At General Catalyst, we have a long and proud history of hatching companies – including Demandware, Datto, Kayak, and Livongo. These days we are particularly interested in scaled, legacy sectors where technology – and especially AI – can have an immediate, transformative effect, and where we can help accelerate this by bringing together the diverse talents required to build and scale these businesses.
The contact center business is one such area. It is massive - per Statista, the value of contact center billings is estimated to grow from $460 billion in 2022 to $741 billion in 2030. Further, 34% of the market and 15% of all white collar jobs in the US come from this industry, with Philippines and India having meaningful market share at 12% and 15% respectively.
Despite this scale and opportunity for impact, the industry has been slow to innovate. According to a Gartner report, contact center cloud adoption is at 12-15%, unlike peer categories like CRM with 55-60% cloud adoption. Most contact centers are seen as cost centers, and AI and cloud investments are often deprioritized. This impacts not only enterprises and contact center operators, but also has an adverse impact on the agents who have turnover rates of 30-35% per the same report due to workloads and burnout per SQM Group’s Research..
Artificial Intelligence and the advent of LLMs present both a threat and an opportunity to this sector. Given how many people are employed in this sector, getting this right is key. AI adoption is expected to reduce up to $80B in labor costs in contact centers by 2026, according to Gartner. But it also has the potential to turbo-charge customer service workers by making them more efficient, anticipatory and effective, ideally reducing burnout and turnover by automating the mundane work and improving job satisfaction. That said, in our view, for many contact centers AI is still an after-thought, especially the majority who haven’t migrated to the cloud.
We see a real opportunity to work with existing scaled players in this industry - namely world-class contact center operators who have the operational know-how to deliver the services day to day - and team them up with two new types of talents: the best AI-native engineers, who know how to build and fine-tune LLMs to make them work by leveraging the deep and rich insights from customer interactions and build increasingly automated resolutions loops, and leading CCaaS product minds who know where to focus on innovation vs re-inventing the wheel.
Today, we’re delighted to announce the result of that effort: Crescendo – one of the first vertically integrated, AI-native contact center businesses. We believe that vertically integrating the pieces and creating a feedback loop could result in industry leading automation of several scaled use cases. Using this IP, we believe we can drive material margin improvements in how contact centers are operated. This project brings together GC’s work in Creation and AI with our growing work in the US-India corridor.
To help build this business, we have partnered with Andy Lee, Matt Price and Dr. Slava Zhakov to be co-founders along with GC. Andy founded Alorica, the Gartner Magic Quadrant leader in contact centers with over $2B in revenue and built it without any outside funding. He is widely believed to be one of the best operators in this industry and combines deep industry knowledge and a track record of creating value with a beginners’ mindset of what AI can do to re-imagine the industry he has helped build. He is paired up with Matt who comes from building several 0-1 products and go-to market initiatives at Zendesk as SVP, joining there 3 years before their IPO and developing a successful decade-plus track record as a go-to leader with deep contact center industry expertise. Before joining us, Slava helped build Genesys from its early days and was a core contributor to their success as CTO. Between the founders, we have a team that has helped build four companies in this sector to over $1 billion in ARR. We believe the caliber of talent we’ve been able to attract is testament to GC’s ‘radical collaboration’ approach. This intentional pairing of talent, many of whom would not have encountered each other independently, is a critical aspect of our creation strategy.
In the initial stages, the goal is to build an AI-layer which creates playbooks that deliver automated resolution paths for repetitive contact center use cases as well as insights into how operations and customer satisfaction can be improved. We will prioritize 1-2 key verticals, and have already begun deploying our technology with early design partners. Our expectation: 10x+ productivity gains for agents and call center operators, while delivering a truly conversational experience for customers, all without long wait times. If done thoughtfully and in alignment with our Responsible AI manifesto, we believe this could be one of the most meaningful technology innovations directly introduced into contact centers in over two decades. We are joined in this by Alorica, who is participating as a strategic investor in Crescendo.
It is our privilege at GC to focus on an essential industry problem that touches so many of us - as agents, enterprise decision makers and most importantly as end consumers. We are honored to partner with Andy, Matt, Slava, as well as Alorica on this journey.
