ADP Acquires WorkMarket
ADP announced this morning that they have acquired our portfolio company WorkMarket.
This is a bittersweet moment for me.
WorkMarket has been a big part of my personal portfolio for almost eight years.
USV and Spark seeded WorkMarket in June 2010, backing two serial entrepreneurs Jeff Leventhal and Jeff Wald.
The idea was to create a cloud based SAAS application to allow enterprises to manage their contingent workforces which were growing in size and complexity. It seemed like a timely opportunity at the time and it was. Eight years later the SAAS contingent workforce management market is in the hundreds of millions of dollars annually and WorkMarket is the creator and leader of it.
But like all startups, the WorkMarket story has a number of twists and turns. The market was a bit slower to develop than we had initially hoped and it wasn’t until the last few years that big companies started to include contingent workforce management in their SAAS budgets.
We also lost one of the two founders, Jeff Leventhal, when he stepped aside at the end of 2014 and was replaced as CEO by Stephen DeWitt who was recruited to the opportunity by Jordan Levy, who has been everything you could ask for in a co-investor.
The last few years at WorkMarket have been amazing. The senior team that Stephen and Jeff Wald built is among the best that I have had the opportunity to work with. And the contingent workforce market really exploded in 2016 and 2017.
But like all exploding markets, the expanding opportunity brought a lot of new entrants and buyers interested in getting into it. And one of those big companies, ADP, made us an offer we could not refuse, both in terms of the financial opportunity and the fit with their business. ADP has been helping enterprises, large and small, with human capital management solutions for decades and has the customer base, market knowledge, and capital to lean into this opportunity in a way that a venture backed startup never could.
So WorkMarket is now part of ADP and I am pleased with that outcome. Jeff Wald will take over leading WorkMarket for its next phase and he is well suited and deserving of that role. He has been the one constant for the eight years that I have worked on WorkMarket. Everyone else who was there at the start has come and gone. But Jeff and I saw it through from start to finish and I appreciate that very much.
I also want to acknowledge Stephen and the senior team of Grady Leno, Jim Chou, Marcy Shinder, and Tom Benton. As I said, this is an amazing team and it has been a pleasure to watch them build the product, market, and customer base. They are all superstars in my book.
This is the way of the VC business. You get inspired by an idea and a couple founders. You spend a lot of time helping them build something. You give a piece of yourself to the business. And one day, you are done. That day, for me and WorkMarket, is today and I have enjoyed the ride very much.
Wow. Eight years! What a ride. Congrats to the WM team and to you/USV, Fred.
Sounds like quite a story.Why no financials on the deal?Mr. DeWitt not shy about his politics – I like that.
You know because they really are nobody’s business. Nobody asks how much money you made last year or have in the bank.
ADP a PubCo tho -if both private, I totally agree.
Just trying to make a little trouble / have a little fun.If it’s big, the #s are in there to bump the win for the VC & the Founders. And, iIf it was material to ADP ( I.e., really big) it would be in the release, b/c their auditors would require it.It’s a win & should be celebrated.
Yeah, it is nobody’s business. Too many curious georges around who want to figure out who made how much money, who lost money, etc. It is generally an energy sapping conversation that either makes people jealous or indulge in some type of schadenfreude
.High marks for schadenfreude (harmful joy at another’s expense) usage, but marked down for misspelling?Oh, wait.JLMwww.themusingsofthebigredca…
hah. something to learn every day!
.Haha, I knew you could take it and how many times is a guy going to be able to call somebody out and simultaneously commit the same offense?Be well.JLMwww.themusingsofthebigredca…
Not enough leakers in this space
.ADP is public and, as such, has to file a US SEC Form 8K within a short time of concluding a “material” transaction.They will have to describe the transaction in their next US SEC Form 10Q as a detailed footnote.They will show the impact on cash flow in their audited Statement of Cash Flows as part of their US SEC Form 10Q.ADP is a very good stock and pays a nice dividend. Has for 30 years.JLMwww.themusingsofthebigredca…
There you go again, bringing the crucial, rock solid, factual information to the top of the subject information stack!As I understand it, VCs and their LPs like liquidity as in stock in a public company or cash in the bank. So, the main approach to liquidity is an exit, i.e., usually just to sell the company, via an IPO or at least an M&A. The LPs want the big returns ASAP, and the VCs realize that they may need as long as 10 years.So, in this case, the exit was in 8 years. Okay.For ADP? As I understand, they are big on handling all the many tricky details of payroll, and, thus, just do the payroll paper pushing for lots of businesses that don’t want to dig into withholding rates, deductions for benefits, stuff about fractional pay periods, an employee working in locations in more than one state, etc. Could have a really bad afternoon, day, month, year trying to understand all that stuff, keep up on it, convert it all to solid software, handle the money carefully, etc. So, let ADP do it!Sounds like ADP should also get into the benefits business, e.g., be able to supply medical insurance for the employees, workman’s compensation for the employers. And for recruiting, ADP has a long listof employee names and for each current employer, salary history, and maybe more?Gee, I wonder how ADP does their software? Old IBM mainframe hard/software with Cobol or PL/I, CICS, IMS or DB/2, Intel/AMD servers in Supermicro cases with Linux, C++, and Oracle, Intel/AMD servers in Supermicro cases with Microsoft’s Windows Server, .NET Framework, C# and/or Visual Basic .NET, and SQL Server??? A guess is that it’s an unwelcome combination of all of those.Then for Work Market, by buying that, ADP comes closer to a one stop shop for both workers and getting them paid.First cut, sounds net good for customers of ADP and Work Market, for both of those companies, and for the investors. I’m a little surprised it took ADP 8 years to decide to buy, to “pull the trigger”.So, now we have the image of Fred skiing downhill at 40 MPH in 18″ deep powder while talking on his smartphone and closing the deal with all the other players!
Congratulations to all! Love the backstory. Would also love to hear about that game of chicken played for sale price, how did the back n forth go…lessons learned?
Congrats!!!It’s like sending a great kid off to college.NT Times after Pershing lost proxy bid.https://www.nytimes.com/201…
Internet We.more sweet than bitter. ADP just needed to add more sugar.https://www.youtube.com/wat…
Hey now….I am not available 🙂
Indivisible….like every true American 🙂
Finally got this, Sugar..
If you ever traveled with me you would know that I just joke right back. Never bothers me, and I actually enjoy. I was trying to get a room today for somebody for the Superbowl. The Loews in Minneapolis, knows me and apologized profusely for not accommodating their “Sugar”
To my other comment the general manager called me back and said NBC rented the entire hotel and the bar and restaurant. The only requirement to get in is to have an NBC badge. NBC is running the security and controlling who stays in what room and the restaurant is their cafeteria.
congrats. sounds like the part of the portfolio you really had to work on (per your blogpost a few weeks ago)
.Well played. Perseverance.JLMwww.themusingsofthebigredca…
Congratulations, and thank you for sharing.
No exit is like the other, but an exit is an exit. It provides financial or psychological relief, sometimes both.Congrats.
Nice!Bittersweet is invariably a bit more sweet than bitter at least when I feel the need to describe things that way.
This is one of the USV investments that particularly caught my interest when you described it in 2010. Always seemed like a great group and I’ve had opportunity to meet an early team member who only had positive things to say.It was funny because this is how the person recognized me early in the conversation: “Oh, I know who you are. You’re a prolific commenter on AVC.” Didn’t know quite how to take this, although I suppose not such a bad way to be known. (Although, not as prolific these days.)Congratulations! ADP is a solid new home.
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Thank you Fred for the support. It’s been an exciting ride to say the least!!
Building a company is like collaboratively working on a beautiful painting or sculpture. One day, it is time to sell. Maybe someone loves the work and is willing to pay a lot of money for it, or it has to be sold at a fire sale, or somewhere in between. Nevertheless, the journey has meant a lot to all parties involved, particularly the ones who have been involved from the beginning and stayed on for the whole ride.This is of course the romantic view that sweeps aside the painful and messy moments of the journey, but how it needs to be seen in retrospect. Every company and work of art is the birth and growing up of an entity that did not exist before. Irrespective of the value, it fetched, it deserves to be celebrated.