Environmental, social and governance (ESG) factors should be key considerations for CTOs and technology leaders scaling next generation companies from day one. Investors are increasingly prioritizing startups that focus on ESG, with the growth of sustainable investing skyrocketing.
What’s driving this shift in mentality across every industry? It’s simple: Consumers are no longer willing to support companies that don’t prioritize sustainability. According to a survey conducted by IBM, the COVID-19 pandemic has elevated consumers’ focus on sustainability and their willingness to pay out of their own pockets for a sustainable future. In tandem, federal action on climate change is increasing, with the U.S. rejoining the Paris Climate Agreement and a recent executive order on climate commitments.
Over the past few years, we have seen an uptick in organizations setting long-term sustainability goals. However, CEOs and chief sustainability officers typically forecast these goals, and they are often long term and aspirational — leaving the near and midterm implementation of ESG programs to operations and technology teams.
Until recently, choosing cloud regions meant considering factors like cost and latency to end users. But carbon is another factor worth considering.
CTOs are a crucial part of the planning process, and in fact, can be the secret weapon to help their organization supercharge their ESG targets. Below are a few immediate steps that CTOs and technology leaders can take to achieve sustainability and make an ethical impact.
As more businesses digitize and more consumers use devices and cloud services, the energy needed by data centers continues to rise. In fact, data centers account for an estimated 1% of worldwide electricity usage. However, a forecast from IDC shows that the continued adoption of cloud computing could prevent the emission of more than 1 billion metric tons of carbon dioxide from 2021 through 2024.
Make compute workloads more efficient: First, it’s important to understand the links between computing, power consumption and greenhouse gas emissions from fossil fuels. Making your app and compute workloads more efficient will reduce costs and energy requirements, thus reducing the carbon footprint of those workloads. In the cloud, tools like compute instance auto scaling and sizing recommendations make sure you’re not running too many or overprovisioned cloud VMs based on demand. You can also move to serverless computing, which does much of this scaling work automatically.
Deploy compute workloads in regions with lower carbon intensity: Until recently, choosing cloud regions meant considering factors like cost and latency to end users. But carbon is another factor worth considering. While the compute capabilities of regions are similar, their carbon intensities typically vary. Some regions have access to more carbon-free energy production than others, and consequently the carbon intensity for each region is different.
So, choosing a cloud region with lower carbon intensity is often the simplest and most impactful step you can take. Alistair Scott, co-founder and CTO of cloud infrastructure startup Infracost, underscores this sentiment: “Engineers want to do the right thing and reduce waste, and I think cloud providers can help with that. The key is to provide information in workflow, so the people who are responsible for infraprovisioning can weigh the CO2 impact versus other factors such as cost and data residency before they deploy.”
Another step is to estimate your specific workload’s carbon footprint using open-source software like Cloud Carbon Footprint, a project sponsored by ThoughtWorks. Etsy has open-sourced a similar tool called Cloud Jewels that estimates energy consumption based on cloud usage information. This is helping them track progress toward their target of reducing their energy intensity by 25% by 2025.
Beyond reducing environmental impact, CTOs and technology leaders can have significant, direct and meaningful social impact.
Include societal benefits in the design of your products: As a CTO or technology founder, you can help ensure that societal benefits are prioritized in your product roadmaps. For example, if you’re a fintech CTO, you can add product features to expand access to credit in underserved populations. Startups like LoanWell are on a mission to increase access to capital for those typically left out of the financial system and make the loan origination process more efficient and equitable.
When thinking about product design, a product needs to be as useful and effective as it is sustainable. By thinking about sustainability and societal impact as a core element of product innovation, there is an opportunity to differentiate yourself in socially beneficial ways. For example, Lush has been a pioneer of package-free solutions, and launched Lush Lens — a virtual package app leveraging cameras on mobile phones and AI to overlay product information. The company hit 2 million scans in its efforts to tackle the beauty industry’s excessive use of (plastic) packaging.
Responsible AI practices should be ingrained in the culture to avoid social harms: Machine learning and artificial intelligence have become central to the advanced, personalized digital experiences everyone is accustomed to — from product and content recommendations to spam filtering, trend forecasting and other “smart” behaviors.
It is therefore critical to incorporate responsible AI practices, so benefits from AI and ML can be realized by your entire user base and that inadvertent harm can be avoided. Start by establishing clear principles for working with AI responsibly, and translate those principles into processes and procedures. Think about AI responsibility reviews the same way you think about code reviews, automated testing and UX design. As a technical leader or founder, you get to establish what the process is.
Promoting governance does not stop with the board and CEO; CTOs play an important role, too.
Create a diverse and inclusive technology team: Compared to individual decision-makers, diverse teams make better decisions 87% of the time. Additionally, Gartner research found that in a diverse workforce, performance improves by 12% and intent to stay by 20%.
It is important to reinforce and demonstrate why diversity, equity and inclusion is important within a technology team. One way you can do this is by using data to inform your DEI efforts. You can establish a voluntary internal program to collect demographics, including gender, race and ethnicity, and this data will provide a baseline for identifying diversity gaps and measuring improvements. Consider going further by baking these improvements into your employee performance process, such as objectives and key results (OKRs). Make everyone accountable from the start, not just HR.
These are just a few of the ways CTOs and technology leaders can contribute to ESG progress in their companies. The first step, however, is to recognize the many ways you as a technology leader can make an impact from day one.
Columbus, Ohio-based Finite State, a startup that provides supply chain security for connected devices and critical infrastructure, has raised $30M in Series B funding.
The funding lands amid increased focus on the less-secure elements in an organizations’ supply chain, such as Internet of Things devices and embedded systems. The problem, Finite State says, is largely fueled by device firmware, the foundational software that often includes components sourced from third-party vendors or open-source software. This means if a security flaw is baked into the finished product, it’s often without the device manufacturers’ knowledge.
“Cyber attackers see firmware as a weak link to gain unauthorized access to critical systems and infrastructure,” Matt Wyckhouse, CEO of Finite State, tells TechCrunch. “The number of known cyberattacks targeting firmware has quintupled in just the last four years.”
The Finite State platform brings visibility to the supply chains that create connected devices and embedded systems. After unpacking and analyzing every file and configuration in a firmware build, the platform generates a complete bill of materials for software components, identifies known and possible zero-day vulnerabilities, shows a contextual risk score, and provides actionable insights that product teams can use to secure their software.
“By looking at every piece of their supply chain and every detail of their firmware — something no other product on the market offers — we enable manufacturers to ship more secure products, so that users can trust their connected devices more,” Wyckhouse says.
The company’s latest funding round was led by Energize Ventures, with participation from Schneider Electric Ventures and Merlin Ventures, and comes a year after Finite State raised a $12.5 million Series A round. It brings the total amount of funds raised by the firm to just shy of $50 million.
The startup says it plans to use the funds to scale to meet the demands of the market. It plans to increase its headcount too; Finite State currently has 50 employees, a figure that’s expected to grow to more than 80 by the end of 2021.
“We also want to use this fundraising round to help us get out the message: firmware isn’t safe unless it’s safe by design,” Wyckhouse added. “It’s not enough to analyze the code your engineers built when other parts of your supply chain could expose you to major security issues.”
Finite State was founded in 2017 by Matt Wyckhouse, founder and former CTO of Battelle’s Cyber Business Unit. The company showcased its capabilities in June 2019, when its widely-cited Huawei Supply Chain Assessment revealed numerous backdoors and major security vulnerabilities in the Chinese technology company’s networking devices that could be used in 5G networks.
Every week over the past three and a half years, an average of three CEOs have exited tech companies in the U.S. That tally is higher — in good times and bad — than in any of the other 26 for-profit sectors tracked by executive search firm Challenger, Gray & Christmas. You’d think tech companies should be the paradigm of how to prep for leadership transitions, since they operate in such a constant state of flux.
They’re far from it.
A change of command is one of the most delicate moments in the life cycle of any organization. If mishandled, the transition from one CEO to the next can result in a loss of market valuation, momentum and focus, as well as key personnel, customers and partners. It may even become that turning point when an organization begins to slide toward irrelevance.
With so much at stake, 84% of tech execs agree that succession planning is more important than ever because of today’s fast-changing business environment, according to our new survey of corporate America’s leaders. Seven out of 10 survey respondents agreed that tech companies face more scrutiny than other multinationals during a transition.
84% of tech execs agree that succession planning is more important than ever because of today’s fast-changing business environment.
Yet we found that tech execs appear just as unprepared for C-suite transitions as their peers in other sectors. Three out of five respondents said their companies don’t have a documented plan to handle a leadership change, even though, by that same ratio, they acknowledge that a documented plan is the biggest determinant in seamless transitions.
The findings may not be troubling if these respondents were millennial startup founders, years from leaving their companies. The executives we polled, however, hail from 160 companies that have been in business for a minimum of 15 years — 35 are tech companies, the largest industry cohort in the survey.
The smallest companies have at least 1,500 employees and $500 million in annual revenue, while the largest have head counts of over 500,000 and revenue upward of $100 billion. They have been around long enough to understand — and put into place — risk management and crisis planning, including what happens should their leaders fall victim to the proverbial milk truck.
Tech execs should be more rigorous about succession planning for one important reason: institutional memory. Tech firms generally are younger than other companies of a similar size, which partly explains why the median age of S&P 500 companies plunged to 33 years in 2018 from 85 years in 2000, according to McKinsey & Co.
These enterprises clearly have accomplished a lot in their short lives, but in their haste, most have not captured their history, unlike their longer-lived peers in other sectors. Less than half of these tech firms, in fact, have formally recorded their leader’s story for posterity. That puts them at a disadvantage when, inevitably, they will be required to onboard newcomers to their C-suites.
It’s best to record this history well before the intense swirl of a leadership transition begins. Crucially, it will help the incoming and future generations of leadership understand critical aspects of its track record, the lessons learned, culture and identity. It also explains why the organization has evolved as it has, what binds people together and what may trigger resistance based on previous experience. It’s as much about moving forward as looking back.
Most execs in our poll get it, with 85% saying a company’s history can be a playbook for new executives to learn and prepare for upcoming challenges and opportunities. “History is the mother of innovation for any type of company,” one respondent said. “History,” writes another, “includes the roadmap to failures as well as successes.”
But this documented history cannot be a hagiography of the departing CEO. Too often, outgoing execs spend their last years in office constructing their own trophy cases. Even as they conceded their own flat-footedness on transition planning, the majority of execs said they have already taken steps to create and reinforce their personal legacies — two-thirds said they have already completed their own formal legacy planning, many with the blessing of their boards.
It’s ironic, then, that three out of five also said that the legacy of a CEO or founder often overshadows the skill set and experience a successor brings. Two-thirds of tech execs believed that the longer a leader has been in office, the more it complicates a transition.
Tech leaders can do this right and have done so. Asked which five big-name CEO transitions was most successful, respondents’ No. 1 was Apple’s handoff from Steve Jobs to Tim Cook (38%), followed by Microsoft’s page-turn from Steve Ballmer to Satya Nadella (28%). The others, at General Electric, General Motors and Goldman Sachs, each netted no more than 13% of votes.
Apple’s apparent predominance in this survey might contradict the advice to play down the aggrandizement of an exiting CEO and highlight the compilation and transfer of an organization’s history to the next chief executive. Jobs, after all, painstakingly managed his legacy until the end. But even as he continued to take center-stage, he also made sure to pass along Apple’s institutional knowledge and ethos to Cook over the 13 years they shared space on Apple’s executive floor.
Sooner or later, everyone in the C-suite today — including startup founders — will depart. For the sake of everyone they’ll leave behind, they should begin prepping for that day now.
Open source has become a major force in the world of IT, and today a startup that has built a profitable operation by developing business management software on the principle is announcing a sizable secondary investment on the back of that growth.
Odoo — a Belgium-based provider of open-source-based business software that ranges from inventory management and ERP to human resources and CRM software, marketing tools and more, some 30,000 in all — has received $215 million from Summit Partners.
This is a secondary investment, meaning Summit is buying shares from existing investors (specifically Sofinnova Partners and XAnge). Odoo is profitable and has been so for years, CEO and founder Fabien Pinckaers explained in an interview earlier, and so it didn’t need to raise more cash by giving away more equity. He added that this investment values the startup at over €2 billion (or over $2.3 billion at current rates), making Odoo the first unicorn out of Wallonia, the region in Belgium where it is based. That in itself is notable; it’s a sign of the evolving decentralization of the tech world beyond Silicon Valley.
This is the second time Summit, which was one of Odoo’s earliest (equity) backers, has snapped up secondary shares. The firm made a similar investment of $90 million in 2019.
With 7 million users on its platform, Odoo is a prime example of the strong payoffs to be had from economies of scale in the most successful open-source projects, but it’s also doing so with a twist.
On the open-source front, Odoo provides a version of its services that is “open source” and free, which Pinckaers said contains about 80% of all of its features. It then offers a paid, proprietary version of the product with the remaining 20% of features (full details on pricing here).
About 90% of Odoo’s customer base takes the free tier, he said, with only 10% taking the paid, proprietary tier. But with 7 million users, that is enough to run the business at a profit big enough that it can continue investing in growth without giving away more equity.
What is also notable is how Odoo pitches itself. While a lot of open source has been seen as the domain of developers and others in the technical community, Odoo designs software on its platform that is actually aimed at others in the workplace, not engineers.
“We are one of the only exceptions of open source built for nontechnical users,” Pinckaers said.
It targets users both directly via its SaaS platform and via an extensive channel partner operation, where channel partners will host the services themselves. Its traction with these partners is strong, he added, because of the free nature of Odoo (which is not only a contrast to the SAPs, Microsofts and Oracles of the world, but at times a much easier sell around which a channel partner can provide other paid services). There are nearly 4,000 partners now, he added, with another 90,000 individual community members contributing software on the Odoo platform.
The company has been growing revenues and customers at a rate of 50% over the last 10 years (and 63% over the past 15 — it’s been around since 2005), and it now has 1,700 employees with plans to add another 1,000 this year. Billings are expected to be €160 million in 2021. Pinckaers said that Odoo’s next steps will be to continue growing the software that it provides to users on its platform. Specifically, it is focusing on e-commerce and website development, he said, two areas that he feels could benefit from more nontechnical, user-friendly open-source tools.
“We are thrilled to support the Odoo team for this next phase of growth,” Han Sikkens, managing director and head of Europe at Summit Partners, said in a statement. “We believe the future is bright, and Odoo clearly has the potential to disrupt the market led by software giants like SAP, MS Dynamics and Oracle.” Sikkens is joining the board with this round.
Leaders become great not because of their power, but because of their ability to empower others.
It’s no secret that most tech companies tout their culture as “unique” or “open,” but when you take a closer look, it’s often merely surface level. Yes, you may be dog-friendly or offer unlimited beer on tap, but how are you helping your employees become the best versions of themselves? We’re at our best when our employees are at their best, so we do everything in our power to make that a reality.
We’re at our best when our employees are at their best, so we do everything in our power to make that a reality.
After successfully running Vincit in Finland and Switzerland, in 2016 we made the jump to the United States, setting up an office in California. Although we had moved over 5,000 miles to a new country, it was important that our two main KPIs remain the same: Employee happiness and customer satisfaction. We believe that happy employees make clients happy, and happy clients refer you to others. Therefore, it was essential that this positive and prosperous workplace environment followed us to the United States.
So beyond traditional benefits, like full medical coverage, 401k matching and standard office amenities, we tapped into our Finnish roots to build and provide our employees with an uninhibited, supportive workplace. We keep our company culture as transparent as possible and fully believe in the power of empowering our employees. We have no managers and no real role hierarchy. Employees do not have to go through an approval process on anything they are working on.
We encourage our employees to make a trip to Finland to visit our headquarters. Instead of “Lunch & Learn” meetings, we host “Fail & Learn” meetings where employees get to share something that didn’t work and what they learned from it. And once a month, we let an employee become the CEO for a day.
Unsurprisingly, the “CEO of the Day” program is one of our most popular initiatives. The program gives our employee the reins for 24 hours with an unlimited budget. The only requirement? The CEO must make one lasting decision that will help improve the working experience of Vincit employees. Whatever the CEO of the Day decides, the company sticks with. They can purchase something for the company, change a policy, update a tool we use … Really, anything that they come up with can be done.
Four months after announcing its last round, Employment Hero has closed another $140 million AUD (about $103 million USD) in funding. The Series E was led by Insight Partners, the venture capital firm known for its ScaleUp program to help tech companies accelerate their growth.
Employment Hero is an automated human resources, payroll and benefits platform for SMEs. Founded in Sydney in 2014, the company is now expanding into Southeast Asian and Western European markets. Its previous funding announcement was a $45 million AUD Series D announced in March, led by online job platform SEEK, at the company’s previous valuation of about $250 million AUD.
Now Employment Hero has bumped up its valuation $800 million in less than six months by reaching 133% year-on- recurring revenue growth. Co-founded by Ben Thompson, its chief executive officer, and chief technology officer Dave Tong, Employment Hero is used by 6,000 businesses, with a total of 250,000 employees. Over the past 12 months, the company says $14 billion in gross wages was processed through the platform.
“We always thought Insight Partners would be a great partner,” Thompson told TechCrunch. “We had been speaking with them for years, so when they asked if we would consider raising, we agreed it was definitely worth exploring. As it turned out all the stars were aligned, and we reached a deal that made sense and allowed us to keep scaling without having to switch back into capital-raising mode.”
Over the past year, Employment Hero grew its headcount by 65% to 325 full-time employees and now has a permanent remote-first work model. The new capital will be used to hire for its engineering teams and for the company’s continuing international expansion.
Employment Hero began entering new markets in October 2020, launching localized versions of the platform in New Zealand, the United Kingdom, Malaysia and Singapore.
Thompson said Employment Hero will continue focusing on Malaysia and Singapore until the end of this year, while looking at ways to cross-promote SEEK’s products and services in Asia. After that, it plans to localize Employment Hero for Indonesia, Thailand, the Philippines, Hong Kong and Vietnam.
To localize the platform, Employment Hero starts with employment contracts, policies, leave rules and pay rules. Then it integrates with tax authorities and pension funds, before focusing on local benefits providers to get discounts on nondiscretionary expenses for users, like health insurance and mortgages.
During the pandemic, Thompson said Employment Hero’s teams shifted their focus to help companies adapt to a distributed workforce. Some of the services it launched include Global Teams, a professional employer organization (PEO) solution that pushes job openings to more than 1,700 career boards and helps companies onboard and manage remote workers. Employment Hero is also working with recruitment agencies that will help employers find remote workers.
Thompson said, “while it’s still early days for Global Teams, it’s definitely popular,” with dozens of companies in Australia, the United Kingdom and New Zealand using it to employ people in 21 countries.
Employment Hero’s Remote Work Report, released in June, found that 94% of respondents want to continue working remotely at least one day a week, up from 2% a year ago. Meanwhile, 74% of employers surveyed told Employment Hero that they plan to keep flexible working arrangements after COVID restrictions are lifted, up from 64% in 2020.
“We are seeing employers embrace remote work as a competitive advantage because it broadens their available talent pool and helps retain and engage their employees,” Thompson said. “Employers are now asking, how should we do things differently if we want to continue working remotely forever? This requires real intention and education, but it’s a whole lot better than losing great employees by forcing them back to the office five days a week.”
In a statement about the investment, Insight Partners managing director Rachel Geller said, “We have been following Employment Hero’s journey for four years and have seen the impressive and consistent growth experience by the company. Its customer-centric solutions have been embraced globally by the small and medium business community and we are looking forward to supporting them through this next phase of their expansion journey.”
Several weeks ago, the Linux community was rocked by the disturbing news that University of Minnesota researchers had developed (but, as it turned out, not fully executed) a method for introducing what they called “hypocrite commits” to the Linux kernel — the idea being to distribute hard-to-detect behaviors, meaningless in themselves, that could later be aligned by attackers to manifest vulnerabilities.
This was quickly followed by the — in some senses, equally disturbing — announcement that the university had been banned, at least temporarily, from contributing to kernel development. A public apology from the researchers followed.
Though exploit development and disclosure is often messy, running technically complex “red team” programs against the world’s biggest and most important open-source project feels a little extra. It’s hard to imagine researchers and institutions so naive or derelict as not to understand the potentially huge blast radius of such behavior.
Equally certain, maintainers and project governance are duty bound to enforce policy and avoid having their time wasted. Common sense suggests (and users demand) they strive to produce kernel releases that don’t contain exploits. But killing the messenger seems to miss at least some of the point — that this was research rather than pure malice, and that it casts light on a kind of software (and organizational) vulnerability that begs for technical and systemic mitigation.
Projects of the scale and utter criticality of the Linux kernel aren’t prepared to contend with game-changing, hyperscale threat models.
I think the “hypocrite commits” contretemps is symptomatic, on every side, of related trends that threaten the entire extended open-source ecosystem and its users. That ecosystem has long wrestled with problems of scale, complexity and free and open-source software’s (FOSS) increasingly critical importance to every kind of human undertaking. Let’s look at that complex of problems:
Meanwhile, the threat landscape keeps evolving:
The net result is that projects of the scale and utter criticality of the Linux kernel aren’t prepared to contend with game-changing, hyperscale threat models. In the specific case we’re examining here, the researchers were able to target candidate incursion sites with relatively low effort (using static analysis tools to assess units of code already identified as requiring contributor attention), propose “fixes” informally via email, and leverage many factors, including their own established reputation as reliable and frequent contributors, to bring exploit code to the verge of being committed.
This was a serious betrayal, effectively by “insiders” of a trust system that’s historically worked very well to produce robust and secure kernel releases. The abuse of trust itself changes the game, and the implied follow-on requirement — to bolster mutual human trust with systematic mitigations — looms large.
But how do you contend with threats like this? Formal verification is effectively impossible in most cases. Static analysis may not reveal cleverly engineered incursions. Project paces must be maintained (there are known bugs to fix, after all). And the threat is asymmetrical: As the classic line goes — blue team needs to protect against everything, red team only needs to succeed once.
I see a few opportunities for remediation:
Basically, what I’m advocating here is that orchestrators like Kubernetes should matter less, and Linux should have less impact. Finally, we should proceed as fast as we can toward formalizing the use of things like unikernels.
Regardless, we need to ensure that both companies and individuals provide the resources open source needs to continue.
For many of us, going to work these days no longer means going into a specific office like it used to; and today one of the startups that’s built a platform to help cater for that new, bigger world of employment — wherever talent might be — is announcing a major round of funding on the back of strong demand for its tools.
Remote, which provides tools to manage onboarding, payroll, benefits and other services for tech and other knowledge workers located in remote countries — be they contractors or full-time employees — has raised $150 million. Job van der Voort, the Dutch-based CEO and co-founder of New York-based Remote, confirmed in an interview that funding values Remote at over $1 billion.
Accel is leading this Series B, with participation also from previous investors Sequoia, Index Ventures, Two Sigma, General Catalyst and Day One Ventures.
The funding will be used in a couple of areas. First and foremost, it will go towards expanding its business to more markets. The startup has been built from the ground up in a fully-integrated way, and in contrast to a number of others that it competes with in providing Employer of Record services, Remote fully owns all of its infrastructure. It now provides its HR services, as fully-operational legal entities, for 50 countries has a target of growing that to 80 by the end of this year. The platform is also set to be enhanced with more tools around areas like benefits, equity incentive planning, visa and immigration support and employee relocation.
“We are doubling down on our approach,” Van der Voort said. “We try to fully own the entire stack: entity, operations, experts in house, payroll, benefits and visa and immigration — all of the items that come up most often. We want to to build infrastructure products, foundational products because those have a higher level of quality and ultimately a lower price.”
In addition, Remote will be using the funding to continue building more tools and partnerships to integrate with other providers of services in what is a very fragmented human resources market. Two of these are being announced today to coincide with the funding news: Remote has launched a Global Employee API that HR platforms that focus on domestic payroll can integrate to provide their own international offering powered by Remote. HR platform Rippling (Parker Conrad’s latest act) is one of its first customers. And Remote is also getting cosier with other parts of the HR chain of services: applicant tracking system Greenhouse now integrating with it to help with the onboarding process for new hires.
$150 million at a $1 billion+ valuation is a very, very sizable Series B, even by today’s flush-market standards, but it comes after a bumper year for the company, and in particular since November last year when it raised a Series A of $35 million. In the last nine months, customer numbers have grown seven-fold, with users on the platform increasing 10 times. Most interestingly, perhaps, is that Remote’s revenues — it’s packages start at $149 per month but go up from there — have increased by a much bigger amount: 65x, the company said. That basically points to the fact that engagement from those users — how much they are leaning on Remote’s tech — has skyrocketed.
Although there are a lot of competitors in the same space as Remote — they include a number of more local players alongside a pretty big range of startups like Oyster (which announced $50 million in funding in June), Deel, which is now valued at $1.25 billion; Turing; Papaya Global (now also valued at over $1 billion); and many more — the opportunity they are collectively tackling is a massive one that, if anything, appears to be growing.
Hiring internationally has always been a costly, time-consuming and organizationally-challenged endeavor, so much so that many companies have opted not to do it at all, or to reserve it for very unique cases. That paradigm has drastically shifted in recent years, however.
Even before Covid-19 hit, there was a shortage of talent, resulting in a competitive struggle for good people, in company’s home markets, which encouraged companies to look further afield when hiring. Then, once looking further afield, those employers had to give consideration to employing those people remotely — that is, letting them work from afar — because the process of relocating them had also become more expensive and harder to work through.
Then Covid-19 happened, and everyone, including people working in a company’s HQ, started to work remotely, changing the goalposts yet again on what is expected by workers, and what organizations are willing to consider when bringing a new person on board, or managing someone it already knows, just from a much farther distance.
While a lot of that has played out in the idea of relocating to different cities in the same country — Miami and Austin getting a big wave of Silicon Valley “expats” being two examples of that — it seems just a short leap to consider that now that sourcing and managing is taking on a much more international provide. A lot of new hires, as well as existing employees who are possibly not from the US to begin with, or simply want to see another part of the world, are now also a part of the mix. That is where companies like Remote are coming in and lowering the barriers to entry by making it as easy to hire and manage a person abroad as it is in your own city.
“Remote is at the center of a profound shift in the way that companies hire,” said Miles Clements, a partner at Accel, in a statement. “Their new Global Employee API opens up access to Remote’s robust global employment infrastructure and knowledge map, and will help any HR provider expand internationally at a speed impossible before. Remote’s future vision as a financial services provider will consolidate complicated processes into one trusted platform, and we’re excited to partner with the global leader in the quickly emerging category of remote work.”
And it’s interesting to see it now partnering with the likes of Rippling. It was a no-brainer that as the latter company matured and grew, that it would have to consider how to handle the international component. Using an API from Remote is an example of how the model that has played out in communications (led by companies like Twilio and Sinch) and fintech (hello, Stripe), also has an analogue in HR, with Remote taking the charge on that.
And to be clear, for now Remote has no plans to build a product that it would sell directly to individuals.
“Individuals are reaching out to us, saying, ‘I found this job and can you help me and make sure I get paid?’ That’s been interesting,” Van der Voort said. “We thought about [building a product for them] but we have so much to do with employers first.” One thing that’s heartening in Remote’s approach is that it wouldn’t want to provide this service unless it could completely follow through on it, which in the case of an individual would mean “vetting every major employer,” he said, which is too big a task for it right now.
In the meantime, Remote itself has walked the walk when it comes to remote working. Originally co-founded by two European transplants to San Francisco, the pair had first-hand experience of the paradoxical pains and opportunities of being in an organization that uses remote workforces.
Van der Voort had been the VP of product for GitLab, which he scaled from 5 to 450 employees working remotely (it’s now a customer of Remote’s); and before co-founding Remote CTO Marcelo Lebre had been VP of engineering for Unbabel — another startup focused on reducing international barriers, this time between how companies and global customers communicate.
Today, not only is the CEO based out of Amsterdam in The Netherlands and CTO in Lisbon, Portugal, but New York-based Remote itself has grown to 220 from 50 employees, and this wider group has also been working remotely across 47 countries since November 2020.
“The world is looking very different today,” Van der Voort said. “The biggest change for us has been the size of the organization. We’ve gone from 50 to more than 200 employees, and I haven’t met any of them! We have tried to follow our values of bringing opportunity everywhere so we hire everywhere as we solve that for our customers, too.”
Diversity and inclusion have become central topics in the world of work. In the best considerations, improving them is a holistic effort, involving not just conceiving of products with this in mind, but hiring and managing talent in a diverse and inclusive way, too. A new startup called Pequity that has built a product to help with the latter of these areas, specifically in equitable compensation, has now raised some funding — a sign of the demand in the market, as well as how tech is being harnessed in aid of helping it.
The San Francisco-based startup has raised $19 million in a Series A led by Norwest Venture Partners. First Round Capital, Designer Fund, and Scribble Ventures also participated in the fundraise, which will be used to continue investing in product and also hiring: the company has 20 on its own books now and will aim to double that by the end of this year, on the heels of positive reception in the market.
Since launching officially last year, Pequity has picked up over 100 customers, with an initial focus on fast-scaling companies in its own backyard, a mark of how D&I have come into focus in the tech industry in particular. Those using Pequity to compare and figure out compensation include Instacart, Scale.ai and ClearCo, and the company said that in the last four months, the platform’s been used to make more then 5,000 job offers.
Image Credits: Pequity (opens in a new window)
Kaitlyn Knopp, the CEO who co-founded the company with Warren Lebovics (both pictured, right), came up for the idea for Pequity in much the same way that many innovations in the world of enterprise IT come to market: through her own first-hand experience.
She spent a decade working in employment compensation in the Bay Area, with previous roles at Google, Instacart, and Cruise. In that time, she found the tools that many companies used were lacking and simply “clunky” when it came to compensation analysis.
“The way the market has worked so far is that platforms had compensation as an element but not the focus,” she said. “It was the end of the tagline, the final part of a ‘CRM for candidates.’ But you still have to fill in all the gaps, you have to set the architecture the right way. And with compensation, you have to bake in your own analytics, which implies that you have to have some expertise.”
Indeed, as with other aspects of enterprise software, she added that the very biggest tech companies sometimes worked on their own tools, but not only does that leave smaller or otherwise other-focused businesses out of having better calculation tools, but it also means that those tools are siloed and miss out on being shaped by a bigger picture of the world of work. “We wanted to take that process and own it.”
The Pequity product essentially works by plugging into all of the other tools that an HR professional might be using — HRIS, ATS, and payroll products — to manage salaries across the whole of the organization in order to analyse and compare how compensation could look for existing and prospective employees. It combines a company’s own data and then compares it to data from the wider market, including typical industry ranges and market trends, to provide insights to HR teams.
All of this means that HR teams are able to make more informed decisions, which is step number one in being more transparent and equitable, but is also something that Pequity is optimized to cover specifically in how it measures compensation across a team.
And in line with that, there is another aspect of the compensation mindset that Knopp also wanted to address in a standalone product, and that is the idea of building a tool with a mission, one of providing a platform that can bring in data to make transparent and equitable decisions.
“A lot of the comp tools that I’ve interacted with are reactive,” she said. “You may have to do, say, a pay equity test, you do your promotion and merit cycles, and then you find all these issues that you have to solve. We’re flagging those things proactively with our analytics, because we’re plugging into those systems, which will give you those alerts before the decisions need to be made.”
As an added step in that direction, Knopp said that ultimately she believes the tool should be something that those outside of HR, such as managers and emploiyees themselves, should be able to access to better understand the logic of their own compensation and have more information going into any kind of negotiation.
Ultimately, it will be interesting to see whether modernized products like Pequity, which are tackling old problems with a new approach and point of view, find traction in the wider market. If one purpose in HR is to address diversity and inclusion, and part of the problem has been that the tools are just not fit for that purpose, then it seems a no-brainer that we’ll see more organizations trying out new things to see if they can help them in their own race to secure talent.
“Compensation reflects a company’s values, affects its ability to hire talent, and is the biggest expense on its P&L. And yet, most comp teams run on spreadsheets and emails,” said Parker Barrile, Partner at Norwest, in a statement. “Pequity empowers comp teams to design and manage equitable compensation programs with modern software designed by comp professionals, for comp professionals.”
The future of work is long on long-distance, and today a startup that’s built a platform to help organizations hire global talent and build out those remote workforces is announcing a round of funding on the heels of strong growth.
Oyster — which provides tools to help with hiring, onboarding, payroll, benefits and salary management services for both contractors and full-time employees working outside of an organization’s home country — has closed a Series B of $50 million.
We understand that the funding is coming in at a $475 million valuation, six times the company’s valuation when it last raised money — a $20 million round just four months ago. The company itself has seen business grow “exponentially” since then, said Tony Jamous, London-based Oyster’s CEO who co-founded the company with Jack Mardack. The company now works with 80 large businesses, he said, helping them fill knowledge worker roles.
Stripes is leading the Series B, with previous backers Emergence Capital and The Slack Fund, as well as new investor Avid Ventures, also participating.
Jamous told me back in February that the idea for building Oyster was planted when he was working at his first startup, Nexmo (which eventually he sold to Vonage), after being faced with the challenges of hiring talent internationally, and specifically the millions the company invested to build out the infrastructure to do so itself, as every country has very specific procedures for employing people and handling all of the contractual, tax and regulatory details related to that.
Oyster’s mission has been to make it possible for any company to hire wherever they want, without going through that pain themselves, making the “world their oyster,” so to speak.
While that in itself is a great idea that definitely fills a need for businesses, it has also been compounded by recent changing tides. Not only are more people wanting to work further afield, but at “home”, many companies — especially those who need to fill knowledge worker roles — are facing talent shortages. All of this is driving even more demand for sourcing and hiring candidates from further afield, and fostering a culture in the workplace that it’s possible to work well even if you are not in the same physical space.
“What’s happening in the world is that there’s a talent shortage, and also there’s no need to be in the office anymore,” he said. “When it comes to tapping into the global talent pool, if you think about it, if you’re a London-based company, then the chances that your best talent is in London is less than 1%. So by tapping into the global talent pool, suddenly you’re dramatically increasing your chances, especially if you depend on talent as a key source of your success.”
Many startups in the market today are targeting the remote working opportunity — helping companies source and hire people wherever they happen to be located — and Oyster is not the only one of them raising big money to scale. Others include Deel, which is now valued at $1.25 billion; Turing; Papaya Global (now also valued at over $1 billion); Remote; and many more.
Oyster is not — yet? — in the business of helping to source or vet potential hires, but once someone is identified and an organization wants to make an offer, Oyster provides a seamless way to handle the rest, including giving advice on whether it’s best to hire the person as a contractor or full-time employee (the trend here, he said, is full time), how to handle benefits based on the country in which the talent is based, and other aspects of remuneration, again particular to each local market. Pricing ranges from $29 per person, per month for contractors, to $399 for working with full employees, to other packages for larger deployments.
The company also has a public service mission in all this. Jamous himself originally hails from Lebanon and has a particular mission to help people from less high-profile parts of the world, and emerging countries, also get on the career ladder. In this day and age, since relocation and migration are no longer a must-do, it opens up a lot of opportunities for people that didn’t exist before. Oyster applied for, and now has, B-Corp certification, which it’s using to fill out that global employment and talent mandate.
This is not just for greater good, though. There are actual talent shortages, and a recent study from Korn Ferry, cited by Oyster, found that 1.5 billion knowledge workers will be entering the workforce in the next decade from emerging economies. Building tools to help hire and manage that talent makes business sense.
“We’re thrilled to partner with Stripes for the next chapter of growth and positive impact for Oyster,” said Jack Mardack, co-founder of Oyster, in a statement. “Investors like Stripes, Emergence, Slack Fund, Avid, and PeopleTech Partners among others, who share in our passion for the Oyster mission and vision for the future of work, give us the rocket fuel we need to change the world by unblocking access to job opportunities for everyone.”
“The transition to remote work is one of the most fundamental macro trends in business today and COVID-19 accelerated that transition by 10 years,” said Saagar Kulkarni, partner at Stripes, in a statement. “Oyster makes it seamless for any company to hire the best person for each job, removing location as a barrier. Tony and the team have built the best software product in the market and are poised to build a market-defining company. We are thrilled to join the entire Oyster team on their mission to level the playing field for the global workforce.”
“People are the backbone of any organization. People are more important than the product. Without people, you don’t have a product,” says Joseph Ifiegbu, who is Snap’s former head of human resources technology and also previous lead of WeWork’s People Analytics team.
Ifiegbu’s startup, called eqtble, wants to give HR teams the same kind of detailed analytics that product, sales and marketing departments have had for a long time, with the goal of creating more engaged and inclusive workplaces. The company, a Y Combinator alum, announced today it has raised $2.7 million in seed funding, led by Initialized Capital, with participation from SB Opportunity Fund, RS Ventures and other venture capital firms and angel investors.
Ifiegbu joined WeWork’s People Analytics team in 2017, when the company had a total of about 2,000 employees. By the time he left in 2020, that number had grown to 15,000 people. One of Ifiegbu’s first hires at WeWork was Gabe Horwitz, the first data scientist on the People Analytics team and now eqtble’s co-founder and chief product officer. The startup’s third co-founder and chief technology officer is Ethan Veres.
At many companies, especially ones that are growing quickly, workforce data is scattered across different HR software, including human resources information systems (HRIS), engagement platforms, benefit programs and employee surveys.
Because information is so fragmented, companies can miss important correlations. For example, they might not see the links between why top employees are quitting and how long it typically takes to promote people, or overlook pay inequality. This in turn impacts a company’s culture, including its approach to diversity, equity and inclusion, and ability to retain talented people.
As WeWork was rapidly scaling, the People Analytics team built tools to analyze data from across the company.
“There were a lot of questions being asked, like what is our promotion like? What is our attrition, are we hiring more men than women? There were all these questions and bottlenecks in our processes, and we wanted to have an understanding of our employees,” says Ifiegbu. “So we built systems to capture all that data, clean it, structure it and deliver dashboard insights to our leadership.”
The process took about two years, and the People Analytics team eventually grew to 15 people. Ifiegbu and Horwitz realized there were many companies that needed the same kind of analytics, but didn’t have WeWork’s resources. This prompted them to start working on eqtble.
“It took us such a long time and quite a bit of money because we had this team [at WeWork],” he says. “So how do we build something that delivers these insights to them, but doesn’t take that much time to do it, because we realize it’s very important that leadership and decision makers have the data to make decisions about their employees.”
The current version of eqtble can be onboarded in six weeks, and Ifiegbu says the company’s goal is to shorten that process to just two days. Eqtble is sector agnostic and its target customers are high-growth companies that have between 250 to about 3,000 employees.
The human resources analytics platform can collect data from more than 100 sources (including Workday, ADP, Oracle, PeopleSoft, Qualtrics and Culture Amp, to name a few), and deliver insights and visualizations about four main areas: talent recruitment, workforce, engagement (including attrition, or when workers quit) and compensation.
One of the things the platform can help HR teams do is identify why top candidates are declining offers.
For example, one of eqtble’s clients realized that their hiring managers were being passed more applications than they had time to look at. This created a bottleneck, because they weren’t able to interview people quickly enough. Other clients saw that candidates were dropping out because the interview process was too long.
“If you as an organization are saying ‘we’re going to have six rounds of interviews, it’s going to take three months to interview,’ you’re going to lose out on good candidates,” says Ifiegbu. “Other people are closing candidates within one to two weeks.”
It’s easy for a company to make DEI pledges, but even the best of intentions don’t result in progress if an organization isn’t willing to scrutinize itself. Because eqtble combines data from across a company, it can highlight potential issues before decision makers realize what is happening.
“Last year, all the companies were saying, ‘oh, we’re going to do this, we’re going to do all these things,’ and it’s like, ok, great, you can say anything, but the truth is you cannot change what you don’t measure,” says Ifiegbu.
For example, a company might be be proud of having a workforce that is divided equally between men and women, or that has a large percentage of people of color, when the reality is that many of them aren’t getting raises or being promoted into management roles.
“That 50/50 doesn’t mean anything if you don’t see representation at higher levels for women and people of color. What we’re doing is showing you a picture of your organization. If you can see the different parts of it, you can see the parts you can improve on and take actionable steps, not just lip service for the media,” says Ifiegbu. “Eqtble surfaces places you can improve or places where you are doing well so you can keep doing that.”
Ifiegbu is excited that the HR analytics space is gaining attention. “I feel like using data to drive decisions is such an important thing, and ultimately builds a healthier company.”
The seed funding will be used to grow eqtble’s engineering team and its platform’s machine learning and visualization capabilities, and user acquisition.
In a statement, Initialized Capital partner and president Jen Wolf said, “Important organizational issues like DEI or equitable compensation are not simply a box a company can check, they take honest commitment. Companies willing to make that commitment shouldn’t have to wait months or be discouraged by the financial investment it takes to understand the data they already own to make these meaningful changes. The eqtble team knows how to solve this, and they’re empowering other companies to do so.”
Diversity, equity and inclusion (DEI) initiatives are often thought to be an issue that can be solved by intuition by some segment of the HR team. However, in reality, it needs to come from a data-driven approach that encompasses the entire workforce.
The primary aspect that companies usually look to, in terms of treating employees fairly, is remuneration. However, having the conversation and agreeing on the need for equality doesn’t mean it will be achieved on an organizational scale.
Particular attention should be paid to addressing inequities in the areas of attracting and hiring candidates, integration, performance assessment, compensation and promotion.
In a recent survey from Mercer that included data from more than 1,000 companies in 54 countries, 81% agreed that it was important to have a plan for advancing gender equality, but just 42% actually had one in place. This points toward a tokenism attitude indicating companies are happy to talk around the issue without addressing it directly.
Despite the fact that women make up roughly half of all college-educated workers in the United States, they are underrepresented in positions of power — just 8% of Fortune 500 companies are led by women, and, incredibly, just 1% by women of color. Furthermore, the last U.S. census revealed that women who are employed full time are paid on average 17% less than men.
While there have been steps to ensure equal pay, such as Canada’s Pay Equity Act, which states that men and women in the public sector should be paid equally, it does not cover the private sector. Given that the Institute for Women’s Policy Research estimates that equal pay will not be reached until 2059, there is still plenty of work to be done.
Particular attention should be paid to addressing inequities in the areas of attracting and hiring candidates, integration, performance assessment, compensation and promotion. Companies need to think about initiatives that are supported by objective tools to drive progress, identify problems and strategize solutions. This is where data can be a great tool to provide insight into DEI: by highlighting shortcomings and areas where there is bias.
The first step is to create a data set so that tangible metrics can be utilized and turned into actionable decisions. To do this, diversity and inclusion officers need to be given the opportunity to weed out bias.
Obviously, the data would drive decisions on areas such as compensation. But far too often, director-level discussions don’t involve the talent acquisition team. To eradicate the pay gap and ensure compensation is equalized on individual merit, this needs to change. Line managers and talent acquisition teams have the best knowledge of their staff and are well placed to procure the right information to help senior managers make equitable decisions.