Seeing clusters and patterns of startup activity emerge is one of the best parts of the venture role, and lately, one area I’ve noticed more activity in is products for frontline or desk-less workforces. This pool constitutes the majority of the global labor population, and modern technology — counting collaborative workflows, digital networks, and data-rich applications — have traditionally underserved frontline workforces. For clarity’s sake, the terms “frontline” or “desk-less” workforce act as umbrella phrases for individuals working in a host of industries from manufacturing and maintenance to restaurants and hospitality. I thought I’d share some notes and observations due to the fact that this trend is bubbling up a bit in the tech ecosystem, and I haven’t been fully satisfied with any of the commentary I’ve seen.
An Expanding Opportunity Set: Many see the current set of SaaS and collaboration software for white-collar or office workers and view a diminishing market opportunity. It’s hard to tell if this sentiment is true (predicting the future is hard!), but I do know there’s a cohort of aspiring founders or prospective entrepreneurs who feel as if it’s hard to build a differentiated product in SaaS. It’s hard to create competitive separation with twists on collaborative remote tools or design software. On the other hand, many industries with large percentages of desk-less workers are not even Excel-based. They’re paper based. The introduction of software still has switching costs, but the impact on ROI is more dramatic.
Software Goes Horizontal: Yes, software is moving from a vertical, isolated category to an integral part of every value chain — horizontal in nature. One phenomenon that drives this is buyer bases who’re aging out coupled with millennials and younger people who’ve grown up with Facebook, the iPhone, the App Store, etc. now making decisions on behalf of businesses. Perhaps they’ve spent some time in an industry or inherited a family business — the common thread is the realization of how broken industry tools are relative to apps in their consumer life.
Double Dipping: Tools for frontline workers also typically provide value to another constituency — the employer. In many cases, the product will act as an operational system of record for the organization. One example is Rever, which enables workers to submit suggestions and allows businesses to collect data and get better insights on what’s going on at the factory floor. Developing towards the enterprise use case, the key is to increasingly gain share of the customer’s wallet. With respect to the end users, the key is to build engagement within “networks in high-value niches that are differentiated and defensible, partially because they are domain-specific.” (USV Thesis 2.0) To build engagement, give workers a single-player utility unbounded to the employer, such as a work identity (LinkedIn for X) or digital certifications.
Amazon Warehouse for X: One way to view an Amazon warehouse is as a worksite with people on their feet, but governed by intelligent business process automation and data-driven resource allocation. This efficient design has yet to be mapped not only to most other warehouses and logistics providers, but also manufacturing sites, mines, industrial ships, power plants, construction sites, etc. The innovation is not about putting dozens of robots on site, but creating an operational system of record, which digitizes labor profiles and jobs to be done on the site. Once that system of record is in place, you can layer on intelligence, where software guides decision making and ultimately provides predictions on how to improve ROI for various processes.
Wedging In: There are dozens of jobs-to-be-done for desk-less workers, but some categories tend to spread across industries, such as:
On-site Logistics and Vendor Management
Health and Safety Assurance
The product or service could start with one of these wedges and then expand either horizontally (worker training for hospitality, manufacturing, mining, etc.) or vertically (worker training, shift scheduling, messaging for hospitality). There’s also multiple modalities for communication and I/O such as audio, mobile, web, or IoT.
Digital Infrastructure: Massive upheaval or change won’t happen overnight, where the global 2000 embrace software and cloud-based tools and deploy across their workforce tomorrow. Like any gold rush, the right picks and shovels have to be in place. Different worksites across the world are harsh and remote, as well as data-denied, meaning there’s little Internet connectivity. Hard to pick up a piece of software when there’s no Internet. Ditto is an example of a startup working to tackle this problem and provide local telecommunications. Other examples of ramps for frontline tools include Android device management programs (Esper is a Haystack portfolio company working on this) or even tools that digitized the office, like e-signatures or fax APIs.
As evident, I’m excited about the new world of products and services for frontline workers in legacy industries. Every day, there are more talented people building and investing in these nooks and crannies. As a word of caution to prospective founders, I would say many investors are still wary of slow GTM cycles, but that will eventually subside with increased industry education.
If you found this post interesting and want to chat further, feel free to get in touch with me at aashay[at]haystack.vc.