Six months into my new chapter as a VC and I find myself consistently being asked about the things that have surprised me most since moving from operator to investor, and where my focus as an investor lies. I’ll start with the latter and save the former for my next post.
Having spent the last 15+ years working at companies like Yahoo, Pinterest, Pixate (sold to Google) and Copper (CRM built for the G-Suite) it will come as no surprise that my primary interest is in Workplace Technology. I’m particularly interested in the intersection we see in consumer-style product-led technology that matches fast-moving user needs with that of a business.
What do I mean by product-led tech in the Workplace SaaS space? Well, if the traditional SaaS model involved a salesperson telling you how great something is and selling you on the features and benefits of a fully-baked product, I am more interested in the products that are so focused on driving value for their users from day one that they virtually sell themselves. I am excited by the companies who take a consumer-driven approach to work-focused products, continually iterating, driving usage and engagement, then iterating again to truly understand where the customer value in their product lies. This then allows paying models to thrive and scale (quickly).
Workplace Technology includes any of the tools that make us all more effective and efficient at our jobs. It can range from productivity and collaboration tools to applications that solve a specific issue for a vertical market or function (think customer success, product marketing or finance). Workplace Technology looks radically different today than it did five years ago, and it will continue to change fast. I have identified a few key factors that I believe have influenced where the market is today:
Key trends that have influenced Workplace Technology
1. Too much input, too many distractions: Build a standout product.
At work we are inundated with data that’s created from (often multiple) messaging apps, text messages, email and phone (yes people still talk on the phone!). This proliferation of input creates a higher volume of data (and distraction) and tools must be created to cope with — or eliminate — both.
2. New generation of workers: Build a flexible product.
The shape of the workforce has changed as millennials move into leadership roles and Gen Z enters the workforce. Today, people expect to be able to work remotely, and as a result, teams are more commonly distributed. How we find work (full-time vs. gig workers) has changed. The nature of what work actually means has changed too. A decade ago who would have imagined someone could work full time managing a single social media channel. This new dynamic has forced companies to create technology that is adaptable enough to seamlessly support different types of workforces.
3. Knowledge sharing and collaboration are getting lost: Build an integrable product.
People are changing jobs more frequently (for millennials, on average every 2 years). This creates lost institutional knowledge, decreased collaboration and time wasted searching for important information. Research shows that it could be up to a 40% drop in productivity and up to 1 hour of wasted time daily. This requirement for more robust knowledge- capture and sharing is forcing products to be able to integrate with other platforms to allow information flow and information bridges to be created when required.
4. I want it when I want it: Build a product with the ability to make a frictionless purchase.
With the ubiquity of social media and messaging apps in everyday life, people want things when they want it. The desire for instant gratification doesn’t get checked at the door when they walk into an office (or turn on their computer to work). Tools need to be accessible and ready for purchase with frictionless implementation and on-boarding.
I believe these trends will ultimately create a set of companies focused on pulling unbundled products and work styles together in some way to enable more efficient and scalable work. This could be a new type of system of record or new way to bridge the gap of information sharing, process, and culture among colleagues in the workplace.
Making Workplace Technology companies work (the framework)
We have the privilege of meeting with entrepreneurs who are striving to build the next iconic company. In reality, many of these companies will fail — that’s why it takes a special breed of team to build a business. When it comes to Workplace Technology, I see a few ways to increase the potential for success.
It starts with thinking through the approach and building product capabilities and then ensuring your Company DNA supports both. So, as an investor in this space, what am I specifically looking for? Companies that have some of the following questions answered:
1. Target customer:
a. Do you know what your ideal customer profile (ICP) is, and what the use case is that you’re trying to solve?
b. Is your product TRULY simple to use? Seriously — if I put your target audience in the room with your product, would they know what to do in the first 60 seconds without any explanation? And would they know what to do next?
c. Are you focused on solving the needs for underserved teams and functions like customer success, product marketing or finance?
2. Product capabilities:
a. Workflow: Does your product fit into teams’ natural work processes. It cannot be outside that flow, or a new addition in how users work. This creates frictionless adoption and doesn’t change the way the user inherently gets work done. This can mean using your product platform or having your product run in the background and integrated into a different daily application.
b. Collaboration: Does your product include a way to collaborate instinctively and in real-time with colleagues, whether that’s the platform, file sync or access to content?
c. Communication: Having real-time messaging or tagging built into the product helps foster teamwork and supports collaboration.
d. Community: Does your product have a way to collect feedback from your community (hopefully reducing tickets and churn), which will contribute to building your brand and a two-way conversation with your customers?
e. Integrations / applications: Do you have them? I believe integration is essential in building seamless connections into other applications to enable better workflow and collaboration into any system your customer may choose.
3. Company DNA:
I was brought up in the consumer world and acknowledge my bias towards companies with an obsessive focus on what the end user needs. I believe it’s what makes a company successful at its core, even in SaaS.
a. Do YOU believe you are a product-led company? At Pinterest, a core company value was “Put Pinners (users) first.” It said “are we making Pinners lives better? If products don’t work for people they don’t work for us.” This was true at Yahoo too, where I started my operating career.
Having product at the forefront of your monetization strategy, versus being sales or marketing-led, creates a different type of company from the get-go. It underpins the current marketing-driven thinking around building a flywheel versus filling a funnel. If you focus on making your customer successful as a direct result of using your product, building your customer base becomes much easier, as your users do a lot of it for you! In addition, your organization will be better aligned across all functions from marketing to product to customer success and everything in between!
b. Are you sales-led or sales assisted? I’m not suggesting you completely abandon a sales-based approach but think of a sales-assisted model vs. sales-led (if your buyer is the end-user). If your product needs to be deployed across multiple functions in order to serve its use case (think HR (Workday) or IT (ServiceNow)) then this approach may not work. But for most of the companies we see, this just isn’t the case. At the end of the day, I believe companies succeed or fail based on whether the product is at the center of their organization and drives decisions.
Workplace Technology companies are finding exciting new ways to solve business challenges across the functional stack. This space is large enough where multiple players can win even in categories like design (this category is already proving the value with companies like Figma, Canva, Sketch and Invision coexisting) and it’s not a winner takes all.
If you’ve created a Workplace product that your users are telling you they just can’t live without, we should talk! Especially if your business is looking for investment, and you believe it ticks lots of the boxes above.
I’ll also be at SaaStr if you want to meet up. Reach out to me at email@example.com. Equally, if there’s anything I’ve touched on here that just doesn’t add up for you, feel free to comment below. The more conversations we can all have about this stuff, the stronger the ecosystem becomes.