Where social media's "It Boy" cut his teethNovember 17, 2009: 8:00 AM ET
Before getting into gaming, Farmville's father was a player in the glam world of online tech support.
Prior to launching the hot social gaming outfit that spawned Farmville and Café World, Mark Pincus founded a trio of companies: Social networking company Tribe.net, downloading service FreeLoader, and SupportSoft, a company that began providing support software for enterprise companies in 2001.
Today, SupportSoft is called Support.com (SPRT) and its current CEO is named Josh Pickus. (The similarity to the name of the company's founder is eerie but purely coincidental.)
The company's focus has also morphed; the company earlier this year sold its enterprise division to Consona Corporation — a daring move, considering that sales to corporations made up a big chunk of Support.com's revenue in recent years.
After coming on board as CEO in April 2007, Pickus instituted a strategic shift aimed at ensuring Support.com's continued growth. He decided the company should pursue in earnest the consumer segment of the market.
Digital home tech support services are expected to grow from $3.2 billion in 2008 to $6.4 billion in 2013, according to Kurt Scherf, principal analyst at Parks Associates. After all, as our world becomes more digital by the day, the possibilities for technology snafus are endless.
The fleet is out
Support.com now focuses on providing tech support for devices like PCs and mobile phones, similar to Best Buy's (BBY) ubiquitous Geek Squad. However, unlike the Squad's "agents," who arrive at customers's homes in VW Beetles, Support.com's technicians take the virtual route, accessing computers remotely via the Internet. A more convenient solution for the consumer and the provider, says Pickus. (Update: Geek Squad offers tech support remotely through a partnership with SupportSpace, which offers services like those available from Support.com).
Most consumers probably have never heard of Support.com, but that doesn't mean they haven't encountered the company's support services. It provides "white label" service for retailers such as Staples (SPLS), product manufacturers like Sony (SNE), and anti-virus providers like AVG.
At Office Depot (ODP), for example, the service is known as Office Depot Tech Depot Services.
Why don't each of these partners draft their own platoon of geeks? "It's too non-core, no one wants to do it themselves," says Pickus. After all, Best Buy didn't invent the Geek Squad, but acquired the company in 2002 for $3 million.
Under the white label set-up — made possible by the remote access subterfuge — Support.com's partners get a cut of the revenue and just as important, the chance to establish their brand as a trusted adviser to consumers, who are then more likely to return for future purchases.
Outsourced, but not offshore, tech support
It's this latter benefit that's attracting scores of players to the tech-support market. In addition to the Geek Squad, Support.com, and a handful of other startups, "Verizon, Dell, AT&T, and Wal-Mart are all poking around in this space," says Pickus.
Indeed several telecoms have begun providing technical support along with their broadband service — some in-house, some outsourced. It's both a new revenue source and a way to retain customers who might be on the verge of defecting or even going completely wireless.
Support.com may win contracts with the telecoms and seek to grow its partnerships in other channels, but its success will ultimately depend on two things: the quality of service it delivers and the ability to automate as much of the support transaction as possible.
Pickus says the company relies heavily on what it calls "support automation." Through software, it helps computers repair themselves so customers don't actually have to call a help desk. If automation doesn't do the trick, a Support.com staffer is available for live support.
Support.com's technicians are in constant contact with the company's R&D team, providing feedback that helps refine the diagnostic tools used to assist customers. The better the software, the faster the problem gets resolved, which serves the company, the customer and the technician (billing is not based on time but on a flat fee per incident or a monthly subscription).
"Tech support is difficult," Pickus acknowledges. "But if I fund R&D as if I'm a software company, I can create margins that don't look like service company margins."
Still, says Parks Associates analyst Scherf, "If you're not fully implementing automated tools, those margins don't exist." He cautions that thorny, time-consuming problems beyond removing malware and clearing out caches could be costly.
Adding to the challenge ahead for Pickus, Support.com is publicly listed and trading at less than $3 per share. That's down about 40% from two years ago, when my colleague Jon Fortt wrote about the company's effort to find a new game plan.
But Pickus remains optimistic. "We'll grow into it rather than take the time to go private."
His prediction? "In the future everyone will have one of these subscriptions and you'll get a free computer with the service."