Pypestream’s CEO Talks Messaging Between Businesses and Consumers

It is pretty much a given that more and more people choose messaging apps as their primary means to talk to each other these days. But so far, companies have been sluggish in using this medium as a way to talk to their customers.

Sure, there is e-mail and the occasional exchange across social media with companies, but New York-based Pypestream wants to bring more direct communication to business and consumer interactions.

CEO Richard Smullen says his company’s app lets consumers, who opt in, send and receive messages from businesses they wish to interact with. That can include making payments on invoices and purchases within the app. Pypestream’s software launched in beta back in December, and the company already works with businesses such as MetroPCS and Billboard.

In the spring, Pypestream will put its artificial intelligence and machine learning software to work to let businesses automate customer service, and also try to make it personal. For instance, if the system cannot answer a question, the message will be directed to someone at the business for a response.

Smullen spoke with Xconomy about the development of Pypestream. He says when he first came to the U.S. seven years ago from South Africa, he was developing technology for verifying views of video advertising online. That became Genesis Media, based in New York. Seven months ago, he left his full-time role as chief revenue officer at that company, though he remains on the board. Now he devotes his time to Pypestream’s growth.

Xconomy: Where did the idea for Pypestream come from?

Richard Smullen: I was in Florida about a year ago at a dinner, and I had a flight back that evening to New York which I wasn’t going to make. I tried unsuccessfully to get through to the airline’s call center that told me to wait 11 minutes, and through their app, which had multi-leg responses and reward travel options which weren’t what I was looking for.

Through sheer frustration, I went onto WhatsApp and messaged my sister, who lives in New Jersey and asked her if she could please change my flight while I was at the dinner. I gave her the confirmation number; a few minutes later she came back with options. My flight was changed and I didn’t need to go through a clunky interface. And I thought, wouldn’t it have been cool if I were doing it directly with the airline.

In the ensuing weeks, I did a deep dive into messaging and what was available for me to talk to any of the businesses I interact with— normally through a phone or e-mail. I was shocked to see the only real messaging software that existed were extensions to apps, websites, and the like. That was the genesis.

Whoever I would present this [software] to at the various companies as a channel to their customers, those individuals wanted to deal with the other companies they were working with through this kind of channel.

Now Pypestream is in excess of 50 people, with offices in San Francisco and New York. We have a large gas utility onboard who wants their 1.4 million customers to interface with the platform instead of calling their call center. In exchange for them agreeing to do that, they would get a discount on their utility bill.

There’s a massive [return on investment] play behind using a messaging system instead of a call center or an app. That’s really around the artificial intelligence that can be switched on in the backend that can answer a lot of the queries, and respond to what consumers require in terms of customer service or support—with the ability to tailor those response messages with some human touch and personalization.

In the same amount of time it takes for one phone call, you could be having up to 16 concurrent message conversations. It’s a very efficient, drastic shift in cost savings.

X: How is this type of messaging different from social media contact with businesses?

RS: Using social media to interact with a company is more about broadcasting something to that company in an open forum. By nature, we are conversationalists. There’s a desire to have conversations, which are there to potentially expose something that people generally don’t want exposed in a public forum.

If you tweet to a company that your cable isn’t working, they may tweet back that your credit card was declined. No one really wants that in an open forum. You do have direct messaging; it’s very one-layered in its functionality. You couldn’t have them see why the credit card was declined, and then try it again.

With conversations in Pypestream, we’ve made it so private and secure that you can update your payment inside the message. No one else is going to see it. You can ask for a statement because it interfaces with the backend of the bank.

With a tweet, they’ll basically tell you to notify the call center, and on a secure line change your credit card. Messaging is the next generation of what social media really is. Social media was fine as a bridge into messaging.

Quite frankly, you wouldn’t do anything on Facebook that you would do with a call center. You wouldn’t change your flight on Facebook; you wouldn’t change your seats on Facebook; you wouldn’t update your credit card details, or ask your doctor for your blood results.

You can now do that in a messenger.

X: How do you plan to scale up?

RS: Our main focus as a business is handling the demand from the two markets we’re addressing. The first is the self-serve, SMB [small and medium-size business] market. Those businesses are finding us through media and word of mouth. We have a waitlist of a couple of thousand companies. Now we’re staffing up to on-board those businesses.

We also have an enterprise side. This is where we go to businesses that have existing call centers and very complex back ends and integrate our software. Any outputs that come from those existing systems can now be channeled through Pypestream. We’re staffing up heavily on integrators and developers that can build our back end into all these legacy systems.

X: Do you have any outside funding?

RS: We’re pretty well-funded by individuals; we have no venture capital. We’re being inundated with inbound contacts because the market’s realizing that messaging is the next evolutionary channel. We’ve raised around $4.5 million to date.

One of the advantages to keeping out of VC hands—we can afford to make quick decisions.

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