Startups

Zoom earnings, remote work and a terrible but possibly bright moment for startups

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Image Credits: Thought Catalog (opens in a new window) / Unsplash (opens in a new window) under a license.

It’s a bit gauche to talk about positive economic impacts of what may become a global pandemic, but the novel coronavirus hasn’t been bad news for every company.

Video conference provider Zoom appears to be one beneficiary; after going public in 2019, its share price rose from around $68 at the start of the year to $115 today. Why? As governments lock down cities and close borders — and companies and conferences shift to virtual for the time being — services like Zoom are well-positioned to see increased demand. (Indeed, Zoom announced today that it is rolling out select products to new territories after improving its free service in impacted regions.)

That Zoom’s shares have appreciated is perhaps not surprising.

The company quickly moved from being a relatively unknown video chat upstart to becoming a celebrated profitable IPO that today is synonymous with its product category in the startup world. Seeing rising investor interest in Zoom merely matches its growing brand; naturally, folks looking for a trade — however that makes your moral center feel — might pile their chips on Zoom.

The rise in Zoom’s value begs two questions: Are future-of-work and remote work-focused startups seeing a global increase in demand? And if so, what impact is that having on their growth? (Are you a startup building remote-work tools? Email me if the outbreak has impacted your growth rates.)

Luckily for you and me, Zoom reports earnings tomorrow. The quarter that Zoom will report, the fourth quarter of its fiscal 2020, stretched from November 1, 2019 through the end of January 2020. So it does include a bit of time in which the novel coronavirus was active, impacting work and perhaps corporate behavior. Obviously, its next quarter will be more interesting, but Zoom should provide guidance for that period. So we’ll get a look at what’s ahead, even if it is provisional.

What about startups?

If Zoom has a bullish outlook, it could lift other, similar companies.

The rise of remote work is still quite nascent. Some data from the Fed indicates that in 2017, the percentage of non-self-employed Americans working from home grew from a little over 1% around the time of the financial crisis to just over 3% in 2018. That’s dramatic, but impressive in percentage terms more thanks to its low base than its absolute rise.

Still, Silicon Valley is responding to the call of remote work by building distributed teams more quickly and adding remote workers faster than before.

I ground those notes purely on having spoken to dozens of startups each quarter for more than a decade. And second, by building tools that at a minimum double as remote-work friendly. I’m thinking not just about Slack, though as someone who works on a remote, distributed team, Slack is great. Or Convo, which is similar to Slack. And not Teams, really. I’m thinking Monday.com, Asana and those sorts of tools built to help teams stay in sync digitally beyond just chat.

You could toss Tandem in there and maybe Airtable. There are hundreds of other startups and companies to include, depending on how far you want to stretch the category. But with more and more companies canceling flights and conferences, we probably don’t have to be too strict. The world just decided that working from home is great, at least for now, and that simply requires tooling.

We have some indications of this already happening. In February, app store data showed that some productivity apps associated with remote work in China, for example, saw their rankings spike as more workers needed to both do things and stay home.

TechCrunch is probably a good example of the tools point. We run Slack, G Suite and Zoom for daily intra-team work. Along with a zillion other things that we need (podcast analytics, to pick one example). If more teams go remote, it should be a boon for more than a few companies if our spend is close to typical, and I suspect that it is.

Obviously the full global impact of the novel coronavirus has yet to be felt, even though the human cost has been huge already. If the episode will permanently reorder how work is done is not clear. But what is, I’d bet you lunch, is that the shift toward acceptance of remote work will accelerate when more people discover its benefits. And the tools that make it possible.

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