Pypestream wants to kill the call center for good

CEO Richard Smullen wants to take the idea of automating customer service further than his rivals have dared.

A call center.

Call centers may look like this, if Pypestream's automation ambitions bear fruit.

Photo: Kuni Takahashi/Bloomberg via Getty Images

Most call center tech providers straddle a tricky line: broadcasting the benefits of automation while still stressing the role that humans will continue to play. Now, one startup is trying to blow up that whole notion.

Companies like Asapp, Avaya and Genesys insist they see their role as using tech like artificial intelligence to augment, not replace, the work of customer service agents. But increasingly, tech can handle more and more of their daily responsibilities, prompting questions over how long the traditional call center will remain. While some industry leaders say it will be at least a decade, if not longer, to completely roboticize the customer service center, Pypestream CEO Richard Smullen is banking on that future arriving much more quickly.

"Our whole vision was built on this belief that call centers are going to go the way of the fax machine," he told Protocol. "If our product delivers on the promise of automation … then you don't need agents anymore."

Despite that goal, even Smullen acknowledges the current need for some human interactions with customers. Pypestream's system, for example, includes its own toss-over to an agent if need be.

"It's a means to an end," said Smullen. "It takes time for customers to be comfortable enough with automation and believe it's really going to resolve its problem."

It's clear, however, that a major change is underway in the industry. Companies have been digitizing their call centers for years. But the pandemic, which forced service agents out of the sprawling rows of desks and into their own homes, sent those efforts into warp speed. That's evident in the growing revenue for providers like AWS, Five9 and Genesys.

And as those organizations shift what were typically heavily on-premise systems to the cloud, it's opening up a world of possibilities for companies to begin to automate more, if not all, of the daily interactions with customers. In Smullen's mind, that means the elimination of call center jobs. Sling, for example, a Pypestream customer, reduced its customer service department from 1,200 agents down to 60, per Smullen.

Moving beyond chatbots

The pivot towards automation is, of course, true for many other job functions. In fact, the University of Phoenix Career Institute found that, during the pandemic, 22% of Americans said their jobs had become automated. But given the advancements in natural language processing, as well as the entrance of AI heavyweights like AWS into the industry, the call center is uniquely primed for that wave.

And it's exactly the wave Smullen wants to ride. He's raised roughly $40 million to date from TomorrowVentures, SouthWinston and other investors — with another fundraising round and acquisitions on the way.

The goal is to combine customer interactions in the call center with marketing, sales and other departments to build a "digital twin" of a customer to improve interactions and, ultimately, drive more sales.

Pypestream isn't the only provider tackling this space. Genesys, for example, has made acquisitions, including buying Bold360, to beef up its AI capabilities.

Its closest competitor, however, is likely Twilio, whose smart call-routing features have widespread adoption among marketing teams. It's able to create a similar blend of call center software with AI and analytic capabilities through its Flex offering and Segment acquisition. Smullen said a nondisclosure agreement prevented him from getting into specifics about Pypestream's work with Twilio, but added that the two companies are "in talks to do some interesting, exciting stuff."

Outside of Twilio, Smullen argued that creating the customer engagement center of the future becomes harder for legacy providers that are still trying to pivot from voice services to digital channels. It's why Pypestream also views Microsoft's LUIS system and Google's contact center AI product as close rivals.

"Our customers, they've all got call centers. But they don't want their call centers to be there in the future. And the call center guys are trying to hold on to their territory," Smullen said. Rivals "are all throwing up chatbots and they think they are now giving a digital experience to the customer. It doesn't work [like that]," he added.

To achieve that vision, Pypestream combines critical pieces like the customer interface, natural language processing and robotic process automation into one platform, according to a demo viewed by Protocol. While competitors have some combination of a few of those in their product suite, Smullen is confident no other provider has the full spectrum.

Some companies would, of course, welcome the savings that eliminating the call center could bring. (Smullen says a human picking up the phone costs companies an average of $6 per call.) But the reality is that many have spent millions of dollars propping up and supporting their current service operations and are likely hesitant to make such a drastic change.

A more likely scenario is that companies refrain from increasing their overall call-center headcount and instead invest in automation capabilities. It's why other industry leaders doubt that call centers will be obsolete anytime soon and instead see some combination of humans and AI running those operations for the foreseeable future.

"There's a place for both, there will be for a long time," said Avaya Chief Product Officer Anthony Bartolo.


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