Dialpad has over 3,000 customers and $200 million in ARR, and AI innovation will be a new opportunity for Dialpad's growth.
The COVID-19 pandemic has brought suffering to human beings, but it has also pushed the accelerator button for some industries, and business communication is one of them. Business communications are shifting to cloud-based telephony systems. Today, businesses are increasingly turning to cloud-delivered solutions that combine the full suite of communications: telephony, conferencing (audio, video, web), messaging, faxing, and more.
Today we look at such a company - Dialpad, a cloud-based business communication, collaboration and contact center platform. The platform aims to provide users with a "single pane of glass" for all business communications.
01 Founder - Serial Entrepreneur in Communication Field
Dialpad was co-founded in 2011 by CEO Craig Walker and CTO Brian Peterson. Walker has previously had the experience of continuous entrepreneurial mergers and acquisitions. In 2005, Yahoo acquired Dialpad Communications, an Internet telephony service provider he founded. In 2007, Google acquired Grand Central, another telecommunications startup he founded, for $50 million.
Walker joined Google Ventures as an EIR in 2010, and based on his previous experience, he and Peterson co-founded Uber Conference, which was later renamed Dialpad.
It is worth mentioning that half of the company's top 30 employees are from Google, and Dialpad's Google roots have also laid a good foundation for the company. Through the CEO experience, it is not difficult to find that the founder has a deep accumulation in the communication field and has the ability to quickly build a team.
02 Two major product lines
In the business communications product line, Dialpad combines calling, chat and video conferencing on one platform.
Dialpad transcribes calls, action items, snippets and notes. It sorts incoming calls based on call routing rules so users can track and manage conversations. Users can also assign operators, set hours of operation, create custom greetings, upload music on hold, and transfer incoming calls to someone on the team.
Dialpad Business Communications products include Dialpad AI Messaging and Dialpad AI Meetings. With AI Messaging users can chat with their team or external partners across devices, send files of all shapes and sizes, and connect with tools like Google Drive all within the same app.
AI Meetings allows users to turn their video features on or off at any time. Users can also screen share from any device, and guests don't need to download the app. Additionally, this new feature of AI Recapd uses AI algorithms, proprietary models, and ChatGPT's summary and text generation capabilities. It creates a summary that captures the main ideas, themes, and follow-up items of the conversation.
Source: Dialpad
In terms of customer interaction product line, Dialpad's customer interaction products include AI Contact Center, AI Sales, Self-Service and AI CSAT.
AI Contact Center is an AI-powered contact center across channels, all within the same application used for Dialpad business communications. AI Sales provides outbound teams with tools like sentiment analysis, real-time AI coaching, and real-time assistance. Self-Service is designed to simplify the process of providing virtual customer assistance. Users can use this solution to connect their knowledge sources such as websites, CRM and ticketing systems to Dialpad. Finally, AI CSAT automatically provides a customer satisfaction score after each call.
03 The market is growing rapidly, focusing on large enterprises and mid-end markets
Dialpad's products mainly involve the two major markets of UCaaS (Unified Communications as a Service) and CCaaS (Call/Contact Center as a Service).
UCaaS is a cloud-delivered solution that combines a full suite of communications capabilities. Digital transformation, hybrid work, and the cloud have fueled its rise. According to relevant reports, the global UCaaS market will be approximately US$91.7 billion in 2022 and is expected to reach US$381.2 billion by 2030. In the CCaaS market, call centers now need to handle inbound calls (such as customer support) and outbound calls (such as sales and marketing). The global CCaaS (Call/Contact Center as a Service) market was valued at USD 4.7 billion in 2022 and is expected to reach USD 15.1 billion by 2028.
In terms of customer base, Dialpad divides its customer base into large enterprises, mid-market and SMB.
Dialpad's clients span industries such as education, healthcare, real estate, technology, professional services, legal, retail, recruiting, and automotive. Such as Stripe, Uber, Splunk, PagerDuty, Toast, Drizly, Quora, TED, Crunchbase, etc. According to April 2023 data, its enterprise customer base will grow the fastest in Q4 2022, driven by Dialpad AI. While Dialpad paid off early on when it signed up big players like Motorola, issues with long sales cycles and skepticism from enterprise customers have plagued the company. Therefore, companies are now paying more and more attention to the mid-end market.
At the product level, building from its core business telephony product into a broader business communications and customer engagement platform, Dialpad has transitioned from a single SKU to a multi-SKU deal and cross-sells to its existing customer base.
04 Competitor's challenge
Ring Central is a market leader in business communications and contact center solutions. The total revenue in 2022 is approximately US$2 billion, of which CCaaS solution revenue is US$300 million. The company has strong corporate partners including AT&T, Vodafone, AWS and more. Compared to Ring Central, Dialpad is targeting a cloud-friendly customer base.
Zoom is also getting into this market, with the Zoom Phone sold as part of Zoom One, its overall business communications suite. As of January 2023, it has 5.5 million users. Zoom also offers a room audio conferencing solution designed to be a full-featured unified communications and contact center solution. Dialpad has more expertise in telecommunications than Zoom.
Finally, as Dialpad becomes more active in selling its sales and contact center solutions, it will encounter professional players in these areas, such as Five9, a public company with a market capitalization of $4.1 billion as of May 2023. If a business values a reliable phone system more than a professional contact center, they may choose Dialpad. Dialpad isn't alone anyway.
05 Rapidly growing ARR attracts capital support
Dialpad mainly charges through products such as business communication, AI conferencing, AI contact center and AI sales. Among them, commercial communication products adopt self-service pricing according to users, and free trial conference products and enterprise pricing can be provided upon request. And its AI sales and AI contact center solutions are priced for custom businesses.
Through these fees, Dialpad announced in April 2023 that it has achieved $200 million in ARR, while it has more than 30,000 customers. Notable clients include Stripe, Uber, Splunk, PagerDuty, Quora, and more. In December 2021, the company completed a Series F round of financing of US$170 million at a valuation of US$2.2 billion. As of May 2023, it has raised $450 million in total funding. Business success has attracted the blessing of capital.
06 AI and Vendor Mergers Bring Opportunity
AI innovation will be a new growth opportunity for Dialpad, which has invested $50 million in AI research and development.
In 2022, its AI engineers published nine research papers. Leveraging generative AI capabilities, they launched AI Recap (summarizing meetings), AI Scorecards to provide instructions for support agents, Coaching Hub (a real-time coaching platform), and AI Playbooks (to provide real-time coaching and tracking of sales processes), among other products.
Meanwhile, in the context of a slowing global economy, Dialpad is a cost-saving solution that combines business telephony, messaging, conferencing, contact center and sales functions into one, enabling vendor consolidation. As Dialpad drives innovation in its business phones, any business that considers calls mission-critical, such as a real estate agent, a WeWork office manager calling home, will offer Dialpad a business expansion opportunity.
To sum up, Dialpad was founded by Google Voice veterans, from cloud-based telephony system implementation to a unified business communication platform that combines calls, meetings, messages, and more. With over 3,000 customers and $200 million in ARR, it has established itself. But facing competition from players like RingCentral and new entrants like Zoom, Dialpad aims to stand out with its unified platform, bringing together data from all channels into an analytics and integrated AI solution. Its future development momentum deserves our continued attention.
About the Author
Zheng Bo, Aka Harbor Harbour. Cui Niuhui is not famous for butter, a middle-aged veteran of 2B infrastructure entrepreneurship, and the initiator of the open source community of CnosDB cloud-native time series database.
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