Mike Murchison and cofounder David spent most of a year working as full-time customer service reps for seven companies before building Ada, the no-code AI chatbot now valued at over $1bn.
Murchison says the team proved the value manually first, avoiding code, and then built software that replicated their own work, with managers unable to tell the difference in responses.
Murchison credits Boris of Version One Ventures, who backed the $500,000 pre-seed pivot, with a founder-friendly response when told Volley was no longer the idea they had backed.
How a failed consumer app pivot became billion-dollar Ada
Ada, now a billion dollar company with about 350 employees, grew out of a failed consumer app. The founders found that software is a service and the service bar was too low. They proved the value by doing the support work themselves and handing it to software only once managers could not tell the difference.
Takeaways
Ada began as a fix for Volley's own problem. Mike Murchison and cofounder David struggled to scale customer service at their consumer app Volley. They first wanted to improve Volley, not start a company, and checked that the same problem appeared across industries before committing.
They worked as agents before writing any code. Seven VPs let the founders join as frontline agents. For the better part of a year they did full-time support at seven companies, which showed them the work firsthand and gave them the data to design the product.
Manual proof came before software. The team proved value by hand, then built software that copied the manual process. When they swapped software in for their own replies, managers could not tell the difference and response times fell. Mike calls it a classic experiment.
Support work exposed a clear market opening. At least 30% of inquiries, in some cases over 80%, were repetitive. Tools were painful, colleagues kept asking for a messaging channel and being refused, and conversations held sales and product insight. Contact center attrition averages about 45% a year.
Lean startup means learning fast, not building an MVP. Mike says lean is about learning as quickly as possible, and writing software is rarely the fastest way. Pablo says about ten sales-oriented interviews is not getting out of the building. Mike adds that committed founders seek a no.
Be committed to the goal, not attached to the idea. Attachment to Volley blinded Mike to other ways of solving the problem. He now stays committed to elevating customer experience but not to any one product. The pivot felt like personal failure at the time.
A founder-friendly lead investor eased the pivot. Boris and Angela of Version One Ventures led a $500,000 pre-seed. Boris took the news that Volley was over with no problem, asked about next ideas and introduced Mike to Shopify, later an Ada customer. Boris is still on the board.
How Volley became Ada
Volley, a social search engine, grows quickly but cannot scale customer service, and its consumer users are not paying.
The founders interview many VPs of customer experience, who say support is treated as a cost center.
Seven VPs let them join as frontline agents, and they work full-time at seven companies for about a year.
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On this episode 2
Show 1
Volley goes into maintenance mode while the founders run both products during a messy transition.
A $500,000 pre-seed round from Version One Ventures funds the pivot.
Early customers come from friends, cold emails and introductions from founders at Wattpad, Wave and Wealthsimple.