Human resources software — the tools that help companies to manage the admin of their workforces — is a big business. Workday, PeopleSoft (Oracle), ADP and SuccessFactors (SAP) are all worth billions. Even though Workday is nowhere near turning a profit — the company lost $24.5 million on $91 million in revenue this quarter — the company’s rich $11.4 billion valuation, shows investors are fans of the category.
Matt Straz, CEO of an up-and-coming HR services app called Namely, believes there is room for another player. Today he’s announced an additional $3.5 million in funding led by True Ventures with participation from existing investors Lerer Ventures (a PandoDaily investor) and Bullpen Capital to expand his small wedge in the industry.
Namely started as a tool to help the industry Straz worked in for years — advertising — retain its talent. The ad agency world is known for job hopping and turnover rates as high as 40 percent. So in 2011, Straz built a dashboard that helps employers identify which employees are “at-risk” for leaving the company. The dashboard allows employers to “check the vital signs” of their work force.
Last year Namely raised an initial seed round of $750,000 from Lerer and Bullpen, on top of an angel round from ad agency and adtech folk including Mike Lazerow, CEO of Buddy Media, Michael Barrett of AdMeld, Michael Kassan and Wenda Harris Millard of MediaLink, Dave Morgan of Simulmedia and Chris Ingram, Jonah Goodhart and Peter Shankman.
With its seed round in hand, Straz decided to test out Namely’s tools in the media and tech industries. He found that those companies had the same retention problems as agencies. Now those industries are Namely’s fastest-growing areas of business. “We found the issues that agencies were experiencing, in terms of managing people in teams, were similar with other high growth, high velocity industries,” Straz says.
Namely has 24 clients with headcounts ranging from 100 to 1000, including agencies like GroupM and Saatchi & Saatchi, alongside startups like Birchbox and media companies like Buzzfeed and Thrillist. Each client pays a monthly fee of $3 to $5 per employee.
As the company’s addressable market expands, Namely’s tools have also expanded to include a wider range of administrative, time-off tracking and performance management tools. That means the company is going upmarket to compete with the likes of Workday, PeopleSoft and SAP’s SuccessFactors. Straz says Namely is uniquely situated because it’s tools work well for a medium-sized business that needs to graduate from managing its workforce on Google Docs and spreadsheets but isn’t interested in larger, more cumbersome integrations that prove more costly.
When Namely got its start, New York didn’t have much in the way of enterprise startups. In the wake of enterprise fever, several have sprung to prominence in the city, including Maxwell Health and Greenhouse.io, two companies designed specifically for HR services.