A new CEO, a new name and a fresh $5 million of funding - it’s a time of change for the San Francisco messaging start-up formerly known as Cotap.
Cotap was founded in 2013 by two Yammer alumni, Jim Patterson and Zack Parker, with a pitch of being a WhatsApp for the enterprise. The basic principle was to provide a mobile messaging service that could be used across an entire organization, “from breakroom to boardroom” as the company website puts it.
Since launch, the company has been using its $15.5 million of funding to date to add features and functionality to the initial offering, including integrations with the likes of Box, Dropbox and Google Drive. This focus on functionality has been a logical development given Patterson’s pedigree as Chief Product Officer and Parker’s role as Senior Director of Engineering at Yammer, before it was acquired for $1.2 billion by Microsoft.
The firm now has around 40 employees and claims a customer base of “more than 10,000 businesses around the world”. That doesn’t provide a specific number of users, but client names in the public domain include Dave’s Coffee and Hyatt. The company has operated on a freemium model to date.
So far, so good - but maybe not good enough to get to the next stage. Three years on from launch, the company’s at a point where it needs to take a different go-to-market strategy in the increasingly competitive collaboration and communications market. The firm stakes a claim to a differentiator in pitching its wares at “industries that depend on workforces outside of offices”. That’s a story that it now needs to be telling more robustly.
Hence the announcement today of a re-brand from Cotap - which does sound a bit like a home-brew beer company - to Zinc, a play on the periodic table, with the idea that information should be regarded as an element. The firm has also won a fresh round of funding, led by Emergence Capital Partners and Charles River Ventures (CRV), early backers of Yammer.
But the biggest change is the appointment of a new CEO, one with a marketing background rather than a product development one. Stacey Epstein was Head of Marketing at SuccessFactors, then Chief Marketing Officer at both ServiceMax and Banjo, and it’s her task to relaunch the former Cotap offering into an enterprise future.
I’ve known Epstein for a good few years, so took the chance to catch up with her in San Francisco to ask how Zinc thinks it can capture an enterprise audience in a market seemingly dominated by Slack.
Wrong question, it seems. Epstein is adamant:
Everyone wants to talk about Slack. We’re not replacing Slack.
The argument here is that Slack is a great internal email replacement, whereas what Zinc aims to be is a messaging tool for workers who aren’t sitting at desks with the likes of Slack open in front of them. It’s significant, for example, that one of the opportunities that Zinc sees is in the walkie-talkie replacement market.
It’s also about addressing what Epstein positions as “the deskless divide”. She elaborates:
Comms and collaboration technologies have been around a while. You’ve got Slack, GoToMeeting, Yammer, Chatter, almost entirely focused on desktop workers. For example, Slack was founded for engineering teams to work collaboratively.
But 80% of the workforce in the US is deskless. Those workers are not sitting in front of computers and probably not collaborating too much, but if you look at field service, at hospitality, at hotels, at retail, you see people out in the field doing a job. They’re not necessarily working collaboratively, but they do need to share information. They need to be able to communicate really quickly, but these are workers who have largely been ignored by the comms and collaboration vendors.
These people are not in front of desks, they’re in front of customers, at the point of revenue. We’re talking about deskless workers who have never been connected to their organizations by technology. But they all have phones. They all text. They end up taking their consumer apps to work. So you have usage of WhatsApp within the enterprise, with people using it all the time, but this is a tool that was not build for the enterprise.
What becomes problematic here then are issues involving enterprise levels of security, compliance and governance. Epstein cites the example of a company which services security machines at airports, where workers are communicating via WhatsApp and discussing which security machines at airports are broken at given times. She also points to a coffee chain where store managers have to share their personal phone numbers so that they can communicate with one another.
People just like texting, says Epstein:
We recently sold our dining room table on Craigslist and you can tick the ‘text me’ box to get in touch. I did and everyone who was interested in buying the table texted me. Text is just the preferred mode of communication for everything you do, but enterprises haven’t worked out how to manage it.
So the focus is on phones for the moment, although Epstein cites the example of a hotel chain that’s given iPods to its housemaids to use for messaging and shaved millions off of the comms budget in the process. No more walkie-talkies in the corridors.
To date, the freemium model has been the go-to-market strategy, although with an eye to IT’s governance role, the firm is quick to flag up that it is HIPAA, TRUSTe, FIPS 140-2, and SOC 2 compliant. But that ‘let’s go viral’ approach needs to be tempered if the firm’s enterprise ambitions are to be met. Epstein says:
We don’t want to lose the virality of the freemium, but this is enterprise SaaS, so we’re moving from freemium to free trial. We’re aiming at the middle space between really viral and really strict license. We’re going to be open and flexible once you’re in a trial. Anyone can be invited to join that, but it will be most sucessful when you have someone who is managing the group.
There is some change management stuff you’ll want to think about. Implementations are most successful when we sit down for half a day with new users and help set up the administration for groups. If there are 5000 users in a company, there’s the danger that this could become a never-ending chat room, so you’re going to want to have an administrative role in place.
Telling your story is something that all start-ups need to get their heads around. I’m minded of the 1990s relational database wars between Oracle and Ingres. A common view at the time was that Ingres was by far the more functionally-rich product, but, as one Oracle marketing person once quipped, the company’s engineering-centric culture would have led it to market sushi as cold, raw fish. The rest is relational history.
With three years of product development under its belt, this is a good time for Zinc to start selling sushi. There’s clearly a market opportunity around the idea of the ‘deskless divide’ and I can see that IT management and corporate governance executives would be interested in the idea of something that enables them to wean employees off using consumer apps in the workplace.
The challenge will be to position the firm as an enterprise alternative in a market with Slack in the ascendency. Epstein’s point about not being out to be a Slack replacement is well made, but that’s a message that will need to be drummed home hard. Overall, this is one to keep a close eye on in the months ahead.