Zello's Explosive Growth by Design, and Freemium to Enterprise Ladder

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This week, we'll look at a company that many of us might not have heard of — but that recently achieved the astounding result of being the most downloaded social app in the App Store, beating out Facebook, Snapchat, and many others. 


Two weeks ago, beating out Facebook and Snapchat, Zello became the most downloaded social app in America after becoming the de facto organizer app for the “Cajun Navy” in the wake of Hurricanes Harvey and Irma.

This isn’t the first time Zello has accomplished this feat, though. The app also topped the app stores in Egypt, Venezuela and Ukraine after being used as the main source of political organizing in each of those countries.

While many in America are hearing about Zello for the first time only now, the app has quietly accumulated over 100 million registered users and $10M a year in revenue, all while remaining completely bootstrapped with a staff of 20 people.

This week, we’ll look how Zello's unique, growth-oriented product design has enabled it to take advantage of unfortunate but massive linear growth opportunities, and to ladder up from a freemium SaaS into an enterprise model.

Key Growth Lessons

1. Group orientation led to faster viral spread.

Zello was able to achieve rapid success and network density, in a space where widely used competitor Voxer already existed, because of its orientation towards groups, rather than 1:1 communication. Zello has a higher branching factor, enabling its viral spread to happen at a higher velocity than for 1:1 messaging tools.

2. Targeting an underserved market segment allowed them to fill the hole where other apps fell short.

We've called it the “Blue Collar Slack” because it's a 1:many synchronous communication tool that's specifically designed for people who aren't sitting at a keyboard, or have hands free to text on a smartphone.

3. A bottoms-up sales approach turns individual users into mini-SDRs supporting top-down enterprise sales efforts.

Zello spread into and monetized organizations with a bottoms-up approach that converted and engaged individual users, while an enterprise sales team closed the bigger deals from top-down.

The details behind these takeaways are outlined in the rest of this piece.

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How Zello works

Zello, founded in 2011, is “CB radio on your smartphone.”

Users on Zello can create channels, both private ones for communicating with people you already know or public ones organized around a common purpose or interest (eg. Uber drivers in a city sharing traffic info).

Once you follow a channel, users can communicate via a simple push-to-talk interface that broadcasts your audio snippet to everyone in a channel. Only one person can be talking on each channel at any one point in time and you are able to still listen (but not talk) on a channel even if the app is running in the background.

Because of Zello’s ability to provide users with ambient awareness of an evolving situation, it is helpful for groups that need to coordinate but can’t easily focus on a screen. This includes everyone form construction workers and taxi drivers to large scale protest mobs.

Zello monetizes by offering ZelloWorks, an enterprise SaaS version of their software which adds features such as encryption and user management that better fit the needs or more complex organizations.

Easy onboarding, and growing network effects

Amid the proliferation of communication and group messaging apps, Zello has managed to carve out an interesting design niche through an embrace of constraints.

Unlike multi-modal messaging apps like Slack or Whatsapp that support text/voice/images/video, Zello only allows you to communicate via voice, meaning that Zello can operate completely in the background, while your attention and focus is on other things.

Zello’s integration with hardware buttons on select bluetooth headsets means that, with the right hardware, you can both listen and speak while the phone remains in your pocket, making it useful for jobs that require both hands free.

Unlike teleconferencing apps like Skype or GoToMeeting which are always on, Zello only allows one person to be speaking at a time. But, this constraint means that Zello users can be following multiple channels, with Zello intelligently interleaving voice messages between them. Having each message be a discrete chunk of audio also allows users to go back through the history and replay past messages.

Compared to other Push-to-Talk apps like Voxer, Zello places a much greater emphasis on group communication vs one-on-one personal chat, with more robust moderation and group management features.

Zello’s optimization for low battery and bandwidth usage have made it especially popular for people in developing nations or who work in remote areas, as well as a natural fit for political organizing during protests or emergency response during natural disasters.

Additionally, the app has also benefitted from a large amount of organic press coverage from its central role during political uprisings or natural disasters, with a reported peak of over 7,000 new users registering per minute during Hurricane Harvey.

Zello's low friction to use, and its orientation towards groups, positions it to turn outstanding linear events into looping growth.

 zello

Bottoms-up growth feeds enterprise monetization

Zello’s growth strategy among blue collar workers has been similar to Slack’s growth strategy among white collar workers.

While Slack is ideal for workers who sit behind a computer for most of the day, Zello is trying to cater to those who are on the move and need both hands free to do their job.

The ease of adoption allows Zello to infiltrate organizations from the bottom up. The bottoms-up approach allows Zello to cheaply acquire users with their free version, and then sell them premium features as they scale up beyond a single team and require more complex features.

Meanwhile, a critical mass of users within the organization gives Zello the credibility to sell large enterprise contracts from the top down, like its deal with South Africa where Zello is an official integration into the country’s 911 system.

 zello

A venture-backed future for Zello?

Being bootstrapped, profitable and growing has afforded Zello an unusual amount of strategic freedom going forward.

Zello’s strong user base as well as a steady stream of recurring revenue from both its self-serve subscription and enterprise tiers represents “a pair of aces” for raising VC according to Zello’s CEO. Timed right, such a raise could push Zello’s growth into hyper-mode.

Aside from acting as leadgen for the app's subscription and enterprise tiers, Zello’s popular free service currently remains completely un-monetized, but a sudden infusion of cash could allow the company to explore different ways to capitalize on that audience.

At the same time, a well capitalized salesforce would allow Zello to build an enterprise pipeline and compete for deals against much larger competitors.

Still, Zello also has its fair share of challenges ahead. It will need to figure out how to balance the very different needs of its public, free product compared to its enterprise, work-focused features. Like many other Internet companies, it has also had to grapple with the role of free speech on its platform after it became an ISIS propaganda tool.

Despite these challenges, we can't help but be reminded of another messaging tool that grew primarily outside of the US, delayed raising VC and operated with a staff of just 55 people before being acquired by Facebook for $19B.

Zello, with its more niche use case, will probably never reach the heights of Whatsapp but it does demonstrate how small scrappy teams with the right growth mindset can build an incredibly successful business even in a field as crowded as messaging.

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