Six months ago, Israeli team management web and mobile application company Monday.com raised $150 million at a company valuation of $1.9 billion. "Our investors believe that we can hold a $10 billion IPO," Monday.com CEO Roy Mann said at the time. Last week, at a press conference for launching a new system, a $100 billion valuation was mentioned.
Mann and Eran Zinman founded Monday.com in 2012. Over the years, the solutions offered by the company changed from a system for managing communications between team members into a system for managing work in large enterprises. A new stage has now been reached: an enterprise operating system, which Monday.com says is a new category. "The market is starting to realize that an operating system is needed for enterprises; project management isn't enough anymore. It's like when they designed the operating system for a computer," Zinman says. The company calls the new stage Monday 2.0, and is embarking on a billboard advertising campaign in order to bolster the brand's visibility, in contrast to the conventional method of obtaining customers through digital marketing on the social networks.
Monday.com's current system makes it possible to manage all aspects of work, from annual strategic planning to current tasks, working with customers, etc. The system contains a great number of work formats suitable to different enterprises and different employees in the same enterprise. The company also emphasizes the flexibility that it provides to users: every user can design work processes suitable to him or her, which makes it possible to manage diverse processes on Monday.com's system: hotels, production processes in factories, work onboard ships, etc.
Monday.com now wants to move on to the next stage - developing a platform that will serve as a basis for different developments, including those not developed by the company. The new system can be compared to an apps store. The store will contain both fairly simple things, such as defining work processes (instead of the user spending time devising a work process) and more complicated things requiring programming capabilities.
For example, up until now, a hotel manager could create certain processes, such as a list of hotel rooms, and mark which ones had to be prepared for the entry of new guests and which ones were available for bookings. Through programming, more sophisticated features can be developed, such as a visual map showing which rooms are occupied. Actually, every added feature defined by Monday.com can be downloaded. The company says that app developers will have the same capabilities as it does. App developers will be able to charge for the service.
The company emphasized that the new system will emphasize integration with other software, such as Slack, Gmail, Shopify, and others. This option also exists with other apps, but Monday.com stresses that since it manages work processes, it has a lot of data that can be analyzed and used to generate insights.
Hoping to double the company's size
At the end of 2019, Monday.com reached an annual recurring revenue (ARR) rate of $120 million, meaning that the company had $10 million in revenue in December 2019. Since Monday.com's business model is software as a service (SaaS), this revenue is recurring. Monday.com is growing rapidly: its revenue totaled $50 million in 2018 and $18 million in 2017. The company plans to double its revenue to $240-250 million in 2020. The number of people paying to use Monday.com's system rose from 56,000 in 2017 to 360,000 in 2019, and the company hopes to double this number in 2020. Monday.com also plans to open additional offices around the world and to double its staff from 350 to 700.
In Monday.com's business model, every enterprise pays according to the number of people using the product - several dollars per user, in an SaaS model. There are various categories of users, depending on the level of the product's complexity. Monday.com says that the pricing model will be the same as in the existing model. How will Monday.com profit from this? More apps will increase the use of the company's system.
Supervision of the new apps
Many technology companies want to develop a "platform" or marketplace in order to increase dependence on it and generate an ecosystem around it. Monday.com wants to reach a situation in which startups are founded on it. At the same time, in the past year or two, the platform model has been criticized, for two main reasons. The first is that companies like Apple and Amazon took advantage of their power to promote the apps that they originated, at the expense of external apps, and to supervise the content on the platform.
Monday.com emphasized that any new app for commercial use developed on the platform will undergo quality control before it is released, similar to Apple's procedure. The company further stressed that it would not compete with the app developers, meaning that it would not offer apps for payment, and would not take advantage of its power as manager of the platform to inflict damage on the developers. Nevertheless, since Monday.com regularly upgrades its system, it is possible that such upgrading could come at the expense of app developers.
For Monday.com, the new platform will not come on top of the old one; they will be two different layers. Monday.com itself will focus on technological infrastructure. The company believes that external developers will build apps designated for specific markets. "The customers and their needs are foremost in our considerations. When a need of importance to the general capability of our customers arises, we respond to it. We develop and add the necessary capabilities to optimally adapt the platform in order to support their regular work. At the same time, 100,000 enterprises from 201 different business verticals manage their work on Monday.com, so we’re also working on expanding the infrastructure layers in the system to enable external developers to build designated apps aimed at specific markets," Mann said.
Published by Globes, Israel business news - en.globes.co.il - on February 4, 2020
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