An Overview of the Work From Home Boom
The COVID-19 pandemic forced employees all across the globe to move from office buildings filled with coworkers to makeshift home workspaces populated with children, pets, and their partners.
According to Karin Kimbrough, Chief Economist at LinkedIn, “During this pandemic, we’ve observed a swift acceleration of certain pre-COVID trends. But perhaps one of the most exciting trends is this rise in remote work.”
By the end of 2021, 25% to 30% of workers will be working from home several days a week, predicts Global Workplace Analytics Report.
That compares with a mere 3.6% of the employees that worked from home at least half the time before COVID-19.
The report further states, “Our prediction is that the longer people are required to work at home, the greater the adoption we will see when the dust settles.”
The year 2020 was quite depressing for many companies across the globe, with almost one-third of American small businesses closing for good during the pandemic. According to Yelp data, around 60% of business closures due to the coronavirus pandemic are now permanent.
As the coronavirus pandemic continues to reshape our lives, some companies have actually seen new gains amid the crises. They have found their business booming in the new normal, even as the rest of the economy recedes.
Let’s take a look at some examples of companies that are making the most of work from home boom!
Top 4 Work From Home Companies
Zoom became almost synonymous with communication during COVID-19. Within a span of just one year, the number of users (with at least 10 employees) using Zoom jumped almost fivefold.
It wouldn’t be wrong to say that the popular video conferencing company truly symbolizes the work-from-home boom of 2020, making its virtual backgrounds a hallmark of the coronavirus crisis.
The company opened its business-focused app to a wide group of non-paying customers and educational organizations. Although this step brought several challenges to the company, it also helped turn Zoom into a household name.
Extensive usage brought attention to its security gaps. According to Zoom CEO Eric S. Yuan,
“Our platform was built primarily for enterprise customers. We did not design the product with the foresight that, in a matter of weeks, every person in the world would suddenly be working, studying, and socializing from home. We now have a much broader set of users who are utilizing our product in a number of unexpected ways, presenting us with challenges we did not anticipate when the platform was conceived.”
While some prominent businesses cautioned their workforce not to use it, the controversy did little to hurt Zoom’s business. In early April 2020, the company revealed that it had surpassed 300 million daily Zoom meeting participants. That’s a huge jump from the 10 million back in December 2019.
By the end of April 2020, the number of medium and larger corporations using the service went up more than three-fold from 2019, while revenue soared 169%. The company witnessed a 413% increase in market value during the pandemic, with an end-2020 market value of $96bn.
As the chart above shows, Zoom saw its revenue rise steeply throughout the fiscal year ended January 31, 2021.
Following a 169% revenue increase in Q1, year-over-year revenue growth fast-tracked to 355%, 367%, and 369%, respectively, in Q2, Q3, and Q4. On March 1, 2021, Zoom had a market capitalization of $120 billion, compared to $31 billion a year earlier.
“In FY2021, we significantly scaled our business to provide critical communications and collaboration services to our customers and the global community in response to the pandemic. We are humbled by our role as a trusted partner and an engine for the modern work-from-anywhere environment,” says Yuan.
Lessons to Learn from Zoom
The company openly acknowledged its security vulnerability and even the CEO apologized publically for all the mistakes. “While we never intended to deceive any of our customers, we recognize that there is a discrepancy between the commonly accepted definition of end-to-end encryption and how we were using it,” said Oded Gal, the chief product officer of Zoom.
Zoom promised to focus on fixing its privacy and security issues in a 90-day plan and the company is already working toward fulfilling its promise. Zoom has officially formed its CISO Council and Advisory Board, including security leaders from across industries.
Moreover, it has hired Alex Stamos, a cybersecurity expert, as an outside advisor to assist with the comprehensive security review of its platform.
This teaches companies an important lesson to implement better security controls to prevent access to customer data and avoid deceptive marketing at all costs.
If a company like Zoom can openly accept its mistake and decide to take charge with a concrete security improvement plan, others can follow suit and improve their offerings.
Ever since the pandemic started, Amazon saw significant gains as the world had gone almost entirely online for work, school, and even socializing. It became the emergency port of call for those anxious to stock up on essential household goods, leading the company to momentarily shut its warehouses to “non-essential” products.
Amazon observed record revenues along with rising costs. Jeff Bezos, Amazon’s CEO warned as much as $4bn could be expended on virus mitigation, such as testing labs and thermal cameras, which could potentially push Amazon into its first quarterly loss since 2015.
Yet, the quick shift to online shopping and the increased importance of its cloud computing business in the era of remote working drove Amazon’s stock to all-time highs.
It reported that net sales increased by a whopping 40% in Q2 2020 compared to Q2 2019, totaling $88.9 billion. Since the market bottomed out in March 2020, Amazon's stock soared by around 97%, adding billions of dollars in value to the company.
Despite the pandemic, Amazon experienced a 79% increase in market value and a $1.6tn end-2020 market value. Moreover, the company's net revenue was $386.06 billion, up from $280.52 billion in 2019.
Amazon Web Services (AWS), the cloud computing giant, closed out 2020 with more than $13.5 billion in annual operating profits. It was responsible for more than 63% of the entire company’s operating profits for the year.
It was the leading cloud service provider in Q4 2020, accounting for 31% of the total spending in the global cloud services market.
According to Canalys, a market research firm, “This is again the largest quarterly expansion in dollar terms, as continuing pandemic restrictions drove intense demand for the cloud to support remote working and learning, e-commerce, content streaming, online gaming, and collaboration.
At the same time, a gradual recovery in economic confidence stimulated cloud investments by organizations in all industry segments to drive digital transformation.”
Such massive growth resulted in the company hiring more employees. Amazon work-from-home jobs have also increased as the company plans to hire 33,000 people for corporate and tech roles, averaging $150,000 in pay.
It was among the first large employers to allow remote work when COVID-19 hit the US and has now extended its work from home policy until June 30, 2021.
Lessons to Learn from Amazon
The key lesson is to focus only on the metrics that matter most. For most businesses, profit margins matter. However, Jeff Bezos doesn’t agree with this.
He clarifies, “Percentage margins are not one of the things we are seeking to optimize. It’s the absolute dollar-free cash flow per share that you want to maximize. If you can do that by lowering margins, we would do that.”
In short, Amazon is prepared to continue lowering its prices with the bigger objectives of creating stronger customer loyalty and increasing sales volume while competitors are driven out of the market due to tight margins. The company is willing to sacrifice short-term profitability for long-term success.
It also teaches us another important lesson: You have to take risks to excel. Bezos claims that he has “made billions of dollars of failures at Amazon.com.” However, those mistakes like the Fire phone, which dropped in price from $200 to just 99 cents a month after launch, have been essential to the company’s overall success.
“Companies that don’t embrace failure and continue to experiment eventually get in the desperate position where the only thing they can do is make a Hail Mary bet at the end of their corporate existence,” Bezos says.
DocuSign, a San Francisco-based company, is the pioneer of managing electronic contracts digitally. It is one of the first to not only surpass the rules and regulations of the ESIGN Act relating to digital signatures, but it also initiates in setting standards in the authentication services and user identity management arenas.
The company enjoyed rapid growth in its share price as shelter-in-place orders during the pandemic accelerated a shift towards contactless, automated solutions.
The company currently has 661,000 paying customers and is hopeful it can charge many more of its free users that are numbered in millions.
According to Dan Springer, CEO of DocuSign, “We added more than 10,000 net new direct customers and almost 58,000 self-service customers, bringing our global total of paying customers to nearly 661,000.”
The e-signature company, which allows users to automate contract management, took advantage of the move to remote working by expanding its product range.
Its artificial intelligence (AI) tools search through documents to flag risks, and the business will soon offer the ability to notarize transactions completely over video.
“A few months of working remotely caused organizations to accelerate their digital plans by up to four years. When customers go from paper-based processes to digital agreement processes, they do not go back,” says Springer.
Fewer in-person meetings mean less paperwork and more digital agreements, which leads to greater efficiency and improved margins. And DocuSign is capitalizing on the need for electronic signatures as people continue to work from home.
Even businesses that bring their employees back to the workplace will benefit from the company’s e-signature service, especially paper-intensive ones like real estate and medicine.
In 2020, DocuSign saw a 212% increase in market value, with a $41bn end-2020 market value. Their fiscal 2021 revenue is expected to be between $1.313 billion and $1.317 billion.
“In an accelerating digital world where business can be conducted from anywhere, the need to agree electronically and remotely has never been stronger, as shown in our 61% year-over-year billings growth. We are just scratching the surface of our Agreement Cloud opportunity and believe we are increasingly becoming an essential cloud-software platform for organizations of all sizes,” says Springer.
Lessons to Learn from DocuSign
Winning your customer’s trust is key and this is what DocuSign truly advocates. When looking for digital signatures, customers want the solution to be simple to use and understand, but most importantly, they want it to be trustworthy.
With the reliability and security that DocuSign has built and embedded in its product, every business across the world now can use and rely on its service.
“We deal with the most significant documents from our customers. At the end of the day, it is trust that builds the background for every business relationship. Trust at DocuSign is sacrosanct. We are trying to provide the most trusted service possible on the DocuSign Global Trust Network with speed, convenience, and security,” says Keith Krach, the chairman as well as the former CEO of DocuSign for 7 years.
It also teaches us another important lesson that global expansion is not just an option but a huge opportunity.
The global reach not only brings benefits to the company’s bottom line but also can offer the key ecosystem that is significant for all the organizations as well as the individuals that use its services.
This explains why DocuSign has partnered with major companies across the world including Google Drive, PayPal, and Salesforce.
Microsoft’s shift to the cloud under its CEO Satya Nadella has left it well-placed for a world where large numbers of individuals are working remotely. The Teams communication app has become a way for employees to stay in touch.
The Azure cloud computing platform has become a more critical part of the digital backbone for many businesses. Microsoft even has a way to entertain those working from home with a record 90 million players turning to the Xbox Live gaming service in April 2020.
Microsoft's strong financial outcomes are heavily dependent on the cloud side of its business and its Q2 2020 results are no exception. Of the total $36.9 billion revenue recorded, 11.9 billion was from its Intelligent Cloud segment, which is the highest figure so far and translates to $4.5 billion of operating income.
According to Nadella, “It was another strong quarter, with double-digit top and bottom-line growth, driven by the strength of our commercial cloud.”
Currently, Microsoft is the most valuable company in the world with a worth of $1.86 trillion. Its stock price has increased by almost 36% since mid-June 2020.
In the same month, Microsoft Teams said it had hit 44 million users, a jump of 40% in the span of a week. This increase in demand came as many companies adjusted to remote work and school closures required the adoption of e-learning techniques.
Lessons to Learn from Microsoft
Even though Microsoft is a tech giant, it is constantly innovating and introducing new products and features to stay relevant and address growing customer demands. For instance, Microsoft’s new Teams features are designed to improve remote meetings as they become the default work mode.
It is also introducing a new real-time noise suppression feature for Teams meetings, which is especially ideal if you’re working from home and children or pets are running around making noise.
Microsoft saw the coronavirus pandemic as a turning point for remote working and used it as an opportunity to improve its existing products.
According to Microsoft 365 chief Jared Spataro, “I really do think it’s an inflection point. We’re going to look back and realize this is where it all changed. We’re never going to go back to working the way that we did.”
How Can You Capitalize on the Work from Home Boom?
Typically, whenever the world faces a crisis or a new normal, companies deprioritize innovation to concentrate on four things: supporting their core business, pursuing known opportunity arenas, conserving cash, and minimizing risk.
However, we believe that more urgent actions to take include:
• Acclimatizing the core to meet fluctuating customer requirements.
• Identifying and quickly addressing new opportunity areas being formed by the varying office dynamics.
• Reconsidering the innovation initiative portfolio and ensuring resources are distributed correctly.
• Constructing the foundation for post-crisis growth to remain competitive in the recovery period.
With work from home becoming the new normal, the Work Trend Index identifies key strategies for business leaders as they begin to make the necessary shift:
• Create a plan to empower people for extreme flexibility.
• Combat digital exhaustion from the top.
• Invest in technology to bridge the physical and digital worlds.
• Take security and data privacy seriously as it can make or break your business.
• Prioritize rebuilding social capital and culture.
• Rethink the employee experience to compete for the best and most diverse talent.
• Encourage a cultural shift that embraces and encourages innovation.
• Be open-minded, fluid, innovative, creative, and tailor your actions to the ever-changing, new landscape.