AI fuels a $4.6T opportunity for service-as-software learn more
June 24, 2021
Ashu Garg
Eightfold AI, in which my Foundation Capital partners and I are early investors, is on a tear. It just raised a $220M Series E. And since the announcement of its Series D in October 2020, the company’s valuation has more than doubled. There are different dots that one could connect in charting the path that Eightfold took to get to this impressive point. I like to think of it as a three-part story about chance…
By accident of birth, I happen to share the same name as the CEO and founder of Eightfold, Ashutosh Garg. That means we also have very similar email handles. We both happened to have been working in tech in 2007 and would often get messages intended for the other Ashu Garg. This mutually assured identity theft ultimately led to our meeting in person. We got to know each other and became friends. We tried to start a company together — and failed to raise funding together. After which Ashutosh went on to cofound BloomReach, a digital experience platform and now unicorn. While our unsuccessful efforts at pitching venture firms led to my joining Foundation Capital as an investor.
At Foundation, my partners and I believe that we are in the early stages of artificial intelligence and machine learning reinventing enterprise software. This is a fundamental platform shift that will transform every layer of the IT stack and every industry and function. Over time, my investment focus has come to be in “AI-first” apps, software applications that automate and augment existing workflows and human tasks.
Meanwhile, after several years, Ashutosh left Bloomreach. For his next chapter, he wanted to both build an enduring company and try to leave the world a little better than he found it. We brainstormed ideas for important problems that could be helped by a startup applying the power of AI/ML. Ashutosh decided that his mission was going to be to increase overall employment levels in society and reduce inequality in the workforce. His hypothesis was that leveraging the latest ML/AI techniques would lead to breakthroughs in the matching of skills to opportunity.
As an investor, I was immediately excited by the scale of what he was tackling — matching the right talent to the right role is a trillion-dollar market — and I participated in the seed round. Over the next months, I tracked Ashutosh’s progress, made some customer intros, and we had many conversations about go-to-market. As soon as the company developed its minimum viable product (talent acquisition) and business model (selling SaaS software), Foundation Capital led the round in 2017 and I joined the board of what would eventually be Eightfold AI.
A life can turn on finding (or not) the right career opportunity. We all know this to be true. For a person, it might mean the difference between a prosperous, fulfilling life and one of regret and unrealized potential. For businesses, getting the best people for roles is crucial to a company’s performance and success. And yet, current HR systems have failed to keep pace with innovation. The course of lives and the trajectory of companies continues to be subject to the vicissitudes of outdated hiring practices and the vagaries of personal bias.
What Ashutosh is doing at Eightfold is harnessing AI-powered predictions to tame the forces of chance and improve the odds for job seekers and recruiters. Eightfold uses deep learning AI and its Capability Matrix to match the right individual to the right job based on their fit and potential. And it helps workers better manage their careers by guiding them on how to acquire desired capabilities and skills. They use technology to look beyond the words on a resume, and truly paint a full picture of the skills that any person brings to the workforce.
It begins with building a deep understanding of all talent: the roles and skills of every employee, candidate, contractor, and citizen. The company’s Talent Intelligence Platform brings together billions of anonymized data points, algorithms and domain expertise required to make a reliable, scalable impact for enterprises. Eightfold is enabling its clients to retain and grow their talent, upskill and reskill their workforce, recruit best talent efficiently, and accelerate their diversity goals.
Speaking of getting the best talent, Ashutosh recruited Varun Kacholia, a brilliant AI engineer, as his cofounder. Varun was an IIT Topper, who built YouTube’s search function and had prior stints at Google and on Facebook’s Newsfeed AI team. Then in 2018, Ashutosh brought Kamal Ahluwalia on board as President to lead go-to-market. They decided to focus on talent acquisition for the G2000 companies because that’s where the need and opportunity were greatest. They later expanded the product to include talent management for existing employees in response to customer demand.
The business was growing rapidly, beating the proverbial T2D3 path to becoming a billion-dollar SaaS company. Everything was going predictably and exceedingly well … until 2020. That’s when the predictable was exposed to the unprecedented.
When the rarest of black swans, the coronavirus pandemic, landed in 2020, the fear was that hiring might be frozen indefinitely. However — even though the uncertainty for Eightfold was enormous — in this hour of greatest need, the company stayed faithful to its core mission of helping people find good, productive work. As companies began laying off employees, Eightfold launched its Talent Exchange in partnership with McKinsey. Despite the risk to its business of offering a free product, the company worked with many of the largest employers in the country to match employees being laid off with companies hiring. In addition to being the right thing to do, it turned out to be invaluable for the evolution of Eightfold’s product and its continued growth. Partly as a result of the experience with Talent Exchange, Eightfold won the Department of Labor’s Veterans Employment Challenge to build a better job-matching platform for transitioning service members, beating out LinkedIn.
Nor did Foundation Capital waver in our belief in Eightfold’s long-term prospects. When the markets were in freefall in late March of 2020, we stepped in and led a round of investment into the company. Now, a year later, as the country begins to return to normality, Ashutosh and team’s commitment and our conviction that Eightfold will be a massive, enduring company have both been vindicated. Today, Eightfold has customers on four continents and users in 110 countries. The company continues to exceed expectations and the recent funding rounds led in quick succession by General Catalyst and SoftBank, respectively, are a testament to its exceptional performance.
Work and the workforce are changing. For enterprises to compete, now more than ever, it’s crucial that they match the right individual to the right job. Moreover, the need for personalized reskilling and upskilling programs has become one of the most critical issues facing employers and employees today. It’s a trillion-dollar problem that Eightfold is uniquely capable of solving, using AI to transform employment and career education for all workers and to help enterprises hire, retain, and grow a diverse global workforce. The progress the company has made in just a few years is stunning and it’s only just getting started.
It’s funny where a bit of good fortune or a small twist of fate can lead you. I’ve heard of people who share the same name friending each other on Facebook or going to a “name twins” meet-up. I’m not familiar with any other case of them launching a billion-dollar business together. Put another way: I said this was a story about chance. Well, another word for chance — is opportunity!