How Technology Enables a Fluid Workforce - Saad Siddiqui

In today’s episode, I chat with Saad Siddiqui, a General Partner at Telstra Ventures, a San Francisco-based VC firm that incorporates data science and quantitative analysis of non-financial data into its diverse investing criteria.

Saad started his career as an investment banker at RBC Capital Markets, and Bank of America Merrill Lynch, and previously served as an executive at Informatica and Cisco. Today alongside his work at Telstra, Saad is also an investor in HR Tech companies like Certn, Spekit, and Forage. 

Which makes him a particularly interesting person to speak with about a number of topics we’re passionate about on this show. 

From remote / hybrid / fluid work, the latest HR tech trends, to what’s on the mind of business executives considering digital transformations today - Saad has a wealth of experience that's on full display here.

We also chatted about the role of technology in fueling fluidity, how data affords visibility, and how he spots start-ups in the HR technology space worthy of investment. 

As you can hear, it was a wide-ranging interview covering a number of topics. It’s something I want to do more of in 2023 - bring on a wider array of guests from different backgrounds to advance a discussion that ultimately affects us all. 

I had a lot of fun chatting with Saad, and hope you enjoy our conversation, as much as I did recording it.


Saad Siddiqui

Saad Siddiqui is General Partner at Telstra Ventures, a San Francisco-based VC firm that incorporates data science and quantitative analysis of non-financial data into its mix of investing criteria. He's an investor in HR Tech companies like Certn, Spekit, and Forage.

Saad is a Kauffman Fellow and also previously served as an executive at Informatica and Cisco. He started his career as an investment banker at RBC Capital Markets, and Bank of America Merrill Lynch.

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Matt Burns

Matt Burns is an award-winning executive, social entrepreneur and speaker. He believes in the power of community, simplicity & technology.

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Transcript

[00:00:00] Guest 1: I've been doing a lot of work on the HR tech side, which sort of. Brings me full circle and sort of seeing, uh, how that function has been changing over the last couple of decades. Some of the things that sort of are missing and making sure that we can sort of find the best candidates for [00:00:20] the jobs that we, that recruiters are looking for.

Uh, how to sort of onboard them and train them properly. How to sort of. Retain them, incentivize them, and then as people sort of look at transition out of the businesses, how to do that properly. Right? So kind of looking at a bunch of different things across the lifecycle there[00:00:40] 

[00:00:51] Matt: in strengths drive innovation. Hey everyone, it's Matt here for another episode of Thinking Inside the Box, a show where we discuss complex issues [00:01:00] related to work and culture. If you're interested in checking out our other content, you can find us@bentohr.com and wherever you find your favorite podcasts.

By searching, thinking inside the box, and if you enjoy the work we're doing. Celebrate the new year by leaving us a five star rating, a comment and subscribing. [00:01:20] It ensures you get updated whenever we release new content and really helps amplify our message. In today's episode, I chat with Sadiq, a general partner at Telstra Ventures, a San Francisco based VC firm that incorporates the latest data science and quantitative analysis of [00:01:40] non-financial data into its diverse investing.

Cri. Sad. Started his career as an investment banker at R B C Capital Markets and Bank of America Merrill Lynch, and previously served as an executive at Informatica and Cisco. Today alongside his work at Telstra, SAT is also an investor in HR [00:02:00] tech companies like Certain SPECT and Forage, which makes a particularly interesting person to speak with about a number of topics that we're passionate about here on the show from remote, hybrid, and fluid work, to the latest HR tech trends to what's on the mind of business executives today considering their own digital transformation.[00:02:20] 

SAD has a wealth of experience that's on full display. In this conversation, we also chatted about the role of technology in fueling fluidity, how data affords leaders and organizations alike visibility and how he spots today's startups in the HR technology space. Worthy of investment. As you [00:02:40] can hear, it was a wide ranging interview covering a number of topics, and it's something I wanna do more of in 2020.

That is bring on a wider array of guests from all sorts of different backgrounds to advance a discussion that ultimately affects us all. I had a lot of fun chatting with sad and in hope you enjoy the [00:03:00] conversation as well. And now I bring you sad. . Well, hello, sad. I'm looking forward to today's conversation on a number of fronts.

We're gonna talk all things hr, technology, HR trends, and most importantly your background and experiences. So maybe let's just start there. 

[00:03:17] Guest 1: Thanks Matt. Appreciate you having me on. Um, [00:03:20] yeah, so my background is I grew up in, in Pakistan and migrated to the United States when I was 14 years old. Growing up, like definitely dealt with a bunch of financial stress.

Uh, Went through college and the way I sort of thought about like the way out of poverty and [00:03:40] progressing through, uh, my career, I thought finance was the best way to kind of get there. The university I went to wasn't the, the most sought after university for people to sort of get into finance. So what I ended up doing is like, to be honest, like went and met up as many people as I possibly could.

Built a pretty broad network. And [00:04:00] interestingly enough, some of the most helpful people to me in helping me find my first job was folks in the HR side and, uh, got to know folks, HR teams at all the major, uh, investment banks where I ended up starting my career on the investment banking side. And, uh, as part of [00:04:20] that helped start a couple nonprofits, um, that sort of help lower income.

Uh, high school kids and college kids, uh, around discovering their careers and helping them connect with folks similar to how I got connected to folks and help them place get placed into. Different [00:04:40] jobs in finance and technology and other industries. Fast forward, I sort of made my way from New York to, um, to the Bay Area where I spent a lot of time kind of looking at different technologies, making investments across different areas.

And today I'm a, I'm a partner at a venture capital firm called Telstra [00:05:00] Ventures, which is, um, which manages approximately a billion dollars in. And we've invested in almost a hundred companies. I've been doing a lot of work on the HR tech side, which sort of, kind of brings me full circle and sort of seeing, uh, how that function has been changing over the last couple of decades.[00:05:20] 

Some of the things that sort of are missing and making sure that we can sort of find the best candidates for the jobs that we. Uh, recruiters are looking for, uh, how to sort of onboard them and train them properly, how to sort of retain them, incentivize them, and then as people sort of look to transition out of the businesses how to do that properly.

[00:05:40] Right? So kind of looking at a bunch of different things across the, the life cycle there, which is a 

[00:05:45] Matt: great. Kind of teaser for what's gonna be an awesome conversation. And we talked offline. My background in human resources obviously makes me somebody who's really interested in getting a sense of kind of what you're seeing, what you're experiencing, what you're hearing.

Um, [00:06:00] so I think, you know, the way, at least the way I see it from a HR practitioner point of view, A lot of the technologies, a lot of the innovation, a lot of the, uh, concepts that are coming out today usually begin much early on into the world of venture capital. Someone has a great idea, someone, you know, needs [00:06:20] funding, needs access to network resources to bring their idea to market, and.

There's been an absolute explosion of HR technology and data organizations that have entered the market over the last five years. Certainly, and I'm, I'm purely curious to hear about, you know, what that's been like from your vantage point. Before we get there, [00:06:40] though, I'd love to hear what people are saying.

So I'm assuming that in part of your work, you're talking regularly to HR leaders across North America, if not the world, getting their insights and perspectives on. What they're seeing, what they're hearing, what they're experiencing, whether it's positive or pain. Maybe just talk a bit about that at a kind of a macro view.

What kind of [00:07:00] things are you hearing and seeing from the broader. 

[00:07:02] Guest 1: Yeah, we've, we've actually gone through this massive transition over the last couple years, right? So we went from a period of hyperscale across all the major industries where it was impossible to find talent, right? So, um, [00:07:20] To Covid, trying to do that in a remote way.

How to build culture, how to maintain culture, how to like see if people are like productivity skyrocketed, managing burnout to now kind of reopening the workplace. And people trying to figure out like what is the best way for their [00:07:40] workforce and their company to now, uh, managing, going through an economic downturn, right?

So, uh, we're starting to see a lot of headlines around layoffs and some of the most iconic companies having layoffs, um, some of which for the first time ever. So how, what does that all look like? So I think, to be honest, [00:08:00] HR professionals have been sort of, in some ways whipsaw in terms of like, grow at all costs and maintain culture and hire all these people to like now sort of manage remote and, uh, manage the workforce a and keep morale high a as we look to right-size companies and the workforce.

So it is, it is, [00:08:20] uh, a very challenging job to be honest, right now, to be an hr. 

[00:08:24] Matt: I couldn't agree with you more. I think it's, to your point, oftentimes HR executives are brought into a broader business conversation once the decision's been made. So more often than not, my experience has been that HR folks aren't consulted.

When companies are [00:08:40] driving scale, that decision is made around rate of growth or you know, perhaps an acquisition or many acquisitions. Then HR is left to integrate that, you know, strategic decision and then cascade it throughout the organization using the aforementioned lenses that you spoke about, whether that's talent management, but certainly diversity, [00:09:00] equity and inclusion, compensation, things of that nature.

And. Now we've done a, to your point, a bit of a 180 and the role has quickly become a role based on performance and efficiencies, where if the organizations are reducing headcount or shuttering businesses altogether, that places hr, again, at the [00:09:20] intersection of business strategy and the employee base.

When you think about. The, the broader trends within the market. Um, aside from the AFR mentioned, you know, obviously the arc of company growth and we're seeing lots of, you know, disruption right now in tech organizations. From a HR technology lens, [00:09:40] what's been the arc that you've seen in terms of the evolution of HR technology over the last little while?

Whether that be the products that are available on the market, or some common threads in terms of products and services and features that you've seen increasingly. , uh, be brought to market. Yeah. 

[00:09:58] Guest 1: Uh, I guess like the thing [00:10:00] that to me underlies everything is the concept of fluidity. What that generally means to, to us is, and we have this, uh, phrase called the fluid workforce, and what that basically means is, Identifying the right talent wherever it [00:10:20] is, train them in the most appropriate ways.

So like in, be it in the remote way or in person, allowing people to do the best work they possibly can in the circumstances that they, that fit their lifestyle. So if you kind of think through what has happened, Through human history, people have migrated on a [00:10:40] global level to places where they can find work, right?

So if you look back in the stone ages, like people move to where water was, and that's sort of where they can harvest, and that sort of has. Literally been the story of history. People move moving to bigger cities to find jobs, and for the first time in [00:11:00] Covid that those restraints were completely upended.

You can kind of work from wherever you wanted and people. Finally got a taste of what it was like to live where they wanted to work, to live and work the way they wanted to work. Right? So you, you, you just, people had no [00:11:20] choice. Uh, when they were, they had little kids at home, for example, and managing them and like, you had to like work around all these schedules.

If you were, had elderly parents and you were taking care of them, there were restraints around that and. Kind of came up with ways to manage your schedule, uh, working different hours. [00:11:40] No one was working nine to five. So to me, if, if nine to five is dead people, generally what companies saw was productivity skyrocketed during the period.

So, um, I think, uh, the way we sort of think about fluidity, um, that is a [00:12:00] component of that. And then, uh, if you can work wherever you want, you can work whatever hours you. And now you need analytics to make sure that you're hiring the right people, they're productive, they're incentivized in the right way, so that it has impacts on benefits and the culture that you're setting [00:12:20] and everything needs to sort of like align with the employee.

Uh, and sort of like making sure that they're empowered rather than everyone sort of fitting in a very neat box of a nine to five role that does a specific function, right? Um, Across that. Across that as well as we sort of transition [00:12:40] to, uh, an economic downturn, people will be asked to do more, right? So you will have lesser resources and people will have, like, will need to take on more responsibilities.

Either be pushed to managerial roles if they were an individual contributor, uh, learning new skills. And that's also part of [00:13:00] fluidity. So I think that is, those are some of the, the, the, that's a major trend that we're seeing and that sort of persists in hyper-growth phase and also in economic downturn times as well.

[00:13:13] Matt: Well, it struck me as you were speaking, that in a lot of ways HR technology these days is [00:13:20] fueling that aforementioned fluidity and you know, sad as I maybe go back and date myself, you know, almost 20 years ago when I first got into human resources and I looked around at the digital landscape, that was the department, my very first job in HR was to physically file paper-based documents into large filing cabinets, , and we had technology to [00:13:40] support.

Some element of things being in a database, but there was very much a, a collective eye rolling when paper-based documents would be sent into a hr. And then people like me early in my career would have to scan them into a computer, put them into an HR database, and then physically file the, the copies into the filing cabinets.[00:14:00] 

And at the time, Remember being part of the conversation with my contemporaries and, and the leaders of the day who spoke a lot about HR technology, really not being representative of the true needs of the HR department. That a lot of the technology that had kind of cascaded through our function had had its origins in it [00:14:20] or in finance.

And HR really wasn't part of the decision making process in terms of selection, but it also seemed as if HR really wasn't part of. The architecture and the design of the solutions themselves. And I'm curious if alongside the migration into more fluid work, if you're also seeing greater evidence of [00:14:40] people with an HR discipline background being involved in these conversations before products make it to market.

[00:14:49] Guest 1: Yeah, it is. Uh, uh, you've, you've, uh, hit the nail on something very important here. I think what people have realized is over the [00:15:00] last couple of decades, and this is honestly like driven by Google and a handful of other technology companies, which is just hire the best people and you can train them over time.

The the reason why that is important, Is because the system, like in the past, like when you hired someone, you hired that person for a specific job, [00:15:20] right? Like, Hey, I have a need in finance, I have a need in marketing. And you, you end up doing that specific job in the world of startups. Everyone's doing kind of like everything.

You've got your main functions, but at the same time, you're asked to step up in a bigger way and try to like put your hands in a lot of different things. And what people have, [00:15:40] what companies like larger enterprises started seeing is some of these startups are disrupting them in a massive way and they want to.

Replicate some of that, um, some of that culture around making sure that people are, are given the flexibility that they need to step up in any way [00:16:00] they want. And that has broken a lot of systems. Right. So in the past, like the systems that you talked about that you were used to, they were meant to. Have everything in a a cookie cutter box.

That's just not how the workplace is today, unfortunately. So the [00:16:20] systems need to allow for faster insights. They need to allow for. Quick responses and then trying to understand what are the needs of the business and who are the best people to address those, uh, needs in the fastest way possible. Um, and that [00:16:40] can only be done through newer systems that can help you identify the right talent and then a set, figure out the teams that can go after some of these challenges.

Um, and that's why some of these existing systems that you talked about are. 

[00:16:52] Matt: Well, they're breaking in. You know, they're just, to your point, not, they never really met the needs. And when I think about [00:17:00] technology driving fluidity, I also wanna reference your comments around data. Cause I think data in a lot of cases drives visibility, which was also slowly lacking in the HR systems of, of previous eras.

And when I think about. Data. I think about a conversation that I had in my M b A program like, like five years [00:17:20] ago, where somebody made a, a wild sweeping proclamation that every organization eventually would become a technology company. And I've kind of evolved my thinking on that to say that every organization's gonna become a data company at some point in time, and the importance of data can just simply not be understated when you're talking.

To your point, some of the big issues [00:17:40] that organizations are struggling with, which is how do you identify, develop, and then ultimately retain top talent. And I'm curious what trends you're seeing more broadly when it comes to analytics, whether that be in the HR context or more just broadly with businesses in general.

[00:17:55] Guest 1: Yeah. Uh, that's a really good question, Matt. I guess, um, the, [00:18:00] the history of data technologies has been let's try to store everything and then analyze that later, and we've gone through a bunch of iterations. Of that through the years. Right? So we've gone from relational databases to now cloud, um, cloud databases like [00:18:20] Snowflake and Databricks and newer analytics that are sort of, uh, there, uh, as well.

So one of our companies called Incorta helps. Oh, handful of different HR companies or HR organizations, um, getting insights, uh, as quickly as possible, and they've. Work with a a bunch of Fortune 10, fortune 500 [00:18:40] companies as well. Um, And what we're seeing is we're saving a tremendous amount of data today in all these systems.

Time to insights is becoming critical. And, uh, trying to identify what are the key things, uh, key metrics that people [00:19:00] should be tracking is also very critical. So on the back of that, people are building these, um, uh, frameworks onto what is the most important metric to sort track. To now what? Like just save everything and we can sort of analyze that a bit later.

Once, once we have everything. [00:19:20] Because sometimes like you're not tracking the right things. So that's sort of like the major trend in, in data is like, One, identify the key metrics, but at the same time also tracking almost everything because you never know what you might find better insights in over time.

Where I do see more and more innovation happening [00:19:40] is using artificial intelligence and systems becoming recommendation engines and helping, uh, what recommendation engines do is help. Tell you or guide you into what are the best decisions to be made, right? So this could be so just a kind of like putting some, some, uh, more [00:20:00] meat behind this or putting this, uh, with an example.

Having a list of like potential candidates doesn't help a lot of people. Right. Ha. Having a list of like 10 people that are looking, that have the exact, uh, roles or responsibilities that you're looking for is very important. Over time, what you also [00:20:20] want to sort of see is like how people, like what is their intellectual curiosity as well, so that's something that's sort of missing today.

Like how are there metrics that you can sort of track that can sort of assess some of. Things that are important to your organization and like surfacing those candidates in a recruiting, uh, in the case of recruiting, [00:20:40] right? So that can, those recommendation engines are now being done on the recruiting side over time.

I do suspect that's gonna start happening on the, uh, on the team building side and trying to figure out who are the. Folks on your team to take on some of the most critical tasks of a company. But yeah, I [00:21:00] think those, those are some of the things that I've sort of seen on the data side and what I expect is gonna happen over the next decade or so.

[00:21:08] Matt: Well, and I think it raises an interesting question because the tension that existed with HR technology and human resources 20 years ago was pretty predictable at the time. You know, I used to [00:21:20] tease that we viewed technology a lot. Kind of the antithesis of the human resources function. I remember sitting with, with coaches in offices talking about how the proliferation of technology was the worst thing to happen with hr, and that it became very, it was, uh, a very inhuman interface with our employees.

We've, of [00:21:40] course, evolved our thinking in the same way we've evolved our thinking around banking. You know, I've said in the show before, my mother used to lament the, the progression of, you know, going to the bank, being able to work with a teller, somebody that you knew. Then they push you to a digital interface and now she's enamored by the flexibility that affords her being able to move her money.

Whereas [00:22:00] before it was very much under lock and key. I think the same, um, parallel can be drawn with data and technology in HR and for folks like you and I that have a bias towards the symbiosis of, of data tech and humans kind of all working interoperably, there's still. Lamenting and the pushback around [00:22:20] can data and technology really replicate the human experience?

And one thing I've tried to stress when I've received that feedback is I don't think anyone's, you know, purporting that data and technology is meant to solve all of the world's problems. If anything, it helps to focus your attention on the critical few problems and provide another [00:22:40] source of data or input or um, context.

You can allow you to make better decisions when paired with more traditional human instinct or, you know, gut instinct or experiences and background, all those things. Working together can be a really powerful group, and I think about your comments around [00:23:00] identifying the right kinds of talent and the shift from measurement of more, I'll call them technical skills.

So previously we would measure things. Does this person have a university degree, and can they answer questions on a quiz that demonstrates their competency in this particular area of specialty? But as we've now migrated to much more of [00:23:20] a knowledge-based economy, I think your comments around, you know, intellectual curiosity are absolutely critical because we're in a place now where it's no longer expected that when you start a new role in a new organization, or even in an existing organization, that you're expected to know everything.

And there's an understanding that even if you stay in the same role for five [00:23:40] years, your role will evolve because of the broader implications happening in society, whether that be technology. Or otherwise. So I think as these technologies become more sophisticated, I think people need to shift their, their reference point from the technology isn't the replacement or the solution, but it's merely a vehicle that's [00:24:00] meant for us to be able to achieve more and pair our own inherent human qualities with tool sets that allow us to do better work in a world that's becoming increasingly.

[00:24:13] Guest 1: Yeah, I couldn't agree with you more about. That's extremely well said. 

[00:24:19] Matt: Hey everyone, it's [00:24:20] Matt here. I hope you're enjoying today's discussion. And before we continue, I wanted to make you aware of my latest creative project this week at Work. Presented in partnership with my good friend Chris Rainey of HR Leaders.

Each Friday will livestream on LinkedIn at 7:00 AM Pacific Standard Time. That's 10:00 AM Eastern Standard [00:24:40] Time and 3:00 PM G M T for our European viewers. And together bringing the latest trends news on topics emanating from organizations. Everything from culture to technology and the future of work joining is easy.

Just follow me on LinkedIn, click the bell at the top right hand side of my profile and you'll get [00:25:00] notified when we go live each week. And whether you do experience the content live or later, if you've been following me for a while, you'll no, don't recognize the fun banter Chris and I have developed over the years and whether it's been podcasts or digital event.

We're so excited to, again, bring you the topics affecting today's workplaces and their leaders, and [00:25:20] now back to our discussion. So I think on that point, I'd love to hear your thoughts on investments. We started this conversation talking about the broader HR technology and data landscape, and we've discussed kind of the evolution of those two tool sets against an enterprise back.

As somebody who [00:25:40] spends the majority of their time either interacting with business leaders or assessing the value of existing or potential investments. I'm curious kind of what your thought process is as you look on the market and maybe come up against a new technology that you see or a new solution that you see.

How do you. [00:26:00] What you believe to be high value investments that are with the trend, that are aligned with the competition that we've had today. You know, and, and maybe speak a bit about what the broader trend is speaking to you in terms of the state of affairs around people and HR technology. Yeah, 

[00:26:15] Guest 1: I think there's a, a couple things that are, uh, sort of like [00:26:20] how, how we sort of assess new opportunities, right?

So I think the, uh, 

[00:26:25] Matt: the first, 

[00:26:26] Guest 1: everything starts with a team, right? So the team has to be. A top caliber team, and there's a thing that we'd like to say is, uh, founder market fit and making sure the founding team has a unique insight [00:26:40] into why the world is the way it is and what needs to change. So just kind of like making sure that.

That, that is differentiated enough, right? Uh, there can't be a lot of, too many copycats. Uh, there has to be something unique from their approach perspective. The second thing we sort of assess [00:27:00] is around, uh, technology, making sure that. There is, the technology is unique and defensible. Uh, over time technology tends to, uh, the mote of technology tends to erode, but it needs to be deep enough that it's not necessarily easy to replicate.

The third, that the [00:27:20] thing that we sort of spend a lot of time around is sort of like assessing the market need, right? Are customers actually pulling this thing or is there more, um, the companies themselves pushing the. onto customers. Is this something unique? Probably unique enough, and the, the, the need big enough for, for people to [00:27:40] either upend their systems or add a new tool to their basket.

So the bar is getting higher as we sort of go into an economic downturn, right? So some, like something can't be a 10% incremental improvement or 10% cost savings. It has to be significant. More or a newer way of doing things. And then, 

[00:27:59] Matt: [00:28:00] um, the third 

[00:28:00] Guest 1: is like, just kind of like, this is more on the business side, but like is the business model differentiated enough and is there enough metrics?

And there's a bunch of metrics associated with different startups around sales efficiency and things like that that we can get into. But those are also really critical to sort of, [00:28:20] Um, and everyone has their different sort of flavors and trying to see what's more important. But ideally, like you have, uh, a, a, a overall view on all of these different components.

And, uh, if, if things are an A on all of these things, like if that's a phenomenal 

[00:28:38] Matt: investment, I [00:28:40] find it really curious that we're talking about HR technology, we're talking about innovation, we're talking about the future, and when it comes to investments, really it, it comes down to people. And to your point, that founding team, that founder, the, the leadership organization, the, the level of cohesion within the broader [00:29:00] organization is something that you assess first and foremost with technology.

I think that's, it really just speaks to the fact that what we're talking about, which is that technology isn't meant to be a replacement. For people, but rather meant to be a complimentary factor of that. And it really kind of dovetails into an observation that I had about, I don't know, five, seven years ago.

At the [00:29:20] time, I was doing some shopping around the marketplace with a company I was working with around H C M solutions, and I was working in an organization where resources were constrained, both in terms of human resources to get the work done and financial resources and. At the time I needed to essentially said, do a ground up rebuild.

I walked [00:29:40] into an organization where they had a single HR technology. It was in payroll, it was legacy, and everything else was being done manually, um, with a human interface. And one of the first things we said about doing was going to the market and looking for H C M solutions. And at the time, the solutions weren't as robust as they are today.

So I had a [00:30:00] decision to make, do I work? An hr, an H C M provider that had this purported, you know, one-stop shop enterprise solution, multiple modules, or do we go best of breed and do we look at procuring different solutions from different vendors and then stitch 'em together on the back end with the help of a solutions [00:30:20] architect along with some really smart programmers and build our own kind of Frankenstein solution and.

I remember at the time speaking with, uh, one H C M organization, I won't mention its name, where we actually had a debate about the future of HR technology where I said the future of HR technology actually looks more like an ecosystem where best of breed [00:30:40] is likely the future facing. Um, we can expect because.

It's darn near impossible for one provider to be best in class at every possible module in their portfolio. Whereas it's more likely that a organization developing a single solution and keeping a narrow focus is likely gonna [00:31:00] have a, a more longevity in the marketplace. And that. Those organizations, the ones I mentioned that are a single solution, would be naturally incentivized to, for example, look at things like open APIs and build solutions with that cohesion in mind.

Whereas the traditional enterprise providers very much had, [00:31:20] you know, Wald off Gardens where it was, if you work with this. We don't play nice in the sandbox, other providers, and they attempted to leverage their size and scale, you know, in a way to kind of exclude the market. Well, seven years later that's obviously materially shifted and even the large H C M providers of today now offer OP open APIs and now have broader partner [00:31:40] ecosystems and do collaborations amongst themselves.

Uh, you know, to me that's a significant trend. The technology needing to fit for purpose and a good example of how we've evolved our thinking in the broader technology landscape to focus in on what is the best solution for the end user and less focusing in on consolidating our [00:32:00] own gains for the larger providers in the market.

Kit, as we've seen more small scrappy startups enter the market and become more agile and more nimble and more collaborative, they've really put pressure on those H C M larger H C M providers to to do things in a different way. I'm curious if that's something that you've seen from your vantage point around just broader [00:32:20] collaboration from the HR technology space.

[00:32:22] Guest 1: Yeah, like Matt, I think what you're saying is a million percent, right? Like HR executives have this really hard problem, right? So do they go with one of the big ACM vendors that have everything, but not everything is not best in class. [00:32:40] But at the same time, something breaks, you know exactly where to go.

Right. Versus if you have the best in breed approach, like to your point, APIs are getting, API integration is getting. Good enough where people can stage a lot of these tools together. But like, you never know, [00:33:00] like, which vendor to go to from a, if something breaks, because everyone starts pointing fingers at each other.

Is, is it a, uh, one system or another? Is it the integration? And sometimes, like in the, in the, the Franken science systems of the, the nineties and the early two thousands were a mess, right? Like they were. [00:33:20] A disaster zone. Things are getting easier to stitch a lot of these tools together. I couldn't agree with you more around these ecosystem plays.

Right? So like, because the APIs are. Significantly easier to integrate with. You can kind of start building a lot of these, uh, like connect a lot of these [00:33:40] systems significantly faster than probably ever before and more seamlessly than ever before. But at the same time, I do think, like I've talked to a handful of like Fortune 500 customers and they're like, I just want to buy one thing.

And like, yeah, I may lose a little bit on innovation. But at the same time, as long as it's good enough, it, it does the job. [00:34:00] I think the, the thing that startups need to sort of also realize is what that means is the bar is just so much higher, right? And it's sort of a comment that I made earlier. If someone comes up with a 10% improvement in anything, it's just not the bar, like the bar's too.

No one's gonna [00:34:20] switch the, the work that people have done, either implementing a big ACM system or built, uh, a best in class system where they've made all, all these integrations. They're like, while in the ladder it's easier to switch things out. You don't wanna switch a lot of these things out because of all the integrations and all the workflow that you, you sort of built on top [00:34:40] and it requires months of effort to replace and replicate the things that you have, even if the systems are relatively modular in nature.

Yeah. So that's sort of like how I've sort of seen, uh, things sort of work. So as an example in one of our, one of the investments that we made in a company called Certain, uh, also a Canadian [00:35:00] company. They are building APIs for background checks, and it's just something that people never realize that was needed.

And those APIs are connected into a lot of, uh, ATS systems like application tracking systems. And, uh, now you can sort of [00:35:20] provision a background check with it, your, uh, applicant tracking systems and, uh, get. Pretty quickly. And the other thing that they do is like, as a, as someone who, like, so if I'm applying for a new job, I have no clue like what's on my background check.

Right. On a global level, uh, an employer does, [00:35:40] it goes to the court systems, it goes to the government agencies, it goes to the education, uh, institutions, and you get educational and criminal background checks and stuff like that. What certain allows you to do is push you to, uh, like it actually sends the candidate what their background checks is so that they can validate, yes, this is [00:36:00] correct, and then that goes directly to the employer.

And that's something that has never been done before. Right. Um, it's, uh, a much better experience for the applicant. It's a much better experience for the HR executive who's trying to. The best talent and because it's integrated into a lot of the systems, it's [00:36:20] easy to start, right? Like you're not waiting weeks and months to get someone's background check.

It takes, honestly, sometimes hours in the case of certain. So yeah, I think that's, that's an example of like a company that I'm like, I'm actually seeing firsthand, uh, what you're talking about and how these systems need to be modular in nature and [00:36:40] offer open APIs and like the bar's really high, you need to do something very differentiated.

[00:36:45] Matt: No, I think that's really smart to say because I think to your point, switching costs, especially in large enterprise, the costs of switching are, are real and it has an implication to business continuity, certainly financial, but even just the bureaucracy of having to go through the tendering process [00:37:00] can take weeks if not months and, and many organizations, the idea of doing that over and over and over again is not appealing in some cases when the solution needs to happen.

In the short term, and I'll speak out of both sides, my mouth a little bit when I say. While my belief seven years ago was that the world was moving more towards an ecosystem model. I do believe that the great leveler, [00:37:20] the great, the great, um, uh, differentiator that I probably didn't account for at the time was some of these large H C M providers now have such a great data repository that they're now being thoughtful about.

You know, insights and to your earlier point, you know, observations and nudges around certain actions that even if the [00:37:40] functionality and features aren't the, the prettiest, you know, whistle or aren't the most compelling features from a point of view, if it's not a significant impact to. Cost or features and functionality.

The H C M solutions themselves are becoming so much more sophisticated that you can get away with having a L [00:38:00] M S solution that is 75% of the best in the market. But if it's. Interwoven within your broader data architecture, the impact around insights and ultimately, you know, the experience for the employees can be 10 x what it was even five years ago, where even within the large H C M [00:38:20] providers, those modules, while in theory.

Stitched together at an enterprise level in reality. And oftentimes through acquisition, you were dealing with different systems, but only getting one bill. So I do, I am seeing, uh, obviously a significant shift from some of the H G M providers in being that one-stop shop and. [00:38:40] Focusing in on the core hr, you know, services, whether that be core HR dashboards or payroll or workforce management.

And then some of the niche systems are kind of at the, at the edge, biting at the edge of things like diversity and inclusion and you know, being thoughtful about using AI to control your recruitment ad spend. And to your point, the [00:39:00] integrations between background checks and a t s platforms. And I think we're gonna continue to see those smaller startups offer that.

But I. The era of. A sole source l m s solution offered in the market might be coming to, uh, its maturity point when you're comparing it against those larger H C M solutions that [00:39:20] are just introducing a stronger data engine to underpin all the great work that they're doing. Yeah. Uh, Matt, what you said 

[00:39:26] Guest 1: earlier that every company's gonna become a technology company and now everything, every company's gonna become a data company.

That's a hundred percent right, because if you like, the data mode is real and data is the underlying thing. That drives a [00:39:40] lot of the AI models that sort of are used for recommendations. If you, if a company has a data mode, the technology, even if it's significantly better, uh, it just cannot compete over time.

So what, another thing that I look for in a lot of different vertical, uh, application company is like, what is the unique dataset that [00:40:00] this company is sort of building and if they're able to build a unique dataset, That's something that can't be replicated and over time that the value of that is significantly more than maybe the, the, the incremental technology enhancement that someone sort of made.

[00:40:17] Matt: So I'm curious from your vantage point sided, you know, we are looking [00:40:20] at it almost the end of 2022 here, getting into another exciting year. Hopefully we see the end of a pandemic. Globally speaking, what do you see in the future for HR technology more? That's a really 

[00:40:30] Guest 1: good question. Um, I think the way I sort of see the, the HR tech sort of expanding over time, right?

So I believe fluidity will [00:40:40] continue. And what that means is we've sort of like learned how to work remotely, not in a good way. Like there's like some janky things that we're sort of like trying to come up with, but like in a, like, technology will help. And things like building culture right? In the past, like you could kind of [00:41:00] tap someone on the shoulder and be like, oh, let's go, um, grab lunch, or let's grab a coffee.

Those things that's spontaneity doesn't happen anymore. The conversations in the, and the corridor about something that you're struggling with and all that other stuff is just not like in. It ends up being a 30 minute meeting, and that's just not how [00:41:20] people, everyone is frustrated because like the person who's trying to provide that advice is just like, I don't have 30 minutes to deal with this thing.

That spontaneity has sort of gone away in the, in their remote. World, like how do you sort of enable that? And I think there are, uh, one thing that I've, I've heard you talk about a bunch is like, [00:41:40] maybe there's like a world where virtual reality in the metaverse is helpful and maybe you can have these virtual worlds where you can sort of like live in an office and then like you can go to someone's desk or the engineering department be like, Hey, I'm dealing with this.

Like, how do, how do you solve this thing? And whoever's there is sort of like, can, um, Help [00:42:00] answer your questions. And it's not like a 30 minute meeting, it's like a, a ten second conversation. And how do you build, like relationships across different departments? How do you build relationships across your team?

Um, I, I'm really happy that there are things like virtual happy hours. I think it helps in a massive way. How do you bring those [00:42:20] teams together? Like how do you marry that with actually in-person, uh, meetings? Yeah, I think the, there's gonna be a lot of, in. On, on that front, uh, over the next, uh, maybe not like, definitely like in next year, but, uh, over 

[00:42:35] Matt: many years to come.

Thank you so much for your time today. It's been a really fascinating and [00:42:40] interesting conversation. And, uh,

n O HR is a digital transformation consultancy working at the intersection of strategy, technology, and people operat. We partner with organizations, [00:43:00] private equity and venture capital firms to accelerate value creation and identify the organization's highest leverage initiatives. And this can take place in many forms from strategic planning and alignment to technology, procurement, implementation, and integration along with organizational design, processory engineering, and change [00:43:20] management.

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