2021 Letter From the CEO
In my letter from last year, I declared that 2021 will be the year of the bots. Looking back this has been proven right. This year’s letter will cover the ongoing pandemic, and after looking at Solvemate’s 2021 review, business learnings and 2022 plans, I will end with a note on remote work and climate change.
Living With the Pandemic
As we are entering our third year of the pandemic, COVID is still a ubiquitous topic. The virus affects not only my news feed, but also daily activities and business decisions.
One thing that I learned is to become reactive with regards to COVID instead of (trying to) predict the future, so I will refrain from doing so. My personal hope for 2022 is that the new Omicron variant, which is replacing the Delta variant at a radical speed, will be less harmful and thus we have a new flu type that we need to live with; prevention is then part of our yearly flu vaccination. Time will tell.
Business-wise I am convinced that most companies have adapted already. Hygiene policies from restaurants to flights have been established, masks are normal and QR codes scanning as well as a ”baby-elephant of distance” have become part of our new life.
Coming back to Solvemate: We have decided to work remotely for the indefinite future already back in mid 2020 and selling B2B software without physical meetings has become the new normal, too. We have had a great ride in 2021, so let’s get into it:
2021 Review
In 2021, Solvemate had a great year. We were able to grow our revenue by 90% and to onboard awesome new brands to the Solvemate family like Focus Bikes, Möbel Höffner and the 1. FC Köln in Germany or Hobbii, GoMore and JoeNimble internationally. Also our product has significantly improved with features like:
New onboarding: To make it even easier to get started for our customers, we have launched a new onboarding wizard that helps them set up the bot even faster.
CRM field mapping: When capturing information in a bot (e.g. a new address), our customers can configure their CRM integration in a way that the customer inputs are directly stored in the right data fields in their CRM by mapping it automatically. Et voilà!
Five new CRM integrations: We launched integrations to Dixa, FocalScope, Help Scout, Cention and Twilio, which means we now have 13 integrations to CRM systems available for our customers.
Accessibility: Solvemate now enables greater inclusiveness - our accessibility feature helps customer service teams extend the use of self-service to those with impairments so all customers can find instant answers.
Multi-lingual bots: Currently in beta version, our customers can now not only have multiple bots for multiple markets, but also have multiple languages per bot. Following our highest quality standards we do not rely on auto-translation and have deeply ingrained this feature into our product.
Voice as a channel: Customers can take the great Solvemate experience and add it to their phone systems to automate even more inquiries. Still, the majority of customer service requests are calls - Solvemate makes another big leap towards being an omnichannel automation solution by offering our - currently in beta version - Conversational IVR.
We have also continued to improve our unique Solvemate Contextual Conversation Engine™. We’ve added Danisch, Swedish and Norwegian in addition to German and English to our supported languages. The Solvemate Contextual Conversation Engine™ is at the heart of our product and a key differentiator. If you want to find out more on why and how we outperform competition - check out last year’s blog post about this.
We are building all the product features for our customers to serve their needs. And they are so happy that they give us not only 4.8 / 5 ⭐ stars on G2, but also quotes like:
“Next year our (direct to consumer) DTC business will grow further. To deal with the ticket volume we need Solvemate’s help so that we offer more self-service to our customers” - Global Head of D2C Customer Experience from On
“Our customer service team actually gets to the bottom of the emails now. I think for the first time since... ever” - Marketing Coordinator at Jacobsen Møbler
“This is the first time we have been able to have live chat open during peak hours, because we can decide exactly on which topics we want to offer it through the chatbot … Our agents actually want to take chats now” - Customer Service Manager from SPORT 24
We are proud of those quotes as they prove why we exist: We help customer service teams serve more customers, faster and thus to save people's time. We help the end consumer to help themselves and agents to be more productive with the ultimate goal to improve customer service efficiency and effectiveness as well as increasing Customer Lifetime Value as we create a better customer experience. We help customer service departments create meaningful conversations.
Because we provide so much value to our customers, we have managed to increase our Net Dollar Retention from 136% to more than 150%, which is among the top 5% of SaaS companies.
Thank you, #SolvemateTeam, for a successful 2021. This is a team effort and a team result.
The Time is Now
As I mentioned in my last year’s letter, 2021 is the year of the bots. I have been tracking the Gartner AI hype cycle since 2017. See below a visual overview of how Chatbots have wandered over the hype curve. Bots passed the Peak of Inflated Expectations already in 2019.
The 2021 version of the AI hype cycle revealed that:
Chatbots will reach the plateau of productivity in less than 2 years.
The time to act is now. Not only because Gartner says that bots are ready, but also because we see more and more evidence that our instant economy leads to more impatient customers who crave immediate actions. Services ranging from music (Spotify) over video (Netflix) to groceries (Amazon Prime Now) are in an ever-increasing race to be the fastest, most convenient, most at-your-fingertips solution.
Thus, also for customer service, real-time solutions will be demanded. I strongly believe that the time of the end consumer is the new gold. Any company failing to keep up will soon find their customers abandoning them in favour of their faster and more convenient competitors.
2022 Outlook
Fueled by the market demand rising, our own growth and starched by our wonderful customer feedback, we have decided that 2022 will be the year of growth and acceleration for Solvemate.
We have sharpened our customer focus to serve the Mid Market as our sweet spot and focus on continental Europe for our expansion. From a product side we will make setting up a bot even more easy, fun and intuitive by enabling more automation with less coding and thus put the power of service automation - even more - into the hands of customer service teams.
We will more than double our team size and continue our way to become the leading European automation platform for customer service. I will not reveal more here - stay tuned for exciting updates to come!
Remote Work
As per Summer 2020, Solvemate already decided “As a company, we default to offering full flexibility for colleagues to choose [to work] in the office and/or [to] work remotely.” Remote work needs - like office work - best practices to be productive. We learned a lot and as the learning process is still ongoing I will write a dedicated post on this later in 2022.
Let’s have a strategic deep dive here and look at the pros and cons:
Private Side
➕ live where you want (within half-a-day travel time to the next company office)
➕ lower cost of living (as it’s optional to live in the expensive center of a metropolis)
➕ (young) families can get social support (when moving nearby their relatives)
➕ save commuting time (the average commute is ~30-40 minutes per day)
➖ less in person social interactions with colleagues
I intentionally did not add any note on productivity as I don’t think the productivity of a company decreases when working in a distributed environment.
But what about a hybrid mode with e.g. three days in the office and two days remote? That’s a compromise which is better than only office work for workers, but not really enabling the benefits 1-3 mentioned above.
Finally: From a private side, this is just a question of personal preferences; there is no right or wrong answer. However, I predict that workers will in the future favor more remote work in the coming decade when choosing a new position. This trend is not reversible as the pros are real.
Company Side
➕ access to international talent (as physical residence in a specific place is not required)
➖ increased company complexity (more countries to deal with for payroll; tax questions; salary levels for the same job indifferent countries; international holiday schedules etc.)
➖ change effort (processes need to be adapted; cultural change is necessary)
First things first: For a majority of jobs remote work is not possible, but in Germany ~40% of jobs are “office jobs”, that are done on a screen or in meetings or on the phone. Those can go remote.
I am convinced that access to international talent outweighs the company complexity, so the change effort tilts the needle.
It highly differs from company to company. E.g. if a company is very HQ-office centric, hierarchically organized and still using paper, the effort for going remote is probably a magnitude higher than for a flat-hierarchy digital tech startup. However, there is only one direction as a strategic success factor of a company is having access to international talent.
The pandemic has accelerated a thought process and triggered technology changes. Five years ago, working remotely would not have been possible as it is today. In the cloud era and with video calls of decent quality, the point-of-no-return is there. Remote work will only increase over the next decades to come.
Don’t get me wrong: I am not saying office work is bad; in-person meetings are great and Solvemate is also actively planning on meeting minimum every quarter in a “homecoming” in person. However this also means that 80-90% of our work is remote at Solvemate.
I sometimes feel that remote work today is like eCommerce back in 2005. Early adopters use it, but the benefits are not yet widely acknowledged. Fifteen years later, by 2020, the non-food eCommerce share of revenue was about 20% in Germany.
I hereby make a bet that the share of companies that are working 80%+ remotely, will exceed 20% by 2035.
Something that has an even longer time horizon than 2035 is climate change. Let me end with my thoughts on that.
Climate Change Needs Everyone's Action
I am a proud member of Leaders for Climate Action and think that sustainability is one of the most important topics of this century. I have been offsetting my personal and business carbon footprint for years. I use renewable energy, try to avoid flights and buy local as much as possible.
One of my favorite books this year was “How to avoid a climate disaster” from Bill Gates. The concept of the Green Premium is genius. We clearly need to reduce the Green Premium to zero via innovation: Sustainable products should reach the same price as conventional ones - which should then get the dominant choice.
But most people (including me) are not researchers or working in green-first companies. So what can we all do ourselves?
Change our own behaviors. The average carbon footprint of a European resident is a magnitude higher than in a third world country (see this eye-opening Wikipedia infographic). I am also convinced that climate change also needs a change in our own individual consumer behaviour. The ecological footprint of any action must become part of our day-to-day decision criteria. Avoiding is best, choosing sustainable vendors is second.
Avoiding: Is it necessary? Do I need to really consume or travel? Will it increase my happiness level? A personal example: For the 10 year wedding anniversary with my wife, we were thinking about an intercontinental flight to the Indian Ocean. We actively decided against the intercontinental flight to save ~6 tons of CO2 and thus ~30% of our private yearly carbon footprint. Instead we will take a car and spend some time somewhere nearby.
Sustainable vendor choice: Often, there is the choice between a minimum of two competing products that are only marginally different in quality or price. If the consumer chooses the vendor that is more eco-friendly, companies will see eco-friendliness as a competitive edge and thus have a financial incentive to change. A recent example: I bought a new headlamp from Petzl as their Social Corporate Responsibility page is significantly more comprehensive and appealing than from the competing vendor I looked at. Every single decision counts. Everyone contributes to the change.
With that, we are already at the end. Thank you for reading.
Stay safe, stay healthy, and have a great holiday season! 🎄
Erik Pfannmöller + all the Solvemates
(A picture from our yearly company meeting (due to COVID virtually)
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