Mark It Zero, Dude? Nope.

Musical accompaniment for this week’s newsletter. There’s an underlying theme in the entire enterprise software market right now that could well drive the plot in 2025 or 2026: Will AI disrupt the enterprise SaaS business model? 

We touched on this a few weeks ago when discussing Klarna ditching Workday and Salesforce. VC Tomasz Tunguz riffed on that topic a little more this week, including its implications. Although this makes for provocative reading in the world of social media, is this just bomb-throwing? Or is this an accurate reading of the tea leaves? My gut says the latter rather than the former.

All of this is leading somewhere, specifically this: Q3 Work Tech investment was another up quarter. September investment was $1.43 billion across 64 deals for a Q3 total of $5.26 billion across 179 deals. This is the fourth consecutive quarter-over-quarter increase. Woo. Hoo.

There is a bit of an elephant in the room in the form of Open AI’s $6.6 billion funding event on October 2. That deal alone would put Q4 ahead of Q3 and push 2024 investment to almost $8.4 billion. And, in an epic understatement, it skews the numbers a bit. Does matter? Does it count? Or mark it zero? Here’s why it matters:

• ChatGPT is everyday Work Tech for millions of workers. The deal sure skews the numbers, but there’s a strong argument in favor of “So, what?”
• We are in a period of AI frothiness. Plenty of $1 billion-plus deals (for example, Writer.ai) are in the pipeline, so the AI blockbusters will keep coming. As we’ve learned over the past few years, what goes up, must come down. Is it time to worry yet? That’s a personal choice.
• AI hasn’t killed enterprise software — yet. Slightly less than 40% of Q3 investment was AI. That won’t be the case in Q4. However, there is still plenty of investment in software and services to address the needs of real, live humans. I expect employers to start spending more in 2025 as they realize that they can’t kick the can down the road on people investments anymore with all of those highly P.O.’d RTO employees (like at Dell).
• OK, AI hasn’t killed enterprise software yet, but it is seriously disrupting things faster than you’d think. This is where we came in. Businesses everywhere are in the process of using AI to dump enterprise software – and that’s just in sales and marketing based on conversations we have with clients and prospects daily. Will the rest of Work Tech be any different? I think not.

I believe that AI and enterprise software can and will co-exist, but the entire business model and go-to-market strategy will be fundamentally different. Not the hill I thought I would die on, but here we are.

What else is going on this week?

Vimeo Making a Work Tech Pivot?

The company that once competed with YouTube wants to become the trusted host for companies’ internal videos ahead of an AI-generated content boom. According to the Wall Street Journal, it is positioning itself as a reliable platform for professionals and corporations and has added former Workhuman CMO Charlie Ungashick to lead the way. Congrats, Charlie!

Is Intuit Poised To Upend Midmarket ERP?

Intuit, the payroll power that somehow everyone seems to forget about, has launched an Enterprise Suite that aims to fill a gap between QuickBooks Online Advanced and costly ERP implementations required when companies grow.

Jody Kaminsky joins iCIMS as CMO

The former UKG CMO and veteran HR tech marketing leader joins the talent acquisition power brand. It’s not an exaggeration to say that this is kind of a big deal. Congratulations, Jody!

Maven Clinic raises $125 million Series F

Kate Ryder , founder of the NYC-based virtual clinic for women's and family health, says that the company could still be undervalued even at a $1.7 billion valuation. Given how underserved this market still is, we agree. She also says the company is in no hurry to IPO.

Funding and Acquisitions

• EvenUp raises $135 million Series D. The San Francisco startup focuses on personal injury AI and document generation for law firms. (FinSMEs)
• Vsim raises $21.5 million seed round. The UK startup is developing solutions for sectors that require virtual testing and training simulations, such as the VFX industry and robotics research. (CB Insights)
• Zeal raises $15 million Series B. The San Francisco startup focuses on embedded payroll solutions. (Press Release) 
• Vahan raises $10 million Series B. The Indian startup streamlines the hiring process for blue- and grey-collar workers, providing services such as recruitment, staffing, and payroll management. (CB Insights)
• HR Path acquires IN-RGY. The Paris, France-based global HR consulting brand acquired the Montreal, Canada-based HR consulting firm specializing in HR digital transformation. Deal terms were not disclosed. (FinSMEs)
• Guild announces acquisition of Nomadic, introduces Guild Talent Advantage. With the acquisition, the Denver-based education and skilling solution adds new employee development and career growth experiences. Deal terms were not disclosed.  (Press Release)
• Cove raises $6 million seed round. The U.S. startup is developing a hyper-visual AI collaboration space. (FinSMEs)
• Gibb raises $5.5 million seed round. The Brazilian startup is developing on-demand payroll solutions. (CB Insights)
• Memotive raises $4 million seed round. The Istanbul, Turkey, startup develops tools for automating service scheduling, managing shifts, handling assets, creating dynamic forms, and managing corporate documents. (CB Insights)
• Haul raises $3.5 million seed round. The Tokyo startup offers recruitment strategy planning, employer branding, and marketing execution, focusing on software engineers and product designers. (CB Insights)
• LAPRAS gets $2.8 million loan. The Tokyo startup is a career-matching startup for the engineering sector. (CB Insights) 
• Good News raises $1.9 million seed round. The Tokyo startup specializes in recruitment branding and employment consulting solutions. (CB Insights) 
• Flucle raises $1.6 million seed round. The Osaka, Japan startup focuses on labor management and workplace solutions. (CB Insights) 
• Flora Fertility raises $1.5 million pre-seed round. The Calgary, Canada-based startup offers a fertility insurance solution. (FinSMEs)
• Entromy gets $1.1 million convertible note. The Boston startup focuses on delivering insights from AI and surveys for critical business decisions. (CB Insights)
• Kavia raises $1 million pre-seed round. The San Francisco startup is developing advanced AI-driven workflow solutions. (CB Insights)
• jinjer gets PE investment. The Tokyo startup offers attendance management, payroll calculation, workflow automation, and expense management. Deal terms were not disclosed. (CB Insights)
• Reveal raises seed round. The Dutch startup workforce diversity and inclusion solutions. Deal terms were not disclosed. (CB Insights)
• KatagrMa raises seed round. The Tokyo startup supports the management and development of staff at various childcare-related facilities, including personnel evaluation, information sharing, and paperless operations. Deal terms were not disclosed. (CB Insights)
• Skill Bridge raises seed round. The Yokohama, Japan, startup leverages AI to optimize the recruitment process. Deal terms were not disclosed. (CB Insights)
• Amboss acquires Nova Health. The Berlin, Germany-based medical knowledge and learning platform acquired the Bochum, Germany-based EdTech startup that developed an innovative platform for nursing education. Deal terms were not disclosed. (FinSMEs)
• The Best Answer acquires Lluna. The Philadelphia startup that develops AI-powered culture success solutions for SMBs acquires another Philly work culture startup. Deal terms were not disclosed. (Press Release)
• Synerion USA Inc. acquires Qumulex. The Southlake, Texas-based provider of cloud-based workforce management software acquired the Fishers, Indiana innovator in cloud-based video surveillance and access control solutions. Deal terms were not disclosed. (FinSMEs)
• Paylocity completes the acquisition of Airbase. (Press Release)
• SHRM has assumed full ownership of CEO Action for Diversity & Inclusion from PwC. (SHRM)

Micro Podcast Ep. 69: Acadian Ventures’ Jason Corsello, Part II

TSC’s Matt Tatum continues conversing with Jason Corsello , Founder and General Partner at Acadian Ventures (see here for Part I). "I think the IPO market is open,” Corsello says. “The problem is no one wants to go public right now in advance of an election in the U.S." WATCH NOW

Industry Notes 

• Open AI projections imply losses tripling to $14 billion by 2026. (The Information)
• Culture Amp ’s Didier Elzinga and Amy Lavoie in HBR talk about the cultural impact of layoffs. (Harvard Business Review)
• It’s time for HR to rethink what it does. (MIT Sloan Management Review)
• September U.S. jobs report shows strong job growth. My hot take: After a history of outsized downward revisions, how many people actually put much stock in this number being anywhere near accurate? (Wall Street Journal)
• BetterUp research: U.S. employees’ self-reported wellbeing and productivity declines before Election Day. Boy, didn’t see that coming. (BetterUp)
• Fosway Group releases 9-Grid for Talent and People Success. (Fosway Group)
• Cielo Talent ’s Felix Wetzel on how Generative AI brings excitement to talent acquisition. (Cielo Talent) 
• WorkTango Inc. announces partnership with UKG. (Press Release)
• KFF: Employer healthcare premiums hit $25k in 2024. (Benefits PRO)
• JAMA research: HSAs and FSAs may not save families any money. (Benefits PRO)
• Mercer study: Paid leave benefits expand amid compliance challenges. (Benefits PRO)
• Workday announces AI-powered wellness solution. (Press Release)
• SAP adds more open-source LLM support, turns Joule into a collaborative agent. (VentureBeat)
• SAP upgrades Datasphere, transforming enterprise data lakes into more accurate, useful tools. (VentureBeat)
• Glassdoor takes a leaf out of LinkedIn’s book, launches short videos, polls, and images. (TechCrunch)
• Amazon develops AI coach for its employees. (The Information)

Benefits Peeps: Doing Cool Stuff?

If you are in the world of employee benefits and doing cool stuff, I encourage you to enter the Benefits Trailblazer Awards, sponsored by Archetype and RAD Collective. Winners of the 2023 Awards included Maven, Wellthy, Modern Health, Access Hope, Tuned, and First Stop Health. Categories for 2024 include:

• Best Benefits Navigation
• Best Health, Well-Being, Nutrition, or Fitness Solution
• Best Technology-Driven Benefits Solution
• Best Financial or Lifestyle Solution

ICYMI: Last Week’s Top 3 Reads

The Three Most Clicked Links from Last Week’s Work Tech Weekly.

1. HR Tech rebrands. (LinkedIn)
2. ADP launches Lyric, the flexible, intelligent, human-centric global HR platform. (ADP)
3. Nico Orie : The HR system architecture of the future will be fundamentally different. (LinkedIn)

Around The Shop

Stuff we’re finding interesting right now at The Starr Conspiracy.

• Awkwafina or John Cena, anyone? Celebrities are lending their voices to Meta’s new AI. (Wall Street Journal)
• San Francisco Doom Loop Update: A little bit of silver lining with plenty of dark cloud. (San Francisco Chronicle)
• A Godfather of AI just won a Nobel. He has been warning the machines could take over the world. (Wall Street Journal)
• Apple brand value declines for the first time in 25 years. (Ad Age)

That’s it for this week!

Everybody love everybody,

Steve

P.S. Let’s meet. Are you a #WorkTech or #EnterpriseSoftware company with more than $10 million in revenue or funding that wants to accelerate your growth? Book a meeting with us to discuss how we can improve your go-to-market strategy and execution.

P.P.S. — Was this newsletter forwarded to you? Subscribe now via email or LinkedIn.