OpenPhone - Bottom Up SaaS Done Right
Also: New product drop from Pallet
Notable Funding Rounds:
SmithRx - Series B - $20,000,000 - Venrock (lead investor)
SmithRx is a next-generation pharmacy benefits partner built on a modern technology platform that creates new levels of flexibility, efficiency, and customer satisfaction. It aligns incentives and harnesses data analytics to deliver pharmacy benefits.
SafeBase - Series A - $18,000,000 - New Enterprise Associates (lead investor)
SafeBase helps B2B SaaS companies close enterprise deals faster by streamlining the security assessment process.
Capchase - Series B - $80,000,000 - 01 Advisors (lead investor)
Capchase is a fintech company that provides financial solutions to startups by allowing access to funds as they grow.
Scouted
Latest Funding Round: $14,000,000 (Series A)
Total Funding Amount: $16,100,000
Industry: B2B SaaS, Telecommunications
Founders:
Key Investors:
Craft Ventures (led Series A)
Y Combinator
Kindred Ventures
Garage Capital
Slow Ventures (led Seed Round)
Jeff Morris Jr.
Giovanni Gardelli
Velocity
Brianne Kimmel
Chapter One Venture
Hack VC
Script Capital
Rahul Vohra
Todd Goldberg
Elad Gil
Snapshot:
OpenPhone develops a reliable smart business phone app that lets users get a business phone number without a second phone or a second SIM card. OpenPhone enables users to separate their business and personal contacts so they can stay in touch with their customers easier. They provide their phone numbers with a VoIP, also known as Voice over Internet Protocol. VoIP allows calls and texts to happen over the Internet through WiFi or mobile data.
The Problem:
The primary problem OpenPhone is trying to solve is the ability to have a “work phone” without needing to acquire another phone (hardware). People want to have a work phone to separate their work life and their personal life and have more privacy. But they also don’t want to be carrying around multiple phones. So OpenPhone enables users to have a separate work phone through an app. That way, they can separate their work and personal numbers on one device.
That’s the problem for the consumer. The problem for OpenPhone is that just having the ability to separate phone numbers on one device is not enough of a competitive advantage. To solve that problem, OpenPhone has built out an experience so valuable to the customer that it becomes a problem for potential customers if they’re not using OpenPhone. As a result, OpenPhone has expanded its product into a solution that offers a real competitive advantage for the companies using its service.
Let’s dig into how OpenPhone is building a moat around their business.
The Solution:
The thing about creating a product that’s trying to solve a problem like eliminating friction that comes with a business phone system is that it can’t just be ‘kind of better’ or ‘much better.’ It needs to be substantially better. Customers will never care about a product that ‘kind of’ solves their problems. It needs to solve their problems substantially, and it also has to be easy and intuitive to use. OpenPhone is doing just that. OpenPhone’s founders have put a ton of thoughtfulness towards the product to make it seamless to use without sacrificing any quality while dramatically improving the user’s work-life.
Some of the features of OpenPhone include:
Local and toll-free - Get a US, Canadian, or toll-free number instantly.
Multiple numbers - Get unlimited numbers for people, teams, or locations.
Texting - Send texts, photos, videos, and files from any device.
Call transfer - Push a live call to another team member.
Call and text globally - Call and message anyone, anywhere in the world.
Group messaging - Communicate with multiple people at the same time.
Call recording - Click to record any call or enable auto-recording.
Business hours - Mute calls when you’re off the clock.
Users can separate the phone numbers inside the app, similar to how you separate emails in your email app. Having multiple numbers also enables the users to have more privacy without owning multiple phones.
You can import, separate, and provide notes to your contacts. Then you can choose which contacts you would like to share with other team members.
It’s also easy to identify what’s a business call and what’s a non-business call. Users can set their “business hours” and enable do not disturb for specific numbers.
Users can have a shared inbox with other team members, enabling multiple users to call and text a customer from a single phone number. Team members can also see who's on a call with who, or who sent what, keeping everyone on the same page. Managers can also get insights and analytics on how every number on the account is used, which team members are having the most conversations, and how to replicate success and use cases to other team members. The data also helps managers make key decisions and strategize on when its best to contact customers.
One of the biggest advantageous OpenPhone has is its innovation towards texting, where the platform helps organize and automate your messaging strategically, both internally and with customers. You can also attach and send virtually any kind of file.
OpenPhone also integrates with Slack, Hubspot, and Zapier.
OpenPhones customers include getaround, Deloitte, Bungalow, Y Combinator, Sonder, ramp, Linear, ondeck, Scratchpad, shōgun, AirGarage, and Athena.
The Business:
OpenPhone has three different pricing plans:
Standard - $10 per user/per month (annually), or $13 per user monthly.
Includes:
One new local or toll-free number per user
Calling and messaging to US and Canadian numbers
Voicemail to text transcription
Basic IVR (auto-attendant)
Call recording
Premium - $20 per user/per month (annually), or $25 per user monthly.
Includes everything from Standard, plus:
Call transfers
Group calling
Analytics and reporting
Hubspot integration
Enterprise - for organizations with complex requirements - You have to contact sales for enterprise.
Includes everything from Premium, plus:
Custom contract and pricing
Dedicated account manager
Audit log
Priority customer support
Some upsell features include:
Additional phone numbers - $5 per month (annually)
Automated messages via Zapier - $0.01 per message sent (billed using credits)
Why I like OpenPhone:
To put it simply, I like OpenPhone because it started as a B2C SaaS company that focused on replacing work phones (hardware) through an app and then expanded into a collaborative B2B product that has so many features and value adds that it’s hard to justify the value in writing. But not only are they expanding their product, but their B2B business works with companies that are also expanding, which will then expand their need for OpenPhones services.
This is classic bottom-up SaaS - and good bottom-up SaaS products produce valuable exits. I believe as OpenPhone grows, they’ll have an opportunity to replace a lot of CRMs. Their focus on early-stage startups has the appearance of slowly building a moat and stickiness as they expand their offerings. Most CRM’s are brutal operationally, and OpenPhone provides a lot of the same value as CRMs, but with more intuitiveness. I’m excited to see what they have in store for the future.
Here is a video of their full product demo:
News:
AngelList Venture takes on rare capital at a $4 billion valuation.
Joe Biden to sign an executive order on crypto.
Startup Scout Follow Up:
One of the scouted companies I wrote about, Pallet, announced a new product this week—the Pallet Talent Collective. Talent Collectives are curated collections of “open-to-work” people sourced from the communities they’re a part of. Community leaders are able to send invite links to their followers to sign up. Companies can subscribe to the community leaders Talent Collective but must get approval first. The community leader can then release cohorts of members to new opportunities. Subscribers can then intro request candidates directly.
To learn more, check out Pallet’s thread on the announcement here:
