I've known Zendesk pretty much since its inception. In fact, I was the first person to write about the company, soon after they launched eight years ago or so. (Disclosure: For a very short period some years ago I consulted to Zendesk around their communications strategy). Back then it was just the three co-founders and lovable sidekick Michael Folmer Hansen (not to mention his alter ego, Jennifer Hansen, a fictitious character that now, as then, greets new customers via email).
Roll on a few years and not only has the company moved location (from Copenhagen to Boston first and then on to San Francisco) but it has grown and is now a publicly listed company.
I caught up with Marcus Bragg, the SVP of Zendesk Enterprise. Bragg has only been with Zendesk for a couple of years but has an extensive history in the broader CRM space -- he's an alum of RightNow (acquired by Oracle) so certainly understands the way traditional enterprise sales happen in this vertical.
Which is interesting given that Zendesk has an atypical approach towards the way it does business -- this is a company that has always been a little bit offbeat (their logo is a Buddha wearing a pair of headphones, after all). I was interested to ask Bragg how that offbeat, small-company culture translates as Zendesk grows -- the company is now over 1000 employees, after all, and has some serious customers -- Tesco, the UK supermarket chain, uses Zendesk for its multi-thousand person call center. And Tesco isn't a massive outlier, Bragg reports that the company is making real headway in the 50-500 person call center companies as well. This is a company that has over 60,000 customers and earned $55 million in revenue last quarter -- no longer a sprightly startup.
"As the company has grown, and particularly post-IPO, it has changed somewhat and lost some of its zaniness," Bragg explained to me. "But it's still a fun place, we may have gone from t-shirts to colored shirts and blazers, but there's certainly still no suits around the place."
On a more serious note, Bragg reflected on Zendesk's robust focus on metrics: ".. our key measure in moving up market is around our ability to have a growing percentage of business from customers who have over 100 seats in their call center. This size of customer was greater than 30% of revenue this year, up from 23% last year. We're scaling up to compete with [Salesforce] Service Cloud, Oracle RightNow and Siebel. The fact that we can compete with these larger players, but still deliver agility to our customers is key. The recent Tesco multi-thousand seat deployment, for example, was up and running in 90 days."
Another topic I wanted to raise with Bragg was that of Zendesk's recent acquisition of BIME analytics. As I wrote when I covered the news, I had some questions about the implications of this acquisition for Zendesk's long-term partnership with competing analytics and visualization vendor GoodData. Bragg was pragmatic in his response: "We know the best customer service is data driven and based on an advanced understanding of the customer experience. We have an ongoing relationship with GoodData that helps us continue to deliver Zendesk Insights to thousands of our customers who seek to take a data-driven approach to customer service," he explained. "Over time, customers will see BIME Analytics powering more of the analytics across Zendesk products, and adding additional capabilities for reporting on customer data stored in external sources.
"Over time we will be using BIME to replace GoodData -- the product is easy to use, with great visualizations and the deep integration of the applications together will help customers understand their businesses better."
It's always an interesting balance felt particularly strongly for a listed company -- the pressure to build up additional revenue streams via building or buying parallel technologies versus the desire to keep an active ecosystem happy and profitable -- Zendesk isn't alone in trying to balance these conflicting drivers -- virtually every other large technology vendor does similarly.
For Zendesk, it means a constant reassessment of what is core and what is better delivered at arms length. Zopim, the instant messaging technology that Zendesk previously acquired is an example of something considered core. Interestingly, its voice offerings, powered by the technology of another partner, Twilio, are considered better delivered by a third party. Clearly there is no obvious science when it comes to making these decisions.
Finally, I wanted to quiz Bragg about what the future holds for Zendesk. In days gone by Zendesk and Salesforce were close partners, and Zendesk even went so far as to donate $1 million to the USCF Benioff Children's hospital to bolster the relationship. That soured somewhat when Salesforce acquired Zendesk competitor Assistly.
So looking forward is there a chance that Zendesk will start to broaden into the customer relationship management area, perhaps going for some of Salesforce's customers even? Bragg was pragmatic: "Business to consumer companies don't need Salesforce," he pointed out. "Zendesk can become the front office customer master and offer powerful integrations with third parties for customers." The market, in Bragg's view, isn't at a point where there is a single vendor anymore. While Salesforce tries to sell itself as a single platform, most people realize that different buyers within an organization will make their own autonomous decision about what is right for them -- Zendesk is embracing this trend. Bragg did mention that the company is making lots of headway with larger 50-500 seat contact center customers, so maybe holding that thought about competing more aggressively with Salesforce is wise.
Either way that million dollar donation wasn't an outlier. In an indication of the global focus of the company (44% of last quarter's revenue came from outside of the U.S.), the company has been throwing money around in other locations. Recently Zendesk launched the Melbourne arm of its global Zendesk Neighbour Foundation, committing $100,000 in financial support to community organizations and 1,000 hours of employee volunteer service for local charities.
It's been a few years since I visited Zendesk's offices and I'm sure there are lots more people and a corresponding increase in management and process. But the core of the company seems to be intact, perhaps the fact that it has had the same CEO since its inception is perhaps one of the reasons for this. Either way it will be interesting to continue watching the company in the years ahead.
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