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Lifestyle benefits startup Fringe gets a pandemic boost, raises seed round
Employers today often use perks to attract new talent in the form of discounts and deals, commuter funds, gym memberships, child care, free lunches and more. But the pandemic has impacted what sort of in-office or other in-person perks employees can access. That’s led to booming growth — and now, a fundraise — for a startup called Fringe, which offers companies a personalized marketplace of perks that people really want, like Netflix, Uber, Airbnb, DoorDash, Headspace, Talkspace and over 100 other apps.
The idea for Fringe came about from the co-founders’ work as financial advisors where they regularly found themselves consulting people who were weighing new job options and their associated benefits.
“Companies are spending a lot money on traditional benefits … $800, $1,000 a month per person. But the perceived value for most employees is relatively small, given the cost,” explains Fringe CEO Jordan Peace. “I started thinking about what could [companies] offer employees that would be a pretty low actual cost, but a really high perceived value?”
He landed on the idea of subscription services — things people use all the time in their daily lives, but sometimes feel just out of reach from a budgetary standpoint.
That’s where Fringe comes in.
Employers sign up for access to Fringe’s platform at a starting cost of $5 per employee per month. (The rate may decrease for larger organizations.) They then place the dollars they would normally spend on lifestyle benefits into the Fringe accounts of their employees, where they’re converted to “points” that can be spent on any of the apps and services.
Fringe Platform Walkthrough from Fringe on Vimeo.
Today, the marketplace offers a range of benefits, including streaming services like Netflix, Spotify, Disney+ and Audible, as well as virtual fitness, virtual coaching and wellness, online therapy like Talkspace, food and grocery delivery, like Grubhub, Uber Eats, Instacart, and Shipt, prepackaged meals, child care like UrbanSitter, and more.
In the U.S., there are 135 services partners to choose from, with another couple hundred that are available overseas.
The startup’s business model involves negotiating a discount of anywhere from 10% to up to 60% off these services, which it passes along to the employees through its points back (rebate) system. Initially, it only allowed employees to spend their employer-provided lifestyle benefits dollars on Fringe. But due to user demand, it later opened up to allow employees to spend their own money, too — a feature they wanted specifically because of the points back.
Fringe first launched in 2019 — well ahead of the pandemic — and saw some slow but steady growth. It ended the year with 15 clients, representing a couple hundred employees in total.
But then the COVID-19 pandemic hit, which sent a number of employees to work from home in a radical change to business culture that appears to have lasting impacts.
“After the dust settled from the first few months of COVID, we started getting 10 … 20 times more inbound interest,” Peace says, as companies realized Fringe could be a way to support their employees working from home.
“We were just in the right place at the right time to begin to profit from this changed workplace. And it’s not just a ‘pandemic perk.’ We’re going to get past COVID, and we’re still going to have two-thirds of people working from home. The workplace has changed,” he adds.
Image Credits: Fringe CEO Jordan Peace
By the end of 2020, Fringe had grown its client base to over 70 employers, representing now over 12,000 users on its platform. Today, its pipeline includes companies with between 200 and 2,000 employees — a sweet spot that allows them to move relatively quickly. This client base often includes tech companies, like car-sharing startup Turo or talent management system Cornerstone OnDemand, for example.
This year, Fringe expects to grow to well over 100,000 users on its platform, and increase its own team’s headcount, which is today around 20. It also plans to update its marketplace website to include things like automatic point gifting, charitable giving, new Slack integrations, improved navigation, and more.
As a result of the recent growth, Fringe has raised $2.2 million in new funding, in a round led by Sovereign’s Capital, with participation from Felton Group, Manchester Story, the Center for Innovative Technology and angel investors, including Jaffray Woodriff. As part of this investment, the company also added longtime advisor William Boland, senior director of Corporate Development and Strategy at Mission Lane, to its board of directors.
With the addition of the new funds, the startup’s total raise to date is $4 million.
Fringe believes the advantage of its marketplace is that it can be personalized to the user. Typically, employers determine what benefits to offer by running employee surveys, where the majority wins. That’s why many companies today provide perks like backup child care or discounted gym access. But this system discounts the minority’s needs — people who may not have kids or don’t want to work out. People who wish they could use their benefits dollars in a different way.
In addition to employee perks, Fringe believes that having so many subscriptions under one roof could present other opportunities farther down the line.
Woodriff, for example, sees Fringe’s potential as a big data play, in terms of who is signing up for what subscriptions and why.
“But if you think about the fact that you’ve got a subscription service marketplace … there’s more applications to that than just employee benefits,” Peace explains. “I’d like our Series A to be predicated upon the much greater total addressable market. And so I think we’re going to spend the next year to 18 months laying down concrete plans and building the tech to be ready to roll out a couple of different use cases,” he says.
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How ‘ghost work’ in Silicon Valley pressures the workforce, with Mary Gray
The phrase “pull yourself up by your own bootstraps” was originally meant sarcastically.
It’s not actually physically possible to do — especially while wearing Allbirds and having just fallen off a Bird scooter in downtown San Francisco, but I should get to my point.
This week, Ken Cuccinelli, the acting Director of the United States Citizenship and Immigrant Services Office, repeatedly referred to the notion of bootstraps in announcing shifts in immigration policy, even going so far as to change the words to Emma Lazarus’s famous poem “The New Colossus:” no longer “give me your tired, your poor, your huddled masses yearning to breathe free,” but “give me your tired and your poor who can stand on their own two feet, and who will not become a public charge.”
We’ve come to expect “alternative facts” from this administration, but who could have foreseen alternative poems?
Still, the concept of ‘bootstrapping’ is far from limited to the rhetorical territory of the welfare state and social safety net. It’s also a favorite term of art in Silicon Valley tech and venture capital circles: see for example this excellent (and scary) recent piece by my editor Danny Crichton, in which young VC firms attempt to overcome a lack of the startup capital that is essential to their business model by creating, as perhaps an even more essential feature of their model, impossible working conditions for most everyone involved. Often with predictably disastrous results.
It is in this context of unrealistic expectations about people’s labor, that I want to introduce my most recent interviewee in this series of in-depth conversations about ethics and technology.
Mary L. Gray is a Fellow at Harvard University’s Berkman Klein Center for Internet and Society and a Senior Researcher at Microsoft Research. One of the world’s leading experts in the emerging field of ethics in AI, Mary is also an anthropologist who maintains a faculty position at Indiana University. With her co-author Siddharth Suri (a computer scientist), Gray coined the term “ghost work,” as in the title of their extraordinarily important 2019 book, Ghost Work: How to Stop Silicon Valley from Building a New Global Underclass.
Image via Mary L. Gray / Ghostwork / Adrianne Mathiowetz Photography
Ghost Work is a name for a rising new category of employment that involves people scheduling, managing, shipping, billing, etc. “through some combination of an application programming interface, APIs, the internet and maybe a sprinkle of artificial intelligence,” Gray told me earlier this summer. But what really distinguishes ghost work (and makes Mary’s scholarship around it so important) is the way it is presented and sold to the end consumer as artificial intelligence and the magic of computation.
In other words, just as we have long enjoyed telling ourselves that it’s possible to hoist ourselves up in life without help from anyone else (I like to think anyone who talks seriously about “bootstrapping” should be legally required to rephrase as “raising oneself from infancy”), we now attempt to convince ourselves and others that it’s possible, at scale, to get computers and robots to do work that only humans can actually do.
Ghost Work’s purpose, as I understand it, is to elevate the value of what the computers are doing (a minority of the work) and make us forget, as much as possible, about the actual messy human beings contributing to the services we use. Well, except for the founders, and maybe the occasional COO.
Facebook now has far more employees than Harvard has students, but many of us still talk about it as if it were little more than Mark Zuckerberg, Cheryl Sandberg, and a bunch of circuit boards.
But if working people are supposed to be ghosts, then when they speak up or otherwise make themselves visible, they are “haunting” us. And maybe it can be haunting to be reminded that you didn’t “bootstrap” yourself to billions or even to hundreds of thousands of dollars of net worth.
Sure, you worked hard. Sure, your circumstances may well have stunk. Most people’s do.
But none of us rise without help, without cooperation, without goodwill, both from those who look and think like us and those who do not. Not to mention dumb luck, even if only our incredible good fortune of being born with a relatively healthy mind and body, in a position to learn and grow, here on this planet, fourteen billion years or so after the Big Bang.
I’ll now turn to the conversation I recently had with Gray, which turned out to be surprisingly more hopeful than perhaps this introduction has made it seem.
Greg Epstein: One of the most central and least understood features of ghost work is the way it revolves around people constantly making themselves available to do it.
Mary Gray: Yes, [What Siddarth Suri and I call ghost work] values having a supply of people available, literally on demand. Their contributions are collective contributions.
It’s not one person you’re hiring to take you to the airport every day, or to confirm the identity of the driver, or to clean that data set. Unless we’re valuing that availability of a person, to participate in the moment of need, it can quickly slip into ghost work conditions.
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15Five raises $30.7M to expand its employee development toolkit
Technology has been used to improve many of the processes that we use to get work done. But today, a startup has raised funding to build tech to improve us, the workers.
15Five, which builds software and services to help organisations and their employees evaluate their performance, as well as set and meet goals, has closed a Series B round of $30.7 million, money that it plans to use to continue building out the functionality of its core product — self-evaluations that take “15 minutes to write, 5 minutes to read” — as well as expand into new services that will sit alongside that.
David Hassell, 15Five’s CEO and co-founder, would not elaborate on what those new services might be, but he recently started a podcast with the startup’s “chief culture officer” Shane Metcalf around the subject of “best-self” management that taps into research on organizational development and positive psychology.
At the same time that 15Five works on productizing these principles into software form, it seems that the secondary idea will be to bring in more services and coaching into the mix alongside 15Five’s existing SaaS model.
This Series B is being led by Next47, the strategic investment arm of manufacturing giant Siemens. Others in the round included Matrix Partners, PointNine Capital, Jason Calacanis’s LAUNCH Fund, Newground Ventures, Bling Capital, Chaifetz Group, and Origin Ventures (which had led 15Five’s Series A). It brings the total raised to $42.6 million, but Hassell said that while the valuation is up, the exact number is not being disclosed.
(Previous investors in the company have included David Sacks, 500 Startups and Ben Ling.)
15Five’s growth comes at a time when we are seeing a significant evolution in how companies are run internally. The digital age has made workforces more decentralised — with people using smartphones, video communications and services like Slack to stay in constant contact while otherwise working potentially hundreds of miles from their closest colleagues, or at least not sitting in one office altogether, all the time.
All well and good, but this has also had an inevitable impact on how employees are evaluated by their managers, and also how they are able to gauge how well they are doing versus those with whom they work. So while communication of one kind — getting information across from one person to another across big distances — has seen a big boost through technology, you could argue that another kind of communication — of the human kind — has been lost.
15Five’s approach is to create a focus on building an easy way for employees to think about and set goals for themselves on a regular basis.
Indeed, “regular” is the operative word here, with key thing being frequency. A lot of companies — especially large ones — already use performance management software (other players in this space include BetterWorks, Lattice, and PeopleGoal among many others), but in many cases, it’s based around self-evaluations that you might make annually, or at six-month intervals.
15Five’s focus is on providing a service that people will use much more often than that. In fact, it encourages use all the time, by way of sending praise to each other when something positive happens (it calls these “High fives” appropriately enough), as well as regular evaluations and goals set by the employees themselves.
Hassell said in an interview that this is in tune with what modern workplaces, and younger employees, expect today, partly fuelled by the rise of social media.
“Most millennials will get feedback on what they eat for breakfast more than what they do at work,” he said. “The rest of our lives exist in a real-time feedback loop, filled with continuous, positive reinforcement, but then you go into work and have an annual or maybe biannual performance review? It’s simply not enough.”
He said that he knows some millennial employees who have said that they will not work at a company if it’s not already using or planning to adopt 15Five, and since talent is the cornerstone to a company’s success this could have a significant impact.
The startup was born in San Francisco in more than one sense. It’s based there, but also, its principles seem to be uniquely a product of the kind of self-reflection and self-care/quality of life emphasis that has been associated with California culture for a while now, even amidst the relentless march that comes with being at the epicenter of the tech world.
In that regard, its newest investor, Next47, will help put 15Five to the test, both in terms of how the product will be adopted and used at a company whose holdings are as much manufacturing as technology, and in terms of sheer size: Siemens globally has around 400,000 employees, a huge jump up compared to the smaller and medium-sized businesses that form the core of 15Five’s customer base today.
Matthew Cowan, a partner at the firm, noted that while Siemens is currently not a 15Five user, the thinking behind the investment was strategic and the idea will be to incorporate it into the company’s practices for helping employees’ progress.
“It’s very representative of how the workplace is transforming,” he said
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Shiftgig raises $20M more to connect hourly workers with open jobs
The rise in on-demand services from the likes of Uber, Lyft and Postmates is fuelling a new workforce of freelancers in the service industry who are not tied to single places of employment and can work hours that are more suitable to them. Now a similar kind of flexibility is finding its way into the world of hourly work, too. Shiftgig — a startup that has built a mobile platform… Read More
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How Old-School Management Kills Work Culture
Early in my career, I had an encounter with a senior leader that left such a vivid impression on me that I can still remember it like it was yesterday. It was our first meeting as manager-employee. We were less than five minutes into our conversation when he abruptly and sharply interrupted, “Wait, is your chair higher than mine?” Read More
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