Powerful Product – Observe.AI’s team has managed to build a unique product that delivers significant technical advancements, and a powerful front-end that users love. It’s not easy to please contact centers, but when we spoke to users and buyers of Observe.AI, they uniformly raved about both the UI and technology of the platform. At the core of Observe.AI is a proprietary Natural Language Processing (NLP) engine trained explicitly on call-center vocabulary to power the most accurate transcription and sentiment analysis engine in the market. Observe.AI has built dynamic, user-friendly dashboards on top of the AI, allowing operators and managers to drill down into a particular moment of interest during a specific call and holistically understand team performance.
- Capable Team – It’s incredible to see what the Observe.AI team has accomplished in three short years. Led by co-founders Swapnil Jain, Sharath Keshava, and Akash Singh, Observe.AI has taken the market by storm with customers, partners, and BPOs alike. They’ve managed to recruit leading technical talent with deep NLP/AI experience out of India and an impressive collection of industry veterans in the Bay Area. They’ve been incredibly thoughtful not only about solving the biggest pain points of contact centers, but also about building a platform to leverage across additional aspects of customer communication.
- Large and rapidly transforming market – Core telephony systems today represent more than $40 billion in market cap and another $4-$5B of revenue locked in legacy systems. Even legacy call-recording has $15B in market cap. According to IBM, businesses spend $1.3 trillion on 265 billion customer service calls each year. While the market had been steadily transitioning to cloud-based telephony systems, the COVID pandemic and associated need for remote work have accelerated these tailwinds. Observe.AI is the perfect complement to modern telephony systems and organizations that crave intelligence into the performance of a distributed workforce and their service operations.
We’ve been waiting for a company like Observe.AI to come along for quite some time, and we are very excited to join forces with the team as they revolutionize voice customer experiences. They will be in good company in the Menlo portfolio, joining companies like Heap and Alloy that use powerful AI to dramatically advance the understanding of important business processes.