Spinvox secures £15m more, but the demo didn't really answer the big questions

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When I walked in to SpinVox‘s plush Buckinghamshire offices this morning, flanked by the Register‘s Andrew Orlowski and Ben Smith and Dan Lane from The Really Mobile Project, the tension in the building was obvious. There were nervously exchanged glances and bad jokes from senior staff. A smartly-dressed James Whatley eyed me reproachfully. But the guys managed to hold it together for long enough to usher us in to a conference room and ply us with pastries.

We were not asked to sign an NDA, but we were asked not to record anything that happened in the room. Ironic, really – and the reason that Ewan MacLeod from Mobile Industry Review declined the invitation.

CIO Rob Wheatley took us through a technical explanation that, while honest about the existence of human agents in the process, didn’t give away as many secrets as he made out (between the four of us, there wasn’t much we didn’t already know), before leaping to what we all came for: the demo.

The big technical question surrounding SpinVox – the one they refuse to answer (as they did again today) – is what proportion of the messages they process are seen by a human being. It’s the one sticking point that has fascinated journalists and customers alike. But SpinVox are staying quiet: all they’ll say is the proportion varies from country to country and from carrier to carrier.

So what happened in the demo, and what can we infer from it about those proportions?

The demo was performed in a standalone test environment, which had only four processing cores – as opposed to the main system’s 800 or so – and was not connected to the wider network. I saw no evidence that what we saw was “a set-up” or “prioritised” demo and I have no reason to think it was (you’ll see why in a minute).

We began with a short, simple message, read by Rob Wheatley himself and called in from his own BlackBerry. The system spat out a perfect text version in a few seconds. Next Wheatley left something a little more complex. A few sentences this time. Again, a perfect and speedy result. But then, both messages were straightforward and they were left in a loud, clear voice at a leisurely pace in a quiet room. You’d have been worried if the system hadn’t got them right.

It was then my turn to try. I left a message, at a brisk speed, that included my full name, the word “TechCrunch” and an invitation for the “recipient” to call me back. I believe that the message was a reasonable and realistic approximation of a real-world message, albeit with a few strange words in it. The SpinVox system failed to convert the whole message – ok, so most humans can’t spell Yiannopoulos – and passed it to a human “agent” (who was sitting in the room with us).

Here’s where it got ugly. From observing the “tenzing” process in action, it was clear to us that the system had failed to pick up a single word in the message correctly. The agent in the room had to listen to and manually type the entire message, from beginning to end. SpinVox has previously claimed that agents do not get to hear entire voicemail messages; only enough to give context and enable transcription. That’s not what I saw this morning.

Spinvox’s people were quick to point out that British English is actually SpinVox’s worst performing language. According to them the system is much better at US English and Spanish.

But if all we have to go on is today’s demo (given SpinVox’s refusal to give any indication of how many transcriptions involve human agents), then it’s hard to escape this implication: that the vast majority of messages left in real-world conditions (like beside roads and in cafes) and containing more than “Hi Jim, can you call me back? Cheers, Bye” are processed to some extent by a human being.

The aim of the day had been to show us how the technology works. First of all: it didn’t, beyond transcribing a simple message in a quiet room. But secondly, and more importantly, that’s not actually what people want to know about any more: since SpinVox refuses to go on the record about the level of human involvement, the media will be left having to continue to speculate about that number, and no doubt investigating it as well.

The sorts of question we did want to ask included:

  • “Do you have a Chief Financial Officer?” They don’t, and – astonishingly – haven’t had one for eight months. This is a company with hundreds of millions in venture backing.
  • “Are your investors comfortable with your CEO being paid over half a million pounds a year when the company doesn’t even break even yet?”
  • “Does the fact that you just accepted another cash injection of £15million mean – given the date of your previous round of investment – you’re burning through £3million a month?”

In fact, that last question was asked by Orlowski during a brief but fiery cameo appearance by CEO Christina Domecq, during which she revealed the new cash injection (again, I wish we’d not been prevented from recording video). Domecq obviously didn’t appreciate the question, and retorted angrily that SpinVox is spending “much, much less” than that per month. She added that the company expects to break even this month and become cash-flow positive very shortly after that.

What else did we learn today? For one, that SpinVox is taking security very seriously these days. “As we’ve matured as a business,” said CIO Rob Wheatley, “Our relationships have matured. Our QC houses [the third-party processing centres contracted to process SpinVox’s messages] are very professional environments in areas where it’s seen as a very good job to have. Our agents are very proud of what they do.”

Proud, perhaps, but apparently not proud enough to be trusted with the Web: we were told that agents’ computers have no web browser (in fact they have no software installed besides the tenzing application and an anti-virus package) or USB ports; agents cannot take cameras or phones into the office; they have to wear ID and uniform at all times and there are background checks into all recruits. 

Ok, that’s reassuring. After all, they’re listening to our voicemails all the time so you’d hope they couldn’t just email their friends the contents or post them online.

But it’s clear: Although the Spinvox denies it’s in trouble and says it is poised to break even, it’s still burning masses of cash, hence the latest injection. And it must surely be clear now that vast majority of messages are seen by human eyes.

So what does that suggest? It suggests that after five years of operation, after processing 130 million voicemails, Spinvox can only handle relatively simple messages spoken in quiet rooms.

And they have not reduced their call centre operation in the last 5 years as the system got “smarter”. If anything they’ve scaled up their call centre operation to deal with the contracts they’ve signed with carriers.

If they were a normal call centre business, a cash business, then that would be fine. But this is a company that effectively claims that at some point, as their voice recognition gets better, the human element will be substantially reduced and the VCs will be rewarded with a business which scales massively. That was not what was suggested by today’s demonstration, which ultimately calls into question the entire Spinvox model.

  • LIAD

    Shame that they had a week + (?) to prepare from sending you the invitiation and still couldnt pull off a meticulous demo even in the santised environment of their conference room.

    $200m of investment is nuts.

    Was the latest $15m cash injection up/down on their previous valuation?

  • deebo

    A difficult situation for Spinvox, certainly one that needs further explaining. Questions need to be answered, and soon. As an investor I would certainly be looking for a satisfactory – and detailed – overview of what’s going on within the company. A high technology business of this nature is a promising investment. A call centre-operation has questionable growth potential.

    That said, the behavior of TechCrunch over the last few weeks has been pretty appalling. You acted like cheap tabloid hacks over the Twitter expose and now you’re taking the high ground over this story. This after hiring a complete twit of a troll that the Telegraph saw fit to drop. A man who, just a few days into the job, ‘accidentally’ published a scandalous and untrue post on a universally respected member of the Spinvox team. Whatever you gain through controversy, traffic to the site and talkability around stories you are rapidly losing in credibility and respect from the technology and investment community.

    Mike Butcher’s renowned abrasiveness is one thing, but at least he has a modicum of decency and a healthy respect for the UK tech industry. Yiannopoulos might have an acerbic wit and eloquent literacy about him, but the vast majority of people on the London tech circuit would be glad to see the back of this jester. Respect has to be earned!

    • Liz

      Damn. That’s a hard post to follow.

    • http://uk.techcrunch.com Mike Butcher

      “renowned abrasiveness”? Wow, really? Like, er, who said that?

      • http://www.daniellight.co.uk Dan

        Yeah, in fairness, I heard that too. On the upside, with Messrs Yiannopoulos and Carr in tow, you’re coming across as downright statesmanlike.

    • http://www.mobileindustryreview.com Ewan MacLeod

      I’ve only really come across Milo’s posts in the last week or so and, based on that, I don’t have a problem with him at all. I was very pleased to read his analysis. Thanks for going down there Milo.

    • http://blog.mo.md Mohammad Al-Ubaydli

      I disagree – really informative article, thank you for going into the details in this and other posts.

  • Liz

    I don’t know what they are claiming (I’m in U.S.) but given people’s accents & mispronounciation, I’d be surprised if human beings weren’t involved in transcribing voicemail messages. Hell, I can’t understand some of the messages people leave me given the speed with which people talk.

    So, I can’t figure out why the use of human beings is so shocking. Is it because this contradicts Spinvox’s claims or because people really have worries about privacy?

    • http://rodolfo.weblogger.com Rodolfo

      “So what does that suggest? […] Spinvox can only handle relatively simple messages spoken in quiet rooms.”

      And that is in line with the actual state of the art in voice recognition. Outdoor cellphone calls will have no more than 20% match on known words. So it will always be a labour-intensive operation.

      Which in itself is not a bad thing and you can still build a huge business around it. But this means you can only make a buck if you are going after rich consumers in North America and Europe for which the marginal cost of Spinvox will be negligible.

    • http://uk.techcrunch.com Mike Butcher

      Liz – It’s because a) Spinvox says its essentially a tech company and makes great play of the fact it’s model scales as a result (so gradually needing less humans to process. And b) There were allegations entire voicemails were being listened to by humans, not machines – this appears to be the case.

  • http://www.mobileindustryreview.com Ewan MacLeod

    I’ve been waiting for your perspective Milo and I wasn’t disappointed. Excellent and revealing post.

    • Justin

      Agreed – very interesting post

  • Sam Mathews

    Its an exciting idea, but the level of technology needed for this to be massively scaleable would be astounding I imagine.

    For starters think of all the regional accents in the UK from Cockney to Brumy to Geordie etc.. then you have slang to take into account, slang itself varies from town to town.. hell even friendship groups use different slang and nicknames. I suppose they could use something similar to Google language translation where by you anaylyse the phrases not simply just the words in themselves and try to make sense of if. However that I assume would be insanely difficult.

    So the question lies then in whether or not they can nail down these three areas to make the business profitable:

    1. Tweak and fine tune the software to get a high enough percentage correct
    2. Maximize the efficiency of the human involvement in the remaining untranslated voicemails
    3. Charge a high enough premium per voicemail .

    A premium which will provide enough margin against the cost of running 1/2 to be profitable!

    Lets hope that they have nailed those 3 things down so they really are reaching breakeven!

    Its a cool concept and I would love to see it succeed.

  • http://www.mobileindustryreview.com Ewan MacLeod

    Neville Hobson’s AudioBoo note on Milo’s post:

  • http://blog.mjelly.com james coops

    As a user the service is amazing – really has made a massive difference being able to get voicemails sent immediately as an SMS for me.

    £500k does seem a bit much to be paying a CEO in a pre-breakeven startup though – and how are they raising more money with no FD in place?

    Hope they manage to sort things out as it really is a brilliant service that makes you much more productive.

  • Danny

    Milo, you say you really wanted to ask questions like “Are your investors comfortable with your CEO being paid over half a million pounds a year?” but don’t explain why you didn’t. If you don’t ask the question it seems unfair to expect Spinvox to answer it. In fact, the way you’ve written this it seems to infer that they stopped you asking such a question, when I doubt that’s the case.

    Also, you’ve stated more than once that Spinvox refuse to go into the extent of human involvement in transcribing messages, but you haven’t reported James Whatley’s repeated justification for that nondisclosure i.e. it would benefit their competitors. Whether that’s a viable excuse or not, you should at least mention it within the context of this article.

    • http://uk.techcrunch.com/author/milo-yiannopoulos/ Milo Yiannopoulos

      It’s not that they “stopped” us asking questions about the business; rather, there was no one in the room either qualified or willing to answer. We did ask a couple – for example, about investment and cash burn – but when Domecq left as quickly as she arrived it was obvious the remaining staff in the room weren’t going to go near them.

      And that’s precisely what I meant when I wrote that this demo didn’t answer the big questions: it was a technical demo of the product, rather than a press conference about the business.

  • Ugo

    What I find interesting is that through out all this One Voice Technologies has been repeatedly bashed against the “Wall Street Rocks” In spite of having signed contracts with Telmex & MTNL and ongoign projects with Intel, Motorola,…


    Check out this link and click the Voice Search link on the left and the story gets even more interesting..

  • anonymous

    “We began with a short, simple message, read by Rob Wheatley himself and called in from his own BlackBerry. The system spat out a perfect text version in a few seconds. Next Wheatley left something a little more complex. A few sentences this time. Again, a perfect and speedy result.”

    You must be joking. He is the guy who set up the demonstration, and he obvoiusly know the text in advance and so he could have easily cooked the demo in advance to spit out the correct words. Dah! Am I missing something?

    • Rich

      Any sufficiently advanced technology is indistinguishable from a rigged demo :-(

  • Aardvark

    Domecq must be laughing all the way to the bank. She’s really pulled off a job here. And who were these investors stupid enough to fork out another 15 million after the first 100 million went down the drain? The mind boggles….

  • Eric E

    This is the sort of thing that can happen when you have no CFO and a well-paid CEO sitting on investor money:


    Lets hope is not the case…

  • David Connors

    Well, that explains one thing I’ve always wondered about … why Telstra charges $14.95 / month in Australia for their “Speech2Text” service.

    Funnily enough I have a different service with Telstra where a REAL PERSON answers my messages and sends me them as an SMS AND an E-mail. LOL

  • Christian

    If some of the comments about human involvement from the Techcrunch Spingate (Facebook debacle) are true, they don’t deserve one more penny.
    The service is cool, no doubt!

    However, at what cost?

  • Christian

    If some of the comments about human involvement from the Techcrunch Spingate (Facebook debacle) are true, they don’t deserve one more penny.

    The service is cool, no doubt about that!

    However, at what cost? If I have to ask myself, every time I receive a message, if the agent who transcribed it just got fired or missed another payday for some minor error, I’d rather listen to my voicemails…

  • Priam Belenge

    Great article Milo – it clarified a lot of things for me

  • Dis Aster

    Dis. Aster.

  • Denny Craine

    Denny Craine!

  • Alex

    Great post!

    There’s clearly something wrong at SpinVox. CEO making $500k in a start up that needs to raise an additional $15Mon top of the $170M already raised. Please!

    I smell fraud

  • anon

    Eric, here is a more better example of what can happen when you have no CFO and a well-paid CEO sitting on investor money:


    Sound familiar?

  • Connor Sweetman

    Well, it sure beats me as to how anybody could invest more money with Domecq. And maybe that is the wrong angle to be looking from in this story or maybe it is the right angle? I don’t know.

    We already know that Domecq is a fraud. She presented herself in England as a sucessful business woman from the States. The revelation of the Bankruptcy in White Plains NY, the stiffing of all the employees and vendors in NY, et al is enough to show that as a fact.

    Now we have D2, The Brain, that is pretty much a flop. No Artificial Intelligence. No Voice Recognition of Billions of different people with thousands of different dialects.

    Just people working in high tech sweat shops being bled to death for their labor and screwing them over as to pay, benefits, etc. all based on some reports that SpinVox refuses to certify or prove out. And if they complain too much, they shut them off.

    Wonder where she is really getting this money? Since I have regularly posted every chance I could get against Domecq whenever her name appeared on any blog since 2002, I was at one point contacted by somebody looking for Michael Domecq’s hidden assets.

    Feeling that was and is totally unfair to Christina to be painted with the *Sins of her Father*, and not knowing Mr. Domecq, there wasn’t much I could tell that person. . . .but now I wonder if they weren’t on to something.

    Or she has pictures of some rich people with hippos. …or maybe she has recorded conversations of them from SpinVox?

    There is no logic what-so-ever in anybody giving more money to SpinVox.

  • Shirley Schmidt

    Love ya, Denny

    Shirley Schmidt

  • coldbrew

    Yiannopoulos: Are you familiar with the CMU SPHINX project? A project from Carnegie Melon University that supplies the core technology via GPL, but the engine has to be trained (sourceforge has the source).

    Do you use Google Voice? I imagine they are using the same core tech. and it isn’t very good (my friends with southern accents are very poorly transcribed). TellMe and Nuance are chasing the same opportunity (Nuance recently acquired Jott, fyi).

  • http://HearWhere.com pedalpete

    There is some reasonable expectation that they would not publicly speak to the number or percent of calls that get handled by humans. That number (if there technology is any good) should drop considerably as they improve, and old numbers have a habit of sticking around.

    At the same time Milo, you’ve done a very good job of introducing the ‘issues’ with the technology, and the info on the new funding round.

    Was the new financing the reason for the demo? or was there something new they were trying to announce? Who raises a 15Million in this market when you are a month from break-even and near profitability? Unless they have HUGE plans for that 15 million in the next few months.

  • http://thereallymobileproject.com/2009/08/spinvox-visit-its-coming/ The Really Mobile Project » Blog Archive » SpinVox Visit - it’s coming

    […] to SpinVox yesterday to see their system in operation.  There have already been several posts by other attendees, but we want to provide a little more of the background information we think those […]

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