How we think about the future of work at Atomico
Last month we announced our partnership with Peakon, the world’s leading employee retention platform. Peakon is a great example of a company solving for the new demands of how we work and it’s an area we are passionate about. We wanted to step back and explain a bit more about how Atomico thinks about the future of work.
The global human resources market is a $400B market currently, but we believe the future of work represents an even bigger opportunity. Why? Because the future of work is connected to how we live, where we live, how we relax, how we get around, even how we raise our children and what skills we equip them with. Future of work solutions will also touch all industries, as technology and software continue to change the nature of work everyone is doing.
We believe there are several core themes defining the changes in how we work.
- A shift in employee preferences as demographics change. Over the next five to seven years, millenials and Gen Z (defined as people born between 1981 and 1996, and those born after 1997, respectively, by the Pew Research Center) will be 60% of the workforce.
This has been accompanied by a push by employees and a pull by employers to provide more flexible work schemes and bespoke development opportunities. For employees, more flexible work and organisational arrangements are about having autonomy. Younger generations are working and studying at the same time. Older generations are using flexible working styles to stay in the workforce, to gain a sense of purpose, and want roles where they can leverage their years of professional experience.
For companies themselves, flexibility is key to working smarter and attracting talent. “Distributed companies are drawing from worldwide talent that hasn’t worked at these same companies before” as opposed to the big tech companies such as Google and Facebook that initially drew from a specific geographic area, says Matt Mullenweg, founder of Wordpress and Automattic.
2. The meeting of data science and talent teams. HR professionals and managers are becoming more open to, and interested in, adopting data-driven technologies to provide the best employee experience across an employee’s career. In addition, questions surrounding talent and people are not just being debated by HR departments anymore as C-suites get more involved. That will only be a boon for bigger and better HR tech.
3. European founders are going to be uniquely positioned to create global, category-winning companies in all of these areas. European founders and operators are used to responding to culturally and geographically diverse teams already. European companies are scattered across many offices, and tech workers are highly mobile (see Estonia’s new visa). We’ve also got to call out SAP, a leader in all forms of B2B and enterprise tech for a whole range of workplace tech and the largest software company in Europe, and we believe we’ll see more companies on that scale.
Based on these macro factors, there are a few areas in the future of work space that we are excited about.
- Companies that cater to increasingly diverse ways of how, when and where we do our work. That applies to everyone from non-desk workers in industrial environments to office workers such as lawyers and developers, and it extends across ages.
We like tools that can help distributed teams feel a sense of community. Beekeeper, who have built the world’s most flexible secure communication and operations platform for non-desk based and on-demand workers, is a great example of a company trying to bring disparate groups together. Communication between workers and managers means higher team engagement, a more cohesive culture and increased productivity.
We’re interested in marketplaces that have a workforce management tool for companies to better manage their short-term staffing roles. That’s why we partnered with JobandTalent, which manages contracts and salaries. Another great company is The Dots, a community for creatives, that lets clients hire individuals and teams through the platform.
Beyond just finding a job, independent workers also need solutions that provide additional security around payroll, income stability, workplace protections, pensions and insurance.
Getting paid once a month — like is the practice for many workers in Europe — may not fit with where work is going. Wagestream in London, for example, allows employees to access earned wages whenever they need it, helping eliminate the payday poverty cycle. In insurance, we’re seeing companies like SafetyWing, that provides travel medical insurance for digital nomads.
2. Benefits. Healthcare, fertility benefits, gym memberships, mental health, subsidized housing. We see the workplace becoming a place that gives employees a sense of community in addition to monetary compensation, and are interested in companies that are trying to realise that.
In the health and healthcare space, we’ve partnered with Hinge Health, who are transforming the delivery of employer musculoskeletal (MSK) health care. MSK injuries — such as knee pain, shoulder pain, or back pain — cost employers in the US alone $100bn a year and millions of lost work days. In terms of keeping employees healthy on a regular basis, we’ve also partnered with Gympass gives flexible access to gyms and studios.
More women are looking for fertility solutions as a benefit as they try to balance work and personal considerations, and big tech companies have made the headlines by offering such perks. For example, Adia Health, one of Zinc.VC’s first cohort is helping women proactively manage reproductive health with at-home hormone tests and access to fertility experts, and we’ll definitely see more companies offer benefits such as these to their employees.
3. Products and services that help companies create more diverse and inclusive workplaces. Europe has always been a leader in building more inclusive workplaces, and so we are certain we will see great companies that tackle this issue as well. The top 10 countries for paid maternal leave are all in Europe, according to the OECD. Countries such as Germany and Norway have mandated that there must be a certain percentage of women on every company board.
In terms of tackling diversity at the hiring level, U.K.-based Applied, is building software to eradicate bias and discrimination in recruiting and hiring. Also in the U.K., Umbrella is helping HR teams address diversity and inclusion through data analytics.
Finally, childcare solutions will also be key to allow working parents to balance the demands of their careers with family and supporting more diverse companies.
4. Data-based people insights. This is exactly what Peakon is tackling for employee engagement. With Peakon, managers can get feedback from employees through frequent (think biweekly) surveys, and then managers and employees can track that feedback though a simple platform that gives immediate actionable insights to remove roadblocks and increase productivity (before problems arise).
5. A strong C. It’s also worth noting here that while Peakon is a B2B software, it’s ultimately B2B2C because employees interact with the platform several times a month. This strikes to the heart of what will differentiate successful future of work solutions from those who don’t succeed. If the C is not strong, employees will not use the product.
We are seeing some fundamental shifts around the work place which is creating lots of different powerful opportunities for those wanting to take on these new challenges. We are passionate about this space and believe its only the beginning of a large transformation that will create a new generation of companies. We are excited to help this next generation scale globally and would love to hear from any founders in this space.