As we’ve written about before, we like to invest in startups that solve big problems by making data actionable. We invested very early in Praisidio because they’re doing just that for the biggest problem many companies face: employee retention. Their motto reads, “Protect your enterprise; care for your employees.”

Reason 1: $1 trillion problem

Keeping talent — or reducing “voluntary turnover” — is so mission-critical that many companies consider it a key risk factor alongside financial, operational, strategic and compliance risks. By some estimates, more than a quarter of the U.S workforce jumps ship each year, costing companies $1 trillion a year in lost productivity, recruiting and other expenses.

This is a particularly difficult challenge in the technology sector, where losing a top engineer can have the same impact as 20 employees leaving. On top of that, engineers are difficult to hire, which explains why there are hundreds of talent acquisition tools available that do everything from matching companies with candidates to analyzing facial patterns of interviewees.

Reason 2: We believe in their thesis

Praisidio views all this recruiting activity as bringing water into a leaky bucket and asks: Why isn’t anyone fixing the leak? There’s a lot to gain for companies that excel at engaging employees and keeping key talent. 

A slide in their pitch deck highlighted:

• It costs a company 1.5x to 2x salary to replace an employee;
• Companies with high employee engagement are 22% more profitable; and
• More than half (52%) of turnover is eminently avoidable.

The last statistic stood out to us as a significant opportunity.

The problem is, companies lack tools to assess how well they’re engaging with employees. 

Despite their many flaws, satisfaction surveys are still one of the best ways to measure engagement at most companies today. Even if they happen quarterly, that’s far from real-time feedback. Before Praisidio, there’s never been a way to pick up on signals employees are sending, as they are sending them. 

As a result, managers fail to properly assess their own engagement efforts; fail to act while they still have time; and end up blind-sided by departures.

Reason 3: Data-driven solution

Praisidio offers a way for managers to detect workforce issues early and provides proactive recommendations to protect enterprise talent. The company’s AI-enabled software functions like a “check engine” light on a car, alerting companies to signs of a disengaged workforce. The company does this by making sense of how employees are engaging with digital applications at the workplace. 

For example: 

• How often do they interact with their manager? Have there been any changes recently?
• Have there been any changes in the way they engage with team or project members?
• How are they engaging with digital tools like Github? Have there been changes?

By making sense of this data, a company can identify employees as they are just beginning to show dissatisfaction — and, critically, before it’s too late to change anything. The tool also makes recommendations to the manager of potential remediation plans.

Reason 4: Proven team

As much as we like the thesis and data-driven solution, we ultimately place our bets on the founders themselves. We ask ourselves: Are these the right founders to solve this problem?

In this case, the answer was an emphatic yes. 

Vahed Qazvinian, who serves as the company’s CTO, was a senior software engineer at Google, had loads of AI experience and had started a company before. Ken Klein, who serves as CEO, is an experienced executive with extensive experience managing enterprise risk as a board member on Fortune 500 companies and as chair of the University of Southern California board of trustees’ Audit, Compliance, Risk and Privacy Committee.

They convinced us they understood the problem and were the right team to build the solution.