Sep
12
12



Announcing our investment in Zendesk

Today Redpoint is pleased to announce that we are leading a round of financing at Zendesk. Zendesk is one of those companies that has re-defined the SaaS landscape. Not only did it dramatically simplify a complex and old software category with a beautifully simple UI, it also embraced the emerging social media channels for providing customer service. It is very obvious now that having a great customer service experience can dramatically improve brand equity. Zendesk removes all of the software complexities that block companies from achieving that goal. When we think about investments, we worry about market, ideas and people. It was clear from the outset that this market was huge and the existing software solutions were tired and old. There were huge disruptions happening in social media and customer support must evolve with that, in addition to the traditional methods such as email. We also believed that this category of enterprise software will see a dramatic shift towards the cloud and a fresh, new, simple, flexible hosted solution that can interface well with other 3rd party services can and will disrupt this industry.  We believe Zendesk is that company and their market and revenue traction already prove that they are well on their way.

 

When I first met Mikkel for breakfast in the spring of 2009, he was already talking about freemium models and how it will allow him to sell without an enterprise sales force.  It is important to note that he was already doing this for a year by then and that he was way ahead of the times in leading this massive move to the freemium business model. It seems so obvious now, as a lot has been said and written about this way of selling software in the last few years, but Mikkel had this vision 5 years ago and was among the first to invent this business model. Last year, my good friend, Alan Black joined the company as CFO. I know Alan from my days at phone.com and respect him and his work immensely. I know Zack Urlocker well from our days together fighting the good open source fight. I know the board members, Peter Fenton (he was an investor in Zimbra and I respect his governance a ton) and Devdutt Yellurkar (whom I know and respect as a friend).  We knew that this was a company that not only had a disruptive product and a disruptive business model in a big market but they had surrounded themselves with world class people.

 

We have followed Zendesk for quite a while and are big believers in the market and the people. But, most importantly, we had such a great feeling about the business model that they are pursuing, and that a category defining company is being built here. So far, no one can dispute that Zendesk is one of the leading companies in the SaaS category that pioneered the freemium business model.