Our investment in Vault Platform — the behavioural compass that every organisation needed yesterday
Culture and ethics are at the core of every great organisation yet there are scarce few tools that directly address this. Not only are the regulatory and reputational risks enormous for failings, firms who get this right can enjoy a huge competitive advantage to their peers as it’s well known that “culture eats strategy for breakfast”.
We are thrilled to be supporting the team at Vault who are tacking this problem with a data-driven solution and today announce our participation in their $8.2m Series A alongside Gradient Ventures, Kindred Capital and Angular Ventures.
Behaviour, conduct and culture are the core of every organisation
If you ask the most prominent business leaders their secret to their success all of them will point to 1) the teams they have been able to build, and 2) the culture, values, and mission that guide them. The Netflix culture deck is one of the most famous examples of this. Firms with a clear, positive culture also have an edge in the increasingly competitive talent market, one where younger staff have different priorities to their older counterparts.
This does not mean that all cultures should be the same. Talented people who perform brilliantly in one high performance environment can struggle in another. It is the responsibility of the organisation to set a clear code of conduct and monitor staff behaviour against this — rewarding those who achieve their goals while adhering to those guiding principles.
While parting ways with an average or underperformer who is behaving badly is a relatively easy; what happens if you have a “toxic superstar”? Someone who smashes their targets but causes issues in other areas. Whether these behaviours are more cultural or cross an ethical line — the organisation must make a choice of what to prioritise. These choices matter as they show other staff what that company will or will not accept in the name of performance and become core to culture (intended or not!).
Business drivers, social demands, and a regulatory imperative
If bad behaviours go unchecked, they can become systemic problems that can lead to a breakdown of internal performance, public outrage, boycotts, huge fines, or even the eventual collapse of that organisation. Much has been written about the changing role that corporates have in a global society and what, if any, voice they should have in political debates (here, here and here to highlight just a few). Whether you think this is right or wrong, organisations of all shapes and size are being called out for socially unacceptable behaviours and prospective staff will factor this into their decision making.
Major civil movements like #metoo and #blacklivesmatter have made diversity & inclusion, ESG, employee activism, employee safety and wellbeing frontline business priorities. Boards of Directors are under pressure to demonstrate they are taking action to address both these significant issues and the ever-increasing regulatory demands policing staff conduct (the Sarbanes-Oxley Act, SEC Whistleblower Program and the EU Whistleblowing Directive among others). CEOs and senior business leaders are also being called on to use their influence on sensitive topics.
For firms operating in heavily regulated industries, such as financial services where there have been high profile failures in benchmark rigging, the bar is even higher. The rise of the ‘Chief Ethics Officer’ stems from this — a role which ‘comes from a need to ensure compliance with federal regulations and other rules designed to prevent monetary misdeeds, such as money laundering and insider trading.’
It’s not just a problem, it’s an enormous business opportunity… and the Vault Platform team are driven to address it
In a study on ‘toxic employees’ conducted by Harvard, hiring a top 1% superstar will save the average company $5,303, but avoiding a toxic employee will save $12,489. Even more telling is that this latter figure does not include “savings from sidestepping litigation, regulatory penalties, or decreased productivity as a result of low morale”.
Put yourself in the shoes of a CxO or board director — culture is key to the success of your venture but what tools do you have to proactively manage this? Traditional HR platforms deal primarily with payroll, benefits, recruitment, and organisational structure. Incumbent whistleblowing hotlines are not user friendly are often too little too late. The team at Vault spotted this gap.
Their digital first platform, underpinned by a sophisticated unstructured data capture engine, gives employees a safe space to raise concerns, have their queries intelligently routed to the correct avenue, and promptly actioned. Not only do clients benefit from the headline administrative savings, but they can also look around corners and see the behavioural icebergs that may be lurking ahead.
Think about the potential if you could harness this data to help guide your organisation. You could clearly spot when teams are falling behind on their training, emerging patterns, any upticks in reporting and remedy minor issues before they become endemic. Vault is the safety rail at the top of a cliff rather than the net (or ambulance) at the bottom. For leadership and boards facing skyrocketing D&O premiums and trying to make heads and tails of manually pulled together conduct dashboards, this is a no-brainer.
Vault’s clients agree. The young business is trusted by clients such as Lemonade, M&C Saatchi and OVO energy, grew ARR 16x in 2020 and has had 0% churn.
Why this team?
Not all entrepreneurs will be able to capitalise on this enormous opportunity. The team will need the right mix of technical prowess, an understanding of the government and regulatory landscape, experience in scaling a software business and, crucially, an unwavering commitment to their own culture. The Vault team have this mix.
One interaction that particularly stood out for us was when, very early in our engagement, we asked about the business’s internal culture. Neta, Co-founder & CEO, broke into a smile and instantly shared a 10-page fully scoped purpose, mission, vision, and values statement. This clearly wasn’t done as an add on to a branding exercise. She was able to point to several instances when they had or hadn’t hired talented people who weren’t the right values fit for their growing team. Culture and ethics are something this team care deeply about and drove Neta, a former senior government advisor, and Co-Founder & CTO Rotem, a tech leader with experience building systems at Goldman Sachs and several start-ups, to start this business. They are supported by a bench of renowned industry leading cultural advisers such as Professor Frances Frei (the person Uber turned to to fix their culture), as well as a leadership team with experience from fast growing companies such as Topia and Zendesk.
We’re excited to work with both the teams at Vault and Gradient to help this company in their next phase of growth. The financial services sector, undergoing an ESG transformation of its own, has a key part to play in shepherding this change in other industries. We look forward to leveraging our industry network to help the business find key channel partners and clients across the sector.
