Minnesota Tech Veterans Scott Burns and Chip House announced the cofounding of a new venture called Structural earlier this month. We connected with the duo to go in depth on this latest chapter along their journey:
How did you two meet?
SB: We both have had a long standing relationship with the ExactTarget team given their connection to Minneapolis and Chip was a very early employee there while GovDelivery was a customer. After ExactTarget was sold to Salesforce, Scott Dorsey (the former CEO of ExactTarget) became a mentor of mine and thought of us.
You see, we were seeking to expand our executive team a while back and actually tried to recruit Chip as CMO at GovDelivery, but we didn’t get him, though we stayed in touch and knew we wanted to work together someday and that time has come.
CH: Both Scott’s have been an inspiration to me over the years and I’m glad we’re able to form Structural together.
At what point did it become clear that you two were going together with Structural, specifically?
SB: In January we really started talking about our interests in this space with High Alpha.
CH: …and I think by March, we determined we were going to move forward with this product and company.
Was it a foregone conclusion that you were going to partner with High Alpha?
CH: When I went seeking something earlier this year, partnering with High Alpha was at the top of the list.
SB: I became really interested in this space a long time ago, even before GovDelivery. What I’ve always been curious about is the intuition that organizations used everyday when it comes to hiring and firing, to promoting, to connecting, to managing — all that goes into the success or lack of it within a company’s organization.
In the human space in general, using data to power decisions is fascinating. Structural democratizes access to the data so it’s sitting in the hands of all employees. I knew I wanted to be in this area of technology when I left GovDelivery and this gave me the right path to do it.
What do you seek to accomplish with Structural relative to your previous pursuits?
CH: Looking back at ExactTarget in 2001 as a SaaS email service provider at the time, email proved to be a very hot and growing space. At Structural I want to do that all over again in a new space. What’s exciting is, Employee Success is as exciting as emerging now as the email space was then. Almost any organization you talk to has the same problem (recruiting and retaining talent) and those who can do it well are proven to grow faster and smoother, to create more value with their people at the center of that asset.
SB: I’ve always had this ideology of using technology for good in the world at scale and in thinking about helping people be successful in the 40 hrs/week they work, that’s an area for great impact. I started GovDelivery when I was 24 and I think now is a big opportunity to achieve greater impact with more wisdom and capital.
There aren’t a lot of repeat founders here but I’m already back in the ring.
What’s your big picture quantifiable goal?
SB: One customer at a time…we make a good team because I can focus from one thing to the next and Chip has experience taking something further in scale. If you’ve done $153m, you have to go for a billion, right…why not?
CH: The total addressable market for Structural (employee success management, employee engagement, people analytics) is many billions of dollars. We’ve both been involved in exciting entrepreneurial atmospheres and we’re focused foremost on creating a great company with a great culture here in the Twin Cities. Good things will come again if we can do that.
What is the relationship between you two as cofounders and High Alpha from an ownership/management perspective?
SB: The first thing is, I don’t focus on the equity stake. It’s clear that High Alpha shares my philosophy that if you put a management team of people that you have trust and respect for with a healthy share of responsibilities.
Chip and myself are on the board already as is Scott Dorsey, among others from High Alpha. We have a significant equity stake, as does High Alpha given their contribution to the product to the stage it’s at today. We’re already setup for an A-round of investment.
As product was incubated within High Alpha, what have you seen in terms of adoption that convinced you this is it?
CH: The way that customers are already using it! For example, there is a large law firm with hundreds of users. The firm’s partners are using Structural regularly on their mobile devices. It’s helping them provide access across the firm to better understand who inside the firm has a certain type of expertise or interest by region, helping them retain business by knowing the unique skills of each attorney. Another scenario is BrookSource, a rapidly growing IT staffing firm, which is using Structural across 23 offices for to know their employees better, to preserve the great culture they fostered as a smaller organization.
SB: I think the polling capabilities in Structural are really strong and it’s proving to move the conversation from the water cooler out in the open. It’s funny…look at LinkedIn…they help people promote themselves better to new/external companies than they do internally, and Structural flips that on its head. I like the stories that we’re seeing around this aspect of the product as well.
What stage is the technology in currently?
SB: We’re past beta, the product is working well with over 10 organizations and 1,000 users. We’re seeing more than 50% of managers and leaders using it more than once/week, it’s not just that it is useful, people are actually using it. We’re continuing to improve it and it’s ready to scale.
How do you charge?
SB: It starts around $10k/year for a 100 person customer and goes up from there based on a number of factors. We’re getting great feedback on the value since the spend represents just a fraction of what employers spend recruiting and retaining talent.
How do you breakdown the geography of Structural?
SB: We’re going to hire the best people where we can get them…High Alpha has great ability in Indianapolis and between us here, we do too. Much like at GovDelivery, I like having multiple offices, and both of us have experience managing dispersed teams. We’ll be hiring both customer/sales side and product/engineering in both places, together though it’s highly likely more of the growth will happen in MSP since we’re here.
Will you be officed be St. Paul?
SB: Yes, we’re in CoCo Lowertown currently and intend to establish a more permanent location over the coming months.
How many current full time employees are there?
SB: About 10 right now and we’ll probably double that this year.
What do you see as the napkin math in terms of overall capitalization?
SB: I think a business of this nature is $5m-$15m for the first wave of growth, depending on what we want to do with acquisitions and international reach, more is an option.
I imagine you might already have that…
SB: We have commitments on a bridge round currently and are going to take some time to find the right partner for another larger round in 2018. We have some good initial interest but have not yet concluded…it’s a lot easier to get the calls and offers lined up now than it was then.
Actually, people are kinda surprised that I’m jumping back in this quick, the pushback I’m getting is “are you serious?”
Why wouldn’t Structural work out as you intend it to?
SB: There is a shift going on in the workplace and the only sustainable skill is lifelong learning. So, are there enough organizations that understand this now and want to take advantage of the technology and data to fuel the growth of Structural company as we see it? I think that’s the first open question – but I believe there is critical mass there. The second is about human resources and helping them move from an attitude of ‘overhead’ vs. ‘strategic’ – are they willing to invest in the things it takes to be successful in the modern workforce?
CH: I think there’s going to be some laggards and some will embrace, like any new technology, but we’re getting great early feedback from organizations of all sizes. Plus the HR space is huge and still growing.
Your website is .ai, though I don’t see that phrase mentioned anywhere on the site or copy…is Structural an artificial intelligence company at the core?
SB: The vision for the company is to use data for automation as a guided sort of process. We have a vision behind that — it’s really not in this phase, don’t be distracted by that.
CH: We didn’t make that decision but we love the name so we’re going with it!
Who in the market do you intend to disrupt?
SB: LinkedIn is trying to do more for the enterprise, though I don’t think they are well positioned given that their model revolves around recruiting people out of the company. All the HRIS systems…and there’s a number of applications that are focused on employee success and happiness, which is critical, but doesn’t quite go as far as we can take things for long term satisfaction. We look at a number of these as partners and data sources…Chip did I get that right, I’m kinda going off script here…
CH: Aha! People analytics and employee engagement are both emerging right now. Our platform really pulls from the best of both as the first platform focused on employee success management.
What key positions are you filling first?
SB: Right now we have the product lead posted – that’s a high priority for us in the near term. Over time, CTO, CRO, sales leadership…though that’s what I do right now.
CH: We have enough ‘C Levels’ to start and we’re both doing everything right now, we’re excited to roll up our sleeves and be on the ground level.
It can get dirty down there…sure you want to do that?
CH: There’s something about creating that I get a lot of enjoyment from.
SB: This is my art — it’s who I am and what I do.