I was waiting to meet Lauren Strenger in the virtual headquarters of Gather, a startup that builds digital office space for remote teams that miss the feeling of physically being together. Gather’s office serves as a workspace where its employees regularly meet and hang out, but it also doubles as a showcase for skeptical visitors who want to see what the company’s technology is capable of.
The reception area was tastefully outfitted with 8-bit wood floors and the standard assortment of office plants, leather furniture, and coffee table books rendered in pixel art. I was represented by an avatar similar to the kind you might see in an old video game. Strenger, a client support specialist, later told me the companies’ co-founders took their aesthetic cues from Pokémon.
But for now I was hovering by the virtual reception desk, wondering, as I often have in physical offices, whether I should remain standing or take a seat in the waiting area. When Strenger showed up to greet me, their face appeared in a small video screen as soon as their avatar came within hailing distance of mine. We chatted while we walked around the space, past the familiar conference rooms and cafeteria and the less familiar control room modeled after 2001: A Space Odyssey. When we stepped past the avatars of two Gather engineers sitting together at a pixel table deep in conversation, I felt a little embarrassed to be intruding on their space.
The feeling of presence here, in other words, was visceral enough to make me feel about as awkward as I typically do on any real-life office tour.
The pandemic has fueled a burgeoning market for digital tools designed to help colleagues collaborate at a distance: video calling software, workplace chat apps, virtual white boards, note sharing tools, transcription services for remote meetings—and, yes, 8-bit office space. These startups existed before the pandemic, but the onset of coronavirus has driven massive new interest, investment, and adoption of the tools they sell.
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For the startups that make some of these tools, it’s not just about selling a new piece of software. They are on a righteous crusade to change the nature of work, even after the pandemic subsides.
“Sharing is completely broken,” declares a promotional video for Notejoy, a startup launched in 2016 to help coworkers take and share notes. CEO Sachin Rekhi says Notejoy’s goal is nothing less than to “increase the searchable knowledge that exists throughout the world.” Mural, a company that sells digital whiteboards, is on a mission to “subvert the hierarchy in your organization” by giving everyone from interns to CEOs equal power to add diagrams, doodles, or notes to a team’s whiteboard, according to “chief evangelist” Jim Kalbach. Collaborative design startup Figma wants to take the ego out of design, while transcription service Otter sees itself as a tool that will fundamentally change the way people collaborate.
But we’ve seen these grand visions of the future before. Today’s worktech startups are following in the footsteps of workplace apps like Slack, their messianic predecessor and the current darling of the enterprise software industry, which has made its own big promises to usher in a new era of work. In fact, the new startups have bought into that ethos so much that a couple are already promising to fix what’s broken with Slack—even as Slack is still in the middle of its quest to fix what’s broken with email.
In many pockets of the remote working world, the startups’ solutions appear to be resonating. Homebound consultants are flocking to digital white boards—leading to hundreds of thousands of new users and hundreds of millions of dollars in venture capital for firms like Mural. Otter saw its revenues soar more than 800% during a pandemic-tinged 2020. Figma has attracted A-list clients like Google, Microsoft, Uber, Spotify, Airbnb, and DropBox.
At the same time, the startups are stepping into a cutthroat, competitive market. Hopped up on massive investments and soaring expectations, workplace tech has become a battleground for the biggest names in enterprise technology. If any of them hope to survive the brawl and realize their lofty ambitions to bring about a brighter future of work, they can’t just sell a handy tool. They’ll have to emulate hulking rivals like Microsoft and Salesforce, which are racing themselves to build the next all-encompassing platform for remote work.
Table of contents
Business tech is booming | Promise and perils of new tools | History (and marketing claims) repeat | Brawling with Big Tech
Business tech is booming
The pandemic has been an unexpected boon for Figma. In 2016, the startup began selling a collaborative design tool that’s something like Google Docs for logos and layouts. Multiple people can work on a design at the same time, each editing or annotating a different piece of the project.
Figma, like the broader industry for workplace software, was already riding high even before reports of a strange new respiratory illness began trickling out of Wuhan, China. In Feb. 2019, Figma celebrated Valentine’s Day with a $40 million funding round that valued the startup at $440 million. It wasn’t alone in its success: That year, Wedbush Securities estimated that the market for workplace collaboration tools was worth about $25 billion.
A year later, the Covid-19 pandemic erupted across the globe, forcing businesses to shut down, scattering office workers to their homes, and creating an instant need for tools like Figma that could help designers keep working under lockdown. In April 2020, Figma raised another $50 million—and its valuation quadrupled to $2.05 billion. The overall market for collaboration tools ballooned, too. Wedbush estimates it has now tripled in size to $75 billion.
“We’ve been shifting to these shared digital spaces for a long time now,” said Figma CEO Dylan Field. “These are not new trends. But the pandemic just took everything physical and made it digital overnight.”
That shift has turned the tech industry into one of the most powerful money magnets in the global economy. Tech stocks have soared, IPOs have hit an all-time high, and startups have absorbed a river of cash from venture capital funds that remain bullish about their portfolios.
Some market watchers have begun to wonder whether low interest rates, limited investment options, and irrational optimism have created a tech bubble that will soon deflate. But financial analysts say that—even after vaccines roll out and employees begin returning to offices—collaboration software has room left to grow. Wedbush predicts the market will hit $500 billion by 2027.
“You’ll see some moderation, but there’s still going to be pretty white-hot growth going forward,” said Wedbush Securities analyst Dan Ives. He predicts that 30-40% of employees will stay remote as companies shift toward hybrid work. “This is a market that’s not going away when things return to whatever the new normal is.”
Brad Zelnick, a Credit Suisse financial analyst who covers software, agrees. “Even one day post-Covid, when people start returning to offices, there are going to be some permanent habits that have formed,” he said. “We’re going to have more distributed work. For that reason alone, collaboration tools are a high priority for CIOs.”
Promise and perils of new tools
Otter sells a relatively simple product. Its transcription tool listens in on calls and meetings and, in real time, spits out a written record of everything that has been said. It’s accurate and reliable—I used Otter to transcribe about two dozen interviews for this story and never had a hiccup. But, at its core, Otter is selling a high quality speech-to-text tool.
Even so, the company exhibits a talent particular to tech startups: the ability to start from a simple piece of software and balloon into nearly boundless promise. Otter bills its product as an accessibility tool, giving hearing-impaired employees real-time read-outs to follow along in meetings. It’s also a tool for asynchronous work, allowing colleagues to skim transcripts to catch up on what happened in calls and meetings while they were away. It’s a way for companies to preserve institutional knowledge, making conversations that otherwise would have melted into the ether searchable and shareable.
And that’s just what it promises today. As the startup adds text analysis features, CEO Sam Liang muses that it could be used to make meetings more efficient, as managers slash huddles that don’t generate a return on investment, or more equitable, as teams analyze which of their members tend to dominate discussions and whose voices go unheard. AI assistants might one day generate meeting summaries and lists of action items, or prompt a team to pick up a discussion it tabled at the last meeting.
The workplace software sector, like the broader tech industry, is full of big ideas and soaring optimism. And to some extent, the past year has borne out many of those promises. When the pandemic struck, ready-made collaboration tools like Slack, Microsoft Teams, Google Meet, and Zoom helped workers shift to work from home without cratering their productivity.
The software has found use beyond white-collar offices, too, on farms, in restaurants, and among wildlife guides. Taken together, these tools help hundreds of millions of people learn, work, collaborate, celebrate successes, and make mistakes—everything you might do in a workplace.
But the promises don’t end there. Among the reigning champions of the collaboration software industry, Slack is the biggest dreamer. Born from the ashes of a failed video game company, its business is built around making work communication more playful and fun—and CEO Stewart Butterfield isn’t shy about making sweeping proclamations about its potential to solve almost any problem plaguing work.
“It’s not just messaging or integrations or collaboration. It’s all of it. It’s helping people work together better than they ever had before: more efficient, more productive, happier,” he told investors in 2019. “In that sense, Slack is like electricity, or the internet. What problem does electricity solve?”
But for all the problems they promise to solve, tools like Slack have limitations—and in some cases, might actually make us worse at getting work done. “A lot of it depends on how technologies are used, how they’re adopted, and the organizational culture you develop around them,” said Jennifer Gibbs, a communication professor at the University of California, Santa Barbara.
First, there’s the danger of distraction: The average knowledge worker checks a chat app or email every six minutes, according to data from RescueTime, a company that sells software that tracks how workers spend their time. Their data also show that workers spent 40% of their day multitasking between communications platforms and other tasks. “That constant interruption—not just from notifications or external messages, but the internal habits we’ve created of checking in constantly to see if there’s something new—totally fragments our ability to do deep work,” said Jory MacKay, who edits the RescueTime blog.
Collaboration tools can also blur the lines between work and home life. Products like Slack and Teams borrow from the design of social media platforms, and come with smartphone apps that can ping workers at any moment. Data from Time Is Ltd., which also sells time-tracking software, shows that 10-15% of Slack activity now happens outside regular work hours.
Finally, there are concerns about privacy. Workers may feel less comfortable communicating on platforms where every message is logged, archived, and visible to their employers. “There’s a very fine line between collaboration and collective engagement, and just control and monitoring,” said Melissa Mazmanian, an associate professor of both management and computer science at the University of California, Irvine.
All these risks reportedly came together at the luggage startup Away, where managers created a particularly dystopian work culture around Slack. According to a buzzy exposé in The Verge, Away banned virtually all private communication between workers and turned Slack into a surveillance tool, and fired several workers for speaking ill of the company in unauthorized private messages. Former employees reported pressure to respond to Slack missives at all hours of the day and being bullied by managers in public channels.
Even Butterfield has recognized that without the right company culture in place, tools like his can quickly go off the rails. “Using Slack (or email, IM, IRC, meetings, phone calls, f2f conversations, CB radios, etc.) inside of a large organization with no protocols or discipline around communication will lead to failure almost all of the time,” he tweeted in 2018. Slack has since put out a starter pack of guidelines it encourages companies to adopt to limit workers’ distractions and off-hours interruptions.
The new cohort of workplace tech startups hasn’t necessarily cracked this problem: Their tools could also lead to distraction and burnout, and they’re only expanding the indefinite preservation of digital communication. Nonetheless, they’re eager to play the weaknesses and misuse of Slack to their advantage.
History (and marketing claims) repeat
Notejoy makes no bones about picking on its predecessors. The startup makes a tool for taking notes and sharing them with colleagues. The notes are meant to be informal and easy to search, giving anyone in an organization quick access to their coworkers’ knowledge.
“If you’ve ever tried to search email or Slack, you know how terrible it is,” said Rekhi, the Notejoy CEO. That’s a problem, he argues, because most of a firm’s institutional knowledge never makes it into a shared document or a company wiki page where others can access it. “It’s actually trapped in these communication tools that are terrible for knowledge sharing.”
Ironically, Rekhi is making the exact same argument about the perils of Slack in 2021 that Slack made about the perils of email in 2013. Butterfield, like Rekhi, likes to say that email “is a terrible way to manage internal communications,” because it traps information in a zillion individual inboxes. Slack was designed to preserve institutional knowledge by putting conversations into public channels, where anyone can check in on a project’s progress or refer back to past decisions later on.
There are a few reasons why we see wave after wave of new workplace software startups that promise their product finally has the key to addressing what’s really wrong with the way we work, said Mazmanian, the management professor.
The first is that collaboration software is on an eternal quest to tackle a problem that technology alone cannot solve: getting humans to communicate efficiently. “I don’t believe that technology is ever going to be a quick fix for problems like information overload and constant interruptions and the amount of time and energy spent just on communicating,” said Mazmanian. Getting your team to communicate better, she said, generally requires a lot of self-reflection and hard work to establish healthier norms.
New collaboration tools can be helpful, but they can also exacerbate the problem by multiplying the channels workers have to communicate with each other. “Inevitably, the more we use [a new tool] the more overwhelming it’s going to feel, because nowhere in this are we actually reducing the amount of communication or becoming more efficient or strategic about how and when we communicate,” said Mazmanian. “We’re just adding more and more. And so it’s not surprising to me at all that we’re going to think the tool is broken or needs to be fixed.”
Hammering away at the narrative that the old, dominant tool is broken and needs to be fixed, however, is a great way for a new startup to market itself. “For every David, there’s a Goliath,” said Zelnick, the Credit Suisse financial analyst. “A lot of these entrepreneurs, when they go out there and tell their story, the easiest way to attract attention and investment is to explain the opportunity in the context of that Goliath.”
Rekhi recognizes the parallels between Notejoy’s pitch and the pitch Slack made a few years earlier. “That’s the story of technology,” he said. “You’re going to see disruption that looks at what’s already out there and invents a better way and really tries to solve the core problems that we’re seeing with the current generation of software.” In other words, Slack was an improvement on email, but that still leaves lots of room to improve upon Slack.
The difference today is that software startups can crop up much faster than they did in earlier eras of tech, because the technical and financial barriers to entry are much lower. “It’s never really been easier from an infrastructure point of view to create a software-as-a-service product than it is right now,” said organizational design consultant Sam Spurlin. As a result, there are startups already nipping at the heels of Slack and Teams, even though those tools upset their predecessors only a few years earlier.
Brawling with Big Tech
Mural is a software startup that sells virtual whiteboards. But it’s also the company that says it’s on a subversive quest to tear down corporate hierarchies. Kalbach, the Mural spokesman, said selling blank canvases that everyone on a team has equal power to edit is Mural’s small way of advancing that mission.
Kalbach would like to see Mural remain an independent company. He said he’s seen firsthand how idealistic startups can get scrapped for parts after they’re sold to big corporations. He’s not eager to repeat the experience. “I think the fact that we are independent will allow us to pursue our mission in a way that we might not be able to if we had a different business imperative [from a parent company],” he said.
Rekhi of Notejoy echoed Kalbach’s sentiment. “Our goal here is to see how far we can take this independently,” he said, “because it gives us the freedom to take our opinionated worldview and grow into larger use cases.” The CEOs of Otter and Figma each said they hoped to stick it out as independent firms, too.
But it won’t be easy. Many of the startups today are in a similar position to where Slack was a few years ago: small, upstart tech companies with novel ideas, a core group of committed users, and no intention of selling. But after Slack rebuffed an $8 billion acquisition offer from Microsoft in 2016, it learned how hard it is to compete with an established tech giant.
Within a year, Microsoft launched Teams, a rival chat and video app. Microsoft aggressively promoted its growth, giving Teams away for free to all existing Office Suite clients. By 2019, Teams had surpassed Slack’s user numbers, and in 2020 it announced it had 115 million daily users to Slack’s 12.5 million. Slack countered with an antitrust lawsuit in the EU, alleging that Microsoft had used anticompetitive tactics to juice Teams’s growth. But by the end of the year, Slack agreed to an acquisition offer from Salesforce, accepting the backing of a major enterprise software giant to help it take on Microsoft.
“I think it just shows that you can scale a business, but when you start to run into the stalwarts it becomes incrementally more difficult to do that on your own,” Ives, the Wedbush analyst, told Quartz at the time.
Slack’s sale has set up a three-way fight for the core of the collaboration software market between Salesforce, Microsoft, and Zoom, the upstart that carved out a big share of the video conference market at the start of the pandemic. Each of these firms is building out integrations with other workplace tools in the hope of becoming the main piece of software through which office workers do their jobs.
Microsoft, especially, has big aspirations for its collaboration tool. Judson Althoff, a vice president who runs the company’s worldwide commercial business, said in December that Teams “has the potential of effectively being a new Windows for us.” Although the company doesn’t make much money on Teams today, it sees an opportunity to grow it into the world’s standard workplace interface, cementing the company’s grip on the enterprise software market.
“There’s significant value in being the go-to app,” said Zelnick, the Credit Suisse analyst. “That’s really what this is primarily about: becoming the sort of super app that is connecting to all the other applications and data and functionality that I need to be productive in my job.”
The fight to create an all-in-one productivity tool gives the major players an incentive to try to buy or clone startups with useful business applications. “These companies have massive, massive firepower to go out and acquire or consolidate these disruptors,” said Zelnick. “In many cases, it’s a lot easier than trying to assemble the talent to put together a team when you can pick up something that’s already proven to work.”
Some startups bristle at the suggestion. “People don’t fully recognize that what we’re building here is not just a feature,” said Otter CEO Sam Liang. “It’s an independent product.” Otter has forged partnerships with Zoom and Google Meets, and sees itself as a freestanding service that can integrate with existing videoconferencing platforms.
Among the new vanguard of startups, Figma is the closest to breaking out as the next big collaboration tool. With a $2 billion valuation and a fresh round of funding, it has plenty of runway and is emulating the all-in-one model of the major players, with integrations and plug-ins for a variety of external tools.
The company has already become something of a role model to its up-and-coming peers. Dominik Zane, the CEO of a video conferencing startup called Around, told me he sees a path for his firm to stay independent and become a multibillion dollar company. “A good example is Figma,” he said. “In 2013 and 2014 it wasn’t as obvious that it was going to become the designing standard, and it has become that standard. So that’s how we think about Around in a couple of years.”
Rekhi, the NoteJoy CEO, said he’d like to do for notes what Figma did for design. “You’re already seeing the kind of VC dollars that Figma has been able to get, and I think you’ll see a similar thing in this broad space of workplace collaboration tools.”
Figma CEO Dylan Field, for his part, said he knows the history of Slack’s rivalry with Microsoft, and hopes his firm will meet a different fate as it goes up against Adobe, the reigning champion of design software.
In 2016, Slack took out a full page ad in the New York Times back-handedly “welcoming” Microsoft’s competition when it launched Teams. Four years later, Slack had become one arm of Salesforce’s giant conglomerate. CEO Dylan Field says he’s determined not to go out the same way. “I believe it’s a cautionary tale about dismissing your competitors,” he said. “And I do not intend to make the same mistake.”