High-tech managers generally tend to set up companies and develop products for people like them. Connecteam started like that too: an app that enabled companies to manage their workforce remotely via mobile phone. But as time went on, Amir Nehemia, the company's CEO and one of its founders, realized he had missed something. Unglamorous low-tech companies had discovered the app and found ways to make it usable and useful - far more than the flashy, clever high-tech companies.
Outside the high-tech bubble is a world of industrial plants, supermarket chains, construction sites, and hospitals that employ millions of people who do not have a company computer or a corporate email account. Most have never heard of Monday.com They are found mostly in the field: on production lines, at cash registers or on scaffolding. The only device they have with them is their personal smartphone, almost always installed with Facebook, WhatsApp, or similar communication apps.
Previously invisible to high-tech companies, these low-tech users have become the best ambassadors for Connecteam, a little-known Tel-Aviv-based startup that recently celebrated its fourth anniversary. Connecteam has added features to the app like an internal chat, time clock, task management, shift and vacation management, and a messaging interface. In short, this is a super-app that offers employees everything they need to communicate remotely with their workplace.
The Covid-19 impetus
The Covid-19 pandemic proved a blessing for the small company, which numbered only a few dozen employees at the beginning of last year. "An immediate need arose to ensure that communication within organizations and companies flowed properly," Nehemia told "Globes". "All at once, procedures and regulations were introduced, especially in the US. CEOs wondered how they could make sure that every single employee would read the email asking them not to come into work because of contagion. Or, for example, how could you contact just one particular department, address them only, and make sure that they had read and internalized the message?".
"Suddenly, organizations were forced to instruct hundreds and thousands of employees in new procedures," says Nehemia. "They understood that it was possible to save the cost of transporting all company employees to a training center and losing work hours. Instead, they could simply send them a video through the app, confirm they watched it, and then test how much information was absorbed through a few questions."
On October 4, 2021, Facebook went offline for half a day. Immediately after the outage ended, Connecteam launched a segmented marketing campaign whose ironic message, "The app that doesn’t crash," reached tens of thousands of human resources managers, security managers, internal communications managers and corporate executives - its target market.
One app for all
Success was absolutely not guaranteed. When Connecteam embarked on an initial funding round, the response from venture capital funds was negative, with the startup cemetery dotted with the graves of internal corporate communications and training apps. A few conditions had to be in place for an app like Connecteam to succeed. Nehemia claims he was just there at the right time.
"We've had explosive growth over the past two years, but not because of anything we've done," admits Nehemia, who attributes Connecteam’s success to 1. the widespread deployment of smartphones, now also owned by low-wage workers; 2. continuing declines in the price of connectivity; 3. technological literacy among laypeople, now accustomed to the daily use of applications like WhatsApp, Messenger, Gmail and Apple Pay; 4. the increasing entry of young people into management positions; and 5. as mentioned, new regulations that require making sure messages are conveyed across the organization, that instructional videos are watched and their contents absorbed by all employees, or ensuring that an employee is on duty or at work before sending them a message.
Every novice entrepreneur is given the same tip by investors: startup companies need focus, and a single goal to begin with. Connecteam, it seems at the moment, is trying to operate in several markets simultaneously with a range of solutions that would not put a company like Amazon to shame. With its many features, the app more resembles China’s WeChat than a single app with a solution for one market need. Connecteam serves construction companies, gas and oil giants, power companies, supermarket chains, schools, and industrial plants. It enables employees to chat with managers, request leave, take online training courses, keep up to date with campaigns, and fill out work-shift schedules.
An aggressive strategy
Nehemia explains that the reason for this diversification lies in the company's aggressive marketing strategy: the app must suit every type of employee, organization and industry. That way, if the cost of an online campaign for a particular industry or position goes up, Connecteam can immediately shift to another industry. "If supermarket-targeted campaigns in Chicago become expensive, I’ll switch focus to factories in the Dakotas," he explains. This, he says, is the secret that kept the company going during the pandemic. "We came out of lockdown and saw there were sectors that grew, despite the coronavirus, so we targeted them. If I’d focused on one vertical, I’d never have been able to maintain growth."
The amount of money the company spends on marketing on social media and Google - $20 million this year and $40 million next year - would suit any unicorn or publicly traded company. After all, the app must compete for attention with WhatsApp or LinkedIn, has to stand out in app stores, and be easy enough to use to avoid relying on human support.
Connecteam can definitely fund its marketing budget, because its revenue has been growing by hundreds of percentage points, year on year. Revenue for all of 2021 is expected to be about $20-30 million, according to estimates, a 400% increase over 2020, when revenue totaled a few million dollars. Companies like Homebase and Deputy are competitors, but Nehemia, who refuses to comment on revenue, says, "We haven’t yet seen aggressive competition in the market. We believe that, in the next two years, the market will mature and it will give rise to a Salesforce or Slack for the sector: one company that will cover all aspects of intra-enterprise communication. We have considerable potential to do that."
Connecteam
- Business: Training and internal organizational communication
- History: Founded in 2013 by Amir Nehemia (CEO), Daniel and Yonatan Nuriel
- Stats: The company, which employs 104 people and is valued at $100 million, has raised $40 million, including from the founders of Wix, OG Tech and Insight. Revenue in 2020 was $5-7 million and is expected to be $20-30 million in 2021.
- Competition: The most prominent competitor is Homebase, which focuses on work-shift scheduling. The company, founded in 2013 by John Waldmann and Rushi Patel, employs 320 people, raised $310 million and is valued at $600 million.
Published by Globes, Israel business news - en.globes.co.il - on December 7, 2021.
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