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Figure raises $7.5M to help startup employees better understand their compensation

The topic of compensation has historically been a delicate one that has left many people — especially startup employees — wondering just what drives what can feel like random decisions around pay and equity.

Last June, software engineers (and housemates) Miles Hobby and Geoffrey Tisserand set about trying to solve the problem for companies by developing a data-driven platform that aims to help companies structure their compensation plans and transparently communicate them to candidates.

Now today, the startup behind that platform, Figure, announced it has raised $7.5 million in seed funding led by CRV. Bling Capital, Better Tomorrow Ventures and Garage Capital also participated in the financing, along with angel investors such as AngelList co-founder Naval Ravikant, Jason Calacanis, Reddit CEO Steve Huffman and other executives based in Silicon Valley.

The startup has amassed a client list that includes other startups such as fintechs Brex and NerdWallet and AI-powered fitness company Tempo. 

Put simply, Hobby and Tisserand’s mission is to improve workflows and transparency around pay, particularly equity. The pair had both worked at startups themselves (Uber and Instacart, respectively) and ended up leaving money on the table when they left those companies because no one had properly explained to them what their equity, which changed at every valuation, meant.  

Image Credits: Figure co-founders and co-CEOs Miles Hobby and Geoffrey Tisserand. Image Credits: Figure

So, one of their goals was to create a solution that would provide a user-friendly explanation of what a person’s equity stake really means, from tax implications to whether or not they have to buy the stock and/or hold onto it.

“I’ve gone through the job search process many times before and there’s all these complex legal documents to understand why you’re getting 10,000 stock options, but obviously we knew the vast majority of people have no idea how that works,” Tisserand told TechCrunch. “We saw an opportunity there to help companies actually convey the value to their candidates while also making them aware of the potential risks of owning something that’s so illiquid.”

Image Credits: Figure

Another goal of Figure’s is to help create a more fair and balanced process about decisions around pay and equity so that there’s less inequality out there. Pointedly, it aims to remove some of the biases that exist around those decisions by systematizing the process.

“We saw a void in this kind of context around equity…and knew that there had to be a better way for companies to structure, manage and explain their compensation plans,” Hobby said.

To Hobby and Tisserand, Figure is designed to help stop instances of implicit bias.

“Compensation should be based on the work that you’re doing, and not gender or ethnic background,” Tisserand told TechCrunch. “We’re trying to give that context and remove biases. So, we’re trying to help at two different stages –– to surface inequities that already exist and make sure there are no anomalies, and then to help stop them before they can exist.”

Figure also aims to give companies the tools to educate candidates and employees on their total compensation — including equity, salary, benefits and bonuses — in a “straightforward and user-friendly” way. For example, it can create custom offer letters that interactively detail a candidate’s compensation.

“Our goal is for Figure to become an operating system for compensation, where a company can encode their compensation philosophy into our system, and we help them determine their job architecture, compensation bands and offer numbers while monitoring their compensation health to provide adjustment suggestions when needed,” Hobby said.

Post-hire, Figure’s compensation management system “helps keep everything running smoothly.”

Anna Khan, general partner of enterprise software at CRV, is joining Figure’s board as part of the funding. The decision to back the startup was in part personal, she said.

“I’d been investing in software for eight years and was alarmed that no one was building anything around pay equity when it comes to how we’re paid, why we’re paid what we’re paid and on how to build equity long term,” Khan told TechCrunch. “Unfortunately, discussions around compensation and equity still happen behind closed doors and this extends into workflow around compensation — equally broken — with manual leveling, old data and large pay inequities.”

The company plans to use its new capital to expand its product offerings and scale its organization.

Parabol raises $8M after reaching 100,000 users of its agile meeting software

This morning Parabol, a startup that provides retrospective meeting software to agile development teams, announced that it has closed an $8 million Series A. Microsoft’s venture capital arm, M12, led the deal. The investment also saw participation from Techstars, CRV, and Haystack.

TechCrunch caught up with Parabol CEO Jordan Husney to talk about the round, and his company. We were curious how large the market that Parabol serves is, and if the company was overly-nicheing its service. While the startup is still young, the answer appears to be no – adding to our general sentiment that the software market is even larger than we perhaps thought.

Let’s explore how Parabol came to be, and how it came to pick its target market. Or more precisely, how its target market chose it.

Building horizontally, focusing vertically

After a stint in the consulting world, Husney was more than aware of the communications issues that distributed teams can endure. With multiple offices the norm among big companies, he told TechCrunch in an interview, communications between remote workers came down to an email thread, or a meeting. A self-described “recovering engineer,” Husney wondered if there was space in the business market for “structured communications,” or the type of asynchronous meetings that are popular in the code-writing world.

Borrowing from the ethos of agile development, a method of writing software that prioritizes collaboration and evolution over process and documentation, Husney built Parabol to bring agile work and communications methods to non-developer business teams. If agile principles were good at helping foster developer results through status meetings, why wouldn’t the same process translate to other work settings?

But the market had other ideas. Instead of hitting it big in the business world, owing to the friction resulting from needing what Husney described as a “behavior change” — something often lethal to rapid adoption of a new service, or product — agile teams themselves started using Parabol’s tech.

The startup followed the demand. And there’s quite a lot of it, as it turns out. Husney estimated that there are around 20 million agile developers in the world, the business from which has helped propel companies like Atlassian to enormous heights. It’s a big enough pool for the startup to swim in for a long time.

Returning to our earlier note about the depth of the software market, Parabol is a good reference point. It appears capable of building a real company on the back of supporting a subset of the software creation world’s peculiar meeting style; the market for software is simply gigantic.

Growth

After deciding to support agile software teams, growth came quickly to Parabol. In 2018 and 2019, the company saw growth of 20% to 40% each month, its CEO said. Calling his company a “rocket,” Husney gave partial credit to Parabol’s freemium go-to-market model, a common approach when selling to developers who eschew the traditional sales process.

By selling to the already-converted, Parabol found product-market fit. Husney himself had underestimated the demand from agile software developers for tools to support they work, because he thought that they’d already figured out their own needs, he told TechCrunch.

What Parabol has built is not a simple tool, however. Powering retrospective meetings and incident post-mortems, its software collects notes from workers on things that should be done, things that should no longer done, and things that should be kept up. The service then aggregates them automatically by topic, followed by users voting to decide on changes and takeaway actions. The result is an asynchronous way for developer teams to stay in sync.

The startup closed a Seed round in November of 2019, just in time to have cash on hand for the COVID-19 pandemic. The rapid switch to remote work quickly drove Parabol’s user growth from 600 per week in January of 2020, to 5,000 per week in March of the same year. The company has some public usage data available here, in case you want to check the spike yourself.

After raising its $4 million Seed, Husney decided to raise more capital after being told by others that it was a great time to do so. And after winding up with a few firms to choose between, wound up taking Microsoft’s money.

There’s a story there. Per Husney, Microsoft’s M12 was not on the top of its venture capital list; there is a somewhat good reason for that, as taking strategic capital over pure-venture capital is a choice and not the best one for every startup. But after Husney and company got to know the Microsoft partners, and each side underwent diligence, the fit became clear. According to the CEO, M12’s investing team called various Microsoft groups — Azure, GitHub, etc — to ask them about their views on Parabol. They raved. So Microsoft had strong internal signals concerning the deal, and Parabol learned that its potential investor was a heavy user of its product.

The deal worked out.

Why $8 million and not more? The startup’s growth plan isn’t super capital intensive according to Husney, and its market is pulling it instead of the other way around. The team is dilution-conscious as well, he explained. The founding team put the company together in 2015, and didn’t raise its seed round until 2019. It was ramen days back then, he explained; you’ll cling to your ownership, I suppose, when you have bought it that dearly.

Parabol runs lean on purpose. Husney said that his team was not following the Reid Hoffman blitzscaling ethos, instead focusing on hiring for individual leverage. In the CEO’s view, you don’t need to scale quickly to build collaboration products.

The $8 million raise could give Parabol infinite runway, the CEO said, but his company instead raised it for about a 24 month spend. At the end of that he expects the company to have around 30 workers, up from its current 10.

Parabol wants to quadruple its revenues this year, and triple them in 2022. And it wants to scale to 500,000 users from its current 100,000 this year, reaching one million by the end of next year. Let’s see how it performs against those goals.

Emotive raises $50M to make text marketing more conversational

While more businesses are turning to text messages as a marketing channel, Emotive CEO Brain Zatulove argued that most marketers are just treating it as another “newsletter blast.”

“The reason the channel performs so well is it’s not saturated,” Zatulove said. But that’s changing, and as it does, companies will have to do more to “cut through the noise.”

That’s what he said Emotive provides, by enabling text marketing that feels like a real conversation with another human being, rather than just another email blast. He compared it to the sales associate who would greet you when you first walked into a department store, pre-COVID.

“The online sales associate really didn’t exist,” he said. “That’s what we’re trying to provide.”

Emotive saw 466% year-over-year revenue growth in 2020 and is announcing today that it has raised $50 million in a Series B funding round that values the company at $400 million. It was led by CRV with participation from Mucker Capital, TenOneTen Ventures and Stripes.

Emotive screenshot

Image Credits: Emotive

“Never underestimate the importance of building a product that your customers, and your customers’ customers adore,” said CRV general partner Murat Bicer in a statement. “One of the things that struck us about Emotive is the sheer amount of customer love Brian and Zack get from meal delivery services, manufacturing companies and even toddler shoe brands. Small businesses find it easy to set up campaigns and their customers genuinely prefer communicating with someone over text rather than email.”

Zatulove said he founded the company with Zachary Wise after they’d worked together on cannabis loyalty startup Reefer, eventually deciding there was a bigger opportunity here after their early successes with text marketing. He explained that while Emotive works with larger customers, its sweet spot is mid-sized e-commerce businesses on Shopify, Magento, Bigcommerce and Woocommerce.

Since those businesses usually don’t have any salespeople of their own yet, Emotive serves that function. It can start conversations around shopping cart abandonment and promote promote sales and new products, resulting in what the company says are 8% to 10% conversion rates (compared to 1% or 2% for a standard text marketing campaign). Zatuolove said the platform largely relied on human responders at first, and although it’s become increasingly automated over time, Emotive still has an internal team handling responses when necessary.

“We never plan on losing that human touch as part of the dialogue,” he added. “We see ourselves as a human-to-human platform. That’s our biggest differentiator.”

Emotive had previously raised $8.2 million in funding, according to Crunchbase. Zatulove said this new round will allow the company to continue developing the product, to grow its headcount to more than 200 people and to open offices in Atlanta and Boston. Eventually, it could also expand beyond texting.

“Longer term, we see ourselves more as a conversation platform, not just as a text message platform,” he said.