Syndio Founder’s Journey from Payroll Uncertainty to $83 Million in Funding
The Path to Pay Equity
“Don’t tell anyone but we are doing good as well as making money.” Syndio Founder Dr. Zev Eigen said this to me in a hushed tone when we first met shortly before his company closed its $50 million series C round. Last Wednesday, Zev shared his founder’s journey for another great session of our Hacking for Humanity and the Planet venture incubator course at Columbia.
Inequality in pay is a tough problem to solve. Collecting, analyzing, and reporting on clean, meaningful, and timely data in an actionable way is a huge task. Understanding and remedying the root causes is an even larger task. Dr. Zev Eigen (MIT PhD), Founder & Chief Scientific Officer of Syndio, launched this company because of his deep interest in this spectrum of needs. Syndio focuses on the data pain points to enable the transparency to address the root causes of pay inequality and create inclusivity of opportunity.
The Syndio solution identifies pay gaps in seconds and measures employee opportunity and representation to build diverse teams throughout an organization. Over 300-400 companies, including over 10% of the Fortune 200, rely on Syndio’s platform to close pay and opportunity gaps, mitigate legal risk, and turn DEI goals into tangible results.
Zev joined our NYC class from Amsterdam. It was midnight for him.
What is the launch story, Zev?
“I think the thing that made Syndio possible was the pivoting.”
Syndio as we know it today originated as an organizational analysis (O&A) IP developed by a company named Syndio Social founded by Zack Johnson. Zev was brought in by one of Zack’s potential clients to vet the company. The original tech was an O&A network tool to understand how resources are exchanged, where the bottlenecks are, and who is influential. This tool was created to derive an individual’s contribution to the overall organization and determine the impact if that person left.
Zev liked the tech, validated the math, and got to know the founder. When the founder chose to sell, Zev’s vision was to raise money to buy the technology, productize it, and build it out. The tech was really good but Zev’s marketplace perspective led him to believe a pivot away from the social network offering to another use case was merited.
“The main pivot in the early days occurred because I spent a lot of time analyzing the market and trying to understand what was going to happen two or three years ahead.”
Zev’s career path has included serving as a lawyer, a labor economist, and as a statistician doing data analytics on the plaintiff and defense side of labor cases. He estimated that there were a lot of use cases that could be derived from the original IP but it would be a heavy lift requiring experts to productize the tech. Zev raised enough money to purchase the IP, the goodwill, and the Syndio name. The initial investors were angels and an institutional investor from private equity.
In the early days, Zev and his team were focused on building the next generation, people analytics platform by making it very broad but actionable. Zev shared his seed funding pitch deck with us and honed in on the three steps of Syndio’s PayEQ solution: Collect relational data, analyze and visualize, and make actionable.
Selling to a human versus an organization.
Zev stressed the importance of refining the value proposition for the buyer versus the organization as the customer.
“When you are selling SaaS into a market you need to have a specific buyer in mind.”
Syndio pivoted from O&A to pay equity for this reason. There were a lot of things that were happening in the macro environment (i.e., regulatory changes and other factors). Such developments were top of mind for Zev’s buyers.
“The one takeaway if you are trying to find product market fit is to deeply understand your buyer. The biggest mistake I see a lot of founders make is they come up with an idea that is good for a business… [such as] good for GM or Salesforce. That is already a mistake because Salesforce, who is a customer of Syndio, doesn’t buy Syndio. They are not the buyer. The buyer is a human being who works at Salesforce, and that person’s name is Stan Dunlop.”
Zev’s point is that the key is not to understand Salesforce’s motivation. What matters most is to understand why Stan, his buyer, would want to buy his product. Is the product part of his budget (a line item that Stan can buy)? How does it make him do his job more effectively so that he gets rewarded for the software Zev sells? How does it prevent him from getting fired from a legal compliance perspective?”
Making the Syndio solution actionable is the hook. Zev strives to make Syndio’s specific buyer the hero of their organization.
“That is how you find product market fit. It is not about the organization. It is about the attention to the specific buyer.”
Zev’s buyers are heads of compensation and benefits. They are heads of total rewards. They were tasked with addressing new legal requirements.
“Many states started to pass more robust laws than the ones on the books since 1963. There was a lot of press coming out regarding these laws. There was a lot of movement in Europe as well.
There was mounting pressure on organizations from the laws that were changing for pay equity and ESG movements that were starting to become a thing. There was a groundswell to really understand how people could be paid fairly equitably. This was in 2016, 2017.”
A lot of people in HR were trying to figure out if and how they needed to comply with this.
“They were freaked out over pay equity and they were not lawyers. They were struggling to get things right. You always want your clients to be the hero for using your product.”
Who else is trying to solve this and how did you fit in then?
“Current solutions were the best competition for us. They were law firms and consulting companies who had no idea how to use technology or they were bad at using technology because they were steeped in a billable hour model.
The status quo was antiquated and suboptimal. This was an opportunity to come in and find a tech solution.”
Zev described his experience as a consultant in this area where the client would give him data to run a bunch of regressions and models.
“You would try your best to explain complicated math to people who don’t care about math who just needed to figure out where the problems were and how to solve the problems.”
Zev described getting data from the client systems, running the analysis, and returning with the results to share with the client only to find that the employment groupings and compensation had changed requiring everything to be recalculated… Four iterations later that data had gotten older, the results were not as actionable, and the client had spent a lot without getting the information most needed when needed.
“It sucked. It was very inefficient. The biggest inefficiency was the back and forth.”
What was the better solution?
The solution was to automate and streamline the process for speed. No more back and forth. The client, not outside parties, would manage the data and review system. Zev showed my class his wireframe for his initial product idea. It was beautifully ugly. We were shown the original whiteboard sketches.
How were these initial ideas received?
“Every expert we met doing this work told us it wouldn’t work. ‘We have PhDs. Customers trust us. They can’t do it themselves. Customers need an expert like you, Zev.’ We did it anyways and pivoted from an O&A to a pay equity tool.
I kind of liked that my competition was saying no, no, no.”
There were five people at Syndio in the early days. They sat in a room and Zev sketched things out.
The first wireframes of Syndio’s PayEQ depicted a system to input HR data which could be customized by the client. The system would do the math and yield the actionable data, headcount by SSG (substantially similar groups), gender (or any other protected category such as race or ethnicity), total annualized compensation differences, and an indication whether they were statistically significant without controls. The customer would then apply their specified controls to yield the output and the percentage variation with information on the effects.
Zev showed us how these wireframes compared to today’s final product where a client clicks through dashboards to access representation breakdowns, factors driving the pay gaps, the likelihood of women (or group) being top earners, diversity of leadership, and the identification of suggested groups for closer examination. Syndio has a new feature facilitating the ability to stay in compliance over time which allows a user to see what internal rates and external market rates are for pay equity. Additional recent features based on customer requests include the ability to review data in different currencies (as well as in one base currency) and the option of system integrations (API/HRS).
Insight, Trust, and Attracting Investors
“I have had a fair amount of interaction with VCs, early stage, middle stage, and now series C. What resonates the most is comfort in your space. They don’t know your space, but you do…
They are basically investing in the trust that you are a human who lives, breathes a space…
None of our investors know as much about HR tech, our buyers, our products, our math and method, or the law as we do. They are investing in us because they trust we do know those things and we have leaders in place that can execute on those things.
You have to have the vision and you have to be able to execute.”
So, founders, how do you get investors to trust you if you don’t have the deep experience in your space like Zev does? You get somebody on your team that does. That is the purpose of my impact venture incubator course. We facilitate cross campus connections for students, researchers, faculty members, and alumni to gain insight and build the needed teams with vision and execution acumen that investors will trust.
Zev’s closing reflections
“People thrive in different stages of start up life. For me, the early days were when I definitely thrived… Maybe we will make payroll, maybe not. Who knows. I have to sell six more things. I have to close deals. I have to support the product. I was customer success and domain support. Now we have a team of twenty people, each one of those things is now a division…
You are doing all these things while you are figuring out how to do all these things…
I was talking to customers all the time. I was talking to prospects all the time. You are constantly listening. You are constantly getting feedback. Being a good listener is so critical. Your prospects are giving you information at all times. You just have to listen really carefully. And that’s gold.
And you have to tune-in in different ways to really understand what people are saying. When I get off the call with product people, they will tell me what they heard while I may hear different things.
If you listen carefully to what a person’s motivation is you can really dig in and hear things others aren’t hearing.”
Tech companies were Syndio’s early adopters. Now Syndio has a wide range of customers. It is currently the industry standard. The Syndio team was a first mover.
Zev added one last plug. He is hiring! Syndio loves hiring people who are passionate about pay equity and are motivated to do good in the world.
“Frankly, I wouldn’t stick around- and I have other stuff to do- if I didn’t love the people and the work that we do.”
Syndio’s $50 million Series C round investors include: Candace Parker of Chicago Sky; Alexi Robichaux, CEO and co-founder of BetterUp; Anita Lynch, chief data officer at New Relic; Rachel Romer Carlson, CEO and co-founder of Guild Education; Spencer Rascoff's 75 & Sunny; and, Cap Table Coalition. Firms Concrete Rose and Next Play Capital invested in the company for the second time. They join Emerson Collective (Fern Mandelbaum), Bessemer Venture Partners (Byron Deeter & Talia Goldberg), Penny Jar Capital, and Voyager Capital to bring Syndio's total funding to $83 million.
Thanks for sharing your journey to pay equity with us, Dr. Z!
A big thanks to our six amazing mentors this week: David Bolocan (Payments & Banking as a Service Guru), John Majeski (CEO of Portola Valley Partners), and Dr. Lyndsey Burton (Worldwide Healthcare & Life Sciences Physician Lead at AWS), Evan Boswell Hamilton (Investor & Chief of Staff at Upfront Ventures), Ben York (Director of Corporate Strategy at Ramp Rate), & Sandeep Tyagi (Chairman & CEO of Estee Capital).