Monday, March 28, 2011
Interview with Morgan Lynch, Needle
Morgan Lynch, is the CEO and Founder of Needle, and is a successful serial entrepreneur, having sold his last company, LogoWorks, to HP back in 2007. Lynch's latest startup is Needle (www.needle.com), which provides online chat services to e-commerce sites and brands from product experts. Lynch told us all about what Needle is up to, how the site grew out of his search for a wetsuit, and how he's applying the same models developed at LogoWorks into a new market.
What is Needle all about?
Morgan Lynch: Needle is a turnkey solution for sales chat for ecommerce sites that want to raise their conversion rates and increase brand loyalty. We use product experts to provide rich conversations. We have really powerful tools, but that also requires the right type of people, something that has been missing historically. We have a cloud workforce of brand mavens that can talk intelligently, knowledgeably, and passionately about products and services they own and use. We basically enable e-commerce sites to leverage people like you and I, who have expertise in an area, and lets them talk to customers in real time. That's opposed to the usual use of someone in a call center, who doesn't have any knowledge about a product or services. The result of that is a high quality conversation, and obviously, a high quality conversation is going to provide a higher brand experience and a degree of brand loyalty.
Isn't it fairly tough to find those sorts of people?
Morgan Lynch: Actually, it's not that hard. There are now many vocal people on the Internet, who like everything. These as the people who are blogging and writing about products and services, people who are providing free tech support, and certainly the people doing product reviews you see on PowerReviews and Bazaarvoice. They don't mind spending time writing those reviews, and blogging about products, talking with friends, and using social platforms to talk about products and services. They're more than happy to have a one-on-one conversation with people as well, with the right reward compensation systems.
What do you mean by a reward compensation system?
Morgan Lynch: They get paid an hourly rate, as in any job. However, there are lots of fun components. The money is okay to pretty good. But, what really is the fun part, is there is a point system which allows users to earn points to do certain things. If you're performing well, and sites are happy, you accrue points. Those points can get redeemed for products, the same products you're talking about. To use our case study of Skullcandy, people who are talking about Skullcandy are rewarded with more Skullcandy products.
What's the story behind the company?
Morgan Lynch: I was shopping online for a triathlon wetsuit. I remember it quite clearly, because I was interested in a challenge from my younger brother. I wanted to beat him, so I got online because I had heard that wetsuits could make a big difference. However, I knew very little about them, and those wetsuits are a technical product. It's something that is a considered purchase. I found out that the typical way you might search for information--on Google--is not a good way to get shopping advice. It's not a good way to get information about a product. That's when the light bulb came on. At that time, I knew there must be 20 or 30 people who were connected to their computer who would be happy to tell me which wetsuit to buy and which were best for my needs, given that I was a beginner, and my body type, and even where to buy them. I wish that a button had been there where I could gladly push a button to talk to a real human being who had used the product--who might even had won some regional competitions, who can help direct me to brands I should pay attention to or what might be the right one for me. That just didn't happen.
Was this while you were at LogoWorks, or after?
Morgan Lynch: I actually spent some time off between the sale of LogoWorks to HP, and then I started Needle. I had been working on various projects, wasting money in real estate, and the light came on when I encountered the wetsuit. I realized that the solution to the problem was actually not that different from LogoWorks. What we did at LogoWorks, which created logos for small businesses, was not very well understood. We had a cloud workforce of graphic designers, who provided very high quality output and creative. The way we did that was we developed motivation and performance systems that kept them motivated to do high quality work. I did that for five or six years, learning how to motivate people, make it fun and entertaining. When you apply those principles, you can do phenomenally well. Even people who wouldn't normally work in a call center, if you can get them engaged and allow them to work a few hours here and there to talk about products they like, they will do that. We can bring that talent to other companies, who just can't get that from other chat or inbound telephone providers.
How is Needle backed--are you funding it yourself this time, or do you have investors?
Morgan Lynch: I've certainly funded it myself, until recently, when we closed a Series A with a strategic angel investors, somewhere over a million dollars.
What do you think you did right at Logoworks, and how are you applying that here?
Morgan Lynch: We did a few things right, though we also probably did a few things wrong. But, one of the things that worked for us, is we bootstrapped it and had to figure out our business under pretty hard circumstances. There was not a lot of room for error. That made us tighten up our actual platform, to figure out how to deliver the high quality creative that we did. We didn't have unlimited funds. Honestly, this time with Needle what we're doing is not all that different. Venture capitalists have been a little cold, because what we're doing is not well understood. We certainly have enough capital, and though it's a little different than Logoworks, we now have customers and metrics and have venture capitalists paying attention. They were asking on how chat can be new and novel, since people have been doing it for ten years, but if you look at the marketing aspects, the conversion, and the power we provide to marketers, it's a totally different model than what anyone has done previously.