Winning in the Enterprise Space & the Future of Work with Jeff Wald Founder of WorkMarket
Jeff Wald is the Founder of WorkMarket, an enterprise software platform that enables companies to efficiently and compliantly organize, manage and pay freelancers. Jeff built WorkMarket from the ground up and sold the company to ADP for $400million. Along the way he learned some incredibly valuable lessons, some of which came during the exit process.
Jeff shares his journey, what it’s like to take on investors as a company grows, his thoughts on the future of work and Universal Basic Income, and why retraining will be key to a successful economy.
What lessons have you learned along the way as you’ve started and grown your business?
Show Links
- Follow us on Twitter: @jeffreywald, @mpd
Transcript
Mark Peter Davis: Jeff. Thanks for being here today.
Jeff Wald: Mark is always a pleasure to be anywhere with you. I
Mark Peter Davis: appreciate that even digitally. All right, let's start off. Uh, I'd love for the folks listening to get a sense of your entrepreneurial journey. Would you mind giving a background, um, feel free to start kinda early on, do the, do the life story.
Jeff Wald: Wow. Um, let's [00:02:00] see. I started my entrepreneurial journey as an investor and an Israeli venture firm. And after being there for a few years, met an entrepreneur who I was so enamored with. And I tried to back the company, he was building, it was called enforced at the time and I got outbid, but he and I became friends.
And when he came back a year later, having exited that company, uh, he said, look, you know, I should have done that deal with you. We had a good exit, a good outcome, but it wasn't as good as it could have been. And so he and I started working on a company together called spin back. Uh, and I eventually left the firm and founded that company with him and it failed miserably and bankrupted me.
That was, you know, I put everything I had into it. You put an equal amount and it's just, he had a lot more, so he was not bankrupted. I was,
Mark Peter Davis: did you officially go bankrupt or you just ran out of money?
Jeff Wald: It's a very, very good statement because I should be more careful with my words. I did not declare bankruptcy.
I just was out of money. He got the call from my mom. Do you need to [00:03:00] move back home? And, uh, you know, it's lucky to be able to have that kind of safety net. And I am grateful that I was able to get that phone call. Does it make it any less horrifying to get. And so, you know, I was able to not do that, but, uh, you know, after a few months of depression, having never had failed at something at that level before and been wiped out before you eventually picked yourself up and you dust yourself off and you get back in and we ended up re forming that same entity and ended up having a successful outcome with two new partners.
Uh, and then I founded with this same man, uh, A company called work market. We were lucky to raise 61 million in total from union square ventures, spark capital, and a few others. And we took that through to its conclusion, a sale to ADP in January of 2018. I had the pleasure of being on [00:04:00] the executive team that ADP for about two and a half years of running the work market division.
Uh, but in September of 2020 is when my obligation ended and. I remained an advisor to our friends at ADP, but now I am thinking about what my next entrepreneurial journey will be. Ooh, you're going to have to share.
Mark Peter Davis: Okay. Before we get to that. Now, when I look at your background before the entrepreneurial part started, you were a bit of a finance guy, right?
You did investment banking and that's not an uncommon story in the New York
Jeff Wald: tech
Mark Peter Davis: startup ecosystem. Um,
Jeff Wald: How
Mark Peter Davis: did you know when you think about being a founder, did that feel like something you had always thought about doing, but what was the mindset going from kind of traditional, safe institutional finance world to entrepreneurship?
Jeff Wald: Well, I will tell you, it was certainly not the plan. When I left JP Morgan, where I had been for about seven years as an M and a [00:05:00] banker that includes time at business school. Uh, I, in no way, shape or form thought I would become an entrepreneur. I, you know, maybe did some things as a kid that were entrepreneurial, but I always thought of myself as like a big company guy.
And there were actually a lot of people in JP Morgan that kept saying, you're going to run this place one day. And I thought, yeah, I am going to run that place one day. Um, but when I got, I went to business school and I finally got a chance to see other people doing other things and hearing about other career paths because, you know, I came out from undergrad and went.
Well, actually I did a combined undergrad and grad program, but I came right out from school right into investment banking. And then I didn't leave the office like 18 hours a day, seven days a week for five years before I left to go to business school. And in business school I saw, wow, everybody else doesn't do this.
This is crazy. And I got back, JP Morgan was nice enough to pay for business school and. I [00:06:00] remember being back for a few months and thinking, this is the worst job ever. Why does anybody do this? And knowing and meeting entrepreneurs of business school, that there was a different way. So I went to an investment firm, but market, I called a venture capital firm.
They wouldn't call it that they would say they're an investment firm. And I just started gravitating towards the early stage investing because as you sit with entrepreneurs, if you sit with an entrepreneur and you don't get fired up, There is something wrong with you because entrepreneurs are the most engaging, exciting people in the world.
They may not know exactly what they're doing. They may be dead wrong and what they're trying to do, but they are so darn sure that they're going to change the world that it's infectious. And I remember my boss at the investment firm saying to me, you have to stop fawning over these entrepreneurs during meetings.
Because I would say, there'd be like, Oh my God, you guys are so great. Oh, this is so cool. Oh my gosh. That's so interesting. Oh my God, you're amazing. And he would [00:07:00] pull me aside and say, you have to stop that because we have to negotiate with these people. And all you do on meeting is tell them how great they are.
And at one point he said to me, if you think they're so great, you should go do it. And about a year later, I left to go do it.
Mark Peter Davis: Do you think you'll ever go back? I mean, you've got this big corporate experience. I know you're on a bunch of boards. Um, and you've been a successful entrepreneur now, so you have options and
Jeff Wald: it's possible.
Um, will I go back to working at a big company, no. I mean, I will tell you, ADP is as good, a big company as you're going to find. These are some of the nicest people I've ever met. There's some of the smartest people I've ever met. Everybody there stays there for 20 years and I couldn't wait to get the heck out of there.
And if I was going to stay anywhere, it would be an ADP area. Great, great company that are doing great things. But gosh, even at a company that I love and ADP, it was so slow. And so bureaucratic, you have to be, you just [00:08:00] have to be, when you have 800,000 customers, you have 15 billion in revenue. So will I go back in that context?
No. Did I say to them, when they said, is there anything you would consider doing to stay? I said, sure, give me a few hundred million dollars and a corporate venture fund, and I'll build you the best corporate venture fund you got. And they said, well, we don't think the corporation should run venture funds.
And I said, that's actually a very good point of view. I don't disagree with that. So, you know, outside of an entrepreneurial context, within a company, it is highly unlikely that I would go back to a, to a big.
Mark Peter Davis: Okay. Now this is a little bit of a different note here. I've known you for a little bit. Uh, I gather,
Jeff Wald: I
Mark Peter Davis: think you got a few years on me that you're in the back half of your forties.
That is true. I know that you're single, not married.
Jeff Wald: That is also true.
Mark Peter Davis: You don't have a family, a nuclear family
Jeff Wald: that is also true.
Mark Peter Davis: How do you think that affected, helped or hurt your entrepreneurial journey? We [00:09:00] had a guest on recently who made a.
Jeff Wald: Strong
Mark Peter Davis: case for the importance of spousal support. What's
Jeff Wald: your take?
I often think about my co-founder through work market, who married at two young children and the sacrifices he had to make to be there 18 hours a day, seven days a week. And without spousal support, it would have been impossible. I mean, just impossible. I think about the. Relationships that I didn't nurture because I was spending so much time nurturing the company.
And I have some regret in that regard. I'm not sure that those were the best decisions for me as a person, but I made the decisions I made and I am where I am. So when I think about doing another one Mark, and then potentially putting life on hold again. Yeah. That scares me in a lot of ways. And I'm not sure that I'm ready for it.
And. [00:10:00] This is an opportunity to really focus on a lot of the things that I delayed doing. You
Mark Peter Davis: mean the moment now
Jeff Wald: where you've
Mark Peter Davis: exited ADP and you're evaluating your,
Jeff Wald: your life.
Mark Peter Davis: Yeah. Interesting. Well, we'll, I'll be watching. Uh, can you tell us a little bit about work market, right. To shift over? Maybe you can just give us the high level what the business did.
So
Jeff Wald: for folks. Work market is enterprise software that enables companies to organize, manage and pay their freelancers. So as companies continue to transform their labor forces and freelance becomes an increasingly important part of the labor landscape companies need the enterprise software to efficiently and compliantly manage that part of the labor force and the systems to integrate that part of the labor force into the rest of their labor force.
Mark Peter Davis: So is that, you know, when did you start work market? How long ago was it
Jeff Wald: 2010. Okay.
Mark Peter Davis: So it's we're 10 years later. [00:11:00] And the goal then was for, to help big companies manage their freelancers through technology. Is that still relevant today? Is the need greater or lesser? How do
Jeff Wald: you, how do you view,
Mark Peter Davis: uh, the relevance of the mission?
10
Jeff Wald: years later? I think the mission was important, then I think it's important. Now, there are certainly still an untapped market opportunity. There work market is not taken a hundred percent of that market yet. Uh, there are, I think two or three other companies in this space at this point as specifically enterprise software to manage freelancers.
Um, and it is a. It's an area of opportunity because there are still a lot of transformation of labor forces to be done, but I don't think it's as big of opportunity as some people think it is. Or as people thought it was in 2010. I see.
Mark Peter Davis: Okay. Why is that so hard? When we, when I hear the managing [00:12:00] freelancers narrative, you know, companies have a lot of HR technology and solutions these days, why do they need something specialized for freelancers?
Jeff Wald: The way you engage with freelancers is just different than you engage any other employee. The freelancer has a very different workflow that requires a different profile and structure requires different data flows requires different approval flows. They don't get paid through payroll. They get paid through accounts payable.
They have a host of different regulations in terms of how they're managed. And it is something that legal and procurement and HR gets very, very involved in. Uh, and so it requires very, very specific, special and specific systems that you can't use for temps and that you can't use for your full-time employees, but at the same time, the way every person engaged as a freelancer is very different just because you have KPMG as a client.
And they're a huge accounting firm. If you go into [00:13:00] PricewaterhouseCoopers or Ian yeah. Big accounting firms of Deloitte, you are starting from square one again. You have no learnings from that to add to that new cycle and the entire integration and configuration and implementation phase will be entirely, entirely different because even though those companies do the same thing, they evolved very differently in how they engage freelancers.
Mark Peter Davis: So this is enterprise tech. Did you have a big services operation to onboard the client? We
Jeff Wald: did. We had an entire implementation team. We had an entire onboarding team. We had an entire scoping team. And it, they were invaluable because as a salesperson going in and trying to sell that product, you wouldn't get into the nitty gritty.
And the nitty gritty is where things are we'll kind of succeed or fail.
Mark Peter Davis: Got it. How big was the team when you guys sold?
Jeff Wald: About 200. Okay.
Mark Peter Davis: So you went from a couple of founders to a 200 person operation working with some of the biggest name VCs in the country had a [00:14:00] big exit. What was the hardest part?
Jeff Wald: What was the hardest part of that journey?
Uh, I would say the hardest part of that journey, or was probably the, uh, I mean, look, I can kind of list out the mistakes we made enough. I would call those the hardest part. The hardest part may have been selling the company because look, we had a big exit. We generated returns for our shareholders. All of our employees made money.
Some of them made a lot of money. But you're left with the realization that you didn't achieve, what you set out to achieve. Right? Whenever that exit comes, that is the exit, unless it's an IPO, right? If that, if a sale comes, you are done, whatever you set out to do from a value creation standpoint or from a conquering, the world standpoint, you either did it, or you didn't.
And so, as we were selling the company, as excited as I was a part of me was [00:15:00] incredibly sad. And it was very, very difficult because I knew we had made so many mistakes and we had left so much on the table, but we didn't leave anything on the field. Right. We gave it our all, but because of all the mistakes that were made, and I knew at the end of the day, Mark, that they were my mistakes because of me.
Right. I was very conscious that because of me, we got to that exit, right. There was nobody more important than me and getting to the exit. And I say that with all the appropriate humility, like those are facts. But it is also 100% true that because of me, the exit was a smaller exit than it could have been.
And so I carried that burden as
Mark Peter Davis: well. You know, it's interesting when I've coached founders and worked with founders in the past, who are evaluating the exit, they're often weighing the idea of cutting short, against achieving a mission relative to the payout, the financial return that the investors are seeking.
Any advice for folks on how to weigh the [00:16:00] importance of the mission relative to the financial objective?
Jeff Wald: That is a really good question. I would say that it depends on how much money you've raised, because we had raised so much that I ceased being the founder of the business as my primary role. And I started becoming a fiduciary to the people that I had taken money from.
And so look, they offer me another 25 million to keep going. They said, look, we'll put 25 million more in the business. You keep going for another, another two years. And I had to sit back and think about it and say, this is the best expected value outcome. If we take that 25 million, there are certainly some chances that we can build something bigger and have a bigger exit, but they're very low.
And the smartest thing to do to return to generate the biggest returns for all shareholders is to sell this company today. And I, I stand by that decision given, you know, the hindsight that I can now look back on, it was the right decision, [00:17:00] but I couldn't sit there and say, look, when that was 25 million, I could go and maybe I could build this thing and nothing that I've always wanted to build.
I couldn't do that at that point. And so it depends on how much money you've taken and whether you become a fiduciary, what
Mark Peter Davis: was the mission statement of the company? But do you remember it.
Jeff Wald: So here in lies, one of the biggest mistakes that we made, not only did we not really have a mission statement, not only could I not tell you the purpose of the company.
So I draw a distinction between mission meeting my North star, and then my purpose, that kind of why we're there, but also during diligence, our friends at ADP said, you know, we asked every single employee what work market does, and here are 72 different
Mark Peter Davis: answers. Huh? Wow,
Jeff Wald: dude, it was like a punch in the gut.
I was like, ah,
Mark Peter Davis: how did that happen?
Jeff Wald: Cause I thought they would all say work market is enterprise software that helps that enables companies to organize the medicine and pay their freelancers. Right. It didn't they do now, they do now, [00:18:00] but we did not have a defined culture document. And I put that very high in the list of mistakes that I made.
Mark Peter Davis: Why do you think that matters other than the acquirer going around and getting different answers? How does that hurt a company to not have that culture document and that alignment?
Jeff Wald: I will tell you this, everyone that founds the company is super smart and they're super engaging and blah, blah, blah, blah, blah.
They are massively fallible. And if they are not harnessing the power of their team, they are decreasing their probabilities to success. If you have a group of people. That are all aligned and they understand why they're there, where they're going, who they are. Right. That one sentence of the company, that purpose of the company, that North star mission of the company, then you have all of these people rowing in the same direction and you can get away with not doing that when everybody's in one room.
Not one zoom room, mind you both, [00:19:00] just one room because everybody will just APR behaviors. They'll just look at what the founder does and they'll repeat what the founder says, but the second you start losing line of sight to everybody. You've hired really smart people that are really creative, and they're not just going to be robots.
And just repeat what you said and did outside of your presence. They're going to start thinking for themselves as you want them to. So how much higher probability do you have of getting to where you want to go? If you've got everybody rowing in the same direction, if you've got everybody bringing their authentic selves to work, because they know that they're valued, everybody bringing their ideas, but all remembering what they're doing, why they're there and where they're going.
I think you've massively increase your probabilities of success. And it's something we just didn't do.
Mark Peter Davis: We had another person on. Recently who talked about minimum viable process, the idea of having fewer [00:20:00] meetings, less all hands kind of breaking down communication internally at some
Jeff Wald: level. I think you can certainly do that.
If everybody understands who they are, why they're there and where they're going. I think you can get away with a lot of things. I think you can get away with a more distributed company where people aren't together all the time, but I will say that. I am a huge fan of learning and transparency. And I think those all hands are incredibly valuable for people to really understand everything that's going on in their company.
And you don't get another chance to do it. One of the reasons Mark that I did our all hands and I would always, the all hands would be right after our board meeting. And I would take the board deck and I'd take out things that were, you know, that has to do with people's salary, because I would always tell everybody at work market, you could know everything that's going on here except what other people make that's between me and them.
And I would present the information that I would present to Fred Wilson and to the other board members. And I would present it to that team [00:21:00] because they had every right as shareholders in that company to know what was going on. But the reason I really did it was not because I wanted them to learn, which was a huge reason.
And I do, and didn't want them to learn. Because it helped me sleep at night because I was so consumed with, wow. If I miss this up, I'm going to mess up like 200 people's lives and their careers and things like that. But if I told them everything that was going on with the company warts and all customers, we lost dev cycles that broke, you know, errors.
We were having people that were leaving how much, how close we were to running out of cash. If I told them that. On a regular basis and they all made the decision to stay and there are super smart adults that I've given them all the information. And if I mess everything up, it's on them. They made the decision to stay and I gave them all the information off.
I hid information from them, very different, but I didn't. And I thought that was a core reason that that team stayed. And it was [00:22:00] a core tenant of work. marcus' values was transparency. And that was one of the many ways in which. We, uh, live that value.
Mark Peter Davis: So the American model is the shareholder model. Where, when you talked about making, uh, the decision to sell you are focused on representing the investors.
He said he became a fiduciary, not a founder.
Jeff Wald: Yes.
Mark Peter Davis: And other countries have a stakeholder model where you have to think about everybody, including the staff. You said you might've lost sleep over the welfare of your team. How much did they factor in your, to your decision to sell the company?
Jeff Wald: The fact that a lot, because they were all shareholders, every single person at that company owned stock, that was very important to me that, you know, hired a new secretary.
She got shares, we hired a new receptionist. He got shares. Everybody on that team got shares in that company now in a transparency [00:23:00] model. You know, I was very clear with them about the price per share that we raise money yeah. About what their options were priced at. But that being said, you know, you can only teach so much.
I remember the day after the acquisition, he walked in and said, you know, I just, why did we sell now? I said, well, I felt that this was the highest price per share we were going to get. He said, well, I just, I really hoped we sell for 20, $20 a share why. You said, well, then, you know, I would have been able to pay off my student loans, so, okay.
But I just, I got to make sure I'm clear about something. You were aware that we sold stock 12 months ago at a dollar a share. He said, yes. You were very clear about that. And you're aware that we just sold the company for a dollar 70 a share it's a 70% increase over a 12 month period. Yes. So what metric did you think was going to yield 20.
It's like, well, I don't know. It's just what I wanted. It's like, okay, get out, get out. I can't, I don't know what to do there. [00:24:00] Right. Um, and so I felt bad about that, but there is no world in which more than a dollar, 70 cents a year, no reasonable world would have been paid. And look, he couldn't pay off the student loans, but he was able to put a down payment on a house.
Right. And so that was something like, I felt good about that.
Mark Peter Davis: Trying to make everybody happy in these situations,
Jeff Wald: we do our best.
Mark Peter Davis: Um, what do you wish you had done differently?
Jeff Wald: I mean, I don't know if we've got time for that, what I could have done differently. So I heard once I really thought about it. Um, and I will say that the, there were three decisions that really decreased value in the company.
One was chasing two very big clients. There were two very, very large corporations that came to us and said, we love what you're doing, but we just need this just a little bit to the side,
Mark Peter Davis: a little customization to the product,
[00:25:00] Jeff Wald: a little customization, and that customization cost us because we were chasing that customization for a year with this company.
And we derailed our process. And any time you start changing your roadmap and your product, people are working on new specs and you're throwing everything off. It costs you twice the amount of time you think it does. And it was, it was a disaster. It was an unmitigated disaster. And look at the time we were doing 4 million in revenue.
This company offered us a $4 million contract. And so it was hard to say no, but we should have said, no, we knew we should have said no. But despite our better judgment,
Mark Peter Davis: this is a classic enterprise problem.
Jeff Wald: A hundred percent
Mark Peter Davis: people get asked for the custom solution. Everyone entrepreneurs are sitting there thinking, well, I can avoid dilution.
This is a great source of revenue, but we're building bespoke
Jeff Wald: work.
Mark Peter Davis: That may not be relevant to your other [00:26:00] clients and derails, the scalability
Jeff Wald: you convince yourself to think it's going to be relevant to other coins.
Mark Peter Davis: Is, is there a time or a framework you use to know when that's a good thing to do? Like when shuns, should someone take that deal?
Jeff Wald: Well, I'll tell you, you could take that deal. If they are willing to sign on the dotted line and start paying you. If it is, Hey, we would sign this deal. If you guys did X, Y, and Z, and you think, Oh, we could just spend a few months and get to X, Y, and Z, then a hundred percent do not do that. I shouldn't say a hundred percent, very high probability do not do that, but it is like, I don't pretend it's an easy decision Mark, but I know that it was the wrong decision for us.
And I think our board could have been more vocal in kind of their pattern recognition and, and their statements to us. Uh, not that it's not important fault. It's my fault. I am the one that the end of the, I said, all right, let's do it. Let's go.
Mark Peter Davis: Did the client eventually sign? Or was it a bait and switch?
Jeff Wald: I wouldn't say it was a bait and switch.
It was just what they wanted was [00:27:00] super difficult. And we convinced ourselves we could do it. We had a few preliminary meetings with other people in their space and they were like, Oh my gosh, if you did that, we would do it. And so we convinced ourselves that there were many more clients behind them. And it was, it was born poor judgment and in inexcusable.
Um, the second thing was the refactoring of the code when, and this is, I think, a problem that every company faces, you know, as founders, you have a responsibility to get an, a minimum viable product out as quickly as possible. Because as smart as everybody is in our world, we don't know a darn thing. You think you got, you think, you know it, you know, it, when a thousand people have used it and interacted with it, And so you need to get something out there and let them interact with it.
And then you need to stop cogitate and then break out the monolith of code that you wrote to get it out really quickly into a series of services. And we avoided this for so long [00:28:00] because it was going to be painful and it meant growth was going to slow. But the cost that we faced to go through this in a piecemeal way is immeasurable just in measurable.
It still takes. Months for developer to get up to speed, because there's still parts of monoliths and everybody's enterprise software. And you need to bite this bullet probably at your series. A maybe your series B in my, you know, obviously very broad heuristics here and you need to just, and your venture capitalists need to encourage you to do it.
And you can hope that you'll sell the company before.
Mark Peter Davis: How much time do you think people use when they shift? Is it, are they losing a year of development or six months or. I'm sure varies.
Jeff Wald: It depends obviously how long you're there. Uh, for us, it was going to be a year and we should have taken a year and we didn't, and it meant that we lost way more than a year in terms of the kinds of things that we could bring out.
And then the stuff's off that we brought out was riddled with errors [00:29:00] and our bug rate was still high because you have all kinds of regression issues. And so it was just a huge, huge, huge, huge mistake. The challenge.
Mark Peter Davis: I think people face when they face that decision is they realize, well, I have to hit all these milestones to raise our next round of capital.
And if we lose a year in development, just to get back to where we
Jeff Wald: are,
Mark Peter Davis: how do we stay on the course? How do we stay
Jeff Wald: on track? I would say this has to really be driven by that, that series a or series B investor. That they have to say, guys, we understand, and we're in this to build a company that is going to persist.
It is going to be able to do something great. And if they're not in for it, okay. Maybe not. And then you hope you sell the company and it's the acquirer's problem to rip it all apart and fix it. Um, but if you start getting into year four and five, you made a mistake by not doing it. If you can sell before, then God bless [00:30:00] God.
Bless. That's great. But if you start getting into your four and five, you have made a very, very big mistake. And again, I'm making generalizations and they're not fair because eve