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LiveChat Software: Competitor Perspective

Former Group Product Manager at Intercom

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Executive Bio

Former Group Product Manager at Intercom

This executive has worked in product management roles with a number of large companies including Zynga and SurveyMonkey. Most recently he spent four years at Intercom leading a growth group of 4 product teams responsible for onboarding and first use, sales-led growth, and self-serve growth.Read more

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

LiveChat is one of my portfolio holdings. My quest in our discussion today would be from LiveChat's standpoint. I know Intercom is a private company, but I'd like to bring LiveChat into the picture as much as possible. I know there are a couple of other publicly traded companies in the space not quite similar to Intercom or LiveChat, for example, Zendesk or LivePerson. Some beta products are kind of comparable to these two but not quite in the same space, so that's why I'd like to keep it from LiveChat's angle. Before we get started, I would love to know you and your background a little bit.

I'm from New Zealand originally, hence the funny accent, but I've been in the US for the last 10 years. I came up from business school, before that, within financial services, McKinsey, and then a private equity holding company. Since then, I've been in product with some large companies such as Zynga, I had my own startup, and most recently worked for SurveyMonkey, which then became Momentive and is now part of Zendesk. I was then with Intercom for a few years and, currently, the company JumpCloud which is more into IT device management rather than being feedback and supports based.

You've spent, I believe, at least four years at Intercom?

Yes, almost four years and I was at SurveyMonkey for a couple. Saw a bunch of changes during that time and the evolution of the space in general.

Maybe that's where we can start, the larger space. As an investor, I'd love to get some quantitative feel for how you've seen the space, but if it's not answerable, I'm absolutely fine. If there's some context, it's always helpful to get numbers. I've seen numbers come out of Zendesk; I think they're the ones that have done a decent job of laying up – from their perspective, of course – the size of the market and how they attack the market. LiveChat is somewhat reluctant. They've come out with numbers that are somehow always below par, from my standpoint, but as somebody from Intercom, how would you think about the size of the market, who the players are, and where do you think it's evolving next?

I think Zendesk has an easier job of this because they have a sector focus. I think LiveChat is a little bit like databases or surveys, where if you asked them how big the survey market is, it depends on what you think is a survey. Most of the money isn't in the survey itself; it's adjacent to the survey. It's sort of the same thing with live chat. If you take Intercom, Intercom is fundamentally a customer support product with marketing automation stuck into it and some sort of knowledge management to help features and a little bit of sales engagement as well. In that sense, it competes with a really wide range of products, in the same way as surveys.

So they might keep competing with Qualtrics and Medallia, very large listed businesses. They're survey-based businesses, but they’re BI tools and that is, actually, where the magic’s made. You’ve got to look at it more as LiveChat as part of the support market more than LiveChat per se. If you look at a lot of the companies that do well, they tend to have a reasonable sector focus. I think LiveChat and LivePerson and some of the very early people in the market have now adapted. The way that Intercom, Zendesk, HubSpot and all the other guys approach it is they were always trying to push away from the idea of live chat and move more to this idea of messaging. If I were to send you a text message or an email, it’s asynchronous. It's not expectational like you're right there, even though sometimes you will be. That's the big fear from the customer standpoint.

I get live chat as a thing for large customer-facing websites where there are teams of people ready to deal with this, and what these other companies have done is they've moved it to this model; it's chat as messaging, which means they're synchronized. They've opened that up a bit, but I think people are still unclear from a main user standpoint. At Intercom, we've spent a lot of time on how to explain to end-users what the difference is here, but we're kind of getting distracted into product stuff.

In terms of the market, I really would think about it as sector by sector. Intercom competes with Zendesk or some portion of Zendesk. I'm not sure that Zendesk would think they necessarily compete with Intercom because they're going after a portion of Zendesk's market. It's even more true now, as Intercom has gotten larger and built more of the features that would make them competitive with a ticketing system like Zendesk. Zendesk does very well with larger ticketing systems that deal with ecommerce. Intercom doesn't deal with phone support and retail distribution or stuff with warehouse products. Intercom is much more focused on SaaS businesses, I think.

If you think of the other big players, it tends to be pretty focused by the channels. With Zendesk, I think of primarily email. They added a chat thing and the phone, but they're very, very focused. I think the product you choose depends on what your primary channel is. Zendesk has phone support, but if you're primarily a phone system, you might go to a Dialpad or a Talkdesk. There's a wide range of companies that focus on that space. It’s the same thing with LiveChat. That was kind of Intercom's differentiation and where LiveChat sits as well where they say, we are primarily chat-based or messaging-based as an iteration of that idea. They all sort of support everything; Zendesk will do chat, Intercom handles email, but there’s a fundamental focus on each of those areas that will make each of those products most successful in that space.

This channels thing continues through; there's a wide range of players. I think it's a pretty fragmented market, and it depends on how you define it. I think at Intercom, definitely the market size we looked at was closer to a trillion than a billion in terms of total market size for CS, and that's very broadly defined. It also depends if you think about agent proactivity. Suppose you look at the prices that a piece of software like Gong is charging for sales enablement. In that case, they’re saying, look, we're charging not as a helpdesk software or a CRM software – for which there is some budget but it's pretty fixed – but actually, they’re replacing agents; they’re replacing people. So as opposed to $10 a user, I can try and say, well, I'm replacing a $100,000 rep. I think that's where some of this ticket deflection or ticket resolution type stuff – answer bot for Zendesk, resolution bot for Intercom, a range of these kinds of AI products – starts to come in and even further expand the size of the addressable market. You're replacing some of the people that would work in the space.

That would be the quick summary. I'm not laying out the landscape necessarily, but it's how I would think about it. In terms of LiveChat players, Olark is a big one; they're like a free tool. LiveChat didn’t come up a whole lot. There’s Intercom, Zendesk, Nice Chat; many people will use HubSpot's chat, especially if it's more on the customer success or sales use cases; they just sold to Vista and they're very strong for that sales use case. There’s Freshchat, a Freshworks product.

The one from India?

Exactly. Help Scout is in that similar space, and there are a bunch of vertically focused guys. Who are those ecommerce people? It’s a startup, these French dudes; I think they're doing a nice job and they got bought by a private equity. They had a nice product, but it wasn't super well invested in. It began with a K; not Klaviyo but something like that.

I think I know which company, but the name slips my mind. The entire space also seems to be going through this move to what they call enterprise, meaning a bigger client base for whatever reason. For example, Zendesk is now turning its focus on CRM, which is Salesforce. I don't know if it's truly comparable, but everybody seems to be attacking. These are the bigger clients, but that seems to be the focus. Was that a focus of Intercom when you were there, or is that a focus now?

Yes, absolutely.

More importantly, is it even a reasonable attempt to do that? To go up against Salesforce?

We’re seeing people bringing in these tools as just a chat layer. What has surprised me is the willingness of people to stack tools together. Certainly, Intercom, on top of Zendesk, was a not uncommon structure. You would think they do the same thing, but basically, customers pick and choose tools for a very specific purpose. They like the UI of Intercom and that interface, but they'll use Zendesk for the ticketing system and Salesforce for the CRM. I'm not intimately familiar with Zendesk's CRM effort; I'm sure it's made some progress. For customers who need a lightweight CRM, maybe you could see that using Salesforce would be stupid, but maybe for very consumer companies or prosumers where you want something that's a bit CRM-like, and most of that information exists in their support tool, you may want to just use a CRM like them. It would be hard to imagine that happening.

To do your job well, it's important to know the information about the customer. Sales need the information about the customer, so there are these replications that happen everywhere. Customer information can essentially be synced and replicated across all these different sources, plus the digital online product. There'll be many things happening in the product that need to be synced between these two sources.

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