[Updated 12/4/18 9:20 am. See below.] San Francisco-based performance management startup 15Five, whose mission is to torpedo annual performance reviews for workers and replace them with supportive weekly coaching by managers, announced today it raised $8 million in a Series A funding round.
15Five gets its name from the feedback and coaching process that its software turns into a consistent routine. Employees use the system to create and share a 15-minute check-in report with their bosses every week. The manager then spends five minutes reviewing the worker’s report and adding items to the online agenda for their next one-on-one meeting. The aim is to keep employees on track to achieve their organization’s top goals, while also to “liberate them to do their best work,” says co-founder Shane Metcalf, a former executive coach who is now 15Five’s chief culture officer.
Metcalf says the authoritarian “I’m the boss” model of management is a toxic holdover from the assembly line environment of the industrial revolution, which required repetitive labor and standardized practices. By contrast, 15Five and and other next-generation management software companies are trying to teach bosses how to tap into the creativity and internal motivations of workers, he says. The system promotes a culture of continual learning among employees, and provides mechanisms to recognize their accomplishments.
Metcalf says the startup, founded in 2011, has nearly 1,700 paying customers. They include Spotify (NYSE: [[ticker:SPOT]]), LinkedIn, Indeed, HubSpot (NYSE: [[ticker:HUBS]]), and Warby Parker. Metcalf declined to disclose 15Five’s revenue, but says the company has been cash-flow positive for most of the past few years.
“Now we’re really ready to scale,” Metcalf says. With its new capital, 15Five will be expanding in all departments, from engineering and product development to sales and marketing, he says. The staff, which numbered 34 employees in January, will end the year 2019 with more than 100 workers, the company says. The Series A fundraising round was led by Origin Ventures, which was joined by other new investors New Ground Ventures and Chaifetz Group. Previous investors Matrix Partners and Jason Calacanis’s LAUNCH fund also participated. The investments bring 15Five’s fundraising total to $11.9 million, Metcalf says.
The 15Five system, if fully embraced by companies, allows employees to send comments and recommendations to their superiors, Metcalf says. “They can tell the truth and not be punished for it,” he says. 15Five can ease a company into this practice by making such employee comments anonymous at first, he says. Workers are also encouraged to ask for more feedback on their own work, he says. [Detail added on gradual adoption of worker feedback to superiors.]
Metcalf says 15Five has direct competitors, including Reflektive and Lattice (both San Francisco-based), that share its vision of management grounded in positive coaching. Other innovators he identified in the employee management field include Australia-based Culture Amp, which operates an employee feedback platform, and Redwood City, CA-based employee engagement company Glint, which recently agreed to be acquired by Microsoft subsidiary LinkedIn.
15Five is planning product improvements including deeper analytics, and tools that employees can use to track the progress of their careers. The startup draws on its partnerships with academics to bring the insights of social science into the design of its new features, Metcalf says.
Beyond trying to make companies more successful and efficient, 15Five and some of its competitors are also urging their customers to promote personal growth among their workers, along with dedication to business priorities, as Metcalf sees it.
“You are going to get all the business results you want, such as high performance and less burnout,” Metcalf says of 15Five’s clients and their employees. “You are also going to be benefiting this person for the rest of their life.”
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