There’s a lot to like about Talkdesk’s position in the contact center space, which is being re-constructed in front of our very eyes. This was certainly validated at Opentalk18 in San Francisco; their third such event, but the first one open to analysts. There has been a long-standing status quo that an established order of contact center vendors has maintained, but all of that is in play now as the cloud has created an entirely new route to market that several types of players have been capitalizing on.
Talkdesk is one such player, and with a new round of $100 million Series B funding, they are in a great position to make their mark now. I’ve distilled my thinking into three things they’re doing that give me reason to believe they’ll be successful. I should add there was plenty of news at the event, and that was summarized in my earlier post here.
Success Factor 1 – Building from the Inside-Out
The company certainly understands the value of having a strong foundation. As with any high-growth company, it’s challenging finding the right talent, especially in emerging fields like AI in business communication and in the contact center, where there simply aren’t enough data scientists to go around. First and foremost, like any software company, the heart of the business is engineering, and that makes up 50% of their staff. Over time, that level may fall, but for a company so focused on internal development and innovation, this foundation is essential.
We also heard about how their funding will allow them to build out other pillars for growth, namely selling upmarket in enterprises, selling more broadly to become global, and of course, more R&D. Then, to drive the top line, they’ve been expanding partnerships in the channel community, building out their sales organization – including hires from within the industry, and investing in marketing initiatives to become better known.
Nothing surprising here, and they seem to be focused in all the right areas. There was no talk about acquisitions or entering new lines of business – which can be distractions – they seem to have a clear path forward with all the right pieces in place. With the market being in flux and cash on hand, Talkdesk just need to execute, and the results should follow.
So far, this inside-out approach seems to be working. They have over 1,400 customers, and with an infrastructure anchored by nine data centers globally, they can offer a guaranteed MOS score of 4.2. That’s a pretty high level of promise for voice quality, but is part of the foundation that will attract contact centers who aren’t getting this now.
Another interesting aspect of this foundation is their server strategy. Like many other cloud players, they use AWS for their main servers, but they also have failovers to Google’s server infrastructure. That’s a pretty bullet-proof one-two combination, and with this, it’s not hard to understand how they can also now offer a 100% uptime SLA promise.
Success Factor 2 – Focusing on Quality and Innovation
Of course, this factor is much easier to support with a solid foundation, and there were several examples from the conference. Security reflects a serious approach to quality, and they cited having 20+ certifications that cover the bases both horizontally across all industries, and vertically within specific markets. This also includes multi-factor authentication and integrations with the likes of Okta, Google and Onelogin. Knowing that security is never-ending, they plan to double their level of certifications by the end of 2019.
Quality is also reflected in your people, and they expect to expand their engineering team to 1,000 by end of 2020. Of particular interest is the fact that the vast majority are/will be Masters level or higher, and they will be full-time employees – not contractors. That speaks to a high level of commitment to developing their human potential, and by extension, this will drive innovation. They claim to have released over 500 features since 2017, and while many may be minor, it’s clear that a strong engineering team will keep the innovations coming. For now, look no further than Talkdesk iQ, the biggest announcement from the conference, and included in my earlier post.
The same applies on the operational front, where it’s no secret they have been successful attracting top sales, marketing and channel talent from the competition. This is largely a reflection of how larger vendors are struggling to adapt to cloud and new business models, as well as the fallout from consolidation that has been helping to reshape the vendor landscape. High-growth companies like Talkdesk are poised to do well in these scenarios, and it’s a great way to take big steps forward for moving upmarket into larger contact centers.
Success Factor 3 – Finding the Creases with Disruption
There are no sure-things right now in the contact center. No vendor is too big to fail, no outsider can be kept out, and any startup can develop the next killer app for customer care. This space is evolving quickly, and in many directions, so there really is no center of gravity. These are ideal conditions for disruption to displace incumbents, as well as finding opportunities with new applications or new areas of value-add for cloud and AI-driven platforms.
Talkdesk certainly understands their place, and is positioned to be a platform that can address these opportunities. As with Twilio, they see themselves as an API-driven platform where developers can build an endless variety of custom applications – to wit, they are currently doing 1 billion API calls monthly. By fostering an open ecosystem, they have deep integrations with over 40 platforms, including CRM, WFO and chat. The name of the game is innovation and rapid product development, and that’s what drives AppConnect, another announcement cited in my earlier post.
Along another vector, they’re also seeing growth enabled by the cloud in e-commerce. For too long, contact centers have been defined by customer support, with agents responding to inbound calls with queries about their company’s products. Talkdesk can support those core needs very well, but they’re also attracting a different kind of customer, namely online retailers. These operations are further upstream in the value chain, where the focus is driving sales rather than solving problems that arise after the purchase has been made. As AI evolves – another front they’re very busy on – this is going to be another crease in the market with plenty of upside for vendors that are ready for it.
Finally, it’s worth noting where Talkdesk’s growth is coming from. Aside from trying to move up-market towards enterprise-scale customers, there is the premise-based/cloud spectrum to consider. Not surprisingly, much of their growth has come from contact centers struggling with conventional, legacy deployments. For whatever reason, Talkdesk has a better value proposition than incumbents, and this is how their initial customer base was developed. Of greater interest are the first-generation cloud deployments that have somehow not lived up to promise and are now with Talkdesk. Coming back to quality from earlier, the crease here is the opportunity arising from the shortcomings of these cloud-based offerings, such lack of resilience or limited microservices. The main takeaway here is that not all cloud players are created equal, and given the steps Talkdesk is taking, they seem well-positioned to capitalize on these various forms of disruption going into 2019.