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.

{audio:0:04:39} My questions would be particularly with an angle from LiveChat Software, a Polish company. Zendesk, HubSpot and a few others are in the same space and that’s why I wanted to take the time to learn a little bit more about Zendesk. LiveChat’s service is offered by a lot of customer service-oriented companies, being live chat where you get a pop-up and the site asks you how it may be able to direct your request.

{audio:0:06:12} I think they’re still a customer of Zendesk who use some of the technology there.

{audio:0:06:36} Can you briefly describe your experience with Zendesk?

{audio:0:06:47} My background in this whole space of customer engagement, customer communications and customer service started probably in the 2007 era. I had a company that built a bespoke customer service platform – at the time for ourselves – running a premium support service we would sell, a Geek Squad like remote care service through telcos. It was all white label; AT&T, Verizon, BT, Virgin Media. We ran a lot of these services for very large telcos and we built the software for ourselves.

{audio:0:07:29} At the time, what was available on the market wasn't good enough so we basically built our own, and it was very much your classic live chat architecture, so I'll call it like synchronous communications. You needed to have that polling connection, the real-time connection between the services. We were innovating on many-to-one service at that time.

{audio:0:07:56} Fast forward eight years, sold that business and it spun out a product that became a company called Smooch. In 2013, we started looking at what does live chat mean in a mobile first world because at that point LivePerson was probably the dominant player and the best example in the market. We were looking at what does that mean in a mobile first world and what we basically concluded was it meant in-app messaging. So you need in-app messaging because, at the time, it was very much an app economy. It wasn't about these really responsive mobile websites. Everybody was producing apps and so the first product we built there was basically an SDK to allow in-app messaging. Think basically what Intercom would offer today in the form of an SDK or what Zendesk offers now is my product evolved in their latest releases.

{audio:0:09:14} We were sort of in this app world but then along came these messaging platforms that opened for business; Facebook and WhatsApp, Instagram DM, WeChat and Line in Asia. We basically realized not all engagement was happening in apps on mobile but, in fact, these third-party messaging platforms. Instead of focusing on the end point, we ended up focusing on this unifying platform to basically allow a business to connect their existing customer service platform to any messaging channel in the world. That could be in-app messaging, web messaging, Facebook, Twitter, SMS, you name it; as long as it was an asynchronous channel built on a messaging protocol.

{audio:0:10:13} Then we took that platform and we licensed it. Our dominant go-to-market strategy was actually to license it to customer service platforms. That's why LiveChat became a customer of ours and, even today, I'm going to assume they might use us for the way they integrate WhatsApp, the way they integrate Apple Business Chat, the way they integrate other channels. I don't know which ones they use us for; sometimes they might build directly or not. Sometimes they use us as this unified API.

{audio:0:10:47} Then in 2019, Zendesk bought that business and I expect over time that they'll replace their live chat technology with our messaging architecture, so going from the synchronous polling technology to asynchronous messaging protocols. That gives you some of my background in the space. From a competitive standpoint, LiveChat, Zendesk, Genesys, Nuance, Conversocial, Sparkcentral, 8x8 were all customers. We were under the hood of a lot of different people’s tech stacks.

{audio:0:11:42} After Zendesk acquired Smooch, how long did you continue on?

{audio:0:11:50} I stayed with Zendesk for roughly 18 months from May 2019 until December 2020. I was there through the end of last year and, aside from being responsible for integration of the business, ultimately I became SVP of Platform which was a cross-functional role. Zendesk was in very early stages of having a platform strategy and the idea was platform outside of their marketplace, thinking should we monetize API and what is our strategy with Platform. That's what I was leading for that period of time.

{audio:0:12:43} I stayed close to my co-founder; we were still working in the same office, together all the time, and he became responsible for the entire live chat offering and he basically took responsibility for all of the assets related to live chat or messaging which included their traditional live chat, the Smooch messaging as well as all of the bot technology that was tightly integrated with those channels.

{audio:0:13:20} That transition to Platform, that's an important question and I certainly want to come back to that. Before that, given your background, particularly with respect to this live chat and the customer communication part of Zendesk's portfolio, do you think the addressable market for that product is still growing or has it plateaued or is it somehow changing at this point?

{audio:0:14:06} I don’t think you can separate the frontend channel from the backend service. To me, live chat is not a market. Customer service is a market. Customer engagement is a market. Sales is a market, like sales software. Chat is a feature. Now, in that context the usage of live chat or messaging, whatever terminology you want to give it, usage of those channels is absolutely growing at the expense of email and voice, but all it is is a shift within features. This was a big problem that Zendesk had when I arrived in that they sold the method of communication as a product, so Zendesk support was email ticketing, Zendesk chat was chat; it made no sense. That's not the way you should break up your product in the current market.

{audio:0:15:30} When you go look at Zendesk it's now different. They now have Zendesk Service, Zendesk Sales which is obvious. This is the same thing as Salesforce Service Cloud, Salesforce Sales Cloud, Salesforce Marketing Cloud, HubSpot, same thing. Everybody's the same thing. The total market continues to grow across all of these and, for sure, the demand for the real-time, asynchronous messaging channels is the fastest growing segment within the market, in terms of channel engagement.

{audio:0:16:13} There seems to have been a big push from freemium providers on top of all this new competition that has come in. Even though the market seems to be growing, what do you think is the opportunity set for these freemium providers, meaning they just offer it as a part of something else or that's all they offer but it's free of cost? Is that a true threat over the next five, 10 years or is that something that will just fizzle out as time progresses?

{audio:0:17:01} Who would be an example there?

{audio:0:17:06} tawk.to out in Canada offers part of the same service, even HubSpot to a certain extent offers the primary sales as the premium product but then all the others, including chat and everything else, as a freemium product. Of course HubSpot is a completely different platform but there are many smaller startup operations that have popped up that seem to be offering free of cost.

{audio:0:17:48} I don't know that market well about who's really offering anything really material that's for free. I know that you can have these free offers but they just don't offer you any real volume. So it's really for a micro business that has no money to spend, then they try and get you to graduate upwards. My gut says, unless you're someone like a HubSpot or a Zendesk who has got a pretty reasonably featured platform, those models are flawed because people will graduate out of you. It’s very different if you're a holistic platform that has a free base offer but there's lots of room to grow. That makes a ton of sense to me because giving someone something for free when they would only pay you $15 a month, you're probably better off giving it away for free than charging $15 a month and getting more market share. If they can't grow with you then it doesn't make any sense.

{audio:0:19:28} That’s always been a part of the larger platform. I was just wondering, from your standpoint, if that was a true threat, but what you said is how I've always understood it. Let's pivot towards a couple of other bigger issues with respect to Zendesk. You mentioned this switch to Platform. From a bigger picture standpoint, in your eyes has that switch been a success or is it still being worked on, only time will tell or would you conclude otherwise?

{audio:0:20:15} I wouldn’t call it a success yet and it’s very far from done. We are in the early stages still. You can look at Twilio and Zendesk as examples. Twilio is ultimately building a CRM from the API up. They're going from Platform and moving up the stack to more integrated and turnkey applications. With any experience in technology, you know that's a much easier path than the reverse, than when you have a full-fledged application of how you separate it into its components and break the platform out, truly modularize all of that technology into microservices on top of a platform, with your configurable UIs and different things to make things easy.

{audio:0:21:22} The path Zendesk needs to go to get into Platform is way more challenging from a technology standpoint that what Twilio has to do. On the flip side, Zendesk has an advantage in winning tons of new, small business that Twilio just can't compete for because someone who needs three or five seats who's a startup, they don't want to be building something bespoke on top of Twilio and the truth is, it's just not that easy. That’s why when you see their launches, when they did Twilio Flex, who were their first customers on this? It's Lyft and a Shopify type of thing. These are people who have obviously tons of engineering resources to go build.

{audio:0:22:20} I don't think the story is written. Even though it's more challenging for Zendesk, I don't think it's impossible. It's just a matter of devoting the right level of resources and executing well. Can they do it well? Can they get it done in time because Twilio is going to move fast and, in five years’ time from now, I bet it’s going to be just as easy for a startup to start working on Twilio as it is to start working on Zendesk. The question is, has Zendesk fully executed on their Platform vision in that time? That's an open question.

{audio:0:23:01} What drove this push towards the Platform switch?

{audio:0:23:06} Before I got there, I think it was a feeling from Zendesk leadership, seeing that enterprise customers have such unique needs that you're never going to satisfy them with just an application. They saw that these enterprise customers needed to build really configurable experiences, tailored to their business and you were never going to be able to do that if you couldn't do it in a platform-oriented way. I think that was the driver and if you go watch Zendesk’s launch of Sunshine, which I think is at the end of 2018, you’ll see that they give a scooter company example and the battery is dying on the scooter and there's a notification; that data is communicated to some backend.

{audio:0:24:23} Zendesk can know this data; Zendesk can proactively tell the consumer, you need to get a new scooter, find a new scooter and we've already found one for you. We've reserved it for you and Zendesk is sitting in the middle because Zendesk is communicating with the customer, but they're reliant on this data like all automated workflows. You need this platform that’s able to consume the data from the scooter company, able to find a new scooter through APIs and let the customer know. The platform becomes this hub of data and communications.

{audio:0:25:04} I'd say that was their primary driver. When we joined Zendesk and my team got there, we tried to open up that lens even more to say, this isn't only about satisfying specific customer demand. This is about how we build product here and how you basically have a microservices architecture internally and how you increase velocity of development. How do you reduce dependencies and coordination around teams is the philosophy that built everything with an API; that every service is built API first and then all these different products or lines of business within Zendesk can then tap into that. So you have a Zendesk sales application versus Zendesk service application; they should be able to share the same live chat service, the same messaging service. You shouldn't have two different services and so you build your chat as a service and then it's consumed by this application.

{audio:0:26:17} So we brought that in and it was something that I believe in deeply, that this isn't only consumer facing value. This is just fundamentally how you have to build products today, especially when you go into a multi-product world like sales service marketing and you want all the data to be shared across it. If you have a customer that was once in a sales funnel and later in service engagement, you want both of those datasets to be available to the marketers when they're running a campaign to decide, should you be in that campaign or should you not?

{audio:0:27:14} The practical way to do it is to do it in a platform way and separate your application layer from your ‘platform’ layer which is this data layer and then we define what should be in this shared layer; we talked about user data, transactional data, behavior data, conversational data. You're really building a customer data platform with communications and that's how we thought about the platform strategy at Smooch. It had your classic data, more transactional data or profile data and then you had conversational data and both of these needed to be shared across the platform, across all the different applications.

{audio:0:28:02} Then applications are basically tools, so if I'm a sales rep, one of my tools is a funnel where I'm able to take a customer and assign them a stage in a funnel, but the customer data exists at a platform level and my application is built on top of it. When I'm in a service application, I'm not looking at a customer funnel. I’m looking at a ticket or a case that's tracking some customer communication around an incident; and if I'm a marketer I'm looking at a campaign. Campaigns, cases, sales funnels: this is application-level functionality but everything else is platform. That was my fundamental vision from someone like me who was trying to lead the strategy; that's what I was trying to sell.

{audio:0:29:04} Let's be generous and say, they're in the middle of this transition, hopefully over time they will accomplish their initial objective but from the outside, from people like me watching the space, companies like Zendesk, HubSpot, LivePerson has always been there; everybody seems to be moving towards the ‘enterprise client’. Are they in the process of leaving behind what may be an attractive small to medium-sized business? Or is that SMB not worth worrying about?

{audio:0:29:54} Great question. My perspective from Zendesk, this is a perennial tension in the business. Are we building for SMBs or are we building for enterprise? Whatever you see of Zendesk’s upward movement in enterprise and constant growth in enterprise, I would not neglect their continued, very, very deep focus and commitment on SMB. Also consider that Zendesk for enterprise is very important to having a great path for their explosive SMBs; the classic startups turned unicorn that have the room to grow within Zendesk, rather than Zendesk only trying to compete with Salesforce on winning enterprise business.

{audio:0:31:08} There will always be people within Zendesk who think they need to be able to go sell the CIO of American Airlines type of thing or Bank of America, while others would think that's a complete waste of time. Personally, I was not a proponent of focusing on selling the CIO of Bank of America or American Airlines or major hospital networks. That's not who I think Zendesk is or who they should become. We want to still be easier to do business with, easier to grow with and easier to buy. We don't need to partner with Accenture on implementations. The day we need Accenture to implement us is the day our product has failed in my opinion. Net, I would not bet on Zendesk leaving behind the SMB market where they are so strong.

{audio:0:32:20} In your view of Zendesk, how do you define SMB? Is it five seats or more like 100 to 500? Where does it fall?

{audio:0:32:43} There's always this debate because the only way to automatically tag companies from the outside is really based on employees, so they're going to use a traditional employee definition. I think, in practical terms, the way they're thinking about it is the number of seats and so, in terms of the Zendesk business what I assumed before I got into the business – and I think what you could derive from looking at their financial data – is that the majority of their accounts are less than 10-20 seats and maybe even less than five seats. But Zendesk's core business from the customers they serve is SMB.

{audio:0:33:38} Now you can look at that top 20%, that top 10% of customers who might have more than a hundred seats. If we create two ends of the spectrum here, less than 10 and more than a hundred, that more than a hundred may count for 50%, 60% of the revenues but that's different than your sales and marketing activity which is much more account-based. This is where you'll have the conversation in Zendesk, is people who are biased and looking at revenue and people who are biased and looking at the activities of the business, and the activities of the business tell you this is an SMB business and the revenues will tell you this is a mixed business.

{audio:0:34:32} What you described seems to be the primary focus of LiveChat as well, smaller SMBs, less than 10 seats, they are trying to grow, but that seems to be the primary focus. Can we talk about the customer acquisition process and the cost involved as far as Zendesk is concerned? I’d love to hear your thoughts on customer acquisition.

{audio:0:35:34} Basically, there's two motions in the industry. There's one motion that is very much a heavy inbound motion where they've got inside sales for what we'll call SMB for now, but much more biased towards the small, where it's all marketing led. If you dig into the org charts and you could do this through the LinkedIns of the world and whatever else, you'll find that the inside sales team actually reports into marketing not even into sales. So there's this massive function or sales motion that's all about inbound. They're doing lots of search engine marketing, they're doing lots of content, content strategies, they're doing email marketing, all of this to drive people to sign up for a trial and ultimately have an inside sales rep work to close them.  This is standard across the industry.

{audio:0:36:49} Then you have the other side of the org which is your classic enterprise sales org or B2B sales org and there you have basically commercial. You have multiple tiers and, at the end of the day, you've got commercial resources all the way up to your more strategic enterprise and even the strategic enterprise. Zendesk and others are doing more what I think people call in the industry departmental enterprise, which means you're calling on big, sophisticated companies but you're not doing it at the CIO level. You're going at department levels. You're finding projects and opportunities and getting your foot in the door and then trying to expand your footprint.

{audio:0:37:38} Uber is a customer of Zendesk. That doesn't mean Uber runs all of their support on Zendesk. It means there might be five different groups within Uber that use Zendesk and they're constantly just trying to work the organization. Again, this is standard in the industry, it’s the way the market works. I would think about the Zendesk go to market motion as very much a split.

{audio:0:38:14} The second half of that explanation, the outbound, outreach from a cost standpoint, that's the more expensive exercise.

{audio:0:38:38} I’m asking because I use SG&A as a percentage of revenue to compare the efficient acquisition of customers, efficient hiring process of employees based on which they're able to generate revenue. The SG&A margin at Zendesk is about 65%. That tells me about two thirds of revenue is going to either paying for employees or acquiring customers and whatnot. It’s a large bucket, a lot of things go in there, so I'm just trying to understand how they think about own efficient use of capital resources to both hire employees as well as, more importantly, acquire customers?

{audio:0:39:55} Here you’re very much going to get opinion from me and I don't recall the specific dollar amounts, but I'd say consistent with some of the other things that I said of the struggle with Zendesk around enterprise, my perception is that cost of selling enterprise is really high. It’s a constant debate as to whether it's worth it and then lots of discussion around being partner-led use partners especially in regions. I think there's a lot of people who are really, really big proponents of being partner-led to lower your cost of sale. I don't remember the numbers, but it was always surprising to me that it could be cheaper to sell with a partner.

{audio:0:41:03} I can understand how you go with partners to increase your reach but the idea that you go with a partner to lower your cost of sale was surprising to me, but I’m not an enterprise go to market expert.

{audio:0:41:46} HubSpot is not a whole lot better in that regard, but you’re talking between Zendesk and LiveChat, so I'd like to keep a focus on Zendesk.

{audio:0:42:05} Where I've found this interesting from your classic business strategy investment, looking at how to allocate your dollars is, is your path to enterprise maximize your investment and acquire SMB and build a really big portfolio and make sure they never leave you; really make sure that you don't have enterprise churn because the cost of that enterprise churn is massive and that's where there's a lot of people who always think you shouldn't worry about acquiring enterprise. If all we did was keep our enterprise, we'd be so far ahead. The churn is just massive when you get into those numbers, even when its few accounts.

{audio:0:42:58} That was this perennial debate. Then there's the debate that says if you can't keep these customers who you already have, how the hell are you going to close new ones? That gets you back to make sure we have the right product to keep these and when we can successfully keep our enterprise customers all the time and not lose them to Salesforce and not lose them to Twilio, then maybe we should double down and spend more on the outbound enterprise sales motion.

{audio:0:43:41} What was the average churn when you were there and what was the discussion around churn? In the case of LiveChat it's somewhere in the 3% to 4% range.

{audio:0:44:11} I don't recall the specific percentage churn numbers but what I would say is there was a risk focus amongst the company’s largest accounts, the Pelotons, the Lyfts, the Ubers, the DoorDashes, the explosive growth companies. It’s hard to keep these customers satisfied, that’s just a fact. Secondly, they grew so fast and it’s hard for anyone to keep uptimes and reliability for these massively scaling companies, especially when they're building more and more integrations and more and more rules, so Zendesk has a lot of this automation built in, like ticket flows.

{audio:0:45:24} You get into a thousand rules and a thousand triggers after five years of layering on all these different things and, guess what, a product can become unperforming. At the end of the day, the only balancing act is that they're so embedded that switching is hard. If switching was easy, you would have massive exoduses at the enterprise level across the industry. This is not unique to Zendesk. I think this is true of lots of people in industry and enterprise software. You get into all these discussions and people are like, oh my God, DoorDash is a hundred percent going to leave. There's no way we can keep them. And then you end up with a renewal.

{audio:0:46:16} It’s like, how did that happen? At the end of the day, it’s because the cost of switching is so high just in terms of their own time. They just don't have the resources to do it and so they make do. But at a certain point, they get big enough and they'll start parallel building. That’s where you have a Shopify and a Lyft as examples; they start building on Twilio and they move some of their volume there and they're shrinking your seats and it becomes much less of a churn issue and much more of a contraction issue. This is how enterprise works.

{audio:0:47:08} I’d like to get to your viewpoint on new competition that seems to be coming in, like Freshworks. They seem to be growing at a rapid clip, eating into LiveChat’s and Zendesk’s market. I know they're much smaller and they're going after the SMB market more aggressively. Any thoughts on how the competitive landscape is evolving from a Zendesk standpoint as the transition to the platform continues?

{audio:0:48:07} I think about two major competitive threats at this stage of where we are in the customer service landscape timeline. The super innovative, differentiated, the Conversocials of the world, Sparkcentral, Gladly, people who take the view of, we're going to build better customer service software; I would write them all off personally and say that isn't a strategy. You’re not going to create something 10X better today that you are going to unseat Zendesk or Salesforce or whoever. You're going to get some degree of market share and then someone's going to buy you. You can go sell your business to somebody.

{audio:0:49:14} But you’re going to have a hard time becoming the new leader if you're focused on a product-led strategy of differentiation. That's part one. What Freshdesk and Freshworks did was very different. This is my view of their strategy which I think is a very smart one, which is the way you conquer this market; the way you unseat Salesforce is by winning all these startups. We want to beat Salesforce in 20 years from now and the way we beat Salesforce in 20 years from now is we steal all their future customers. Not only do we need to steal their future customers, we then need to keep them. So Freshdesk is applying a strategy of, we're not trying to be more innovative.

{audio:0:50:11} We're not trying to have a better product. What we need to do is be the number one acquirer of new business and then spend so much money on product that we will not lose these people. We will have better product because we'll have newer tech and it'll be fresher, more reliable, more stable, but it's not going to be sexier. We're not trying to innovate on the experience. That's why Freshdesk is just a fast follower. They look at everybody else in the industry, they don't create anything that's new and they don't try new; they're not trying to invent. They think that you don't need to invent today and then they spend exorbitant amounts of money on marketing. They layer on top of that lower pricing than anyone and then they back it up with a great product. They’re a real threat. I think they can just continue to continue their growth rate and eventually emerge as a dominant competitor in this space and I can see them on that strategy unseating a Zendesk or others, beating them from behind.

{audio:0:51:35} Anybody else in that same mold of Freshworks?

{audio:0:51:40} Then I think the next mold is different. The next mold is more marketing led. I think people are thinking very strategically about, how do we win the future enterprise customers? The way we win the future enterprise customers is by winning the startups now, so then you have the Intercoms and the HubSpots of the world who basically say, the first value proposition a startup needs isn’t customer service software. The first value proposition they need is more outbound engagement, marketing led, sales led because that's the first tool a business needs. They don't have any customers yet. So we'll lead with that product and then we'll roll in customer service and so that's also interesting. Then you need to see if you can keep those customers and if you can scale your customer service product well enough.

{audio:0:52:40} I think it's flawed if you think about it in terms of, the only reason we have customer service software is to keep our small businesses happy, in which case what you're going to do is you're going to churn your small businesses at the end of the day. But some are doing it more strategically and thinking no, no, no; I'm going to make everything enterprise ready and I'm going to scale all of this. I think there is a threat from this unification across the industry of marketing sales and service; the way you attack the service guys is by leading with marketing and sales and then making it really easy for them to adopt customer service with you.

{audio:0:53:26} As an example, I have a new business that I started this year and I'm running on Intercom. I don't think Intercom service is nearly as good as Zendesk’s. It's not as powerful. It's not going to be as useful, but for right now, I don't need to optimize. I'm frustrated by some things in Intercom, but at the end of the day, if I go to Zendesk, I need to either keep Intercom or I need to go get HubSpot or I need to get MailChimp, I end up with two tools. At this stage, just keep one tool. Now the question is, will Intercom keep me? Am I going to evolve faster than they can handle my support needs, as an example? I think those are the two fundamental threats; the Freshdesk model which is just spend it all costs. Their investors are betting on them being a Salesforce.

{audio:0:54:38} One of the important aspects that I focus on with all my portfolio companies and companies that I'm interested in is the competitive threat. I typically like to invest in spaces with monopolies, duopolies. This is one which is sort of an anomaly, with a whole bunch of competitive threats but I'm constantly keeping an eye on how people like Freshworks and all the other CRM focused players are growing. Everybody seems to be taking this approach of throwing money at marketing or customer acquisition to continue their growth. LiveChat seems to be taking the exact opposite approach. Their SG&A margin is about 20%+, almost one fourth of what Zendesk is incurring at this point. In your description, you said Zendesk has this two-pronged approach of getting inbound requests and then pushing for outbound enterprise clients. LiveChat seem to be doing almost all inbound. They've hired some salespeople now and they're slowly growing this point, but in any case, that competitive threat continues to be an important focus for me. One thing that seems to have jumped up in terms of competition is competition for talent, given the increase in wages particularly with respect to software developers and everything associated with IT talent. Did you see that as an important driver of increased costs while at Zendesk or are you seeing it in your current operation? Do you see that as a threat going forward based the information you’ve got?

{audio:0:57:24} It’s not clear that it's a threat because everybody's in the same ballpark. The question is, do you have investments or I guess, at face value, it’s not implicitly a threat. Are you able to do better than your competition; so how can you do better than your competition? One of the different vectors I think about is, do you have a global recruiting strategy so that you're not reliant on one location? Someone like a Freshworks, out of the gates, might have a labor advantage because they're tapping into a market where they have a differentiated value proposition from a lot of people who are outposts for US companies and you never really feel connected to the brand and you're very much sort of the Indian development center; whereas that's not how you would feel at Freshworks given the Indian roots of the company.

{audio:0:58:34} You look at Zendesk, offices around the world, who have strategically done acquisitions and then turned those into basically recruiting hubs, so it definitely helps them. It helped them diversify out of the San Francisco Bay area. Now obviously, we have this whole new vector of being remote and does that level the playing field more? I'd say this is one whole level of, you have a diversified recruiting strategy where you've got the maximum pool to tap into.

{audio:0:59:11} Then there's the other side which is what is your retention rate on employees, because everybody you lose you’ve got to replace. Companies need to be really good at keeping their employees and then, of course, this might impact how you recruit. What's remote only going to do to retention? If you’re running those global business and you've got engineering offices that go around the world, it's tough on employees. It's tough when you have to have an engineering call with a team in India and you live in the US to find these hours of the day. It's taxing on employees to have to do this global coordination, so there's trade-offs there. I definitely don't have an answer other than to say, of course, employee costs are going up and the cost of recruiting is going up. It's a game everybody is competing in.

{audio:1:00:21} Yes; everybody's is in the same boat in that regard. Freshworks has a slightly different advantage because of its India base or legacy operations. I was trying to explore to what extent some of these Western competitors of Zendesk are able to pass on the cost or at least manage the wage inflation internally. From what I hear uniformly across the space, everybody seems to be complaining about the increasing cost and I'm not sure if anybody is really able to offset it accordingly.

{audio:1:01:26} Other than global recruiting to lower your costs.

{audio:1:01:34} LiveChat on the other hand, is a Polish company. All their tech talent is in Poland and even there, there seems to be a significant demand for tech talent.

{audio:1:01:48} Yes. One thing for sure is that your brand in recruiting is really important and there's such a huge segment of employees that really value a brand that they perceive as a positive, trustworthy one and who deliver a whole bunch of good experiences and good services to them. Zendesk definitely has that in a number of markets they’re operating in. In Poland, LiveChat might have an advantage. It might have a better reputation than Zendesk and so understanding where your advantage lies and being able to exploit that is obviously important.

{audio:1:02:43} As a wrap-up, anything else that you would like to highlight, either from the standpoint of Zendesk or from the standpoint of the larger customer service app-oriented space?

{audio:1:03:01} The one feature that I believe in deeply that I haven't seen really permeate the market yet is web chat, web messaging. You go to a customer's website, which is still probably the dominant place people go, especially in enterprise software, and then there's some messaging there and, typically, it's not live so you have to leave a message. I'm sure LiveChat does this, Zendesk does it, everybody does it, but the idea that the way they reply to you is by email makes no sense to me. At Smooch, and now available to a certain extent within Zendesk, depending on how you buy or we would allow a user to say, I'm not going to give you my email; I'm going to give you my SMS.

{audio:1:04:04} I'm going to authenticate with my Facebook messenger account or my WhatsApp and basically allow a reply to go to a messaging channel. I think that is an under considered value because there's huge breakage in customer engagement when you go from this web chat and it goes into email and then people miss the email, it gets buried in their updates box in Gmail or whatever else and by the way, they've moved on; it’s not as engaging. I think that if you got the SMS response you would engage at massively higher level. I've been very surprised to see how slow the industry has been to integrate that type of experience.

{audio:1:04:58} I keep feeling I must be wrong in this because even Intercom, when I spoke to their CEO probably four years ago on this topic, he agreed; there's a problem with breakage when people leave their email, but they still haven't done anything about it.

Zendesk and Live Chat Software

SVP, GM Platform at Zendesk

inpractise.com/articles/zendesk-and-live-chat-software

Why is this interview interesting?

Zendesk and Live Chat Software(July 24, 2021)

Former SVP, GM Platform

SVP, GM Platform at Zendesk

Interview Transcript

Related Content

LiveChat Software: Competitor Perspective

Former Group Product Manager at Intercom

LiveChat Software: A Partner Perspective

Current LiveChat Partner

Former SVP, GM Platform

SVP, GM Platform at Zendesk

Subscribe now

Related Content

LiveChat Software: Competitor Perspective

Former Group Product Manager at Intercom

LiveChat Software: A Partner Perspective

Current LiveChat Partner