Protocol | Workplace

Google Chat is back for real, and Google's going to need it to win the future of work

Google's messaging strategy has gone haywire. Now it's coming back into focus.

A screenshot of Spaces inside the new Google Workspace

Google is bringing Chat to all Google users, and making it the center of its work tools.

Image: Google

Three billion people now use Google's Workspace apps every month, the company announced on Monday, making Gmail and the Google Calendar/Docs/Slides/Meet suite among the most popular apps on the internet. "It's a crazy number," said Javier Soltero, Google's VP of Workspace. "There's a lot of products you can use to communicate and collaborate with people, right?"

For its next act, Google is looking to win in messaging. Because without it, you can't win the future of work.

The new Google Chat is coming to all Workspace users, the company announced, meaning anyone with a Google account will soon be able to use it. Within Chat, there's a new feature called Spaces (an evolution of a feature previously called Rooms), which acts as a more durable, project-based tool for keeping track of files and tasks across groups of people. "There's a time and a place for email," said Sanaz Ahari, Google's senior director for communication products. "There's a time and a place for chat. Now we recognize that we need a more permanent real-time collaboration canvas — that's Spaces."

Google's also making it easier for individuals to get the full Workspace experience, offering an individual subscription that doesn't require buying a domain or running an administrative console. And for bigger enterprises, it's also offering a more secure, encrypted system that means even Google can't see the data being created in Google apps. In the midst of a time of change and upheaval for so many businesses, Google is trying hard to position itself as the obvious choice for productivity tools. And it knows that in a remote and hybrid world, productivity starts with communication.

Historically speaking, Google's messaging strategy has been somewhere between chaotic and totally incoherent. The original version of Google Chat eventually turned into Hangouts, before Hangouts was split into multiple products, Google Voice became a somewhat competitive thing, Google Fi showed up to compete with both, and at various times Google Wave and Buzz and Allo all made a run at messaging supremacy. (Didn't work.) When it comes to video, Meet and Duo both still exist, and Hangouts can do video calls. Google Messages has become a success as the go-to Android texting app, but Google has even tinkered with that to the point of confusion while trying to bring standards like RCS into play. In general, Google seems unable to make up its mind about how messaging is supposed to work.

While Google has struggled to solve this problem, others have done much better. Microsoft has quickly begun to build its entire Microsoft 365 suite around Teams, realizing that in a world of remote and hybrid work, a chat app is actually the closest available analog to the office itself. Salesforce bought Slack, and Marc Benioff said the company is rebuilding "all our technology, once again, to become Slack-first." Google, which was years ahead of the industry in thinking about work as web-based and collaborative by default, suddenly risks being left behind because it can't figure out chat.

Google readily acknowledges that it needs a coherent strategy. And at least for the moment, it seems to have one. It starts with Gmail, which is now both an email client and something of a Google-wide communication hub. Users can have Meet calls, respond to Chat messages, work in topic-focused Spaces and, of course, send email all from a single place. Because it's all unified under a single Google account, with a single system for setting status and getting notifications, Google's hoping that at the very least users will have to spend less time thinking about how many products Google has.

The tricky part for Google, Ahari said, is offering everything without being overly prescriptive. "We're not here to dictate what's the best way to collaborate," she said. "We're more of the belief that collaboration happens across these mediums. And we want to make it easy for everyone to choose the best medium for them." The team seems to see communication as a spectrum of timeliness and permanence: Email is permanent but not timely, Meet and Chat are timely but not permanent, Spaces is both timely and permanent. But every company, every team, is different, so Google sees its job as simply providing all the options in one place.

Working inside Google Spaces Spaces is Google's way of creating permanent, searchable chat a la Slack or Teams, but it exists inside of Gmail and Google Chat.Image: Google

That kind of flexibility is a running theme for the new era of Workspace. In an effort to make meetings more equitable for everyone, for instance, Google built a companion app for Meet so that everyone, even in the conference room, can participate in polls or share their video. It now offers a Workspace-wide status system that lets people quickly mark where they are and whether they're available. And Google's even opening up more access to third-party apps and integrations. "It's fine for people to have the habits they have," Soltero said. "We just have to kind of nudge them along … there's an elegance to doing this that actually connects them to the things Google is great at."

Google has been working on all this integration for the last year or so, as it takes Workspace from a collection of apps to a more unified, singular canvas. Users can work on spreadsheets inside of Gmail, or have Meet calls in the same tab as their slide deck. The most common criticism of the new-look Workspace is just that it's too many options, too many buttons, too much in one place. Google agrees. "I think one of the very first conversations we had when I joined," Ahari said, "was about the clutter." On a normal-sized laptop screen, there was just too much going on to be able to fully engage in any one thing. Ahari and her team focused on making it easy to quickly jump between things without making the interface overwhelming, and moving notifications out to the corner where they don't get in the way.

In general, Google faces the same broad challenge as every company making workplace software, which is that nobody knows anything. Soltero and Ahari both acknowledged that they don't know exactly how the future of work will work, and that there are likely to be a huge number of different ideas and experiments in the coming months both within Google and among its billions of users. Google, like so many others, is trying to make its tools simultaneously functional and flexible, able to adapt to every variation of hybrid and remote work without devolving into overwhelming chaos.

Few companies have a larger opportunity or responsibility in this space, though. Three billion users gives you a lot of sway over the future of just about anything. Soltero said he's spending his time thinking about access, security and making sure the future of work is both available for and optimized for everyone, no matter their situation. He has always said that one of the reasons he joined Google after a stint at Microsoft was because Google was so far ahead on helping people collaborate. With communication, he's playing catch-up. But he and Ahari seem to like their chances.

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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