How impact helped mint a unicorn in two years: The case of Oyster
At Big Society Capital, we believe that being impact-driven (i.e. trying to solve a social or environmental problem) can be a huge source of value to businesses. Over the last 12 months or so we’ve been sharing our hypotheses around the mechanics of how this might occur. Where possible we’ve backed this up with emerging evidence. As our thinking has matured, we’ve entered discussions with startups across our underlying portfolio to test whether these mechanisms play out. Below we share a case study on Oyster.
Oyster is a global employment platform helping to create a more equal world by making it possible for companies anywhere to hire people everywhere, simply, and affordably. Their latest impact report can be found here.
In Oyster’s case, we think impact interacts with commercial value via four buckets:
- Unit economics
- Market size
It is some of these dynamics which we credit as helping Oyster get to a unicorn valuation in two years from incorporation. We unpack them further, below.
Any successful founding team will know that talent is key to building successful startups. According to one study, not having the right team was the third most common reason for startup failure. Talent is increasingly caring about making an impact and yet 76% of millennials believe that their employer only cares about making money. Startups that can demonstrate a genuine impact intent are therefore more likely to win the best talent. Oyster has leveraged this dynamic to great effect.
As CEO, Tony Jamous, says ‘Our mission has acted as our north star. It has allowed us to assemble incredible talent from across the world, achieve an engagement score that is in the top 3% for VC-backed companies, and attract more than 12,000 applicants to our job postings each month.’ In case you were wondering, that last stat translates to >350 applicants per job!
As a case in point of the power of impact to attract great talent, Oyster’s new president, Ellen Silver, former VP at Facebook, had to say about joining the team: “I needed my next role to be at a company where my work mattered — where it would make an impact and improve people’s lives. That’s why I’m thrilled to announce that I have joined Oyster as President.”
It’s not just about attracting talent, impact can help enhance the contribution of that talent to the organisation. Once again, Tony notes: ‘In my experience, rallying around a common social mission improves internal morale, unlocks productivity gains, and creates an environment where people are excited and hopeful about the work they are doing.’ This is somewhat reflected in the company’s Glassdoor rating which boasts a 4.9/5 stars from 60 reviews.
Talent drives value in many ways across an organisation. For a tech company, product is clearly a core one. In Oyster’s case, the calibre of talent working on product is clear as demonstrated by a 4.8/5 rating on Product Hunt.
There are many ways that impact interacts with unit economics. Most relevant here is in customer acquisition and retention. Most businesses are becoming more conscious about the growing need to be responsible citizens in our society. Therefore, doing business with impact-driven service providers like Oyster appeals to them.
According to internal analysis, 20–25% of Oyster’s customers cite mission alignment as a critical reason for choosing Oyster. In the fierce race to be category leader, this impact edge can make the difference between success and failure. Not only does this lower the cost of acquiring customers, but it accelerates the speed of growth. This may in part explain Oyster’s 20x growth across 2021. Winning the customer is only half the battle, retaining them is the next challenge. Building a compelling product that keeps customers on board is hard for any startup. In Oyster’s case, fuelled by an impact purpose, the product team has built an offering which generates a CSAT rating of 4.5/5.
Given some of the business and growth dynamics we’re talking about here, we expect that investors will gravitate towards impact over time as they recognise that these are competitive businesses. While it’s very early days we’re beginning to see this trend. According to Atomico data, the proportion of purpose-driven deals across Europe increased by 44% between 2017 and 2021, from 9% of all deals to 13% of all deals.
All the term sheets that Oyster received for its Series C had an impact angle to them. One was from a pure impact investor. So, even at this early stage, it seems that having an impact-driven business can help to attract capital. It’s not just about amount of capital but also the ‘right’ capital. One of the key challenges in fundraising is finding aligned investors and given that all of Oyster’s options had impact as a core part of their thesis, being explicitly impact-driven in your pitch to investors can help to ensure alignment.
When thinking about how impact interacts with market size here, it’s helpful to think of two different layers of market size.
Total Addressable Market — total market for your product
For any global employment platform, the TAM would be any company that is looking to recruit outside of countries where it has a presence. In Oyster’s case, this is true but an enhanced value proposition means that other customers also become relevant. For example, given Oyster’s focus on underserved markets, customers are also considering Oyster as a solution to enhance diversity in their organisations. As a result, the TAM is larger than what other global employment platforms may be looking at.
Total Obtainable market — percentage of the market you can realistically capture
When thinking about winning market share, impact helps to stack the deck in Oysters favour. Having the best talent driving customer acquisition, having a winning value proposition that customers can relate too, and being fuelled by mission aligned investors is a recipe for being able to capture a larger part of the segment. This again might explain Oyster’s 20x growth last year on the path to realising that TAM.
We believe that being impact-driven drives value in terms of building a winning company. While this has largely been a hypothesis in progress, we’re beginning to see tangible evidence of this, and Oyster is a great example.
In trying to understand these dynamics it’s important to remain critical and consider alternative explanations. In Oyster’s case it’s worth noting that other players in this category, including Deel and Remote, are also doing well and so this is clearly a complicated picture. We look forward to seeing how the category evolves over time to better understand the relative advantage that being impact-driven has given Oyster. Some of the clear examples we’re seeing of impact driving value gives us increasing confidence that the long-term data will support our hypotheses. It’s worth noting that, Deel’s latest raise included the Emerson Collective, an impact-driven investor and Remote have launched a refugee programme. This suggests that they too are seeing the benefits of impact.
Have we said anything that triggered a thought? Want to find out more about BSC or Oyster? Get in touch, we look forward to hearing from you!