The call centre next door

The Leipzig-based start-up colpari wants to use its platform to make the call center world more accessible to other young entrepreneurs, with the help of better pay for employees and personal service. Venture capitalists have been holding back so far, which is why a new business model is now being developed.

For many technology-driven startups, the rule is to first drive your market share as high as possible and then look at profitability. A good example of this is the delivery service app developers that have mushroomed around the world over the past decade. It has been shown that their business is usually only profitable when a market is only served by one provider.

Venture capitalists, unlike banks, therefore look primarily for such rapidly scalable business models. As a result, companies that operate solidly but don't promise rapid growth can fall behind in the fight for these funds.

Oliver Farr knows this problem all too well. He and his three co-founders Daniel Alex-Laese, Frank Fricke and Rene Rost founded colpari in 2019, a company that aims to enable young start-ups to set up their own service departments for their customers. To do this, colpari matches them with freelancers who want to work in the field via its in-house platform. This way, young companies can, for example, set up their own call center without having to hire one of the big service providers. At least, that's been the business model to date.

Freelancers get up to 30 euros an hour

Farr knows both the call center world and the startup world. He used to work for corporations in customer service, then he advised Leipzig-based startups in the field. "My co-founders have similar biographies, so it seemed logical for us to start a company for exactly this service," he says.

Many of the founders Farr met in Leipzig found the concept of established call centre companies unsuitable. Especially the fact that they do not get a permanent team there, deter them, he says. Colpari therefore places freelancers with companies, who are then supposed to be a permanent service team for the customers. They are paid either by the minute or by the ticket, the latter especially if customer service is not primarily provided over the phone but via e-mail. Colpari collects a fee per minute worked. One minute of service costs at least 85 cents, 50 cents of which is paid to the freelancer. That makes an hourly wage of 30 euros. "For training, they also get a fixed hourly rate, which is not common in the industry, for the self-employed," Farr says.

The concept has been in place since mid-2020, and colpari has been able to attract a number of customers. Among others, a cosmetics company uses the start-up's offer. A technology article provider also relies on colpari. The model can be expanded at will, says Farr. Basically, the bigger the client's staffing needs, the better, he says, you're in a volume business. "I used to work at Ebay, they had well over 300 people working in customer service, in theory we could do that with our model," Farr says.

The start-up wants to be less of a call center and more of a tech company in the future.

Colpari is already profitable with its current model. But because the start-up wants to grow further and needs more money to do so, it feels compelled to fundamentally revise its business model. In fact, companies like colpari often come up against limits during the growth phase. This is because venture capitalists usually focus on one thing above all: rapid scaling potential. It only helps to a limited extent if the business model is already profitable at an early stage.

The Leipzigers therefore want to take the first steps from customer service provider to software company this year, not only to place freelancers, but also to provide their own computer programs. "Companies put a lot of time and money into their service organization. You have to provide infrastructure, administration, and hire experts," Farr explains, "With our customer service operating system, companies have a one-stop shop to design and set up your entire service organization." That's how the startup hopes to make it to be perceived as a technology company in as little as two to three years.

The advantage of being a software-as-a-service company: the business usually has more rapid growth, more investors take notice. If everything works out the way Farr and his colleagues envision, the call center market would end up being truly revolutionized. After all, each company could set up its own.