Practical Founders Podcast

#32: From her Kitchen Table to Global HR Employee Relations SaaS leader – Deb Muller

Deb Muller was an experienced HR executive at a large global company who left her job to start a consultancy specializing in managing important employee incident investigations. Surprisingly, her customers asked her for a software solution that included her best practices, so she mocked up some screens and had someone build the first version in 2009. She started selling it to fellow HR leaders and her software company HR Acuity was born. 

Professional management of employee incident investigations was new when HR Acuity started, but there was no shortage of employee incidents to track, especially in larger companies with more than 1000 employees.

She and her team built a community of HR leaders and led the global discussion about proactive employee relations and transparent HR incident management. Big changes like #MeToo, DE&I awareness, and remote employment during COVID increased the awareness of these HR issues and the tools to manage them. 

HR Acuity is now a fast-growing company with over 100 employees. Deb took a small angel investment from a friend a few years after starting the company. They grew mostly from revenues with no interest in any major funding until 2019, when HR Acuity took a growth equity investment from Growth Street Partners. In 2021, they took additional funding from K1 Investment Management. The company is still independent and growing steadily. 

Best quote from Deb:

“When we finally raised our first round of growth equity funding 10 years after starting HR Acuity, it really helped us think about scaling and investing in people.

“The talent pool gets richer because there are a lot of people that don’t want to take a bet with somebody that’s not funded, which I understand. It also gave me a sounding board with people that have done this before. It helped me understand the numbers in ways that I had never looked at them before. They also pushed me if I wanted them to push me. 

“I often wonder, should I have taken it earlier? But I’m not sure I was ready for it earlier. I’m not sure the world was ready for our product the way it is now.”

Edited transcript of Practical Founders Podcast interview with Deb Muller, founder and CEO of HR Acuity

Greg Head: And we’re live with Deb Muller, the CEO and founder of HR Acuity. Welcome to the Practical Founders Podcast, Deb.

Deb Muller: Thanks, Greg. I’m happy to be here. 

Greg: Well, HR Acuity is not a startup anymore. It’s a bigger company selling to much bigger companies. Let’s just start with where you are now. What is HR Acuity? And then we’ll go into how big is it and then we’ll go back to your journey of starting and growing this company.

Deb: Sure. HR Acuity is a SaaS platform. It’s an HR technology platform that focuses on employee relations. We are the only technology that was solely developed and is out there really focusing on employer relations and investigations. To folks that aren’t in the HR realm, I sort of describe that as when you have your employees working, you’ve hired them, you’ve brought them in; it’s when things don’t go right. When there are deviations from what you expect, whether it’s a performance deviation or a policy violation or maybe there’s an allegation of some misconduct in the organization. How do you manage that? How do you look for that? How do you predict it and get more preventative to make sure that employees have a safe and productive environment in which to work?

Greg: Is this predominantly about productivity management, documenting when somebody’s not making their numbers so you can document that? Or is it more about the other incidents that happen in, of course, larger companies?

Deb: Yeah, people always say, “Well, what kind of company needs HR Acuity?” And I’m like, “Well, do you have two employees? Do you have an employee? You probably need it.” Now, that being the case, those aren’t our customers. Typically, our customers have at least 1,000 employees, up to several hundred thousand to really need technology for this. And some of it’s about documenting, and some of it’s about helping with productivity, but it’s really about creating that environment, that culture, understanding what’s going on. There’s a DE&I thread to it to make sure that you’re doing things consistently, but at the bottom of it, it comes down to how we create that trusted relationship with our employees. How do they know when things don’t go right? Because they don’t always go right. How do they know how their employer is going to react to it, how they’re going to be treated, and do they feel safe in the environment? And then of course, from the employer’s perspective, they want that for their culture, but there’s also an element of risk. We read about that in the papers all the time about these lawsuits. Are we doing the right thing to protect our organization? Is there something happening that we don’t know about that could be a big headline?

Greg: Are we doing enough? Yeah.

Deb: Absolutely.

Greg: So you sell to big companies. How big is your company now? Can you talk about revenues and employees and the number of customers?

Deb: Yeah, I’m not going to really talk about revenue, but we have just over about 100 team members right now. So we’ve grown, which I can’t believe I’m saying that. So we were a primarily New Jersey-based company. COVID changed that. I sent everybody home for two weeks and then the world changed. And we really took advantage of it and were able to hire team members across the country, which really opened the talent pool for us to get some amazing individuals. So we are primarily a remote company right now with a headquarters in New Jersey that people congregate to on occasion. And then we also have some offshore developers that we use as well.

Greg: Yeah, that’s over 100 people. Congratulations. You’ve grown a serious company, right? This isn’t a startup idea or the “I wonder if we can get it to a million.” You’re probably over $10 million in revenue. When did you start the company?

Deb: So I actually started HR Acuity in 2006, St Patrick’s Day. That’s how I remember it. But I did not start it as a tech company. So I had done HR for many years, a couple of decades, I’ll say, and decided to go out on my own to start a company, to do workplace investigations, to conduct workplace investigations. I had done a lot of them in my career, I knew that I was good at them. I actually liked doing them and I found out that other people didn’t like doing them. So they always say, “Do what you like.” That was the hypothesis. I would go out, I would conduct investigations, I had a plan, and maybe I’d have investigators around the country. That was sort of the growth plan. We’d be different than a traditional law firm that tends to do these things. And that was how I started. There was no concept of technology or doing anything in the future. That sort of came a year or so in when I was going after prospects. I had never done sales before, but I had a pretty good network of HR professionals at large companies, and I would tell them about our investigations. And I had a methodology that we were using to conduct investigations. So they would say to me, “Well, when we need you to conduct our investigations,” because I really was only trying to do the high profile, the more complex, the ones they wouldn’t do in-house, “When we need you for those, we’ll call you. But we’re really interested in your methodology. We don’t have a good way to conduct investigations internally, all the ones that we’re doing.”

Deb: So initially, my response, again, no sales experience was, “Sorry, I can’t help you with that. It’s proprietary. Like, only I can use my methodology.” And then I would hear it over and over and I tell the story, like the two-by-four that was hitting me over the head started to hurt. And I sort of remember the old adage, “You should listen to your customers.” I thought, “Oh. I think they want what I have, but they need it in a different form.” And ironically, the company where it really kind of hit home was AOL. So it kind of gives you the timing of this. They were asking about it. I left a meeting and they’re asking. I said, “Well, I’m thinking about licensing it.” I had no clue. I mean, I knew what licensing meant, but I didn’t know how I was going to license this thing. And then I went home, which was my office at the time, and I said, “Well, it’s AOL. I can’t give them paper-based tools. I’m going to try to webify this or I’m going to build some software that can do this.” Didn’t know how to do that. The only tech that I knew was PowerPoint. I had kind of grown up with really bad or non-existent administrative support, so I learned PowerPoint. I was good at it. So I drew what would look like a login screen. The other thing I had on my side was that I also grew up with really terrible HR software, so I knew what I didn’t want it to be like.

Greg: Was there any good HR software back in the day?

Deb: No, it was terrible, right?

Greg: Right, all terrible. Just checking.

Deb: The problem with it was it wasn’t built by HR. It was built by some engineers who had no idea who the user was, no idea what they were trying to do, so it just was terrible. So that was one of my guiding principles, that we were going to make something that the users would understand, it would talk to them. So on PowerPoint, I drew a login screen, I drew a homepage, and I kept going. And 50 screens later I had this process. I was like, “Well, this wasn’t so hard to build technology.” I shared it with colleagues, I shared it with AOL. They liked it. I got lawyers and HR professionals around my dining room table. I showed it to them. I used my son’s Zoom mockups which were a thing at the time. I projected it on my dining room wall and they were like, “This is great.”

Deb: And so I said, “All right, well, I can do this.” I had $40,000 in the bank. It was some sort of, I don’t know, earnings that I had saved from something. I had $40,000, and I said to my husband, “Let me just pivot the business a little bit. I have this money. I think that’s probably enough. And I think, you know, take six months or so, we’ll get this thing off. It really could be this great thing.” And I learned a lot of things over time. I learned that, first of all, $40,000 was not going to be enough, number one. I learned that it was going to take a lot longer than six months. And probably the most important thing I’ve learned is that I had a very supportive husband because he was just like, “Sure, go ahead, do it.” That’s how it all got kicked off.

Greg: Yeah, that’s awesome. My sister was a VP leader of a large company in HR and did that for years. And that’s what you did. You were an executive in large companies doing the leading HR. Most of them don’t go off and say, “I’m going to work on this specialty thing as a consultant, then I’m going to create a software company.” Did you have an entrepreneurial gene in the background that made you want to kind of get out of the machine and go do it? Or was it you just saw a problem that nobody was dealing with and you were the one to go do it?

Deb: Yeah, I wish… I don’t know. I mean, when I look back, it’s funny because I look at my father. My mom was a schoolteacher. My dad was an engineer who hated his job and became a realtor and had his own company and sort of grew his company. You know, my brother has his own business. My sister has her own business. So I didn’t see a lot of sort of corporate growing up. No one around me was doing corporate. And when I was in corporate, I would look at sort of the most senior HR person and think, “I’m not interested. Like I don’t want to go to that path.” So when I had the opportunity to start my own thing, I knew I wanted to start it. And ironically, I didn’t know what I wanted to do. And I would ask people and they would say, “Well, why don’t you just go and be an HR consultant, like just a general HR consultant?” And I thought, “Oh, I don’t know. I’ve spent my career paying HR consultants to do all the crap I don’t want to do. So why would I want to do that?” Then it dawned on me that I like doing investigations. I was good at them. I had done some really complex ones and there was a need.

Greg: So that’s a really interesting thing too. You’re not an industry expert knowing the software industry, or education, or something else, but you’re an HR expert. An HR expert who said, “I’m going to be the expert in this functional niche, the specialty within HR that apparently most HR generalists don’t really understand the basic processes or the sophisticated stuff and all of that, the systems.” And you jumped into a specialty that appealed to you.

Deb: Absolutely. And I knew that there was more. There was data that was not being gathered that would be really so beneficial for organizations. And from my background, I didn’t know anything about technology. Ironically, I have a friend who was on sort of an early advisory board that I made. And one day he said to me, “I think you should build this as SaaS. And I’m like, “What’s that?” Like, I had no clue. And to this day, still, a really wonderful friend of ours to whom I still say, “You know, Scott, thank goodness. Thank goodness you had that conversation with me and I listened to you.” But I really didn’t know anything about it. But I knew I could find people. I mean, I obviously made some mistakes. I often say that if I knew what I needed to do, if I had researched really heavily what it would take to stand up an enterprise-wide technology solution, oh my God, I would have run so fast away from that. There’s no way I would have done it because I was like, “Who am I to do that?”

Greg: What year was that?

Deb: So I think the original PowerPoint prototype, which is now in the archives, was done in 2007, but we didn’t go live until the end of 2009. So I had a couple of stops and starts with developers. I did have to find a partner to help me because that $40,000 maybe got me a login screen. So I was very fortunate to be introduced through another sort of advisor to a group out of New Jersey who had resources in Mumbai and they sort of said, “Hey, this is what we think we need to get you to production and we’ll do a technology-for-equity swap.” So I did a little, you know, a minority to get me half a million dollars worth of technology, which got me to…

Greg: That’s a form of funding, right? You had your time to make this happen and maybe you were getting some service contracts, you know, just to see what was going on.

Deb: Still did some investigations to pay the bills.

Greg: Right. And you didn’t raise money to go get coders, you did this other kind of swap, which is a creative kind of thing. You must have had some credibility for them to say, “This founder is onto something. She’s going to do it, and we’ll make a bet.” You feel like now you didn’t know what you were doing, but was there a confidence there that said, “I’ve got to go create something?” Why did they bet on you?

Deb: I’ve always had this real bias for action. I mean, they did bet on me. And I look at it now and I really am thankful. And you know, that same company, they are still investors. Obviously, they’ve been diluted a bit. But we still use some of their resources. A great friend and I thank these people that really took a bet on me early on. Some of our early clients took a bet on us early on. Whether they knew how early on it was, who knows?

Greg: That was the early days of SaaS. It wasn’t obvious and ubiquitous and 10x multiples and everybody’s got to have SaaS in every industry. If you went to an HR department, I don’t know, was there any cloud-based software that they used in 2007? Maybe you were in that first wave.

Deb: It was really new.

Greg: You were a pioneer of SaaS for HR.

Deb: Yeah, it was really new. We had a lot of conversations with companies about, “Oh, will you do this behind our firewall? We don’t know about SaaS.” Obviously, we never have those conversations now. And there were times when I was like, “Well, if it’s a big enough company, maybe we will build it behind their firewall.” Thank goodness we never went that route and we just went down the pure SaaS route. But yeah, we had our server that we licensed through Rackspace. You know, the cloud wasn’t there. And I actually have a company that’s still a client today. When we were going through their security review, I remember this vividly because it was during Hurricane Sandy when we were out of power here on the East Coast, and they insisted, they insisted that as part of their security review, they had to go see our server. So they went to wherever our servers were in Texas, somewhere at Rackspace…

Greg: San Antonio.

Deb: …and they’re like, “We’re not going to let them on the floor. That’s sort of in conflict with our security.” And I’m like, “Can you just, if you have a little window, like put a little sticky on a server? Show them that that’s ours.” Somehow, someone went. Someone paid to go there; they felt comfortable. But it was very different. What people would ask for when it came to security reviews, you know, it’s just changed so much.

Greg: What was the most important pain that you wanted to solve first?

Deb: So initially it was all about investigations, putting together a process, a consistent process for how you conduct an investigation. You know, I know how I learned how to do investigations. It was sort of on my own. I mean, I’m going to age myself, I think I already have, but I went out and bought a book, “How To Conduct a Sexual Harassment Investigation.” And then I got better at it, and I had some attorneys come and went through training, and things like that. But the way people conducted investigations was how they learned and there was no standard. And typically, you didn’t really ask questions about how an investigation was conducted. The only time you ever got into trouble was if there was some litigation. And so it was very sort of behind closed doors, people put their files in their drawers. And so as a result, first of all, you weren’t using the data. Second of all, people were probably having a bad experience. We know that, when they were part of an investigation. And third, you actually could get to the wrong outcome if you weren’t doing it properly.

Deb: So that was initially what I was solving. The product actually was not called HR Acuity. The company was, but the product was called Dimensional Investigations. It was focused on investigations. Before we went live, we did expand it. It was called HR Acuity On Demand to include what we call employee relations issues. So those issues are not investigations, but they’re things that have to be documented, a performance issue, someone violating a policy. There’s no investigation, but you have to keep track of them. And so that was sort of the second thing. We have since now expanded our product and our platform. That focused really on the HR user, the ER user. Last year we introduced something called Manager, which gives managers tools because they’re dealing with employee issues. And then we just did our first acquisition earlier this year, a company called Speakfully joined us, and that is a workplace reporting. So an employee can anonymously, or not, come forward with an issue. So it sort of closes that loop and we’ve added to that ecosystem.

Greg: The world has changed since the ’90s and the 2000s and the last ten years post-COVID and post-COVID in tech companies, technology, and employee-employer relations, right? It’s all moving around a lot. I’d love to get into that with you. Let’s go back to your company. You had some first customers. When did you know you actually were on the other side? You say, “I have a company. Honey, I think I’ve got something here.” Usually, that’s about a million dollars in revenue and a couple of crazy employees and you feel like you’re onto something. What was it for you when you felt like you were onto something that wasn’t an experiment?

Deb: Yeah, it’s funny, that million dollars were always sort of that key milestone. I remember one year we got so close and to my accounting manager then, like at the end of the year, I’m like, “Come on, Susan, come on!” And ironically, years later, in one month we collected more. The month that we collected more than a million dollars she called me up. She’s like, “Remember the year when we were…” So I think that was part of it. But for me, one of the things my team always reminds me of is I don’t take a lot of time to celebrate because I’m always ready for the next thing.

Greg: Go go go.

Deb: So there have not been a lot of times. But I will tell you, one of the most emotional times for me was early on is when we moved. I was working out of my house. I had a few early employees come to my house, They would be working at my house.

Greg: The old dining room table thing.

Deb: Oh, the dining room table. We have stories. They got to take the dog out a lot. But we eventually got office space. Our first office space was in my town. It was above a salon. It was about 1,200 square feet. And we went, we rented it, and I got the keys. My husband wanted to do some things over the weekend, and I went back to take measurements because I had to go to HomeGoods to furnish it. And I went back and I was alone in my office and I got pretty emotional. So that was sort of for me a big step.

Greg: Oh my gosh. Yeah, a milestone.

Deb: I always remember that.

Greg: Yeah, right. Also signing a lease and a little bit more expense than… You’re kind of in the game now.

Deb: Absolutely, absolutely.

Greg: How did you find your first 10 or 20 customers? Were these people you knew that had that urgent investigation crisis somewhere in their organization and that was “call Deb time?” How did you get to those first 10 or 20 customers?

Deb: A lot of them, it was through my network. I didn’t realize, I mean, I’d never done sales before, but I had a great network. I had worked at AlliedSignal Honeywell for many years, I had worked at Citibank. I’d worked at big companies, and these HR professionals had gone on to other roles, very senior roles. So that was sort of my network initially. Ironically, when I first created the tool, I needed testers. I didn’t have a QA team, so I built test plans, which now when I look at, actually weren’t too bad for what I was doing. But I called a lot of my HR friends and colleagues and I said, “Would you just run through this test?” So one of them did the testing and said, “My company needs this,” and they became one of our first customers. And ironically, she now works for us. So she was a client and is actually our head of people now.

Greg: What was it that became a little bit of the factory to get you up and running? Was it you added a salesperson and they just started calling around or put content out on the web and people came to your website? How did you grow the business with sales and marketing?

Deb: It was a little bit of both. Marketing took us a while to figure out, it was a lot of starts. I did have an early salesperson who did just that, did a lot of calls. He got a lot of early healthcare customers. We had a great book of healthcare contacts. It was actually a book. The other thing that we did, which again, I didn’t know I was doing until I did it, but one client, it was actually Honeywell, they weren’t a client then, they are now. They were interested and they said, “Well, what are other companies doing? We want to get answers about what other companies are doing. We have these ten questions. Can you find these out?” And I said, “Look, I have contacts. I will get answers to these questions, but I just want to own the data. Let me own the data.” And they’re like, “Yeah, we don’t care.” So I sent out this survey. I created a survey on SurveyMonkey. I sent it out to my 40 contacts. I think I got 28 to respond, which is actually a pretty good response rate, and I published my first survey. And the next year I went out and I got 200 people to participate and then I got 500 people to participate. And we kept publishing that out. So that was one thing that started getting us some traction because no one else was really talking about this.

Deb: The next thing that happened was in about 2015, we started getting a lot of calls about employee relations. Employee relations was just starting to turn to kind of come into its own. It was really more buried within HR before that. It wasn’t really its own function like comp or organizational design. So people wanted a conference, and we were getting calls. The Conference Board was actually sending people to us, asking us about conferences. So we said, “Let’s do a conference.” Already we had meeting planners, and I’m in the room and I said, “I really hate conferences. I despise them. The idea of putting one on is not appealing to me. Let’s do something different. Let’s get some employee relations leaders together. This is a new function. I don’t know, we’ll get 50 of them. You know, we’ll get them in a room, we’ll get them around a square table, a round table, and we’ll create a roundtable. And let’s just start talking about what’s going on in the industry.” So it was very much Field of Dreams. If you build it, will they come? They came. Some we knew, some we didn’t. And we started having this conversation. The first roundtable was three-quarters of a day, and it was amazing. Not because of what we did, but because the people just had found their people.

Deb: They never had been brought together. So the next year it was a day and a half, and then it was two days. Then we expanded to do an East Coast one and a West Coast one. We were supposed to do an MBA one last year, but because of COVID, we couldn’t do that. And we continue to have those. In addition, they wanted more data. So in 2015, instead of doing a survey, we started doing a benchmark study. We just published our sixth benchmark study. It covers over five and a half million people. I will have to say many of our large customers, the relationships grew through their participation in our roundtable. We also have a community, empowER, which is an online community for ER professionals. It has over 3,000 ER professionals on it at all levels. So I think, you know, really coming in at a time when there was such a need, there was nowhere for these professionals to go. We’ve created this community and we continue to nurture this community. And they are wonderful. Not only are they amazing customers, those that are our customers, but they help us understand the direction in which we should take the technology. We listen to their challenges. They’re just talking about challenges and trying to figure out how to make it, and we’re thinking, “Huh. I think technology can help with that.” So it’s been great.

Greg: Obviously, you are a proven professional and you gained some expertise and had some proprietary processes for this specialty thing, but you didn’t say, “I’m the expert. I’m going to write the book. I’m going to do the speaking, I’m going to pontificate the answers to this group,” your audience. But you are more of a community builder bringing out the data from the answers. “I don’t know the data,” then you get the data and then you bring people together. “I don’t know the issues,” here are the issues. And you’re actually more of a community builder than a top-down expert. And I’m sure it builds your expertise. You know more about this probably than anybody in the world these days. So you became an equated position, marketing, with the word employee relations or employee investigations.

Deb: Greg I would love to say that this was a strategy that we laid out and executed perfectly, but really, we just fell into it. We talked to people, what do they need? And the timing was perfect. If we think back, 2015 was when we really started this. You know, not long after that, we have #MeToo. So, you know, the timing was just right. And now, yeah, we are listening to our clients, but we are also as a company really trying to push, push our members, push the community as to what employer relations can be. Because I think when you’re sitting in the role, it’s hard to do that. So we want to be sort of that sound piece to say, “Look, this is what we should be aspiring to. This is where things are going.” Actually, in this year, 2023, we are going to be releasing something and I don’t know if I’m allowed to say this now, it’s called ERQ, but it’s really about what is your journey in employee relations, in your organization. And we think organizations are ready to talk about it. I mean, they have to. If we think about the environment we’re in, are we going to have a recession or are we not going to have a recession? Are we pulling back on people? Are there going to be unions in our organization where we’ve never thought about unions before? We have more employee activism going on. DE&I, ESG, we’re talking about these things.

Greg: Remote.

Deb: Remote, COVID. I mean, you know, you need to be talking about what’s going on with your employee experience. You need to be tracking it. You need to be looking at the data related to it. And so if you don’t have a case management system or technology that is bespoke for that, you’re not going to be able to do it and it’s going to impact your organization.

Greg: Well put, salesperson.

Deb: Hey, I learned.

Greg: Yeah, that’s right. Your customers and your business started with kind of a tactical problem, an urgent, important tactical problem that wasn’t being solved. And you’ve grown that into a more strategic, I’m hearing, employee relations, employee experience, not just getting it after the fact, but building it into the system. Was that just your customer is pulling you that direction or did you have this expansive vision to be more strategic and use bigger words? And did that just grow organically, or how did that happen?

Deb: I think it grew organically, but that’s sort of who I am, sort of thinking about what we can do next. I mean, when I started in 2008, 2009, I never said, “Oh, in 2023, you’re going to be sitting here with 100 employees.” That would have never crossed my mind. I think a lot of founders or entrepreneurs come in and they’re like, “I’m going to IPO, I’m going to be a unicorn.” I still don’t think about that. I just want to build the best thing that we can build. I know we have a problem to solve. A lot of things have happened. Again, the world has changed a lot in ways that we never imagined. I knew I was solving a problem, but now I’m so excited because there’s just so much more that we can do for the employees that are missing right here, for employees, for the employer as well. Look, if your employees are happy, if they’re in the right spot, if they’re treated properly, things are going to go wrong, but if you know how to deal with them, you’re going to have a much more successful company.

Greg: Let’s talk about funding. You kind of did this on your own time and consulting revenue, and a little trading for equity with a development partner. Did you raise funding or try to raise funding?

Deb: I didn’t have an approach to funding because I didn’t know. I wasn’t from that world. I’m in New Jersey; I’m not in Silicon Valley. So I never really thought about it. The equity swap was the biggest thing I did, and someone helped me along with that. And then around 2014, I went to one of those pitch fests and I won some awards and I was kind of hooked up with a coach to help me, and this gentleman decided that I needed funding. So we put together a deck and he took me on this road show, you know, dog and pony show. And a couple of things happened. No offense, Greg, but I was in a room with a lot of white men who just didn’t get it. Not only did they not get it, but there was no way that I wanted to partner with them. I didn’t like them. They didn’t respect me. I just, I didn’t like them. The other problem was I didn’t believe the story we put together. So he helped me with this deck and it was sort of like, you have one salesperson now…

Greg: Dot, dot, dot, huge.

Deb: …if we multiply that and give you 12, you’ll have 12 times the revenue. I’m like, “I don’t think it really works that way.” So I didn’t believe the story. And we didn’t need money, at least I didn’t think we did, we were doing fine. So if I was going to give part of my business away, I was going to make sure that whatever we said we were going to do, we were going to do it. That’s just it. You know, it’s my company.

Deb: The other problem with that was it was a big distraction. I mean, there wasn’t a lot of us. Four, maybe three. I don’t even remember how many people I had at that time. So for me, being out on the road, I needed to run my business. And I finally said, “I’m done. Like, I’m done.” We did have one VC who was going to participate in the round. They were great, but I just said no. So we stopped that, and we just kept moving along. I did have a couple of advisors, and one of them a really great friend, advisor, Steve Schlesinger, said to me one day, it was after #MeToo, and he said, “I want to do an angel round. I want to lead an angel round for you. I think you need funding.” This was in 2018. So I said, “Well, thank you very much. Let me go think about it.” I went back and I ran the numbers to the best that I could run the numbers, and I went back to him and I said, “Thank you, Steve, but I don’t need your money.”

Greg: So how big were you at that point? Because you had grown slowly and then had the instigating…

Deb: A couple million, maybe. But I told him we didn’t need it. And he called me up two weeks later, and he’s a really good friend. He says, “We need to go to lunch. You need to take money. I don’t want to see you undercapitalize this business. You have such potential.” So he convinced me to let him lead a round. So he led a small angel round, and I was like, “Oh, money.”

Greg: Can I ask how much that was? Was that a few hundred thousand or a couple million or something?

Deb: It was a million.

Greg: Oh, great, great.

Deb: So we did that. And, you know, I was like, “Oh, money. That’s sort of good to have a little extra around.” You know, you can hire a little bit differently, you can invest in some marketing that you couldn’t do before. And so then I went back to… And I always had people calling me all the time looking to see if I wanted to raise money. And I said to myself, “You know, maybe we should think about this. Maybe I should take more money.” And around the time Growth Street Partners, Steve Wolfe, Nate Grossman, they’d been one of the firms that were calling, but for some reason, I had talked to them. Some I wouldn’t talk to, but I talked to them. I really liked their approach. You know, Steve was the one that called me. So a principal called me, not sort of a young analyst who had no idea. We had a great conversation. I still wasn’t ready. When he first called me, I wasn’t ready because I remember they were coming to New Jersey and wanted to have coffee and I totally blew them off.

Deb: But around this time I was out in San Francisco and I was visiting Lyft, who at the time was a prospect. And it just so happened in the same office complex, I walk by a door, it says Growth Street Partners. And I’m like, “Oh, I think those are those guys I talked to sometimes.” Knocked on the door, no one was there. I still give them a hard time about that. I emailed Steve and I said, “I think I went by your offices,” and he said, “Oh yeah.” And of course, I was like, “Well, we were there to visit Lyft, you know, prospect.” So he said, “Well, the next time you’re in town, why don’t we have coffee?” And so that was maybe February. Fast forward to July, and Lyft is a customer now. We’re going back on a trip to San Francisco to meet them and we decide to have coffee. And at the time, I was not thinking about funding. I actually brought with me my brand new head of sales, who hadn’t even started yet. I would not have brought her to a coffee to meet potential investors, but I brought her with me. And before I knew it, we’re talking and sort of we just start going. And by December we’d closed our Round A. So that was a great, great first step.

Greg: Well, that’s some practical funding. I know Steve and Nate at Growth Street Partners, they would say growth equity, and they’re looking for serious founders who have been very capital efficient and aren’t doing crazy things but are really on to something, super savvy about their customers and their product and their business and growing businesses. Different than the VC experience where it’s kind of like can’t raise enough money and there’s all these crazy terms and valuations and, you know, it’s bad funding drugs for most practical founders. But this is just like reasonable growth capital. Their math works when you grow a reasonable business. You don’t have to do crazy things. And they’re very operational and savvy, so.

Deb: They were really perfect. I didn’t know what growth equity was until I started talking to them and understood sort of it wasn’t just about the money, it was about helping us operationalize the business, bringing expertise that we didn’t know. They were small enough that they were involved. And they’ve continued. They’re still investors and they’ve become great friends. I really owe them so much. They have also, quite frankly, taught me a lot about being a CEO. Being a CEO and being a CEO with funding. And that was really important in a way that was just… But they still let me run my business and they respected my expertise as well.

Greg: What would you say to a bootstrap SaaS founder who is looking for reasonable, practical funding like that? They’ve gotten it to a point and they say, “I could move a little faster, I could get a little help. I don’t want to change my trajectory too much.” What would you say was the benefit of getting funding? You just didn’t leave this money in the bank and say, “Thanks, I’ve got a backstop in case COVID happens, or whatever.” But like, what did you do differently and how did you think about funding, as you said, a little differently than you did before?

Deb: It really helped us think about scaling and investing in people. You can hire a different caliber of person. That’s not true, I don’t want to say… The people we hired before are great. But the talent pool gets richer because there are a lot of people that don’t want to take a bet with somebody that’s not funded, which I understand. But, you know, it’s maybe the wrong bet to make. So certainly that. It also gave me a sounding board for people that have done this before. So it helped me understand the numbers in ways that I had never looked at them before. I mean, it sounds crazy now because this wasn’t so long ago, we didn’t focus on ARR as much. You know, we were like, “Oh, well, implementation revenue is good too.” We’re like, “Yeah, no, really ARR is really what we want.” So there were just things that we learned. They also pushed me if I wanted them to push me. On people, on changes to make, and on understanding kind of what we needed to do to get to the next milestone in our growth. It was really good. And I think, you know, I’m very grateful that my funding happened when it did. I often wonder, should I have taken it earlier? But I don’t know. It’s working out well, For me, it’s working out well, and it might have been too early. I’m not sure I was ready for it. I’m not sure the world was ready for our product the way it is.

Greg: Generally the case, yes, between the founder, their readiness, their business readiness, product, and customers, you add rocket fuel too early to something that isn’t tempered enough to chart their own path without going off the rails, it’s usually a problem. So the general rule I would say is to procrastinate funding and do it on your terms, which you were able to do. And you got a lot of advisory help. You mentioned some other advisors.

Deb: You do have to pick and choose. Everybody wants to give you advice and I have learned that I don’t have to listen to everybody and that I can sort of just say, “Thank you, but no thank you.” Everybody wants to give you advice and you really have to choose wisely. Who’s going to help you, who can actually do something better than you can? I mean, there are many times I’ve invested in either coaches or advisors or marketing help and found out, “You know what? No, no, no. We’re okay. Like, we’re doing the right thing. You don’t understand the business as we do.” But sometimes we do get really good advice.

Greg: Now you’ve got an executive leadership team, which when you’re starting, you don’t have. It’s just you doing everything with a little help and everybody is furiously paddling away. But now you’ve grown through that. Was it a major shift for you to go from CEO doer to CEO strategy team leader, chief cheerleader?

Deb: It still is, as some of my leaders might say. And I really try very hard to think about how I spend my time. But the biggest thing is having leaders who I have confidence in. My sales leader has to be better at sales than I am. My marketing leader has to be better at marketing. I want people who are great at things. Just let go and just do it and are willing to take those risks and work with me in partnership. I think one of the best hires I made this year was my Head of Product, and that was probably the trickiest, if you think about it, the trickiest hire to make. And we have so landed on that one. Because in a way, I was the Head of Product, right? It was my product. So it’s hard to find someone. You know, that person has to be pretty special, who I trust and I know can be the steward of the product more than I can be. Still comes to me, as the expert, as the founder, as the one who understands the domain. But she is, her name is Diane Frommelt. She’s amazing. And so I think that’s one of the hardest hires of any founded company because you are the product leader, essentially.

Greg: Right. And that’s a little different than the engineering, the code and the data and so forth. Product is the nuance of, “No this customer wants exactly this thing, and there are seven variations.” All the nuance of that that you have built through the years. And did your product leader have experience in the HR space or in this kind of space?

Deb: She did. So she did, which I think was another plus for bringing her in. But yeah, absolutely. But that’s where the trust comes in. Even with my engineering leader, I have to trust my engineering leader because half of the things he tells me I don’t even understand. So, you know, the other half I understand enough. So trust is just so, so incredibly important.

Greg: On your website, there’s your leadership team and at least half of your leaders are women. Deb, is that right?

Deb: Yes. They sure are.

Greg: It seems a little higher than normal. Is it higher than normal women employees around the company?

Deb: Right now, I think we’re about 50/50. I think we’re a little more heavily weighted on women if we look across our organization. I don’t know the exact numbers. And I don’t know why, maybe it’s because I have no bias in my hiring. Or maybe it’s true that people hire people similar to themselves, which is one of the problems with a lot of men. But I certainly make no apologies for it. I do remember when we hired our first male employee, it was a big deal, way back when. And we thought, “He’s going to have a really good shot at the March Madness pool,” because we didn’t know what we were doing.

Greg: Well, you’re also selling to HR leaders who are disproportionately high women, executive leaders in HR for large organizations.

Deb: Absolutely, absolutely.

Greg: Did you always sell to very large organizations? The bigger they are, the more employees they have, the more problems and the more likely they have investigations and will pay. Or did you experiment with selling to smaller companies and did your customer profile change through the years?

Deb: So at the beginning, which is probably another founder problem is you sell to whoever will buy, right? You cast a very wide net. And I didn’t know what an ICP was. I didn’t know how to kind of figure out my market. So I would sell to anybody. But over time, we got smarter. First of all, you need to have enough of a problem that a spreadsheet is not going to work, or doing it manually. So that’s why there’s sort of over a thousand and above kind of hit. We did try a couple of times to go downstream because as I said earlier, smaller companies still have this problem and there are a lot of them. But I started to realize, again, through the help of my advisors, that we couldn’t boil the ocean. We really had to decide what makes the most sense, and what customers were going to be the stickiest. We started looking at some smaller customers. They just weren’t good customers. They didn’t use the product to get its full value. The time to sell it was just as long as a large customer, sometimes longer, and we decided really to focus on 1,000 employees and greater. And even within that, we have different ways of selling to them because their needs are different. At some point, might we go downstream? We might, but right now we have a focus and that’s fine. There’s enough for us to do in the market that we’re in right now.

Greg: And what’s the average annual cost of your software to a big company? Is it like $100,000, or?

Deb: It depends. I mean, a smaller customer can get in for around $30 or a larger one can be multiples of hundreds of thousands of dollars depending upon their size and their use of it.

Greg: Well, now you have 100 employees. A former founder I worked who created two companies used to say, “Once you have 100 employees, you have one of everything.” Every personality, every background, every preference. Have you had challenges in growing your own company culture and HR? I notice you’re a Great Place to Work. I mean, is this something you emphasize, or as a scrappy, forward-thinking founder, did you have to go back and learn to spend time with the team?

Deb: So our culture grew from us, right? It was me. And then I had two employees in my house and we sort of grew up together doing everything. So if you worked for us, you wore a lot of hats and you just did… So that culture grew, and formed the foundation for our values and what we do as an organization. It does worry me every day that as we get larger, we’re going to lose that. And we do have more challenges and we’re more of a company now. We have to deal with company, like things in ways I don’t want to. Now, I am proud that last year when we became a Great Place to Work, we had grown by 30% or 40%, and our scores, which are actually very high, were even higher. And I was like, “Wow, that’s great.” I mean, that made me feel really good. It wasn’t the certification, it was the fact that we actually were getting better. But it’s just going to get harder. I don’t interview everybody. I used to interview everybody that came to the organization. That’s not possible anymore. I do try to meet with everybody. Sometimes I see a name and I have to think, “What do they do?” We’re larger, so we really are trying.

Deb: My Head of People, who I said used to be a user, we talk about this a lot. And one of the things we’ve sort of said to each other is, “We’re starting from scratch.” She also came from larger organizations. We can do things our way. We don’t have to do things by the book. We can make decisions that are good for our organization. We can pivot. We really listen to our employees. We’re not going to make everybody happy all the time, but we want to make this a great place to work. We want it because we feel like people do their best. But it is something that we continue to talk about every day. We have an offsite leadership team, in January, and one of our topics is our culture because we’re at this inflection point with so many employees.

Greg: It is an inflection point.

Deb: It is. And plus, we have the challenges that we don’t see each other all the time. When we’re all together, rah-rah, in one room, it’s a little easier. So how do we intentionally do things to ensure that we preserve that and enhance our culture? It’s a challenge.

Greg: In that whole conversation there, you never mentioned the investors. That means you actually have practical funding. You’re doing it on your terms and the investors aren’t really part of that conversation, to grow faster and then lay people off and pay people less or more or go crazy. A big VC-funded founder would be talking about employees and their investor goals in the same sentence, and you didn’t do that. So that means you’re doing the right thing for your business and your employees and your customers, and it’ll grow just fine as a result of that. And that’s one of the lessons there.

Deb: Well, I was just going to say, you know, when COVID hit, we didn’t know what was going to happen to our business. And we made a decision at that point. We actually pulled two job offers back, something that was terrible to do.

Greg: Yes.

Deb: But we decided, not knowing what was going to happen, that we would rather pull those back, than have to take action on any of our employees. We did not have to… All of our employees stayed on. I think we made two sales in the second quarter of 2020. We rebounded and we had actually had a really strong year, but we didn’t know. And we’re approaching this year the same way. We’ve had very high growth, and so one would assume we’ll continue to grow at such rates, but we know that there could be things that happen that are out of our control and we are really taking a very practical approach to our expenses because I never want to be in that position of having to choose because that’s on me. That means I didn’t run the business responsibly.

Greg: A true practical founder and I’m sure your employees appreciate that when they’re watching software company layoffs all over the place, the ups and downs. So, Deb, you had a little angel funding and then you’ve got some experience with that. And then you worked with Growth Street Partners and found the right fit there. Did you raise any other funding?

Deb: We did. So about two years after, so 2021, in July, around the summer, we started talking about what was next. We were doing well; we were growing as we expected to. Things were going well. We had cash and we’re like, “Look, this is a good time to start looking.” And Growth Street was really instrumental in that and helped guide us through the process. And we were really fortunate. We found another great partner. So we did our Series B with K1 Investment in September of last year. And that has just accelerated us even more. And sort of as we’ve gotten to different parts of our journey, they’ve given us different things to help us. They have even more operational resources that are really supporting us. It’s also a minority investment, still a minority investment. It’s just continuing a part of our journey.

Greg: I talk to a lot of investors like Steve and Nate at Growth Street and others. They say, “I’m looking for a serious founder who’s built a specialty business that’s been capital efficient to $3 to $5 million.” And you definitely did that. And now you’ve got a little funding to move faster and to help to use it wisely, it sounds like.

Deb: Absolutely, absolutely.

Greg: Deb, you’ve had a focus in employee investigations and a lot of those are sexual harassment and #MeToo was a little boost to that. What can you say about what’s happening in larger organizations over the last 10 or 15 years, or 5 years or two years? Is the world getting better? Is there a little less sexual harassment as maybe people are getting wiser and being discussed more and there are more penalties from the #MeToo or is it the same as it ever was and it’s a problem that still needs a lot of work?

Deb: Is sexual harassment happening less often? I hope so. I mean, certainly, there should be no surprise that people should know what is and what isn’t okay in the work environment. I think some organizations have made progress or have tried, but I think most can do more. You know, #MeToo was sort of a wake up call, everybody starts talking about it. It’s somewhat died down. You know, we have that conflated with like the DE&I approach and Black Lives Matter, and there are a lot of things going on in organizations. So proactive organizations or progressive organizations, many of our clients are doing the right thing. The issue is, yes, you want educate people. You want to tell them what’s allowed and what’s not allowed. But as an employer, you can’t assume that’s enough. You have to make sure that people can come forward when something doesn’t feel good. Whether it’s perceived or not, it’s happening and they feel that there’s trust. That they can come forward, talk about it and the company is going to take action. It doesn’t necessarily mean they’re going to like what the company does. The company might do an investigation and maybe move someone or not terminate someone, but they have to see that there’s transparency to that process, that something’s being done about it.

Deb: And I think that’s more important now than ever, this trust, this transparency that employees want. Employees know everything doesn’t go right. I always talk about this analogy. I’m a big fan of Nordstrom. And Nordstrom’s all about their customer service. And if you think about the stories we hear about their customers, it’s not, “Everything was going great. I went in, I found a dress, I bought it, I left.” It’s about, “something went wrong and here’s how they managed it. And and they did such an amazing job that I am a customer for life.” Amplify that and tell that to the world. Those are the moments that matter. It’s not about when someone gets promoted or gets a raise. It’s when they’re having a performance issue or when they don’t get along with their boss or when somebody does something to them that makes them feel unsafe or not welcome in the environment. How does my employer respond to it? They don’t expect perfection, but they do expect the right response and to be treated with respect and with dignity and understanding that this is a priority for the organization. And that’s why what we do is so important.

Greg: Well said. Deb. Congratulations on your success, your 15-year journey plus now. And where does this go from here? Do you just dot, dot, dot, keep growing? You’ve got investors, and they expect a payback at some point. Is that kind of in your future or is that in your long future? How do you see the future of HR Acuity?

Deb: I mean, that is a difference because they do expect something. You can’t like hide that. I explain that; my employees should know that. However, what that means… There are so many different routes we could take. It could be more capital, bringing in more capital. It could be some strategic partnership. It could be something bigger than that. I don’t know. Right now we have a great focus on growing in 2023. And beyond that, we have a vision that we’re really excited about because we believe it further differentiates us and is so needed in today’s corporate environment. That’s what we’re focused on, and we’re going to figure out the fastest and best ways to get that to deliver to our customers.

Greg: And the interesting thing is a three-person startup can find a big problem in the world, but you actually have to scale up to impact that problem and create change in the world, right? And the bigger you get, the more change you can make. That’s really exciting. Deb, is there anything you’d like to share for practical founders about your lessons or wisdom and maybe even women founders out there that they wouldn’t hear otherwise that you’d like to share with them?

Deb: I mean, for women, just do it. Be bold. That is one of the values of our company. Everybody in my company knows it’s my favorite value. Be bold. Take that step. Be willing to take that risk forward. Because what’s the downside? I mean, so you can just make a mistake and pivot. Be ready to take that step forward, I think is the most important thing. For women, think about who you’re surrounded by, who’s really helping you. Can you find allies to help you in the process? I’m also glad to talk to any women founders at any point in time. One of the things I learned growing a business is that there are people who say they’re going to help you and then there are people you don’t know really well who go out of their way to help you. So I do try to be that person. So I think it’s who do you surround yourself by? Do you really need them? If you have a vision, just go for it.

Greg: Excellent. Well, Deb, thanks for being on the Practical Founders Podcast. How could a woman founder reach you if they wanted to reach out and compare notes on their journey and get a little bit of advice?

Deb: I’m always on LinkedIn. Feel free to send me a message, or connect with me. I’d love to chat and get you into our community.

Greg: I’ll put that in the show notes for our podcast on the website. Thanks again for sharing your story and congratulations on your success, Deb, with HR Acuity and changing the world. It’s definitely a problem that needs help. So thanks for moving it.

Deb: Thanks, Greg. I enjoyed it. Thanks so much.

In this episode, Deb explains:

  • How she started her company by providing HR incident investigation consulting for large companies, then slowly transitioned to being a software-only company.
  • Why she grew their community of HR leaders at large companies with roundtable discussions to share ideas, processes, and approaches with each other.
  • How she bootstrapped the company with customer sales revenue, but slowly learned that some appropriate funding could help the company grow faster without being crazy about it.
  • What has changed in the employee-employer relationship in the last 15 years that has helped them grow
  • What women founders should be thinking about when they are serious about creating change in the world with a software company

HR Acuity Software Company Facts

  • Founded: 2009
  • Description: HR Acuity is a leader in HR employee relations and investigation management software for larger companies across industries
  • Number of Employees: 100 remote employees
  • Funding: Bootstrapped with a little angel funding for 10 years, then raised $49 million funding from Growth Street Partners and K1 Investment Management
  • HQ Location: Started in New Jersey, but not they are a remote global company



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Greg Head recorded this on episode on February 10, 2023 for the Practical Founders Podcast see all of the episodes.

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