I’ve worked for startups in my career as a system administrator, and I always enjoyed these smaller communities with tightly knit groups who all know each other and spend time together. Much of the camaraderie and resulting company success depended on face-to-face interactions; even little things like Bagel Day and company holiday parties where families were also invited, did so much to foster interpersonal relations and build bridges between people.
It seems difficult to conceive startups flourishing given their dependence on hands-on work. I spoke with Clay Kellogg, CEO at Terminal, an online global community provider; Kristen Durham, vice president of startups at Zendesk, a CRM provider; and Oliver Harrison, CEO of Koa Health, a digital mental healthcare provider, to see how these organizations are weathering current events.
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Scott Matteson: How are startups faring in the pandemic?
Clay Kellogg: Startups already capitalizing on the remote work movement prior to the pandemic were strongly positioned when the pandemic hit, better than those that had to quickly pivot to a remote workforce. They already had a remote work culture in place, so there wasn’t a shock to the system like there was for other companies.
Kristen Durham: All businesses have felt the impacts and challenges of COVID-19, no matter the size. And though it may seem like an especially hard time to be starting or growing a business, that’s not necessarily the case. Capital remains available for great startups, and in many instances, the events over the past year have created opportunities for new businesses to flourish.
At Zendesk, we have the opportunity to speak frequently with startup founders, and we’ve heard and seen a consistent theme emerge—an undeniable need to focus on customer retention. Acquiring users has remained expensive, so ensuring customers of your product are successful, productive, and paying is the most efficient way to drive growth.
Going beyond that, startups focused on delivering a customer experience, rooted in empathy and addressing a pain point of this particular time, continue to thrive, even as the world faces massive changes. For example, one of our startup customers provides credit-building loans to people who are underbanked or without credit history, a widespread problem that can be detrimental to people who have lost their jobs. By working with customers on payment plans to fit their needs, the company has been able to help those in need and build long-term customer loyalty.
Pandemic times or not, people continue to consume products and services, and by listening to and doing everything you can to help your customers, your business will benefit.
Oliver Harrison: Koa Health was born during the pandemic! We officially spun out of Telefonica (a global telecommunications company based in Spain) in October and subsequently closed a Series A funding round. Our mission is to make mental health accessible for all. So whilst it’s unfortunate that COVID-19 has created so much extra need for mental health support, we’re pleased to be able to offer digital mental health solutions to help make addressing that need even easier during this difficult time.
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Scott Matteson: How is their remote work strategy faring compared with larger companies?
Clay Kellogg: Some startups are fully embracing remote, some companies can’t wait to get back into the office and some are struggling. That said, according to Terminal’s Remote Leadership Report, rising startups are the most likely to have a remote strategy at 44% compared to 29% of mid- and late-stage and 27% of public companies. Additionally, our report revealed that rising startups are the most likely to have a single individual overseeing remote processes company-wide at 34%, compared to just 16% among public companies.
The pandemic has revealed startups and large companies are recognizing the benefits of recruiting remotely moving forward. Those that are dead set on full-time return to the office are likely going to see increased competition for their employees being recruited by companies that are more flexible about fitting into their ideal state of work/life balance.
Kristen Durham: Looking back at the first half of 2020, businesses of all sizes had to rapidly transition to remote working, which came with its own set of obstacles—local operating conditions, remote onboarding challenges, surges in customer requests, trying to help your kids with their online learning while you’re in your own Zoom meetings. Startups had fewer staff to dedicate to building remote work strategy, but with teams more accustomed to change they organized quickly and got right back to work. Other startups who already had fully remote workforces served as a model in many cases.
When it came to serving customers, it wasn’t about whether you had a good remote work strategy, per se. An interesting finding from research we conducted in partnership with Enterprise Strategy Group shows that companies—both large and small—with more mature CX strategies were better equipped to quickly pivot their businesses to remote working. For example, if you already were investing in cloud-based support platforms and collaboration tools, or had built online training for your customer service agents, these things made it much easier to pivot to remote. We’re also seeing that many CX teams are considering making permanent changes to their flexible remote work policies as the pandemic continues to change the way businesses work.
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Oliver Harrison: Our company has always had a flexible working model, so we had a solid foundation of both experience and trust to build off of once the pandemic hit. While every company is different, it is likely that smaller companies are faring better given the scrappy mentality of startups and smaller headcount. It’s much easier to manage adjustments for smaller teams, simply because of the logistical aspects.
Scott Matteson: What advantages do startups have compared with larger companies?
Clay Kellogg: Smaller companies are typically more agile, and based on research from the Remote Leadership Report and Terminal’s past Engineering Survey 2020, we know that startups are often viewed as offering more meaningful work. While large companies are perceived by engineers as offering stability (87%), strong salary (60%), killer benefits (59%) and mentorship (45%), early-stage startups are viewed as offering more opportunities to make an impact (54%) and create something new (79%). Startups’ main advantage coming out of this unprecedented time is that they can offer both more interesting roles and a remote framework that is more flexible.
Additionally, the Remote Leadership Report found that startups have other benefits that large companies may not yet have mastered—67% of leaders at rising startups say the culture of proactive communications is most important, much higher than mid-stage 41%, late-stage 45%, and public companies 35%. Communication has shown to be another strong point for startups, with 52% of leaders at rising startups asking employees directly how effective and productive they think they are, compared to 35% at late-stage and public companies.
Kristen Durham: As a startup, your superpower is agility. You have the ability to use your limited resources in sometimes smarter, more imaginative ways than big companies, deliver iterations to customers quickly and adapt readily to changes without having to navigate multiple layers of approval and discussion. The COVID-19 pandemic has taught us that the world as we know it can shift in the blink of an eye, and companies need to be ready to adjust just as quickly.
Additionally, startups have the opportunity to build a customer experience strategy into the core of their businesses from the get-go. In a competitive market, your customer service can be as big a differentiator as your product. In fact, it’s been shown that fast-growing startups make greater investments in their CX strategies and do so more quickly, positively impacting customer loyalty and retention.
Oliver Harrison: Our smaller size has definitely kept us closer. We are still able to have meetings with the whole company over video calls, which helps maintain team spirit and makes sure that everyone’s voice is heard as we grow. As other companies have become sick of corporate happy hours, we’ve been able to engage with those types of meetings in an authentic way. For example, we had a virtual celebration to mark our $36M Series A close, which was a way for us to reward our team and everyone really enjoyed this collective commemoration.
Scott Matteson: Are there any specific challenges they are facing?
Clay Kellogg: It is anticipated that many large companies will soon make the decision to go fully remote, which could make things harder for startups on the recruiting front. The Remote Leadership Report found that 63% of leaders at rising startups say that big tech companies going remote will make it harder for them to find and keep great talent, compared to 44% at mid-stage, 37% late-stage and 43% public.
Kristen Durham: At the start of the pandemic, our team began monitoring our own customer data to understand the specific impacts companies were experiencing by looking at their customers’ interactions. We found that both small and large companies were seeing similar surges in terms in the number of inbound customer support requests, and that their customers increasingly moved to contact them over channels where they expect a faster response.
With fewer resources, it’s much more difficult for startups to throw people at customer demand. To combat these challenges, companies are using artificial intelligence-powered chatbots, automation, and online help centers to strengthen self-service capabilities and lighten the load on their support agents.
Oliver Harrison: Whilst some people and teams really like working from home, others are less keen (maybe because their home life makes that difficult). Some teams miss the collaborative aspect of being in the same room together for creative sessions or brainstorms when you just want to stand together in front of a board and draw out your ideas, building off each other’s ideas in the moment.
Scott Matteson: How are their IT departments managing the workload?
Clay Kellogg: The rise of SaaS has enabled companies to be able to manage their workloads and bring better infrastructure to power the remote workforce.
Kristen Durham: IT teams have been tasked with getting their organizations up and running in a remote world and finding and implementing new tools and technology to help people collaborate and stay productive. Startups don’t necessarily have big IT departments, so they are making choices to streamline their tech stacks and prioritize investment in tools that deliver a lot of functionality natively and integrate easily with the rest of their stack.
They are also turning to systems that make it easy to deploy and onboard users. Without the luxury to do something like in-person training when releasing a new tool, the software they provide for the company has to be more intuitive to use and require a lower ramp time.
Oliver Harrison: Our IT team is fantastic. Our products are designed to operate at scale, so serving our growing customer base has not been a problem. In terms of directly supporting the team, one policy we put in place really early was to allow everyone to go into the office to take whatever they needed in order to work from home; we’ve pretty much stripped the office! This applied to everyone but I know that the software engineers in particular valued being able to take another screen to have at home.
Scott Matteson: What’s going to happen down the road?
Clay Kellogg: If 2020 has proven anything, it’s that no one has a crystal ball. That said, most things move in cycles—what is old will be new again. People will come out of COVID with a newfound appreciation for leaving their homes, but also have the confidence in knowing they can do their jobs well from wherever they want to be and don’t need to be locked into roles and companies that aren’t willing to adapt to their needs. The lines between work and life were already shifting prior to COVID, but top talent should be emboldened, and the companies that are already thinking how their remote strategy is tied to their talent strategy will be ahead of the curve. Companies—both startups and big tech alike—must learn that people are your differentiators at the end of the day. Your company’s people make your product work, your business run, your revenue grow, so taking care of them will always serve you well.
Kristen Durham: 2020 was a year of massive disruption and transformation, and as we continue moving forward in 2021 and beyond, we know that things will not go back to the way they were pre-pandemic. We’ve witnessed fundamental shifts in how people live, collaborate, and connect with each other, and companies have had to adapt in ways they never imagined. To add to these challenges, customer expectations continue to go up—they still want the same speed and convenience, but are also looking for empathy and want to buy from companies that are committed to the issues they care about.
For startups that want to keep pace with increasing demand and thrive in the new world of work, it’s more important than ever that they focus on building a strong customer experience foundation. These days, providing great customer service is not just about answering tickets, but about embracing the customer experience as the invisible glue that keeps your team, product and business centered on what matters most.
Oliver Harrison: We know that once the pandemic starts to subside we won’t return to how we were. This isn’t just about not going back to the office; the mental health impact of COVID-19 will continue long after the vaccinations have been rolled out. We’ll be continuing to develop our product portfolio so that we can offer great mental health support for both customers and employees. We’re also walking the talk on mental health and have just introduced mental wellbeing days as a new part of our employee support.