Skyhive Revenue & Funding (2023)

[00:00] My name is Alison Lands. I lead strategy at skyhive technologies. We are a series b skills intelligence platform. We use AI and machine learning to synthesize the world's labor market data and we put it to work on behalf of learners, job seekers, governments, fortune 500 and global 2,000 enterprises, as well as post secondary institutions and educators. So if you work in a startup that employs people, this talk is for you. If you work in an HR [00:27] tech or skills tech or end tech startup, this is especially for you and you'll probably be thinking about a lot of this type of functionality and a lot of these macro issues and megatrends in your day to day work. I will echo the previous speaker, Andrew's sort of clearing call for sustainability, not only in the form of sort of finance and finance ops, but actually in the form of workforce and labor and cost of talent, because [00:51] that really becomes a huge issue for companies at all sizes. Before skyhive, I worked for Coursera both pre IPO and then post exit. So I've seen the issues that occur across a variety of startups of different sizes and different stages of growth. I'm assuming that this is my mic or my remote. So in the next twenty minutes, we're gonna talk a little bit about the megatrends, how work is evolving and what that means for startups and [01:14] why startups actually have a unique advantage as opposed to like larger legacy companies, particularly larger brands or larger enterprises. We'll then talk a little bit about what is skills agility and how to become skills agile through both your incumbent workforce, through your sourcing of talent, through the different ways that you can sort of strategically position your teams to be successful and what you'll get from that skills agility, which is not only lower operating costs and a [01:43] more competitive return on your investments in people, but greater enterprise resilience for the twists and the turns of a startup's journey, as well as better products, I will argue that ultimately investing in skills agility and employing diverse staff and cross training them accordingly is actually going to result in better product design, more thoughtful requirements for your marketplace and also just better alignment across functions. So why do skills matter now? If you work in the HR or [02:15] skills or ed tech space, you will already be familiar with a book called Work Without Jobs, which was a bestseller on the New York Times and Wall Street Journal bestseller list last year. It was written by a partner, Robin Jesse Thassen and John Boudreaux from University of Southern California, labor economist, and it was about how work is evolving and how enterprises need to think about their talent in light of these larger changes. So they're arguing that [02:42] the way that we currently think about work and the way that we thought about work to date was largely cultivated in the early twentieth century and it was aligned to industrial production. So we thought of jobs, we thought of occupational categories. There was a much longer timeframe in terms of how long employees stayed with a company and what their scope of work was was relatively static during the period of time when they held that title or [03:05] that role. [03:07] With the digital transformation and the advent of increasing automation eroding jobs and tasks and activities at the work level, we're starting to see a disintegration of work. And so as automation takes away tasks from a job, but doesn't necessarily take the job itself away in total, we're seeing a need not only to hybridize work, but to backfill some of those automated responsibilities and to think differently about how digital work is organized. It's no longer really around [03:36] the title or the role or the occupational class, it's really more about the skills that that worker brings to the table. There's an increasing need to evolve and transform those skills continuously over time. Historically, employers may not have always seen this as their primary responsibility, but increasingly they're seeing a need, particularly in startups which have to be agile, pivot often and evolve quickly. A need to invest in workers so that they can flex as needed as [04:03] the business demands. We're also seeing the emergence of a new way of labor supply or talent as a service. So I'm coming to you from the South by Southwest stage, I'll try to weave in as many nuggets from that convening as possible, but one of the breakouts, one of the last breakouts I attended was really about freelancing and Fiverr was hosting this talk and they were talking about how by the year 2,030, over half of The [04:30] US workforce will be self employed freelance, will have its own title of CEO because of its side hustle, because of its own work, because it's become self employed, because it's launched its own individualized brand. And when they pulled the audience, probably two thirds of the audience was already working in a freelance capacity, the remainder were there to learn how they could work in a freelance capacity. So we're not only seeing a disintegration or an atomization of [04:55] work and an evolution of how work presents itself, we're also seeing evolutions in the labor supply about how people will supply their labor and how many different types of employers or experiences they'll have over the course of a working lifetime. So what this means for us is that a skills first labor market, whether you're ready for it or not, whether you think about work this way or not, is evolving around us and it's happening with or [05:19] without us. And first mover firms will ultimately have a strategic advantage. This is why I think startups in particular have a unique advantage because they are not beholden to a lot of the traditional work architecture that larger and more established companies currently subscribe to. They don't have big enterprise HCM systems in place that are aligned in a certain way that they have to sort of operate to. And they're quite accustomed to needing to slot in talent [05:44] and work with freelance talent to do that sort of contingent build, borrow, buy decision making on a regular basis as the company grows, as quarter by quarter their needs change and evolve. Recent LinkedIn report said that of folks who are using LinkedIn as a hiring channel, this year over 40% of employer were looking at skills first more than imperfect proxies for experience, background, degree, major as a hiring criterion. That's a 20% increase year over year. And [06:16] of those 40% who are using skills based evaluations in their hiring and talent decisions, they are 60% more likely to find a fit faster than those who are subscribing to a traditional kind of more of a post and pray type of approach or who are holding out for that idealized candidate. What this means I think is that skills agility will end up becoming a competitive differentiator in the sauce landscape. Those who take this agile approach to [06:43] their talent and how to skill their people and how to source those skills into their organization will end up being able to operate leaner, to avoid paying a premium on skilled talent when they need it, and will be able to source that talent faster and more efficiently, close their vacancies faster and result in less churn as well. So what is skills agility? I'll define the term, it's probably not one that if you Googled it you would [07:09] find this term, but I'm defining it. An enterprises of any size, capacity to anticipate and contextualize operational and larger market shifts in the context of workforce readiness, and then to leverage the transferable skills that are within their organization, one to know what those are, and then to leverage them strategically and tap hidden sources of talent in order to adapt to those shifts, those operational and market shifts. This means really understanding the skills that you currently have, [07:37] the skills that you will need both now immediately and in the near term future, probably not more than three years out because it's hard to evaluate things more than three years out. But if you're able to then optimize how you source talent from a build, borrow or buy perspective, and then you're also able to understand where to source that talent from. Know both of the traditional labor pools that are available to you, but you're also able [08:01] to start to tap into non intuitive or unorthodox labor pools and pull in those skills and upscale and onboard them accordingly. This is lending skills agility to the organization. And just for purposes of illustrative, skyhive is full disclosure, a skills intelligence company. And so we help companies do this quite frequently. We're aware that most people can upskill or reskill for a new role in less than six months, often four to six months with training. There's a [08:28] large amount of transferable skills within sauce that play across functions and we're able to at the individual level, not only see what those pathways look like for a particular person in the role that they possess, we're also able to specify personalized training pathways to close those skill gaps efficiently and quickly. So how does a company, a SaaS company become skills agile? It's really about three sort of three capabilities, being able to understand the future of soft [08:56] skills for your organization and that is both within the functions of the business as well as within the market that you play. So if you're vertical sauce like HR tech or skills tech, you'll have to have a certain set of capabilities and understanding of how skills in that marketplace are moving. How HR leaders, CHROs, human capital oriented decision makers think and how they're behaving, as well as how a soft startup needs to operate for your particular [09:22] stage of growth. You'll also need to think about how to strategically source talent. And by that I mean, examining skills adjacent pools. We know from just the general tightness of the labor market, I don't know how many of you read the jobs report every month, but I do and I report on it on LinkedIn. So what we're seeing is that despite interest rate increases, despite attempts to adjust through fiscal and monetary policy, labor supply and to [09:50] build some slack into our labor market, we're seeing a continued and persistent tightness. And there's a reason for this, it's actually structural, it's demographic in nature. Even with recent increases to the interest rate, we're still seeing several 100,000 jobs added to the economy each month. We're also seeing a really outsized number of new business starts in the form of solopreneur and small person businesses. So you can start to see what I had just mentioned about the [10:13] freelance economy rising up. You can see it in our labor data today, but it's part of a much much larger shift. So being able to strategically source talent from pools that you may not have previously considered or channels that you may not have previously considered, as well as to look at internal mobility and ways to cultivate the talent that's already under your roof to do the work that you're going to need in the next three years [10:36] will become a superpower that high performing sauce companies have, which will allow them to operate very leanly and also allow them to be super agile in the need, if they need to pivot, they lose a key hire, if there are certain disruptions to the business. I would also advocate if you're not familiar with the term stars, skilled through alternative routes, there are 70,000,000 of them, they are half of The US workforce. They often gain their skills [11:00] through boot camps, certificates, military service, community college, and by and large have been overlooked and ignored by the labor market. Skyhive works with an organization called Opportunity at Work, which specifically focuses on this population of stars and ways that we can get them meaningfully employed and make the most of their skills so we can combat underemployment. Lastly, I'd say really upskilling and cross skilling is a key way to develop skills agility within your organization. As I [11:27] said, I don't come from background, I don't come from tech originally, I come from workforce and economic development as my background, as well as a background in management consulting. But from this I know that you can reskill into a new role pretty quickly with the right training and that skills that you're gaining in the flow of work and on the job are often the stickiest. We also know that especially in sauce, human and durable skills and [11:49] AI conversancy are becoming table stakes for all functions, not just the engineering teams, not just the ones who are focused on product. And so that's a key investment that you can make in all workers to sort of level up the game of the entire organization in parallel to really trying to cross train folks to fill open vacancies. I'd also argue we should exploit cross functional synergies in order to deepen your bench as much as possible between [12:12] product, revenue, marketing and other functions. [12:17] If we are thinking about where might those untapped sources of talent be, there's a whole bunch of different examples here that you'll be able to see to reference the slides. In some cases we see folks who are embracing hybrid work and they're embracing secondary labor markets internationally as well as looking at rural America or other outside of the major tech capitals where you're able to source skilled talent. Coursera became [12:42] a remote first company, my previous employer, primarily for this reason. It made it easier to tap talent outside of Mountain View and New York and London where the offices were and we were able to be able to opt out of some of the bidding wars for talent as a result because there are good content marketers, great account executives, good CSMs and data scientists spread all over the country. And so if you have a CEO who feels [13:06] really adamantly that everybody needs to be in the office all the time, you may want to help challenge some of those orthodoxies as a leader in your organization or if you have board members who feel strongly about it to challenge some of their orthodoxies as well. I mentioned STARS, we also have the frontline workforce if you're in a larger sauce organization that happens to have a customer service arm or a technical support arm, we found in [13:27] working with our clients that these are some really good hotbeds of unrealized customer success talent as well as sales talent that can be tapped into. Not only do they seek it out, it will retain them in your organization longer, it'll do so in a way that's really cost competitive and preserves a lot of intellectual capital for your organization. And you can refer to some of these examples for additional sort of hidden sources of talent. I'd also [13:53] say internal mobility, increasingly over 50% of hires are now internal hires, they're being sourced from other parts of the business. But oftentimes within SAAS because there's a thin bench or a need to sort of keep a key person on a team, folks may feel like workers, employees may feel like they don't have as much mobility as they'd like either because their manager does not want them to leave their team and go to another or because they [14:18] are just unaware of what other possibilities might look like within the organization. If they sit on the revenue team, they might not know enough about what product management or project management looks like to be able to transition into that kind of a role. But the graph that you see on the slide there is an example just for CSMs of the different pathways that they can travel. Oftentimes that can be into management, but it could also be [14:40] into sales, it can be into engineering, it can be into product, and it can be into marketing. And it's actually really effective to do some of this cross training and perhaps even not just encourage it, but to require it in some cases because especially for revenue teams, revenue and marketing and product teams, there are some symbiotic relationships there that when people have played on more than one side of the transom, they're able to better sell into [15:05] markets, to penetrate new markets, to develop more compelling marketing positioning and to also work with product to establish better product market fit. If you do all of this, what you will gain from skills agility and the TLDR because there's lot of text on this slide is that it is all upside. So you will not only lower your labor costs, the cheapest hire is an internal hire, but it's also very cost effective to retain talent. And with [15:32] the lifespan of a typical sauce employee being somewhere in the one to two year time frame, it certainly was in management consulting where I came from. Increasing your upskilling in incumbent workers actually leads to according to McKinsey, a 34% increase in retention. So the ability to keep people in house longer, it's not only better for their careers because it's rather traumatic for employees to change jobs, most people do not want to. They do it either because [16:01] they have a terrible manager or because they want to change something about the way they work and they just don't see a path forward under your roof, under within the walls of your organization. That's often a misconception. We find in data, in our skyhive data that there are often multiple pathways within an organization, but they're either not visible or they're not well understood by either the employee, the manager or both. So making these types of investments [16:24] will increase retention, it can also help you avoid having to get into some of the bidding wars for external talent. We know that there are sort of four key skill sets that just about every region of the world and every industry are competing for in the form of software engineering, data and analytics, AI machine learning, cybersecurity and cloud. If we're all competing for the same scarce talent and it's currently undersupplied in our labor market, you will [16:49] pay a premium for that talent. Better to invest in your incumbent workforce and to take some of those technical skill sets and layer them onto functional and domain skill sets. Better yet, hire from industry. I can tell you business analysts, consultants and senior consultants at the big four consulting firms can do these jobs really well. And they will not only see the workload of a sauce as a refreshing break from what they've been doing in management [17:12] consulting. They'll also see the wages that are paid and the stock options as a premium that others who have come from that background might not. Let's see, I'm gonna breathe for a second. You can also create enterprise resilience and I say this from one of two perspectives. One, the past six to twelve months where we've all been sort of rocked, the ecosystem's rather volatile. Companies are being very hesitant about bringing on FTEs, there needs to be [17:42] a strong value case for that. And workers in turn are starting to see a little bit of the golden halo of technology and working in startups sort of start to wear off. So this is one way to address some of those concerns while also providing flex if employees are leaving, it often leaves especially in earlier stage companies a big hole. This is a way to prevent some of that pain when a key hire leaves is to [18:05] have cross trained employees who can sort of flex in and ideally you're retaining them to begin with. And then lastly, think I will argue that I think that cross training in this way and bringing in diverse sources of talent, particularly if you work in EdTech, HRTech or SkillsTech, we are building technology for the future of work and the future of work is everybody's business. So having just tech people or just folks who've worked in startups informing [18:30] product design and developing the marketing and messaging often falls quite flat when you go out into the verticals and into industries. So I would argue that bringing in a lot of those diverse perspectives and also translating across business and technical teams will result in better requirements, better messaging, better product, and product that's built for the eightytwenty of use cases that you're gonna get when you actually take it out into the marketplace and into the world of [18:53] work, particularly if you have a consumer business. So companies that lean into a skills based approach, it's not only cost effective, it's not only efficient, it will actually help better prepare the workforce and I believe that employers are the long pole in the tent of workforce development and it's going to help us address some of those talent and skills pain points. So over the last twenty minutes, I've given you your what, your how, and your why [19:14] of skills agility. I hope you will adopt it and please come find me if you wanna talk a little bit more later in the conference. Thank you. Thanks a lot, Alison. Appreciate that. That was great.

hello everyone my guest today is sean hinton he's the founder and ceo of sky hive a canadian technology company that applies machine and deep learning to discovering revolutionary efficiencies in the movement of human capital sean is a future of work thought leader and passionate about applying sky hives technology to support the workforce's most at-risk populations sean are you ready to take us to the top yes sir okay so break this down for us i mean tell me tell me exactly what the company does and maybe a customer story sure so uh two years ago i was uh president of a large manufacturing company here in vancouver we had a 250 million dollar top line 500 employees 23 global offices and i came to the realization through a series of events that i really didn't know what my workforce was capable of and what i mean by that is i would look around my office and i and i knew the people that were hired and and for the jobs that they were hired but were they actually really working to their true capability and so i started to to look around and realize that this was uh sort of a systemic problem that that we understand our level but not at a deep level and so um what skyhive does is it takes uh it uses machine learning deep learning to extract the skills from people extract the skills required from jobs and then we apply data science to finding efficiencies and correlations so the idea is is that you're compressing the amount of time it takes to move people from one job to the other or to acquire people uh you know for new jobs within your company but it also supports learning and development for people so they can get a sense of what skills do i actually have and how do they apply to my company so a good use case is we're working with a a a large german auto manufacturer and they have a strategy that goes out from uh now until 2023 they have a skill set that they require in 2023 and a skill set that they have today obviously the world of auto manufacturing is changing considerably with uh going away from combustible engines and going towards sort of autonomous vehicles and so it's going to be a very different world in 2023 and what we're able to do is we're able to inventory the skills that are required uh then inventory the skills that are in place now and find direct pathways to getting those folks up skilled and ready for the changing needs of the company so is this i'm a little confused is this something a tool that a company would use to help advancement of their own employees or is this something that a recruiter would use to help place employees in the first place so the application uh is twofold so it's within a company within a large enterprise and uh the the the tool can be used to find people out in the world that you want to come in and work with you with a particular skill set uh but it's mainly focused on looking at large enterprise workforce efficiency um opportunities and learning and development opportunities and sean is is the revenue model for you is it a peer play sas company absolutely okay so i mean give me a general sense what's the customer going to pay you per month or per year to access this tech so the the customer would be looking at somewhere around 5000 a month for uh full team access and and that would be both an admin license as well as uh an employee user flow as well okay and you'd say that's a fair average of your current base is about five grand a month yep okay great and put this on a timeline for us when you launch uh we launched alpha uh last april and that's how i know you're a developer by the way when you have alpha launches yeah okay developer not a developer at all actually i'm on the business side oh interesting okay yeah um so we launched alpha last year and then launched beta in june okay this year so 2017 launch alpha beta this year in june and how many customers have you scaled to to date uh right now we're working with 17 uh large enterprise customers okay 17 and i mean so how did you close those deals how did you get the first one uh we were really fortunate that we were uh completely inbound up until this point and um our first client was the canadian military and so we were awarded uh shortly after our beta launch a department of national defense contract and that that obviously lends a lot of credibility to the company with respect to stability and and security et cetera i mean so how does a government organization trust a brand new startup with no customers and award them a five thousand dollar a month grant or customer contract how did you win that so that that contract's a little little bit different it's uh it would be more than five thousand a month but uh the canadian government has implemented a new innovation program called ideas and the idea is for ideas that they would go out and solve some of their innovation challenges working with new canadian startups and innovative technology companies and so we were fortunate to be uh four of 600 companies uh that were awarded one of four of 600 companies that were awarded their initial contracts so was it a grant it's um it's not quite a grant it's it's a program where they're actually investing in growing the company and operationalizing it over time and so we go through a process of basically stage gate development where we're proving concepts and milestones along the way and as long as we're doing that that that contract and program continues to grow but sean what what is the car are they on your cap table i don't understand are they a customer are they on your cap table are they investor is it a grant are they a bank what's the form factor of that money they're giving you a customer through uh a government project so you know not quite a grant but but a government contract okay interesting okay so five thousand a month on average 17 customers that puts you about 85 grand a month right now on revenue is that about right something like that yeah okay uh why would that not be accurate is it higher or lower or what would change that no no you're you're pretty much you're pretty much in the ballpark yeah and going back a year you'd be zero right going back five months we'd be zero yeah yeah so look i mean this is this is this is healthy growth i mean landing 17 folks paying five grand a month like is not easy tell me about the second customer uh second customer was a research project that we're doing with a local university uh here in british columbia and uh what we're looking at they're the key drivers um that support women into the uh workforce and so it's a gender uh gender equality project that we're working so that's almost like like they're paying you five grand a month to get access to basically your research yeah interesting and our machine learning capability yeah will they keep paying after the research is done like is it is this actually sticky revenue that particular project is is a one-off but the the the military project is a long-term project for us have you had any churn today no it's okay so it's too early really to be looking at churn and stuff yeah tell me about kind of how you funded this to date so have you bootstrapped to raise capital so we bootstrapped uh when we got to the point of completing alpha and then we went out and uh raised a seed round uh we were fortunate to over subscribe that round and that was with uh basically friends and family direct investors okay so how much was the seed uh that was just over a million and a half canadian oh great okay so did you end up doing uh i mean was that a convertible note or do you sell equity that was equity okay oh you did you did equity right off the bat why why why go through the stresses of setting evaluation why not do a convertible note on the beginning uh i had a team of very experienced uh investors that that came in and um you know we made the decision collectively that uh it wasn't that difficult to get us to uh an equity valuation uh in addition to that we had some conditions sorry sean why is that that would be there's no data to go off of how would that be easy getting evaluation um it was easy in the sense that there was a middle point for us that we could all agree on with in our we had some incentives in our term sheet that looked at uh you know penalties if we didn't hit a certain valuation in the next round et cetera so um so it's quite reasonable yeah and innovative um talk to me about team today how many folks are on the team uh so we have a full-time team of 14 and then we outsource some development everyone in vancouver yes okay that's great vancouver and i assume you're probably still burning cash investing in the product so your cash flow negative at this point are you profitable uh cash flow negative yeah so when you raised how much runway are you raising for how many months does that buy you you think uh at that time we were raising for 18 months uh obviously we had um in our use of funds document we we had a an 18-month road map that looked at the implementation of enterprise in q1 q2 2019 and so we got a whole bunch of um demand from enterprise around the time of our public data and that sort of compressed our operations plan so we're uh having the problem that i understand is a good problem that all startups want to have which is uh compressing two phases of an operations plan into one when will you be casual positive uh we're hoping to be cash flow positive uh q3 2019 2019 yeah that's great very good um and talk to me about i mean have you besides you being the closer you are on going and selling these the canadian government and school systems and things i mean do you know can you spend money to make money do you know what you're like your cac is um we like i said now the majority of what we do is inbound and so through uh discussions on future of work we we're also a portfolio company of singularity university ventures ah okay and um they have a strong corporate innovation network that's led us into a variety of different discussions and relationships in the bay area that's really helped us with respect to getting in front of uh corporate uh clients and and innovation partners yeah when we're going to share that little detail yeah that's obviously a powerful network to be tied into when you go through their program is there a cash component of that or no it's just advisory it's advisory it is advised but they they take equity right yes yeah yeah interesting um okay good so too early to really talk about cac stuff that's not something your diet you're not dying up spend right now to drive growth it's really just using the singular university connections your own connections and word of mouth yeah and since um since june we've been able to establish a pretty strong network in the bay area and so we have other relationships as well uh on top of singularity that uh great folks that we work with down in california yeah interesting have you looked at i mean as you look to fuel like additional growth have you looked at kind of unconventional means that wouldn't dilute you like venture debt or no uh not at this point um we are looking at uh we we are looking at that for for sort of q1 q2 of next year what do you dislike or like about venture debt um typically it's the the valuation cap um is something that makes me a little a little nervous just in terms of wait hurry sean one second sorry a venture debt usually it is it doesn't it's not a convertible it doesn't have a cap on it there's no there's no component of that oh you're talking about straight up debt well no it's not it's not there's no personal guarantee it's not bank debt it's venge it's venture debt which are you familiar with that model at all no you could explain uh no no explain no no it's okay if you're not thinking about it there's no i don't want to go down that rabbit hole but but i mean it's essentially it's essentially a non-dilutive way to get capital uh that's that doesn't require personal guarantees but also doesn't dilute you there's no cap there's there's no equity component it's basically they'll fund you up to like four or five x your current monthly recurring revenue you pay that back over three to five years there's like a 1.3 to 1.5 x repayment cap but it's a good way to drive growth in a non-dilutive way if you know how to spend cash to make more yeah i've had some preliminary discussions with some groups of toronto that are that are providing this type of model like espresso capital is one of them probably yeah exactly and and we just haven't gone down the path of thinking about it yeah at this point yeah yeah interesting very good um let's uh let's wrap up here with the famous five number one what's your favorite business book uh seven habits of highly effective people number two is there a ceo you're following or studying right now oh everyone everyone's the same answer i would think elon elon is one number three uh what billing tool do you use billing tool yep uh stripe stripe number four how many hours of sleep to get every night about three and a half to four that is sean that is not healthy that is not healthy at all nathan why do you sleep so little i've got stuff to do we're hustling man oh come on yeah but you can you can you can get more done if you're well rested i i gotta be honest i i'm not a guy who slept a lot anyways before i started this thing so that just gives me an excuse now to stay away okay okay fair enough and what's your situation married single kids uh married with kids yeah how many kiddos uh two twin boys oh wow okay so two twins and how old are you uh from me i'm 38. 38 last question what do you wish your 20 year old self knew that sleeping more than three and a half to four hours a night was a good thing guys sleep more if you can help but again launch this company sky hive uh back several years ago again helping uh really it's almost like competency discovery tool right helping teams understand who to promote what skills they need to promote or if you're looking for a job helps you really um hone that process in as well today they've scaled about 17 customers they're doing about 85-ish grand per month up from nothing a year ago they just launched pricing about five six months ago cash flow negative today they raised 1.5 million bucks they're gonna be profitable in q3 of 2019 and they've got about 14 people in vancouver too early to talk about unit economics most of their growth coming from their singular university network uh and that first contract and word of mouth coming from the canadian government via their innovation program called ideas all right sean thanks for taking us to the top thanks nathan appreciate the time