1Mby1M Deal Radar 2017: Waggl, Sausalito, CA

According to Gallup, 70% of all employees in an organization are disengaged, which translates to $605 billion lost each year in productivity. Waggl addresses this problem by going beyond measurement to create alignment across the organization.

Waggl goes beyond the traditional survey by offering an extremely easy way to listen to many voices at once within an organization, and to create richer connections between individuals, teams, departments, and locations. The company’s real-time listening platform creates a transparent, authentic two-way dialogue that gives people a voice, distills insights, and unites organizations through purpose.

Waggl was co-founded in 2014 by CEO Michael Papay. Michael is a technology entrepreneur who has co-founded and served as CEO at two HR Tech companies (Fort Hill Company and Waggl) focused on improving the performance and engagement of organizations and employees. He has over 15 years’ experience in building and leading Software as a Service (SaaS) businesses within the discipline of Human Capital Management. He was worked with several clients such as GE, Home Depot, Oracle, eBay, Yahoo!, Pfizer, Stanford University, Boeing, Genentech, Deloitte, Morgan Stanley, IRS, and the Department of Defense.

The idea for Waggl stemmed from the feedback of many of these organizations about the challenges they encountered regarding employee engagement. In 2014, he co-founded Waggl to provide a simple, cloud-based solution to help transform the way organizations listen, distill insights, and improve processes. Other co-founders are Chief Evangelist Tony Mitchell; Head of Marketing and Experience Kate Benediktsson; Head of Sales Adam Tanner;  Jennifer Conway, Head of Customer Success; Alex Kinnebrew, Head of Strategy;  and Head of Engineering Drew Batshaw. Waggl is headquartered in Sausalito, with remote employees located in Brazil and Philadelphia, Peru, and Ohio.

Waggl lives at the intersection of two key issues faced by organizations: The need for real-time interaction with employees and the increasing desire for analytics about employee engagement. Technology vendors like Jive, Slack, Chatter, and Yammer provide corporate enterprise communications tools but offer no meaningful data or actionable insights for the organization. On the other hand, bigger platforms with integrated survey capabilities such as Ultimate Software, ADP, WorkDay, and SalesForce don’t offer real-time, human interaction. In the midst of this landscape are firms like AON, Qualtrics, Willis Towers Watson, and Gallup and new startups like CultureAmp, TinyPulse, and Blackboard that are trying to develop capabilities at both ends of the spectrum.

Waggl already has these capabilities, and is deploying them with a simple and intuitive UI designed for leaders who want to be in tune with the pulse of their organizations. It competes most directly with other pulse survey and real-time feedback tools that also offer analytics – specifically, CultureAmp and Glint.

Waggl’s key differentiators are its ease of use and deployment, UI, and gamification as well as real-time visibility, precision, and actionable insights. Waggl believes that work should be more human, and that people deserve to be heard. Data is useful, but it isn’t an effective substitute for human interaction.

Waggl’s business development efforts have focused on selling into its co-founders’ existing network of prior clients from Fort Hill and HR tech ventures. Since the Waggl platform was built specifically to solve many of the issues those clients had expressed in prior work engagements, it has naturally opened the door to discussions, and usually results in subscriptions.

Waggl currently has more than 100 enterprise customers, and is on track to triple its sales by the end of 2017. Its current client roster includes a number of premiere brands like CenturyLink, University of Utah, Apollo Education Group, Juniper, Sutter Health, McGraw Hill Education, Kaiser Permanente, and the City of San Diego. In 2016, Waggl was used by 138K employees, and that number is expected to reach 300K in 2017. Waggl has also forged alliances with a number of partners in the past year, including Denison and Agility Consulting, to integrate world class IP into its platform and build out an open content exchange ecosystem. In addition, Waggl has developed marketing partnerships with organizations such as the Northern California Human Resource Association (NCHRA), Recruiter.com, the Advanced Learning Institute (ALI), the International Peace and Security Institute (IPSI) and University of Phoenix’s RedFlint Experience Center to expand its reach and collaborate on research.

Waggl’s target markets are vertical markets including healthcare, manufacturing, nonprofits, financial services, technology, and education, where it has already gained traction.

Waggl’s pricing is based on a subscription scoped for the size of the client organization. The entry price for small organizations is approximately $10,000 per year (sub 250 employees) while larger scale enterprises pay an annual license in the six figures.

In the SMB market (100-499 people), with an estimated 90K accounts nationally at an average deal size of $15K, the market size is $1.35B. In the enterprise market (50+ people, with an estimated 20K accounts at an average deal size of $75K, the market size is $1.5B. In combination, the total available market size in the US is $2.85B.

Waggl’s revenue is based on licensing fees. Its revenues in 2016 grew by 450% over the previous fiscal year, and it is on track for another 300% growth by the end of 2017.

Waggl expects its growth to come through SMB accounts, larger enterprise accounts, and channel partnerships like the one with Denison. In 2016, its sales grew by almost 6 times and it expects to achieve 3x sales growth for 2017. MRR is pacing to reach 500k by the end of 2017.

For the first 18 months, Waggl was incubated by Fort Hill Company. It then raised a seed round of $1.7 M from a group of prominent angels, including Robert Hohman, Co-Founder and CEO of Glassdoor; Rob Bernshteyn, CEO of Coupa and former Head of Product Strategy at Successfactors; Jeff Snipes, Founder and CEO of 9th House; Joe Abrams, Co-Founder of The Software Toolworks. Over the past year, Waggl has opened two Simple Agreements for Future Equity (SAFEs) for $1.7M, which will convert to equity at the next formalized round. In addition to this traditional funding, Waggl has debt vehicles in place on receivables and revenue, based on lending through Lighter Capital, which has provided additional liquidity while minimizing the dilutive impact.

Although Waggl is generating significant revenue and is currently cash positive, it will likely explore additional growth financing in the coming year to accelerate its ability to rapidly scale.

Formulating an exit strategy is not its priority right now. Its primary objective is to build the business and brand “brick by brick” (or one happy customer at a time), while honoring its objective of maintaining a distinct and world-class culture.

This segment is a part in the series : 1Mby1M Deal Radar 2017