Chatwoot challenges Zendesk with an open source platform for customer loyalty
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As consumers flocked to online channels during the pandemic, companies took advantage of whatever technology they could get their hands on as part of an industry-wide digital transformation effort. Customer communication and engagement tools, in particular, were at the fore as companies tried to make sure queries and issues were answered and resolved quickly.
At the same time, companies are faced with more and more data protection regulations, while customers expect their data to be treated with care and not passed on to third parties without a valid reason.
That’s why Chatwoot is building an open source customer loyalty platform to challenge some of the key players in the space, including multi-billion dollar publicly traded Zendesk; Salesforce Service Cloud; Freshworks; and intercom. To help with its mission, Chatwoot announced today that it has raised $ 1.6 million in seed capital from Goat Capital, Y Combinator (YC), Uncorrelated Ventures, Hack VC, and a variety of angel investors including Austen Allred, CEO of the Lambda School.
By offering an open source alternative to these well-known proprietary established companies, Chatwoot promises two great benefits to businesses of all sizes. In the age of the European GDPR, the California CCPA and countless upcoming regulations such as the Colorado Privacy Act (CPA), companies can no longer play quickly and easily with user data. Because Chatwoot is an open source platform, companies can host it entirely on their own infrastructure.
“It is an operational effort to ensure that the third-party vendors you use comply with these laws,” Chatwoot co-founder and CEO Pranav Raj S told VentureBeat. “In regulated industries like healthcare, where HIPPA compliance is required, using a third-party solution may not be an option.”
Another key selling point is Chatwoot’s extensibility, and Raj S argues that while most existing customer loyalty tools work well for a SaaS business, they are likely not flexible enough to accommodate different data models from industries like healthcare and insurance integrate. A SaaS platform may want to monitor product usage metrics, user engagement, and other data that is either anonymized and aggregated or otherwise not particularly sensitive. However, an insurance or healthcare provider can hold all kinds of confidential and personally identifiable information (PII) that it needs to access internally while protecting it from third parties.
“With Chatwoot, these companies can define their own data models for a customer and add information to them,” explains Raj S. “Ultimately, this helps to provide more context for the members of the customer service team.”
Welcome to Chatwoot
Chatwoot’s genesis dates back to 2017 when Raj S and its co-founders developed a proprietary product that focused on customer support tools for social messaging channels. Things didn’t quite go that way for Chatwoot in its original form for various reasons, and after seeing the growing number of privacy regulations and companies exploring self-hosted options, the team decided to release the product as open source in 2019 before it ended was founded last year as a new company. The founding team also made it into YC’s 2021 winter season.
The central Chatwoot platform represents a common inbox that enables companies to connect all of their various communication channels – such as social networks, email and messaging apps – in a single, central location. From here, everyone in the company can see all previous communications and pick up where the last chat left off.
Elsewhere, Chatwoot offers most of the tools you would expect from a modern loyalty platform, including a live chat tool; native mobile apps; and pre-built integrations with third-party platforms like Slack, Shopify, Stripe, and chatboot tools like Rasa and DialogFlow.
At least one other similar platform already exists. Fellow YC alum Papercups calls itself an “open core intercom alternative,” although its current focus appears to be on a live chat widget. Chatwoot, on the other hand, supports most of the channels a customer is likely to want to reach a business through, including Facebook, Twitter, WhatsApp, Instagram, and email, and businesses can also create their own custom channel using an API.
Show me the money
The customer engagement software market was valued at $ 11.5 billion last year and is expected to double in five years – so Chatwoot is chasing a chunky segment.
In terms of business model, Chatwoot takes a hybrid approach to monetizing its platform. For those who want to keep full data control and self-hosting, Chatwoot offers a number of premium add-on services, including a $ 19 per user / month plan, installation support, monthly software updates, and priority technical Support provides. An Enterprise plan that comes with “bespoke” pricing includes additional features such as the ability to develop custom integrations and customize the Chatwoot user interface to be more branded.
At the same time, Chatwoot also takes a fully hosted and managed software-as-a-service (SaaS) approach that starts free for a limited “hacker” plan, with additional tiers called “startups”, “corporations” and “corporations” include. “
Companies that want to use the free and open source (FOSS) Community Edition, of course, pay nothing, with no limit on the number of agents they can use.
While it’s still in its infancy, Chatwoot claims that around 1,000 companies are using its product worldwide, although it’s mostly used in the free self-hosted community edition. Raj S noted that, while not actively tracking self-hosted installations, it has observed contributions from developers working at Unity, Microsoft, and some government organizations in Europe.
Available under a permissive MIT license, any third party can take Chatwoot and do whatever they want with it. Does this mean they could also build a competing service like we’ve seen elsewhere in the FOSS space? According to Raj S., while there are numerous examples of what is happening in the infrastructure space and beyond, it is unlikely to be a problem for Chatwoot.
“I don’t think that would be a problem for us as there is a significant UI component associated with the product that cannot easily be repackaged into another product,” he said.
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