Live Person, Inc. (LPSN)
Interview with:
Robert LoCascio, Chairman and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
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real-time, online sales, marketing and customer service solutions.

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Live Person, Inc. – The leader in real-time customer service, sales and marketing solutions

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Software & Programming

Live Person, Inc.

462 Seventh Ave – 21st Floor
New York, NY 10018
Phone: 212-609-4200

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Robert LoCascio
Chairman and
Chief Executive Officer

Interview conducted by:
Lynn Fosse
April 2003

Bio of CEO,

As the founder of LivePerson, Robert LoCascio is the guiding force behind the company's vision to bring dependable, real-time sales support and customer service to the online businesses. With a background in interactive media and a track record of building successful, new business ventures, Robert brings to LivePerson a unique blend of technological and business expertise.

Prior to LivePerson, Robert was the founder and CEO of IKON. IKON developed public kiosks for college campuses that integrated interactive video features with advertising and commerce capabilities. IKON's advertising clients included Citibank and Northwest Airlines. In 1995, Robert sold IKON to a leading college marketing firm and started Sybarite Interactive, a real-time chat technology component to serve as a customer service tool. Sybarite built a Web-based community named TOWN for companies such as Xerox and TRW. The inception of the LivePerson product came from the real-time chat technology within TOWN.

Robert holds a B.A. in Business Administration from Loyola College. 

Company Profile:

LivePerson is the leading provider of online sales, marketing and customer service solutions. Over 3,000 websites currently use our solutions to increase revenue and productivity, answer customer questions, build relationships and deliver results.

LivePerson enables sales and customer service teams to interact with customers online, in a secure, real-time environment, at critical moments during their visit. Our solutions offer websites a timely and cost-effective solution to reach the right customer at the right time – helping to increase revenue and the productivity of sales and customer service agents.

LivePerson is an ASP (Application Service Provider) solution that eliminates the heavy infrastructure investment normally associated with one-to-one customer facing solutions.  LivePerson’s complete product portfolio includes LivePerson Sales Edition, LivePerson Service Edition, LivePerson MultiCARE and LivePerson Pro for small businesses. 

LivePerson (NasdaqSC: LPSN) is a publicly traded company with offices in New York City and Tel Aviv.

CEOCFOinterviews: Mr. LoCascio, please give us a brief history of Live Person, Inc. .

Mr. LoCascio:   “The Company was founded in 1995 and we launched Live Person in 1999. We thought that at the time, when the customer comes to the website, they should have the ability to click, pop open a window and ask a question in real-time and get that question answered in real-time. We launched the company around that notion. What we see today is our products used by companies like eBay for customer support, where they want to reduce costs on phone calls. We also have companies like Microsoft Corporation, which use it to drive on-line sales. It is really about putting the person back in the store online, and that is what our technology enables."

CEOCFOinterviews: How do you get people to start using your product?

Mr. LoCascio: “Right now, 1.5 million people a month use our service to get help through one of our customers. Out of that 1.5 million people, a certain percentage see it and think it is great because they used it on eBay and got great support and they will want it for themselves. We get a fair amount of leads that come through just people using our products.”

CEOCFOinterviews: What is it you are selling to these various companies?

Mr. LoCascio: “We sell them software as an ASP, so there is not hardware or software to install. We sell them the ability to chat with their customers in real-time. If you go back to eBay, right on the format screen there is a button that says, ‘click here for live help.’   We sell the ability for a customer to click on a button, pop open a window and start text-based chatting with a client’s customer support center. We always supply the technology to allow those chaps to have it back-and-forth between the company and the customer."

CEOCFOinterviews: Is customization required for the different customers that you have?

Mr. LoCascio: “There is a little bit of customization. There is a knowledge base that the operators will use to answer questions and that is customized. There may be some integration into a localized system so that when a chat is completed, that can be saved locally. Our model is about getting customers up and running quickly.”

CEOCFOinterviews: What is your revenue model?

Mr. LoCascio: “The revenue model is all recurring; we charge anywhere from three thousand dollars a month to ten thousand dollars a month to serve our starting points on our product line, and we have three product lines. There is a monthly subscription fee, and if you look at our revenues, that is why they have been increasing on the last few quarters. We have that nice base of recurring revenue and we keep building upon that base.”

CEOCFOinterviews: Is it based upon how many people use it?

Mr. LoCascio: “It is based on how many operators the customer wants online, so if EarthLink, which is a customer of ours, has a hundred reps on line, they pay on a per-Rep basis.”

CEOCFOinterviews: Will you tell us about your three products?

Mr. LoCascio: “We have our Live Person Pro, which is our small business product; so, if you are a small business out there and you want to take one or two or ten shots a day, we have a product for you. We have a Live Person Service Edition, which is our product we have had since 1999, which is ‘Click to Chat” that is the one that eBay is using. We just recently released a product called Live Person Sales Edition, which isn’t about click to chat. What it is, if you take Microsoft Corporation for example, you are going to go around and based on how you go through the website, they may proactively pop to the window that says ‘Hey, how are you doing, do you need help?’ - then the customer is proactively engaged automatically. We find that thirty to fifty percent of the chats that the customers are engaging in turning into sales. The merger rates are very high and that is why this product is doing so well. We grew 10% last quarter in an economy that is pretty bad and we are actually growing and expanding right now.”

CEOCFOinterviews: Is there much competition for you?

Mr. LoCascio:  “In the proactive Live Person Sales Edition, we are the only guys out there. We acquired a company back in August of last year, so we took out our competitors. On the Click to Chat, there are two, maybe three companies out there, which are burning cash, and are not doing well as companies. That is why this company is one of the few in the sector that is profitable, growing and increasing its product line.”

CEOCFOinterviews: What is the barrier to entry for someone wanting to start a service like yours?

Mr. LoCascio: “It is really three phases; one is that they have to build a product, which has taken us three years to build and we have a lot of intellectual property in the product. The second part is getting customers, which include: eBay, EarthLink, QVC, Intuit, Ford Motor Company, Proctor & Gamble and American Airlines. The largest companies in the world are using our product. The third part is just capital. There is no more capital going into this space and it makes it hard for a competitor these days to just come out of nowhere, build a competing product and then launch it and enter the market. We have a lot of pricing flexibility and it is hard to beat us on pricing, quality and the feature set of the product because we have been out there so long. For the last three quarters we have had growth; 3% growth in Q-2, 3% growth in Q-3 and 10% growth in Q-4.”

CEOCFOinterviews: What is the market potential for you?

Mr. LoCascio: “The market is about a 100-million dollar market today and in the next three years it will go up to a five to six hundred, million dollar market. It is rapidly growing because it is really moving from an early adopter type of technology. eBay is a very early adopter when it comes to technology and they just came online with us eight months ago. That is why we are signing a lot more traditional companies these days and it is moving rapidly. That is why you can see the growth in numbers expanding, because the market and demand is expanding and we have the product to expand with the demand.

CEOCFOinterviews: Do you envision a time when it would be standard for companies to offer this type of service?

Mr. LoCascio: “I believe everyone will have our technology someday. There is going to become an inflection point, in which it will dawn on most sites and companies that they have to have this because they can’t treat their customers in a way that they are going to come to the site and leave. That is the key to this technology, to embrace customers so they don’t go to competitors. On the Internet, it is one click away to a competitor. Our technology allows them to keep them as a customer and sell them.”

CEOCFOinterviews: Do you have many customers outside the US?

Mr. LoCascio: “The product is currently in fourteen languages. We have about 45% of our revenues, which are sold outside of the United States. We have a base of customers outside of the U.S. and I think it is close to thirty-forty customers. We are representing China, Korea and Japan, all the European countries, and South America. People from around the world use our technology because we deliver it as an ASP, as a service. It is easy for them to get it up-and-running, they don’t have to install software, they can go to our website and have it up in an hour. We have done well outside the US”

CEOCFOinterviews: Are there many companies trying to do this in-house?

Mr. LoCascio: “I think there are a few but when you are dealing with large organizations, there is really no call for them. We have a technology that is hard to build. It is not just chat, which is relatively easy to build. We are building a technology that enables them to put one to two hundred people online to take chats, and that is very sophisticated technology. It mirrors a phone switch, what Lucent Technologies has, except we are using chat.”

CEOCFOinterviews: Will you tell us about the cash and credit position of Live Person?

Mr. LoCascio: “We have eight million dollars in cash; we have not burned any cash since December of 2001. We are putting in 500 thousand dollars a quarter in cash in the bank. The company has been cash flow positive for over a year and a few months and we are growing. We are a very stable company.”

CEOCFOinterviews: What are your biggest challenges going forward?

Mr. LoCascio: “It’s sales and marketing. We have growth and have recently been in investing in our sales by doubling up our sales forces. We are hiring a vice president of sales this quarter. When I talk about this growth, it has been based on our own three sales people. We shut down the sales organization in 2001 into early 2002 and started building it back in late 2002. We are seeing the fruits of the three by people. We are going to double that sales force this quarter and we are investing in marketing. We have to get the word out there and get decision makers to support and have this on their mind.”

CEOCFOinterviews: In closing, what you like to say to shareholders and potential investors?

Mr. LoCascio: We have two aspects of the company that are important for shareholders today. One is that we have spent the last two years making sure the core of this company is extremely strong and the foundation is strong. It shows that we haven’t burned cash for over a year. Secondly, we have eighty percent plus gross margins and a good business model. Thirdly, we have very good technology, good customers and good people at the company. We have that core in-place.

We have three quarters of back-to-back growth. We announced our quarter yesterday and put out that we are confident that we are going to hit our projections for next year and we are anticipating growing by a little above 30%. We think that is healthy growth for a company of this size. Potential investors should look at a strong core, expanding market, growth with the market, and good customers. I am excited about the company. The dream one day is to see that every site has this technology and that LivePerson provides it to them.”

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