ChaCha aims to differentiate with human search guides

Online search provider ChaCha last week sashayed onto a very crowded mobile dance floor.
The Indianapolis startup unveiled a short-code based version of its search offering, which uses paid human “guides” instead of computer-generated algorithms to deliver information. Users can send questions to 242242 (ChaCha) to query local business listings, sports scores, current events and trivia.
“The ability to ask any question on your mobile phone at any time and receive the answer from a knowledgeable person was unheard of until now,” said ChaCha CEO Scott Jones. “We’re giving everyone with a text-enabled cellphone instant access to information at their fingertips.”
ChaCha is shifting its sites to mobile after failing to gain ground on the Web against behemoths such as Google Inc. and Yahoo Inc. But the wireless playground may prove even more hostile: ChaCha will compete against several white-label mobile search providers (Medio Systems, JumpTap Inc.) and a host of direct-to-consumer companies (Google, Yahoo, go2, 4INFO).
It appears ChaCha comes to the battle well-heeled, however. Amazon’s Jeff Bezos was the lead investor in an initial round of funding that raised $6 million, and ChaCha recently pocketed an $8 million equity investment plus a $2 million grant from the state of Indiana.
And the service appears sound. The “guides” – which ChaCha hopes set the company apart from the crowd – effectively decipher users’ text shortcuts and overcome spelling errors, and a quick testdrive delivered impressive results. A query for ski conditions in Colorado received a response within three minutes informing us that conditions “are generally good with most lifts open in all resorts,” as well as a brief weather forecast. A cocktail recipe was delivered within two minutes, and the service took all of five minutes to return the five most recent Heisman Trophy winners. The simple message “Denver Zoo hrs” elicited a quick reply with the zoo’s year-round schedule, as well as a warning that “Admissions close 1 hour before.”
Unlike competing offerings from Google, Ask.com and others, ChaCha’s mobile search doesn’t include a voice option, forcing feature-phone users to triple-tap queries rather than simply speak them. (Ask.com added voice-activated functionality to its Mobile Directions service last week.)
The startup also faces a major hurdle in driving consumer awareness. The company is looking to build its profile through a pact with the Sundance Film Festival, encouraging attendees to use ChaCha to send text questions about screenings, festival events and local restaurants.
Unlike some other search providers, ChaCha is looking to install a monthly subscription model rather than rely on advertising dollars. A user could pay $5 or $10 a month, for instance, for a large number of queries or unlimited access.
So as traffic on the wireless Web ramps up, ChaCha’s biggest challenge will be creating a service that substantially outperforms established offerings such as Google and Yahoo, which are gaining impressive traction among mobile users. The company is working to differentiate its service with an online “instant search” that uses staffers to include “cool, hard-to find sites” in search results. And a “live guided search” allows consumers to interact directly with a guide in order to deliver highly targeted answers.
The allure of such offerings is valuable in mobile, where even simple services can be cumbersome to use and can return a host of irrelevant results. But whether consumers are willing to spend a few extra bucks a month for such a premium service is far from clear.