15Five, a startup that offers a cloud-based platform for employees to provide weekly feedback about their progress — and for CEOs and other managers to be able to read all of it quickly, is today announcing that it has raised its first VC money, a seed round of $1 million from a list of investors including Richmond Global, 500 Startups, Yammer Founder David Sacks, USTREAM founder John Ham, Jason Calacanis, ex-Mashable editor Ben Parr’s Dominate Fund, Sincerely CEO Matt Brezina, and Ben Ling.
Prior to this, San Francisco-based 15Five, which opened for business last year, had only raised a $200,000 friend-and-family round, David Hassell, CEO and founder of 15Five, told TechCrunch.
The market for online enterprise collaboration products, taking a page from social media services originally aimed at consumers, has exploded in the last several years, and 15Five is riding the wave of growing interest among businesses to invest more in these services to improve their productivity and communication among workers.
The inspiration for the concept, Hassell says, comes not from the world of tech but the world of adventure sports
(prior to 15Five he had also founded and run Kite Adventures, an adventure travel company): it was a concept first pioneered by the outdoor wear and equipment company Patagonia, which found that taking time for this kind of feedback actually helped the company be more productive, confident and successful. “The most productive people I know spend time reviewing and planning for their week,” noted Hassell.
15Five plays on the idea that it’s just as important for employees to reflect on the work they’ve done, as it is for them to share ideas about what is going on right now and to plan for the future. Equally so, it’s imperative that their managers are able to keep track of everything that is happening.
Realistically, though, we are all time poor, and so the idea is to make the process of creating and reading that feedback as painless as possible. Hence the name and concept of 15Five: 15 minutes to write the reports, 5 minutes to read them — courtesy of some algorithms that help sort and manage the feedback, and an interface that allows for quick browsing (see examples below).
Similarly, to help bring on companies that may be cautious of the concept at first, 15Five is based on a pay-per-use model, rather than long-term subscriptions. The cost is $49 for the first 10 employees and $5 per month every month after per employee, on a month-to-month rolling basis.
Hassell declined to give details on user numbers since 15Five came out of beta in August 2012, but noted that the service so far appeared to resonate with “Fortune 500 companies, universities, churches and non-profits.” He also told me of several startups that rely on distributed workforces, which are using it — although names haven’t been cleared yet for public disclosure.
At a time when we are hearing a lot of talk about funding crunches — but also seeing some startups positively swimming in cash — Hassell told me that he was actually turning people away from 15Five’s seed round because he likes to keep the company lean and mean.
“I’m happy with just $1 million for now,” he said. “We are really focused on a certain set of key milestones at this point and I originally put it out to do the round at $750k. I wanted to raise enough but not more than we need. Our team works great with constraints, where we are frugal and every dollar counts. We run a lean and tight organization and I want to make sure that we are focused with the money that we have all we need to prove out the next milestones of the company.” At that point, he says, 15Five may raise more.
Of course, providing employee feedback is not a new concept, but what is is the idea of using technology to make that process more efficient. That’s a concept that clearly appealed to Sacks, who has many times celebrated the concept of startups that are using new tech to sold old problems.
“I discovered 15Five when they presented at the Launch Conference. I was a judge and agreed to invest on stage,” Sacks told me in an email. “There’s a big opportunity for an employee survey tool. Think SurveyMonkey meets Yammer. In particular, 15Five does a great job rolling up employee feedback. Yammer integration helps.”
Indeed, where there is a lot of potential for 15Five is in how it integrates with other services that enterprises are already using, whether that be something from Salesforce or a mixture of software from several smaller vendors.
“We have a 2.0 product in the works out later this year, using everything we’ve learned and building on it,” says Hassell. “Our aim is like Apple’s: elegant simplicity to help with inherently complex problems. In our case, that challenge is how to create employee feedback that highlights the most important things without taking up too much of people’s time.”
That is a challenge the investors think is being solved now and is only improving over time.
“David and his team know exactly what they need to do to turn 15Five into a large and profitable company that changes the way teams and organizations interact,” Parr told TechCrunch. “They are executors who will overcome all challenges.” He sees 15Five as a potential successor to Success Factors (now part of SAP). “They are absolutely ripe for disruption.”
Further down the line, Hassell says the company has “a number of integrations planned” once version 2.0 is released. “There is a big opportunity for us to pay with other systems in the communication and collaboration space.” Whether that will take 15Five closer to Yammer’s new owner in Redmond remains to be seen.