After all the talk of Software-as-a-Service companies losing some luster, Zendesk had a successful IPO last week rising 49%. Now, Zendesk has a market cap of over $1 billion according to Google Finance (NYSE:ZEN). Back in April, when the Zendesk S-1 IPO filing was released and covered here, many of the basics were covered like financial information, capital structure, and more. Zendesk is one of the more interesting public SaaS companies and deserves more coverage.
Zendesk is interesting for several reasons:
- Age – Zendesk is the youngest of the publicly traded SaaS companies and represents a new wave of second-generation SaaS companies (newer tech stacks, more customer centric, less of a corporate feel, etc.)
- Market – Zendesk has a huge opportunity with millions of help desk workers using out-dated software (or no software!), and has shown that there’s an opportunity to build a large, fast-growing standalone business even when competing with Salesforce.com
- Design – Zendesk is one of the most design, and delight, centric companies at scale (along with Mailchimp) — just compare the interface of Zendesk with Netsuite and you’ll the difference between first-generation and second-generation SaaS companies
- Customer Acquisition – Zendesk spends a tremendous amount of money on sales and marketing but is still a freemium model where most of their leads try before they buy, and do so in an entirely self-service manner (there are plenty of free trial products out there but many are too difficult to use without help)
- Platform – Zendesk is well positioned to be the platform company of the help desk space where other companies build add-ons and integrations (see Kevy Connectors), much like the AppExchange eco-system for Salesforce.com
The big takeaway is the Zendesk will grow and scale in a different way compared to the majority of public SaaS companies (which are more enterprise-focused). Overall, I think Zendesk will do well and be the dominate player in the help desk market.
What else? What are some more thoughts on Zendesk?