An outcome-driven platform for people development: Why we invested in Sharpist
Sometimes you have investment propositions or founder stories where you think, YES, spot-on … our own “Aha!” moment. That’s exactly what happened when I first met with the Sharpist team and saw their product. They have a simple but intelligent empowerment solution for a universal problem in society and business:
Great Problem: How to transfer knowledge to empower people?
We need knowledge transfer to take place in a frictionless and engaging manner to develop our skills. We also need to be trained to manage our weaknesses and accentuate our strengths. Or learn how to recognise and suppress our bad habits. How can we do that when we increasingly work remotely and are no longer being ‘corrected’ by our colleagues? How can organisations stimulate their employees and develop the best skills from a distance? How can they retain and propel the most talented employees or develop and support others into discovering their strengths? This is what Sharpist does: providing personal development for learners and, in parallel, assisting HR and leadership personnel at enterprises to train and retain skilled employees. This ensures durable long-term innovation and continuity of business.
That’s our core investment thesis for Sharpist: solving a big enterprise problem in a simple way. Sharpist digitally transfers one-to-one personal development knowledge from experienced skilled coaches to learners: all of us! We all need and want to learn and develop ourselves and others. It is human nature — from childhood to parenting. It is also human nature to transfer knowledge: fulfilling Maslow’s hierarchy of needs from learning skills to survive, to the top-level need of self-esteem (confidence, respect, morality). Every one of us is a learner and ultimately a coach. These needs have been around since the time of Socrates. The Greek philosopher felt uncomfortable when he was told he was the wisest man in Greece and began teaching his students by asking them questions, rather than telling them answers.
Sharpist demonstrates that everyone needs a coach. “Coaching is the investigation of truth through dialogue”. At the other end of the spectrum, employers need to create a sustainable market position to beat out the competition by having access to the most productive and smart workforce. Coaching is no longer an executive perk. It has quickly become a driver of worker productivity. Until recently, a democratised approach to coaching was considered too expensive and time-consuming to be realistic for larger groups of employees. But with the advent of AI and machine learning, coaching tools and digital platforms are transforming the value proposition, making coaching for the masses a realistic option. At Endeit, this reinforces our thesis around Intelligent Empowerment.
Great Scalable Product
Sharpist has built an innovative solution to transfer personal development knowledge in an easy-to-access, accountable and affordable way. It unlocks and intelligently empowers people’s talent digitally via one-on-one coaching/e-learning in a personalised, safe environment. Sharpist is an app that resides on your smartphone and offers personalised learning sessions and tailored content aimed at business professionals that are looking to improve their focus and productivity. It does this with the help of a dedicated coach intelligently selected by the platform, who is an experienced manager capable of providing an external perspective.
Sharpist also looks at the individual needs of each person joining its platform and tailors their journey accordingly. This goals-driven approach means that each person will have a different experience of their journey towards leadership experience on the platform. It also offers micro-tasks and proprietary content in between coaching sessions for a more personalised learning experience. Further, the platform is integrated with licensed partners for specific content or learning tools (like training or languages). It hires top-rated coaches with 80% having management and executive experience. More than 70% of its coaches have over 15 years of relevant coaching experience and it takes at least 1,000 hours of coaching to join the Sharpist network. The supply side of coaches is nearly unlimited; it’s more a function of strong personal selection and automation in onboarding.
The digital transformation of the industry and the provision of an innovative, trusted, and results-driven product is a strong starting point for Sharpist, where both the individual learner’s goals and overall organisational goals can be met. Sharpist enables HR managers to gain aggregated insights and analytics across 32 focus areas and into team development progress. The Sharpist team uses artificial intelligence and automation to reduce the time and cost burden of engaging with professional coaches. Human beings do the actual coaching, but technology streamlines and optimises the process of matching employees to coaches, as well as provides automated reminders, reporting, assessments, and content recommendations. This frees coaches to focus more time on one-to-one engagement. We also see a great opportunity for using AI to bolster the value of coaching even more. For example, it can augment the training to remind users to practice their skills in real life. The strength of Sharpist versus its peers lies in uniquely tailoring the coach as well as the tasks towards the needs of the individual user, client, or department head. Sharpist has top-end corporate clients like Zalando, Otto, Franke, Porsche, Metro and BASF that are increasingly subscribing new employees to the platform.
But, having a great product in a big and transforming market is not good enough. It requires excellent leadership to propel such a business from (1.) product development to (2.) product-market fit and then to (3.) scalable market expansion. Here, most of the investment propositions we evaluate fail — on leadership and prudent growth strategy. The authentic founding team at Sharpist, however, impressed us straight away. Hendrik Schriefer and Fabian Niedballa are executing their focused strategy in a systematic, ambitious, and very open-minded way. Founder and CEO Hendrik Schriefer has a strong psychology, HR and entrepreneurial background (a former Global Venture Development Manager at Rocket Internet). Co-Founder and COO Fabian Niedballa is experienced in operations and hyper-scaling (previously of GetYourGuide). The origin of their company stretches back to 2018 when Hendrik and Fabian decided they wanted to help people lead more self-aware lives, as they believed this would help them better interact with their friends and colleagues, and even understand themselves, ultimately contributing to more successful organisations and prosperous societies. The name Sharpist is inspired by the idea that they wanted to do “something in the domain of mental wellbeing” and personal development ‘sharpness’, hence “Sharpist.”
The founders have proven to be able to first ‘scale’ themselves by talent-picking and broadening the capabilities of their C/VP-level team. That’s critical for a growth capital VC like Endeit Capital, since we look for investments that can move forward quickly following our capital raise using the core existing team. For example, Product and Tech leadership are run by two senior talents: CPO Khurram Masood (ex-entrepreneur at McKinsey and Oracle) and VP Engineering Joshua Hoffman (multiple tech leadership roles at firms like RedHat, Tumblr, SoundCloud, Blendl, LeaseWeb, Usabilla), who both chose to work for Sharpist when they could have easily worked very senior positions at a US tech behemoth. All this is supported by the finance and legal operator Leon Philipp who is ‘project-managing’ all core actions of the company. My colleague Niclas Englert and I together with the founders had various intense debates around organisational set-up, growth strategy, product-market combinations, focus and time horizons, where we exchanged many pros and cons. We liked how the founders took nothing for granted and questioned/reviewed all the thoughts being shared around the table. Open-minded, flexible and with a healthy anarchist Berlin style of shooting for the stars!
Sharpist is operating in the Corporate Learning & Development market — or more specifically, in the coaching and training market. The total global size of this market was recorded as €305bn in 2020. It is split up into 26% external service providers (€79.3bn), 64% internal resources such as talent management systems, and learning and development staff (€195.2bn) and 10% business process outsourcing (BPO). Sharpist, with its digital coaching platform, is currently predominantly tapping into the budget of external service providers. However, the company is also working with internal coaches and client networks, which enables it to access the internal resources budget, resulting in a top-down addressable market of €275bn globally.
The investment in Sharpist is attractive due to the sheer size of the incumbent Learning & Development market that is being rapidly transformed digitally. In that sense, it represents a ‘blue ocean’ of as yet largely unexploited, uncontested digital market space. Further, the complex, fragmented nature of the European markets, complete with its language barriers, tight workforce and cross-border enterprises, provides a great untapped opportunity for European digital platforms like Sharpist to deliver accountable personal development solutions for employees and employers.
The fact that the software is “made in Europe,” and the personal data protection it can offer to learners is another interesting element to consider for a highly trusted HR product targeting European enterprises. There are however also endless point solution companies and HR products offered in the traditional ‘red ocean’ of the Corporate Learning & Development market with limited access to large enterprise HR client departments that will not easily switch to other HR solutions.
The need to recruit, assess, develop, and retain top talent has created a €300bn+ market, characterised by a hyper-fragmented value chain (there is a tool for anything from benefits to attract and motivate employees, over performance and development tools, to literally an unthinkable amount of learning and training solutions). This makes the landscape increasingly hard to navigate for enterprises and also their employees. Often, especially learning and development interventions are ineffective as they do not build on relevant data and offer surprisingly little personalisation. Meanwhile, the pandemic has shifted the centre of employee attention away from work, driving phenomena, such as the Great Resignation and Re-Imagination of the workforce. Around 65% of employees say the pandemic has made them rethink the role that work should have in their lives. Employers desperately need to invest in retaining and growing their talent. Better analytics, insights and more accountable ROI in coaching is critical for HR departments to unlock more learning and development budget and leverage employee and team skills. Digital here is the only way.
Great Momentum: The Trend is our Friend
With digitalisation — further accelerated by Covid-19 — bringing various changes to enterprises, and digital transformation representing a major challenge for many traditional businesses, the need to retain and carry the workforce through these change processes is significant. In the current candidate-driven market, rapid fluctuations in workforces, and with mental health becoming more and more important in various industries, employers must address topics like the work-life balance and mental health to attract and retain talent. These macro trends increase the relevance and democratisation of coaching and training for the general workforce as opposed to traditionally only being available for executives and top-level management.
The Sharpist platform is used by four different personas: 1. coaching recipients (= learners, employees), 2. HR (= employers, Sharpist clients), 3. Department Heads (= internal clients of HR) and 4. coaches. The learners set their curated personal goals, conduct coaching sessions, document their progress, communicate asynchronously with their coaches, and receive content or perform tasks in between coaching sessions. HR managers use the Sharpist dashboard to manage their learning and development budget allocations and review outcomes and goals with their department heads. Coaches use the platform to market their expertise, conduct sessions, plan for their coaching recipients and distribute content, such as micro-tasks, blogs and e-learning tools. There are various traditional coaching/personal development agencies in the market and coaching marketplaces, however, none of these brings an innovative, high-engagement solution.
Digital solutions have some specific advantages compared to old school coaching. Coaching is a very personal and trusted experience and requires a highly personal discrete match. Therefore, bespoke selection of a coach via the platform significantly improves outcomes for the learner and client due to the high level of engagement it delivers — offering a private, trusted, digital location. Continuous learning in between coaching sessions ensures the long-term impact of the coaching.
Traditionally, large parts of corporate learning and development budgets are wasted on solutions that are not being used by employees and therefore also have limited to no impact on the output and happiness of the workforce (Forbes). HR clients pay increasing attention to ROI and measurable success when purchasing learning and development solutions. In many companies, employees are not yet familiar with coaching and, especially for mid-level managers, the concept is new and needs to be introduced in a familiar manner. Once this hurdle is overcome, the impact is clear to the employee and the demand for coaching rises. Easy to access and app-based products like Sharpist reduce these barriers. Sharpist has more than 90% engagement among its learners. Such a high level of customer engagement is unique and a crucial element of its success.
In defining a post-pandemic workforce strategy, employers need to know when and how to repair, humanise, outcompete or double-down on their recruiting efforts. Remote and hybrid working setups have expanded the reasons for employees to move jobs beyond basic economic incentives. Post-pandemic HR efforts and employee investment are needed to stop the Great Resignation. A quick ROI can be made: retaining is cheaper than hiring. This is exactly where Sharpist comes into play. Leveraging our recent investment, it will:
1. Further expand its most holistic coaching and learning ecosystem “from internship to retirement,” empowering employees and enterprises to reach their people development goals
2. Integrate additional steps in the people development value chain, such as group coaching and other forms of digital learning
3. Link its solutions to people analytics systems, positioning Sharpist as an especially business-impact-oriented tool
4. Internationalise (starting in the UK and Ireland) from its home market DACH.
We are proud and excited that Endeit — along with the founders, all Sharpies, angel investor experts and fellow venture capital shareholders — is working on positioning Sharpist as the number one solution for people development. We care. Let’s create many “Aha!” moments.
Endeit Capital is a growth capital firm fueling internationalisation and innovation since 2006. With its 2021 Fund III of €255m and local partner teams in NL, DE, SWE, we specialise in boosting European tech scale-ups that have outgrown the start-up phase.