Kustomer gets $26M to take on Zendesk with an omnichannel approach to customer support

The CRM industry is now estimated to be worth some $4 billion annually, and today a startup has announced a round of funding that it hopes will help it take on one aspect of that lucrative pie, customer support. Kustomer, a startup out of New York that integrates a number of sources to give support staff a complete picture of a customer when he or she contacts the company, has raised $26 million.

The funding, a series B, was led by Redpoint Ventures (notably, an early investor in Zendesk, which Kustomer cites as a key competitor), with existing investors Canaan Partners, Boldstart Ventures, and Social Leverage also participating.

Cisco Investments was also a part of this round as a strategic investor: Cisco (along with Avaya) is one of the world’s biggest PBX equipment vendors, and customer support is one of the biggest users of this equipment, but the segment is also under pressure as more companies move these services to the cloud (and consider alternative options). Potentially, you could see how Cisco might want to partner with Kustomer to provide more services on top of its existing equipment, and potentially as a standalone service — although for now the two have yet to announce any actual partnerships.

Given that Kustomer has been approached already for potential acquisitions, you could see how the Ciscos of the world might be one possible category of buyers.

Kustomer is not discussing valuation but it has raised a total of $38.5 million. Kustomer’s customers include brands in fashion, e-commerce and other sectors that provide customer support on products on a regular basis, such as Ring, Modsy, Glossier, Smug Mug and more.

When we last wrote about Kustomer, when it raised $12.5 million in 2016, the company’s mission was to effectively turn anyone at a company into a customer service rep — the idea being that some issues are better answered by specific people, and a CRM platform for all employees to engage could help them fill that need.

Today, Brad Birnbaum, the co-founder and CEO, says that this concept has evolved. He said that “half of its business model still involves the idea of everyone being on the platform.” For example, an internal sales rep can collaborate with someone in a company’s shipping department — “but the only person who can communicate with the customer is the full-fledged agent,” he said. “That is what the customers wanted so that they could better control the messaging.”

The collaboration, meanwhile, has taken an interesting turn: it’s not just related to employees communicating better to develop a more complete picture of a customer and his/her history with the company; but it’s about a company’s systems integrating better to give a more complete view to the reps. Integrations include data from e-commerce platforms like Shopify and Magento; voice and messaging platforms like Twilio, TalkDesk, Twitter and Facebook Messenger; feedback tools like Nicereply; analytics services like Looker, Snowflake, Jira and Redshift; and Slack.

Birnbaum previously founded and sold Assistly to Salesforce, which turned it into Desk.com — (his co-founder in Kustomer, Jeremy Suriel, was Assistly’s chief architect), and between that and Kustomer he also had a go at building out Airtime, Sean Parker’s social startup. Kustomer, he says, is not only competing against Salesforce but perhaps even more specifically Zendesk, in offering a new take on customer support.

Zendesk, he said, had really figured out how to make customer support ticketing work efficiently, “but they don’t understand the customer at all.”

“We are a much more modern solution in how we see the world,” he continued. “No one does omni-channel customer service properly, where you can see a single threaded conversation speaking to all of a customer’s points.”

(In actual fact, Zendesk has now started to respond: in May the company launched a new omnichannel product called The Suite, which bundles Zendesk Support, Guide, Chat, and Talk to give a unified view of a customer to the support agent. One more reason Kustomer needs to keep expanding what it does.)

Going forward, Kustomer will be using the funding to expand its platform with more capabilities, and some of its own automations and insights (rather than those provided by way of integrations). This will also see the company expand into other kinds of services adjacent to taking inbound customer requests, such as reaching out to the customers, potentially to seel to them. “We plan to go broadly with engagement as an example,” Birnbaum said. “We already know everything about you so if we see you on a website, we can proactively reach out to you and engage you.”

“It is time for disruption in customer support industry, and Kustomer is leading the way,” said Tomasz Tunguz, partner at Redpoint Ventures, in a statement. “Kustomer has had impressive traction to date, and we are confident the world’s best B2C and B2B companies will be able to utilize the platform in order to develop meaningful relationships, experiences, and lifetime value for their customers. This is an exciting and forward-thinking platform for companies as well as their customers.”