SpinVox, founded in 2003, is a pioneer in delivering speech-to-text applications. SpinVox claims it has agreements with twelve telcos, to provide a system to translate voice mail messages into SMS or emails. These days SpinVox has been in the news because it just secured $100 Million financing from Goldman Sachs, GLG Partners and others, to fund their international expansion. See the blogsphere reaction:
- VentureBeat SpinVox raises whopping $100M+ for voicemail to text conversion states “SpinVox claims more than 6 million users.”
- TechCrunch SpinVox Translates Voice-to-Text Service Into A $100 Million Round mentions “The 31-year-old CEO, Christina Domecq (a member of the liquor family of the same name) says this latest round values the company at $500 million.”
- GigaOM SpinVox Nets $100M and a $500M Valuation quotes “Currently it can transcribe in French, Spanish, English and German; the funding will help it add Italian, Portuguese and Arabic to its repertoire”
Considering Automatic Speech Recognition as just a Voicemail feature, $500M valuation seems really high when compared to Voicemail suppliers. Current price for Voicemail systems can easily be under $2/user. Even assuming Spinvox could sell the feature to carriers at $2/user, how many customers do they need to have to justify their valuation? Note the many competitors in this domain: startups (Jott, GotVoice, SimulScribe), specialized software (Nuance), big players (Microsoft, IBM, Google) and messaging vendors such as Comverse, Openwave or Alcatel-Lucent. The valuation reminds me of the Internet Bubble, where money was coming from investors instead of from the customers.
Nonetheless a good learning for any start-up seeking financing. SpinVox just does once thing, speech-to-text, and builds on its core competency to provide related applications (voicemail, blogs, social networks, etc). Do one thing, and be the best at doing it. Venture capital will love you, and hopefully your customers too.