Some big news today for Quip, the mobile-first word processing and collaboration app that competes with the likes of Google Docs. The eponymous startup behind the service has raised $30 million in funding — a Series B round led by Greylock with participation from Benchmark.
Along with the funding, Quip is announcing some key people joining its team. Patrick Moran — who had been the CMO at New Relic — is joining as Chief Customer Officer; and well-known VC John Lilly of Greylock is joining the board.
Co-founder and CEO Bret Taylor — who also happens to be the former CTO of Facebook (he joined Facebook when the company acquired his previous company, FriendFeed) — says the funding will be going to start ramping up Quip’s expansion in earnest.
To date, the company has gotten by on what he describes as “viral growth”: one person on a team of workers tries it out for free, recommends it to a colleague, and then eventually the whole team signs on and, and significantly starts to pay to use it. Pricing is typically between $10 and $25 per user per month, depending on features.
This slow-growth technique has so far served the company very well: he says that over 30,000 businesses are already using (and paying for) Quip’s word processing, spreadsheet, chat and other features. It’s been a lucrative enough state of affairs that the company (which was co-founded by ex-Googler Kevin Gibbs) hasn’t really touched any of its previous $15 million in funding (which also came from Brenchmark and Greylock) .
Customers include Facebook, New Relic (which is how Moran first encountered Quip) and many more, who are flocking to the app not just because you can use it to create and edit documents and chat with colleagues easily across both mobile and desktop devices, but because it allows for offline and online collaboration in a clever and seamless way, despite the fact that the software does not ‘live’ on your device.
So why raise now? Two reasons, he said in an interview. The first is that Quip now feels ready to grow the business more proactively.
“The company has reached a point in our maturity, and we feel confident of the Quip experience and how we can grow and change the way teams work. We now want to invest in that,” he said. “Before we were still figuring out our model and strategy, and it felt immature to take on a burden of funding now we know where we are and how we would want to invest it. We feel good about our customer feedback and customer engagement.”
The other is that there is an ever-so-slight suspicion that while the going is very good right now — as a testament to that, Taylor mentioned to me that they would start raising money only weeks ago, and now the deal is done — there’s no telling how challenging conditions for capital raises will get down the line.
“It is definitely is a founder friendly time to raise money right now, but a lot of money available and has a consequence of valuations are higher now than might be justified in less frothy environment,” Taylor said. “Still, if there is a downturn you don’t want to be the company that waited too long to raise. Because we know what we want to do with the money, it was a good time for us.”
The landscape for cloud-based, mobile-first productivity tools is not only very crowded, but some might argue that it’s actually going to something of a shakedown. Evernote, a personal note-taking app that looked like it was on a path to greatness, seems to have lost its way in more recent times. The company, under a new CEO, recently laid off staff and closed down several international offices. Dropbox, which focuses more on cloud storage but has also inched its way into services that sit on top of this, has been challenged to justify its lofty valuation.
And Quip, it should be pointed out, has not been immune to this either. Taylor says that it’s been approached by a number of companies as an acquisition target, and it’s had many an approach from VCs.
Lilly has an opinion on how the bigger picture will play out: “There’s a ton of competition, noise, and marketing — but Quip‘s built a very special product that I think will stand the test of time — it’s just a really good fit for the way work happens now,” he said in answer to my question about the competitive challenges in the market. “And I think bridges extremely well from the systems that people have worked with for decades like Office.”
He also points out that he uses Slack and Dropbox both “all the time — they’re critical to workflow for us, and we’re very happy investors in Dropbox as well,” he told TechCrunch.
“But neither [Slack nor Dropbox] really addresses how you create lasting documents and information with people. What we’ve found with Quip is that it’s kind of magic. You start working on something new, realize someone else could really improve it, you tag them on the document, their phone buzzes them in real time and suddenly they’re there, in the document, collaborating and helping you get better. This is something that’s new, and important — the longer we have Quip, the more embedded it gets into everything we do. We create documents and spreadsheets together, and they get better over time because collaboration is such a fundamental layer.”