Last September, Cooleaf co-founder John Duisberg said he needed to raise $500,000 to double the size of his startup, which makes a software platform to help companies engage and retain their employees. Eight months later, “we closed that funding,” Duisberg told Hypepotamus, which means Cooleaf now has a chance to engage and retain new talent of its own. (The company currently has 5 full-time employees and a similar number of freelancers.)
Part of that funding round included a March win in the Citi Smarter Worklife Challenge. The financial giant culled through 200 tech startups, searching for solutions that would help it “enhance the professional journeys of their employees – from recruitment to retirement,” according to the Citi news release. Cooleaf was one of nine companies making the final cut to share a $50,000 cash prize.
Money is always welcome, but Duisberg, a startup veteran who also has large company experience, says having Citi designate Cooleaf for an internal pilot program is the real victory. “Citi gives us a level of credibility that we didn’t have, and it also signals to the market that large enterprise firms say it is okay to work with Cooleaf,” he said. “So for us to be able to take that use-case data and share that with potential prospects is very meaningful, and we plan to use it.”
For Duisberg, the Citi win and the new funding will hopefully mean adding to the 24 paying company customers already using Cooleaf’s iOS/Android apps. Those customers include Cushman & Wakefield, Children’s Healthcare of Atlanta, Georgia State University and DeKalb Medical. Company sizes range from the 30,000-employee WestRock to 75-person consulting firms.
Duisberg says that range illustrates Cooleaf’s ability to customize and scale its platform to the needs of clients who want to make employees happy, thereby reducing their costs to attract and retain talent. Cooleaf is introduced to employees during the onboarding process, where they self-select professional interests and other activities/hobbies. You’re a Ruby on Rails developer? Cooleaf alerts you to internal meetups for others looking to improve these skills. Are you a cycling demon? Cooleaf lets you join others who might be planning a weekend ride on the Silver Comet Trail.
Cooleaf users are awarded points for these activities, which could result in paid days off, company charity donations, lunch with the CEO. Or it could be just internal recognition for hitting a personal milestone. “Just a simple thing of saying ‘thank you’ doesn’t happen enough, and it means a lot to people.”
It means a lot to company executives if they know what the return on investment is for building out an employee-friendly workplace. “What we’re finding is that companies are wanting to maximize the time they have with these people, and hopefully give them a career path. So they’re investing in learning and development, different types of mentorship programs, leadership programs, health and wellness, volunteer and community service programs, social and culturally-related things,” he said. “All of this is happening inside the company, but we’re finding is that they don’t have good insight into the results of these programs.”
The data that Cooleaf generates regarding engagement and employee acceptance is what differentiates it from companies like Slack, which makes a popular workplace chat app, and others that focus on activities like fitness for rewards and team-building, Duisberg said. He points to a Cooleaf customer, a midsize consulting firm, that wanted to reduce turnover while boosting employee collaboration. The software, plus a customer success manager to suggest strategies, combined for a 40 percent reduction in unwanted turnover that translated into about $1 million in cost savings. “And they just signed a two-year renewal with us, so obviously something is going very well with this,” he said with a laugh.
More case studies like that, and Duisberg says Cooleaf “may become much more of an analytics company, where we’re able to give you predictive information around (employee) flight risk, for example.”
In the meantime, Cooleaf will start implementing the lessons – and capital – acquired from its recent participation in the 500 Startups accelerator in San Francisco. That included a cash investment, but also mentorship and bootcamp-style coaching. “We wrapped up that program, and now as we’re heading further into 2016 we’re focused on customer acquisition and growth, and we’re going to deploy that capital for the rest of the year.”
Duisberg noticed the difference between the kinds of questions venture capitalists ask of startup founders in San Francisco versus what entrepreneurs hear from Atlanta-based VCs. “Here, they say, ‘Let’s talk about EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). Let’s talk about cash flows. When are you looking to break even?’ Out there it’s more, ‘How big could this be? Are you disruptive? How fast can you grow?’ And I would say there it’s a mindset that says if you don’t make it, it’s okay, just start something else. Here, before we put all our eggs in that basket, let’s test it out and make sure it’s going to work right. Here it’s slower and much more steady.”
[Image Source: Cooleaf]