Welcome to our Weekly Wrap, where we cut through the noise to bring you our favourite insights from the technology and startup world.
This week we dive into the growing trend of tech-fuelled productivity.
Productive capital gains
Despite the current uncertainty, technology company valuations are going through the roof. This week, Apple was the first US company to hit a market cap of US$1.5T, while Microsoft hovers around US$1.4T - chump change!
Around the world, technology indices like Bessemer’s Nasdaq Emerging Cloud Index and our own S&P/ASX All Technology Index are bouncing back from lows in March and continuing to outpace more traditional indices.
Of course, fuelling this fire is the rapid adoption of cloud technology as a result of recent lockdowns. Companies have been forced to invest in tools that enable their newly remote workforce to do their best work.
In particular, we’re seeing a boom in collaboration and productivity tools. Physical meetings have been replaced by Zoom, Teams, Slack. Whiteboards and post-its have been replaced by Miro, Trello, Notion, Figma… the list goes on (more on that below).
As at market close on 11 June 2020 the market cap for Zoom was US$63 billion (equivalent to Australia’s entire iron ore exports to China in 2019), Atlassian - whose software was "crucial" to the recent Space X launch - was US$43 billion, and Slack was US$17 billion!
Next level productivity
Bubbling up alongside the comparatively mature examples of Zoom, Slack and Atlassian, is a new generation of productivity tools that are seeking to overthrow the incumbents (predominantly Microsoft and Google) and completely change the way we go about ‘knowledge work’.
A few examples are Airtable (vs Google Sheets/Excel), Notion (vs Evernote/Confluence), Superhuman (vs Gmail/Outlook), Linear (vs Jira), Figma (vs InVision), Canva (vs Adobe), and Coda (vs Google Docs).
Cash is pouring into these tools. They’ve become some of the most sought after investments by the biggest names in VC - Sequoia Capital, Andreessen Horowitz and Index Ventures. At the peak of lockdowns in April, Notion and Figma each raised US$50M at US$2B valuations led by Index Ventures and Andreessen Horowitz, respectively. New VC funds like Work Life Ventures are building their entire thesis around our changing work habits - here’s a great 30 min Blackbird VC interview with Brianne Kimmel, Founder & Managing Partner of Work Life Ventures.
Why the hype?
Comparative to other advances in technology, incumbent solutions like Word haven’t really evolved much since the 90’s - they’re still digital versions of legacy processes - so they’re ripe for disruption
The market is massive and will only continue to grow as 1. businesses continue to ‘work from anywhere’, and 2. digital native generations (with different expectations, preferences and behaviours) start to form a greater proportion of the workforce
There’s likely room for more than one multi-billion dollar business within most of these categories as everyone has their own way of working. For example, Atlassian continues to grow in spite of increased competition from Notion, Asana and Monday.com (which expanded into Australia last week). As Benedict Evans explains (related essay here):
The lockdowns have certainly forced us to pay more attention to how we work together at Ignition Lane, and to reassess whether we have the best tools for our work.
Outside of communication tools like Slack, Zoom and Microsoft Teams, have you really considered how tech can help you to drive greater velocity and productivity?
We’re really excited by the next generation of tools being built.
Building a cult following
The likes of Slack, Airtable, Notion, Superhuman and Figma are by no means overnight success stories. Nor are they the first to try and tackle the productivity challenge - anyone remember Mailbox?
It’s true that these startups now have timing in their favour (great TED talk on the importance of that, here). But what also sets them apart is their ability to create a cult-like following by their customers. Speak to anyone who uses these tools on the topic of productivity, and they’ll probably start raving about how great <insert tool> is. This doesn’t happen by accident.
These companies have taken smart, intentional steps to ensure their early success. And while there’s no one way to scale a business, it’s worth considering what we can learn from them:
MVP isn’t a thing if your user base is broad
Slack was one startup that led the way with an exceptional, feature-rich beta product - it was by no means a ‘minimum viable product’ (MVP). Many of the latest productivity apps have followed suit. Recognising that our expectations as consumers are now extremely high and that first impressions impact brand, many invested two years (or more) developing the product and refining design before releasing it to public scrutiny.
Relatedly, Rahul Vohra (Superhuman’s CEO) has a great essay on finding product market fit - your core metric should focus on what percentage of your users would be very disappointed to no longer be able to use your product.
Notion’s initial reviews on Product Hunt.
Be at the frontier of product design innovation
Delightful moments - where reality exceeds expectations - are what lead to happy customers who advocate for your product. To do this, you need excellent product design.
The productivity tools are schooling us on what future design needs to entail:
Invest in onboarding and customer experience
We often see startups seriously underinvest in onboarding. The process is created as an afterthought, without any underlying strategy. By contrast, these productivity startups place significant emphasis on onboarding.
For example, everyone who joins Superhuman is onboarded by someone on their team. The aim is to increase new organic distribution, decrease churn, and perhaps more importantly, achieve a tighter customer feedback loop. Here’s a comprehensive breakdown of their onboarding process.really great breakdown of the onboarding process by ! 👌🔥
Superhuman @SuperhumanWhy do we personally onboard new customers? ❶ Increase delight 💜 ❷ Create power users ❸ Drive word of mouth ❹ Foster human connection @growthdotdesign gets into the details. Dive in 👇 https://t.co/FSi2lPowJD
It will be interesting to see if Superhuman continue this approach as they scale. If their customer lifetime value (LTV) is high enough, it might remain a smart strategy.
Ultimately, these products aim to perfect the user experience and create superfans to drive growth. Being obsessed about building a product your customers need and value, and delivering an amazing experience is always the best strategy.
Spotlight on: Indigital
Continuing from last week’s Weekly Wrap, we are excited to shine the spotlight on Indigital, which was founded by Cabrogal woman, Mikaela Jade. Indigital is dedicated to preserving First Nations’ culture by creating culturally-led digital skills and language learning programs.
The Indigital Schools program is Australia’s first training program that teaches kids how to bring First Nations culture to life using technology. Through the course, Elders share stories, language and cultural knowledge. Students bring what they learn to life by creating animated characters and stories using Paint 3D, Minecraft and Blender applications. So cool!
If you’re a teacher or have kids at school and want to find out more, you can register your interest here.
That’s a wrap! We hope you enjoyed it.
You can now watch us live on AusBiz at 2pm on Mondays, when we open the Startup Hour of Power.
The team at Ignition Lane
p.s. we love feedback - if you have any, please let us know.
p.p.s. please share with your friends and reach out if you want to continue the conversation of any themes in this week’s wrap.