Viva la growth? What Microsoft’s bet means for this longtime player in employee experience tech
Article originally appeared in GeekWire by Todd Bishop
Microsoft doesn’t bet big on small markets. With more than $150 billion in annual revenue and a market value that tops $1.7 trillion, the tech giant needs to see a major opportunity, with the potential for meaningful growth, to justify investing in a new product.
“Microsoft is savvy about when the time is right for their business,” says Henry Albrecht, a longtime Seattle-area entrepreneur and tech executive. “They require massive global shifts, like the shift to cloud computing, the shift to the personal computer, and now, the shift to putting culture at the center of work. This is a seminal, once-every-decade shift in the employee-employer relationship.”
That is Albrecht’s read on Microsoft Viva. The Redmond company’s new employee experience platform, unveiled Feb. 4, is part of a boom in technologies to help companies assess and improve the productivity, job satisfaction, engagement, and overall health and well-being of their employees. The rise of remote work during the pandemic has boosted interest in the market.
Albrecht is in a good position to know. He has been betting on this market for 15 years as the CEO of Limeade, an employee experience technology company based up the road from Microsoft in Bellevue, Wash.
He and his co-founders started Limeade in 2006, recognizing the value of employee well-being back when Microsoft was launching Windows Vista, and some guy named Satya Nadella was named to run the company’s business applications group.
Limeade already integrates with Microsoft Teams, and Albrecht said he believes the Redmond company’s positioning of Viva as a platform “opens up immense possibilities” for other companies that want to leverage Microsoft’s reach.
“For me, this is a tremendous validation of everything we’ve been working for, serving some of the biggest and best companies in the world for the last 15 years,” Albrecht said.
Revenue rose 19% to $56.6 million, with $1.2 million in pre-tax earnings, vs. a $2.1 million pre-tax loss in the prior year.
Limeade’s net loss after taxes was $300,000, bringing the company close to absolute profitability.
Average headcount increased to 271 people from 236 people in the prior year.
Limeade’s overall corporate customers fell to 150 at the end of 2020, from 173 a year earlier, which the company attributed to churn experienced by a key reseller partner.
The company is projecting revenue of $50 million to $53 million for 2021, with a projected $7 to $10 million loss after taxes, due in part to higher spending on sales and marketing, to capitalize on “the booming demand for employee experience software,” the company says in an investor presentation.
HR mindset shift: Speaking on the company’s earnings conference call, Albrecht said the pandemic initially had “a chilling effect” on purchasing by human resources departments, especially those that were dealing with layoffs and furloughs initially. However, he said, that’s changing now.
“They’ve had a year to think about this, they’ve had a year to soak in how impactful this pandemic has been on things like addiction, social isolation, how do you manage a team remotely and get feedback, and just overall stress and burnout,” he said. “So we’re starting to see companies now say, we need to take this much more seriously in the future than we have before.”
M&A: Asked about the outlook for mergers and acquisitions, Albrecht said on the earnings call that Workday’s $700 million acquisition of Peakon further illustrates the overall interest in employee experience technology. In addition to growing its own business organically, Albrecht said Limeade is “always looking for creative, strategic, selective inorganic growth through mergers and acquisitions.” The acquisition of Sitrion in 2018 added new capabilities to Limeade’s platform.
Impact of the pandemic: The shift to remote work has “radically accelerated” the focus on employee experience technology, and the recognition of the importance of employee well-being, Albrecht said in an interview. He cited recent research from Limeade and others providing “clear evidence that work is broken, and employees are suffering.”
In a report released by Limeade in October, surveying 1,000 employees at companies with at least 500 people, 72% reported that they were experiencing burnout, up from 42% in a similar survey prior to the pandemic.
Limeade’s report found “staggering” differences in the experiences of male and female managers, with women managers reporting lower levels of overall well-being and job security. Its data showed 11% of women reported extremely positive well-being, vs. 42% of men who responded to the survey.
Microsoft’s Future of Work reportfound similar patterns, and a wide variety of experiences depending on individual employee situations. While some employees reported benefits from increased flexibility, others reported increased stressed and “a feeling of always working.”
Data from Seattle startup TINYPulse, which offers technology for quick employee surveys and feedback, indicated a 34% drop in peer recognition for new hires onboarded in 2020 versus 2019. New hires “are struggling to get connected in the social fabric and culture of organizations in ways that may not be easily observed,” the survey found.
Technology: Employee experience technologies vary widely by vendor, but generally include survey, communication, informational and educational tools.
Viva, which will be integrated into Microsoft’s Teams platform, includes technology that analyzes how employees spend their time, provides a central hub for internal company resources, integrates learning into the flow of work, and provides access to internal corporate knowledge and expertise.
Limeade’s technology focuses on overall well-being, engagement and inclusion, including individual and group activities, connections to HR and other company resources, tools for communicating, giving praise and feedback, forming groups, and connecting with employees.
Market size: Microsoft cites analyst estimates putting the employee experience tech market at $300 billion in annual corporate spending. “In fact, I have never seen such a massive proliferation of technology hit the enterprise at once,” wrote industry analyst Josh Bersin in a white paper. “I am tracking more than 1,400 vendors that sell new tools for recruitment, performance management, wellbeing, learning, employee surveying, and other HR applications.”
Limeade, an immersive employee well-being company that creates healthy employee experiences, announced the promotion of Dave Smith from GM of the TINYpulse division to President and Chief Operating Officer, reporting to CEO Henry Albrecht.