Lattice Raises An Additional $175M For Its People Management Platform, Valuing It At $3B
Lattice raises an additional $175M for its people management platform, valuing it at $3B
During the past two years, Lattice, a platform that enables workforce people management (including the ability to conduct performance reviews, employee feedback, and praise; tools for setting and tracking goals and other long-term career plans; and analytics to gain an overall view of how a workforce works) has really come into its own as an enterprise, as our concepts of "office" and "team" have been stretched by the challenges of a worldwide pandemic. A large funding round has been completed by the eponymous startup at a high valuation — $175 million in a Series F round that values Lattice at $3 billion — underscoring the company's market position and long-term ambitions.
It was led by Thrive Capital, Elad Gil, Tiger Global, and Dragoneer, with participation from previous investors Founders Fund, HighSage Ventures, Shasta Ventures, Fuel Capital, and Khosla Ventures, in addition to several new, unnamed angel investors. The round was co-led by Thrive Capital and Elad Gil. A Series E round of funding at a $1 billion valuation brought the company's total funding to $330 million, and this latest round comes just ten months after the company's previous round of funding (also at a $1 billion valuation). The company's rapid growth, according to Jack Altman, the company's founder and CEO, led to a proactive approach from Lattice this time around.
More Information About Lattice
Employees who work at desks, also known as "information" or "knowledge" workers, are the focus of the company's current strategy. It now has 3,550 customers, an increase of more than 1,000 from the previous round, which took place in March 2021. A large proportion of Lattice's customers are local technology firms. This group of companies, which includes Slack, Turo, and Clio among others, currently accounts for roughly half of its users. Even though front-line, deskless employees do not currently fall under the purview of Lattice's mandate (because they require a significantly different set of tools and frequently differing priorities from those who spend their days sitting at computers), Altman did not rule out a future expansion into this market segment in the coming months and years.
The fact that Lattice's tools are well-suited to today's work environment contributes to the company's market success.
Recently, there has been a significant shift in how people interact at work. As a result of Covid-19, a large number of people who previously worked in offices are now working from home or other smaller, more localized settings. But one thing hasn't changed: today's workforce still requires a cohesive team environment in which individuals are free to communicate about their accomplishments and goals, and managers can gain an understanding of how they're performing in order to reward them or identify ways to improve their performance.
Even though Lattice had been steadily expanding for several years prior to the arrival of Covid-19, it was the pandemic that brought home just how critical effective people management can be.
For a variety of reasons, the world in which we now live has accelerated things, as Altman explained in an interview. "We'd built a number of products and gained considerable traction [prior to the pandemic]," he said. "The office environment promotes a wide range of interpersonal interactions, connections, and opportunities for apprenticeship. No, you don't need software for people management in an office environment, but even if you don't have those connections, you still need to feel like you're making a positive difference in the world. While we've been spending the majority of our day staring at a box, we don't have a manager who stops by to tell us we're doing a fantastic job and make us feel appreciated. I am reassured by systems such as Lattice that define how we connect and interact, and that our manager recognizes my value as a professional and as a person. Because of Covid-10, there is a tailwind."
Also beneficial (if surprising), has been the state of the economy. There were many who predicted that everything would implode in the spring of 2020 as a result of a decline in demand, the collapse of supply chains, and a cloud of uncertainty that would impair growth. While some sectors struggled initially — travel and tourism, for example, came to a grinding halt — the economy as a whole did not collapse, unemployment did not spike, and some people even realized they had some bargaining power as a result of the hiring demands made by employers. Consequently, according to Altman, there was a greater desire for better people management tools.
The following is how he described the mindset: "‘Oh my gosh, we have to invest more in people if we want to keep them,' says the manager. In the long run, this became the economic backdrop"
Within enterprise information technology, people management has evolved significantly over the last several years as an integrated and broader component of enterprise IT. Organizations such as Workday, which dominates the human resource software market, have expanded their toolkits to include management of various aspects of performance and compensation; at the same time, a number of pure-play companies, such as 15Five, have emerged to focus solely on areas such as goals and recognition. Lattice collaborates with and competes against larger platforms. It was suspected that the latter will become a more significant component of those relationships as Lattice continues to expand its own platform's functionality. For example, over the last several years, it has added performance management, engagement surveys, and now a variety of career development tools.
Moving forward
"Over time, the plan is to continue building and expanding," Altman explained. Within that, the company may expand into more traditional HR tools, but Altman believes that whatever it adds to the mix — which may include more AI-based automation, but only if it proves useful in assisting people in being more mindful of their work performance — Lattice will always stand in contrast to these because it was always designed with the individual employee, not the HR team, at the center of the wheel.
"The world of work has shifted, and the dimension in which we find ourselves is shifting from businesses to employees," he explained. "As a result of this shift, businesses must transition from being company-centric to employee-centric. Our argument is predicated on that thesis."
The expansion of the platform and its functionality, while serving a rapidly growing but slow-growing customer base, holds a great deal of promise for investors.
"In recent years, we've seen a convergence of several broad trends — the rise of remote work, the evolution of HR's role — that have fueled the HR market," investor Elad Gil said in a statement. "Lattice's strategy of developing a diverse suite of interconnected offerings has struck a chord and resulted in truly exciting growth."
