Zendesk priced its IPO at $9/share on May 14th and achieved a first day close at $13.43, up 49% from IPO price. Although the Zendesk IPO is only one small step in an exciting journey, the deal represents a great milestone for the company. Firstly, Zendesk raised $100M in new capital, which will help the company finance its rapid growth. Secondly, the company brought on several new high quality public investors who see the opportunity for Zendesk to continue its ascension for years to come. In particular, public investors with whom I spoke highlighted the following key traits:
- Management Team. CEO and Co-founder Mikkel Svane really impressed folks with his genuine style, straightforward answers to difficult questions, big vision for the company and desire to build a very special company, where culture matters. CFO Alan Black also impressed people with his command of the business model, no nonsense approach to describing the business and frank assessment of the company’s opportunities and challenges going forward. I think the public investors nailed it on their enthusiasm for Mikkel and Alan. I also think these investors will be wowed when the get chances to meet the rest of senior management. Adrian McDermott, who runs product, Marcus Bragg, who runs sales and customer success, Bill Macaitis, who is CMO, and the roster of other senior execs at Zendesk are top notch. They’ll help drive the company to new heights.
- Market. Public investors love big, fragmented and under-penetrated markets. They’re excited by the customer support and engagement category because, as one investor mentioned to me “every company has customers, and they all need to be supported at some time or another.” This market is huge and its growing more important by the day, as end customers are equipped with social media megaphones to rave about companies with whom they do business enjoyably, or conversely grouse about companies that provide shoddy products, services and experiences. In short, it’s never been more important to be continually listening to the heartbeat of your customers, and Zendesk is the best stethoscope on the market (analogies aren’t my thing)!
- Model & Product. When we invested in Zendesk we were enamored by the business model. The company has one of the most efficient sales and marketing machines the SaaS world has ever seen. As we’ve come to know the company better, we’ve realized the importance of Zendesk’s “beautifully simple” approach to everything they do, including their product. The model works so well because the beautifully simple product sells itself in many ways. The public investors with whom we spoke love this aspect of the business and see it as a core differentiator and driver of value over time.
My partners and I at GGV have never been more excited about being Zendesk shareholders and we’re glad there are now a bunch of new shareholders with whom to enjoy the journey.
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