Employment Hero's mission to get rid of payday
It could soon be valued at $2 billion and is already managing $75 billion worth of salaries. But Employment Hero's ambitions are even bigger than that.
Inspired by Marc Andreessen ’s iconic article “Why software is eating the world,” Employment Hero’s CEO and co-founder Ben Thompson set out to “digitise employment” and make it easy for small businesses to employ people. It's something he is deeply passionate about.
With a background as an employment lawyer, it all started off nine years ago with the simple idea of digitising his clients' company welcome packs. That mission has now evolved into a goal to get rid of the idea of “payday”.
"As we have progressively digitised employment, it's like playing some type of computer game where you sort of reach a new level and then you unlock all of these new abilities you didn't know you had,” says Thompson.
Employment Hero, which makes HR, payroll and employee engagement software for more than 200,000 Australian SMEs, boasts 1 million employees being paid through their platform monthly. It manages $75 billion worth of salaries and is growing "well above 50%" year on year.
During the pandemic, Employment Hero raised $181 million valuing the company at $1.25 billion on top of a $140 million funding round in mid-2021. While many companies have failed to raise at the prices they could during the height of the pandemic-driven funding frenzy, the widespread rumour is that Employment Hero has completed a deal that would value the platform at $2 billion, though Thompson declined to confirm it.
John Henderson, partner at Airtree, which was an early investor in Employment Hero, backing its Series A in 2016, says the company has "the killer combination of deep insight into their customers and a world-class engineering team that can ship features rapidly".
As well as its B2B business, Employment Hero recently launched a self-described consumer ‘super app” called Swag that aims, amongst other things, to take on Seek (which is also an investor) with a new approach to recruitment. Currently, Swag onboards about 40,000 people a month to its app.
But, as ambitious as that is, Thompson already has his sights on a new goal that has broader financial implications — and that’s how, or more specifically, when, people are paid.
It’s early days, but they’ve already made it a possibility through their InstaPay feature on Swag, allowing people to be paid earned wages before payday — without interest, credit or late fees.
Thompson says the traditional idea of being paid monthly or fortnightly in arrears is outdated and was born out of necessity when payroll was an arduous manual process for small businesses. The issue is that employees have expenses in that month, says Thompson, often forcing them to live on credit because they haven’t been paid yet.
“The global financial system works on the basis that people work, and then after a month or weeks they get paid,” says Thompson. “When payroll is done digitally, you can pay people in real time. There is nothing stopping you from knowing on a daily or hourly basis how much somebody has earned and you know, money moves at the speed of light now, so there is no reason that employment will not become an immediate ‘work, pay, work and get paid’.”
