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When Customers Get Angry, This Startup Seeks to Help Modria, a conflict-resolution platform built from eBay and PayPal software, seeks to resolve disputes between consumers and businesses.

By Brian Patrick Eha

Opinions expressed by Entrepreneur contributors are their own.

Online retailers are gearing up for a busy holiday shopping season. But what happens when your customers don't receive the items they purchased? Or if they claim the goods are incorrectly described? Modria, a new conflict-resolution platform, wants to be the place you can resolve customer issues swiftly and transparently.

Modeled after the software that eBay and PayPal use to process their own claims, Modria was founded by the man who built that software, 42-year-old Colin Rule. To date, Modria has been testing its new dispute resolution system with a number of big clients but will be available to everyone starting today.

The company, which has raised $1.25 million in seed capital, sells its platform as a software-as-a-service and will also charge for disputes resolved through its panels of mediators and arbitrators. It expects to quadruple its current monthly revenue of $10,000 to $15,000 by the first half of 2013, Rule says.

We spoke by email with Rule and his co-founder, 40-year-old Chittu Nagarajan, also formerly of eBay and PayPal, who is based in India, to find out how Modria can help ecommerce companies. What follows is an edited version of our exchange.

Entrepreneur: What made you decide to launch Modria?
I've been in the dispute resolution field for 20 years. I wrote a book called Online Dispute Resolution for Business in 2002, and eBay hired me in 2003 to build their online dispute resolution system. It's the single largest ODR system in the world, processing over 60 million cases a year. Realizing that disputes expanded far beyond eBay and PayPal, we spun some technology out of PayPal in 2011 to start Modria and we have since built a technology that handles any kind of dispute online.

Nagarajan: [ODR] was a true calling for me. I got trained as a mediator and jumped straight into ODR by starting and in 2004. Colin in 2007 asked me to join him at PayPal to help him with another cool ODR project called "The Community Court." This project won the PayPal innovation award LabRats for two consecutive years in 2008 and 2009. This sent a message to both me and Colin that the time had come for us … to start Modria with a vision to help resolve disputes efficiently, quickly, at low costs right from where you are seated anywhere in the world.

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Entrepreneur: Are eBay and Paypal part owners in Modria? How are the intellectual property rights handled?
We're an independent company. eBay doesn't own any of us. We license the code from eBay. That initial platform that my platform built when I was inside eBay -- we licensed that from eBay when we started Modria. eBay did not take an equity stake, but as we improve that initial code base, eBay has the rights to use those improvements. I kind of joke that the code was my severance package from eBay.

Entrepreneur: How will Modria try to redefine conflict resolution?
The field of conflict resolution has grown rapidly over the last 30 years. Now people all over the world are using mediation and arbitration to resolve their disagreements outside of the courts. We want to take the next step by expanding conflict resolution onto the Internet.

Modria will be the place consumers and businesses will go to resolve any type of dispute. [Even beyond customer complaints.] The list is endless.

Entrepreneur: What has been your biggest struggle since founding the company in April 2011?
The hardest thing for me, personally, was saying no to some opportunities so as to be focused as much as possible on building the best possible resolutions platform at launch and then starting to build discernible traction. I realized early on how large this opportunity was, how easy it would be to say yes to everyone.

Most people see disputes in a negative light, like an inconvenience, or even a failure of some kind. It's been said that dispute resolution is like the dentist's office: you never think fondly about the dentist's office on a day-to-day basis, but if you have a toothache, you can't think of anything but the dentist's office. So we've had struggles getting organizations to see their disputes as an opportunity -- both to make a connection to their customers and to build loyalty.

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Nagarajan: Startups are high-pressure environments. The need for business and the need to motivate your colleagues and manage the globalized team are all part of the game. [Sometimes] you need to change strategy within a minute. Explaining the benefits [of new technology] to people who are not willing to accept the change is also an uphill task.

Entrepreneur: What is the biggest lesson you've learned at Modria?
Everything takes longer than you think it's going to take. Even though we had the software live and running within eBay for three years before we spun it out, it still took us months to get customers on board, build a team, raise money and scale revenue. Be conservative in your estimates, because there are always going to be unforeseen challenges.

Nagarajan: Everything takes so much time. There is no magic formula. Challenges are abundant.

One more thing which I would like to add….Colin and I always wanted to have two offices -- one in the U.S. and one in India -- and would never change that, because we believe we can be situated anywhere in the world, with a single passion, same vision and mission we can run a successful company. Also being located in different countries provides very different perspectives to the product, company and most importantly how to handle conflict (which differs across the globe).

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Brian Patrick Eha is a freelance journalist and former assistant editor at He is writing a book about the global phenomenon of Bitcoin for Portfolio, an imprint of Penguin Random House. It will be published in 2015.

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