Business ideas sometimes come from the most unlikely places. Take Any Question Answered (AQA), a British-based mobile phone service company that charges a flat-rate of £1 ($2.06) to answer any question customers throw at it via text messaging.
AQA's novel approach to mobile search got its start after founder and Chief Executive Officer Colly Myers was stumped by a friend who wanted to know, of all things, the word for a baby herring. When Myers wasn't able the find the answer surfing the Web from his mobile phone, he sent a text message to a friend who looked it up online from a PC and texted back a reply.
The No-Scroll Search
The answer to the question—a baby herring is called a "slid"—wasn't nearly as important as the epiphany Myers experienced. Why not, he thought, set up a mobile service for people who want fast answers to everyday questions when they're away from their PCs, but don't have the patience to scroll and click through the responses offered via mobile search? In 2004 the South African native, who ran smartphone software maker Symbian from 1998 to 2002, started AQA with about $2 million of his own money.
Now, four years after Myers' light-bulb moment, AQA answers more than 16,000 questions a day from customers, ranging from serious ("What is the gross domestic product of Latvia?") to silly ("What color underwear am I wearing?"). By 2008, Myers figures, AQA will be fielding more than 50,000 questions daily. The cost of the service appears directly on customers' phone bills or is deducted from their prepaid balances, so AQA needn't get involved in collecting service charges.
The company says it manages to answer three-quarters of incoming questions within five minutes and 95% within a half-hour. But it makes no formal promise of response time because some obscure inquiries can take hours to research. All questions are eventually answered—somehow. Revenues are growing smartly, topping $5.7 million last year, up from $846,000 in 2005. AQA earned $413,000 in pretax profits in 2006 after a loss the year before.
A Sustainable Model?
The question, of course, is whether AQA is just a novelty or has latched onto a sustainable growth market. Analysts are impressed so far. "AQA has tapped a rich vein that has the potential to work very well," says Mark Grant, head of broadband and media at telecom researcher Analysys in Cambridge, England. "The service has grown remarkably with little publicity."
It's not alone, though. A pair of former UBS (UBS) bankers have set up a rival company in Britain called Texperts that also charges £1 to answer any question submitted via text message and claims to be growing at 20% per month. "Our service has hit a chord with people looking for a better way to use their phones," says co-founder Sarah McVittie, who adds that the startup is evaluating sponsorship deals that could lower prices by placing ads after individual answers.
The longer-term concern for both AQA and Texperts is that as handsets and the wireless Web continue to improve, mobile consumers may prefer to fetch answers themselves from Google (GOOG) or other search engines, rather than paying somebody $2 to do it for them. Early evidence shows, for instance, that Apple (AAPL) iPhone owners surf the wireless Web far more than users of earlier, browser-enabled mobile phones.
Myers isn't breaking a sweat. After all, the vast majority of today's handsets are still designed primarily for voice calls and text messaging—the perfect setup for services like AQA.
What's more, Myers argues, part of what AQA customers are paying for is human intelligence. "The real breakthrough was to get actual people to answer the questions," he says. "Automated answers wouldn't have satisfied anyone; the human touch is where we add value."
Profits in Piecework
For that reason, AQA's business setup is quite unusual. The company employs about 1,000 freelance researchers in Britain and abroad—many of them students—who are paid about 60¢ for every correct answer they provide. (The balance of the $2 fee is divided between AQA and mobile operators.) The piecework approach keeps overhead to a minimum. "They only have to pay researchers when texts come in," says Analysys researcher Grant.
No doubt some of AQA's traffic could be vulnerable as the novelty wears off. About 40% of incoming inquiries run from unanswerable ("Who is going to win tomorrow's football match?") to absurd. But the remaining 60% are serious requests for information—everything from facts and figures to the location of the nearest Chinese restaurant. Myers says he expects the percentage of nontrivial inquiries to grow as customers start to see AQA as a kind of mobile Yellow Pages.
To speed responses, reduce costs, and improve the quality and consistency of responses, AQA also has built up a database of 10 million previously answered questions to which researchers can refer. Myers says that 35% of incoming questions now can be answered immediately from the database, and he expects the figure to rise above 40% in the next few years.
One question in the database that gets asked surprisingly often is "What is the meaning of life?" AQA has an answer for that: "Life is the result of a complex sequence of chain reactions and has no underlying meaning: Find out what you love and do it." For other such inquiries where there is no definite answer, AQA researchers are urged to be creative. "We're not afraid to give you our opinion," Myers says. "Opinions are more useful than not answering the question."
Plans for Expansion
To branch out from its core business, AQA now is in talks with firms to offer bespoke text-answering services for customers. An airline, for example, could hire the British firm to field questions related to flight delays or connections, which would usually be answered through call centers.
AQA also has plans to expand into Germany and Italy, where services will start under licensing agreements with local companies in the third quarter of 2008. This will be combined with a $4 million advertising campaign across the company's markets, which dwarfs the $500,000 AQA spent on marketing last year.
Still, AQA and rival Texperts face the risk that mobile search eventually will go the way of its fixed-line counterpart—to Google and others. "These products are really hot, but it's still early in their commercial application,"” says Stephanie Pittet, an analyst for research firm Gartner (IT) in Paris, who adds that lots of firms are trying to find the killer application to bring mobile search to the masses.
Text-based responses backed by human researchers are likely to be just one of the solutions. But as long as someone in the world is dying to know what a baby herring is called, there still will be a place for mobile services like AQA.