Collaboration Market Valuations Are Crazy
The Collaboration space sees serious hype
It pays to be in the collaboration world these days
Driven by the age of mobility and remote working, the collaboration environment has grown at record pace. In a world where your employees are logging into tools from anywhere and everywhere, you need a way to keep your teams connected. A space that started with a handful of instant-messaging tools like Slack has now become a thriving multi-vendor environment, packed full of new opportunities.
In 2018, the value of the communications and collaboration market sat at around $32 billion. By 2025 (only 6 years from now), the space will be worth more than $60 billion according to Global Market Insights. With such a huge opportunity for potential revenue, it’s no wonder that countless UC companies are trying their hand at the collaboration space.
Slack, the original collaboration tool in the eyes of many, is set to IPO with a value of $17 billion. Zoom, the video-focused collaboration company just entered the market with a $19 billion valuation – and already they’re seeing incredible success.
“I haven’t seen the technology space so overheated since right before the dot-com bubble burst.”
Zoom: The Most Recent Collaboration IPO
Zoom has taken its slice of the collaboration pie with a focus on video-first communications. The business believes that companies connect better when they have the nuance and intricacies of face-to-face interactions to work with. However, there are plenty of different ways for people to communicate with Zoom. The platform also offers instant messaging, calling through Zoom Phone and so much more. It’s no wonder that it’s one of the most valuable collaboration platforms on the market today.
When Zoom launched their IPO at the end of April, they entered into a battle with a string of “unicorn” companies The term “Unicorn” used to be much rarer than it is today – it described a private company that entered the market with a value of more than $1 billion. When the term was first coined in 2014 by Aileen Lee, there were only 39 unicorns in existence. Now we have more than 334 unicorns around the world, and many of them come from the collaboration industry.
Within only 3 days of trading, Zoom had already surpassed fellow Unicorn “Lyft” to become the most valuable tech company to go public in 2019 so far. Zoom helped to kick off what many industry analysts believe will be a massive year for high-profile tech IPOs and collaborative companies.
Slack’s Public Debut Is Just around the Corner
Zoom’s not the only one set to make waves in the public stock market either. We’re sure to see some disruption when Slack completes their IPO soon too. The company recently filed its direct listing documentation, which highlighted some of the incredible benefits that come with being perhaps the best-known collaboration tool in the world.
Slack currently has around 88,000 paying customers worldwide, and 575 of them have a subscription plan that adds more than $100,000 each year in recurring revenue to Slack’s portfolio. These customers accounted for approximately 40% of the annual revenue for the fiscal year ending in 2019.
Of course, Slack is far from the only player on the market anymore. While this is the company that introduced many of us to the idea of collaboration technology, to begin with, there are plenty of other businesses that have no jumped into the marketplace. For instance, within just a couple of years in the market, Microsoft Teams has already far surpassed Slack in paying customers.
Teams might not offer the “pure play” experience that Slack provides, but it does have a range of unique benefits under its belt, including the ability to integrate with the already-popular range of Microsoft Office productivity tools.
Fuze, another market leader in the collaborative space, is also making their way into the trading space soon too. The company’s valuation is up in the air right now, but there’s no doubt that we’ll see Fuze appearing as yet another “unicorn” when they launch their IPO. Fuze has been named a leader by Aragon Research in the collaboration industry for three years in a row, offering incredible results with seamless experiences across messaging, video, and voice.
Opportunities are Everywhere in the Collaboration Market
The rise of the unicorns has created a particularly intriguing environment for the collaboration companies that are looking to put their value to the test this year. Experts believe that many of the IPOs waiting in the wings this year could come from “unicorn” companies. This means that the tech environment could quickly raise over $100 billion between them, creating one of the most valuable years in trading history.
Many of the biggest tech companies in the world today trace their growth back to the dotcom boom, and now it seems like we’re seeing a similar revolution driven by the demand for collaboration. Aside from the companies we’ve already mentioned, like Zoom, Slack, Microsoft Teams, and Fuze, there are plenty of other companies making strides into the collaboration space too.
For instance, we’ve got:
- Communication market leaders RingCentral: The Glip solution for unified communications and collaborations gives businesses an easy way to stay connected, share content, and chat through video – wherever they are. RingCentral is currently trading at about $122.92 per share – making them a huge contender in the marketplace
- Gartner magic quadrant market leader 8×8 also have a strong position in the collaboration market: Their market value has jumped up and down in recent years, with a current trading price of around $23.79. 8×8 is one of the most well-respected collaboration and communication platforms in the world, offering mobile, voice, and UC to all sizes of business
- Vonage, another telecommunications market leader, has its own stakes in the collaborative space, trading at $11.50 per share. They deliver collaborative tools through the comprehensive Business cloud – complete with everything you need for hosted productivity and employee support
There list goes on, with new competitors emerging all the time, like Five9, Talkdesk and more. It seems like almost any brand with a customer experience and unified communication portfolio now has to invest in collaboration too if they want to compete in the marketplace.
Taking Advantage of the Market
There’s no doubt that the opportunities for vendors in the collaboration and communication space are growing. The question is how do you take advantage of this rise in demand?
Crucially, leading businesses in the UC space will need to do more than add instant messaging and video conferencing to their stacks to appeal to the consumer of tomorrow. Today’s collaboration environment requires organisations to keep an eye on the evolutions of disruptive technology like AI and analytics. It also means that vendors have to think carefully about how they’re going to stay compliant with regulations like GDPR while implementing new features and capabilities.
There are a lot of challenges out there for businesses that want to compete in the UC&C environment, but it seems safe to say that collaboration is worth the investment.