Investment Notes: Functionly - Designing the workplaces of the future
People are the backbone of any business. It’s never been more important to set them up for success.
We love teams that tackle global problems and have an audacious vision to completely re-imagine a function, and that’s exactly what we see in Functionly.
Multiple community members played a role in this investment. Functionly was introduced to Adrian Petersen by Appbot CEO Stuart Hall, and our resident HR whiz Amy Christenson pitched in to try out the product and interrogate the value it drove for organisations.
What is Functionly?
What is the problem Functionly solves?
Anyone who’s worked at a large company knows that the structure of an organisation has a massive influence on how the company operates. But many organisations don’t intentionally and strategically design their organisational structures.
This failure to be thoughtfully and constantly iterating organisational design, particularly when a company is scaling, can have consequences which ripple through an entire business. Misaligned team members and unclear accountabilities not only leads to confusion and duplication of effort, but also squanders the significant potential for collaboration between teams.
Moreover, having to map this information manually, with spreadsheet-heavy processes, is a soul-sucking process that every finance / HR professional, and management consultant engaged to support them, knows far too well.
What’s more, these processes and spreadsheets can’t help executives to answer some of the most foundational questions about their organisation, such as: where in the organisation do I need to put more capacity? Where can I improve productivity? How do I flow a new strategy into my teams’ day-to-day activities?
What does Functionly do?
Functionly is an organisational design tool that helps executives intentionally design the structure of their companies.
Functionly’s platform allows leaders to drive visibility, alignment and effective structuring across their organisation, with ease and efficiency. The tool enables them to understand resourcing & accountabilities by modelling links between people, teams, roles, and responsibilities. They make this process of dynamically designing and redesigning organisations from the top to bottom super simple with a drag-and-drop interface, which displays the impact and implications of those changes in real-time. The tool provides a clear line of sight as to how strategy flows through an org structure, and into a given team’s day-to-day activities and responsibilities.
Functionly’s mission is greater than making life easier for executives. Well-designed organisational models, which can be iterated as companies grow and conditions evolve, is critical for creating productive and fulfilling workplaces. Functionly supports clear accountabilities, correctly-resourced teams, and forward planning; capabilities critical for business success.
What we loved about the opportunity
A world class team building an amazing place to work
Our decision to invest in Functionly was, in large measure, a decision to invest in a world-class team. Prior to founding Functionly, CEO Tim Brewer grew an IT business to ~50 employees through to sale, before moving to the US where he architected & launched Dropbox’s global channel program. He then worked across a range of startups as an investor, EIR and adviser, focusing on organisational design for growth.
Across his journey, Tim saw companies undergo the same problems again and again, many of which could be traced back to poor organisational design. This inspired him to co-found Functionly along with Damian Bramanis. Damian is an experienced product leader & entrepreneur who previously founded Teamline – a company where Tim was an investor and advisor – which he grew to over 51,000+ organisations with a two person team and an ultra-lean budget.
Tim and Damian have demonstrated an ability to attract top talent from fast growing tech companies, and already they have built a robust, dedicated and driven team. Throughout our diligence process we were consistently blown away by every team member we met. Together, they’ve designed a beautiful product and as we’ve got to know them, we’ve witnessed them iterate at an enviable and rare speed.
Many companies have spreadsheet-laden HR functions, needing overhaul
The problem Functionly are solving exists for organisations across all verticals and all sizes. To help interrogate the opportunity and inform our hypothesis, we pulled in community member and resident HR expert Amy Christenson. We found that organisational design – and HR more generally – has a deeply embedded set of conventions when it comes to software and processes. There is a massive opportunity to overhaul the spreadsheet-laden HR function and drive significantly better outcomes for organisations and the individuals within them.
Functionly helps its customers create more meaningful places to work
Work is a large part of all of our lives and it should be a fulfilling one, yet poor organisational design can wreak havoc on employee satisfaction. Not only is Functionly a meaningful place to work, it’s also helping other companies create more meaningful places to work. We believe clear accountabilities create ownership mentalities, and aptly-resourced teams who are empowered to execute on well-defined priorities create happy employees.
The challenges we saw
Can Functionly convince companies used to manual, spreadsheet-heavy processes to adopt a digital tool made by an early-stage startup?
The team has found early success in customer acquisition and is consistently bringing in customers at small scale. While we believe that Functionly can scale its go-to-market approach to become a globally-dominant force, there is a risk that they’ll have trouble selling to larger companies and enterprises.
The key will be identifying how to discover companies at the moment they know they need support to implement change. We see huge potential to scale through integrations, which will enable smoother on-boarding and collaboration, and also by demonstrating thought leadership in what great organisational design looks like.
Organisational design is ultimately a very people-centric process. Functionly’s role in that process is as a tool to augment leaders’ ability to execute on their vision more effectively – either by directly leading change or by providing a tool for consultants to leverage. Although some leaders might initially be sceptical of this software-focused approach, when we spoke to some prospective customers, they said they would cry tears of joy at the advent of certain modules in Functionly’s product roadmap.
A few well-funded competitors exist, backed by funds such a16z. Large consulting firms also have their own in-house products which they use for their engagements.
However, we believe the market is large enough for there to be multiple winners. Every company with more than a few dozen employees undergoes constant change. The need to plan and manage that change effectively has never been greater, and we don’t see things slowing down. Given the sheer size of the market, we see enough room for many large companies to thrive, and think that several of these will be created in the next few years.
Despite the competition, we have conviction in Functionly’s approach and believe they will be the overall winner. Functionly’s product is qualitatively different from many of its competitors, since it takes a flexible approach to organisational design guided by the real world experience of its customers. Its product focuses explicitly on enabling leaders to design their future state organisation, while the majority of its competitors focus on analysing the state of an organisation in the present.
The questions we had for the team
As we got to know the team, there were two main areas we wanted to dig deeper into:
As a software-based solution to a people-centric problem, how does Functionly influence actual change within organisations?
Functionly’s role is to augment leaders’ ability to more effectively drive change. Most leaders aren’t trained as managers, but are promoted into their roles for being strong individual contributors. As a result, many leaders simply haven’t learnt how to design and execute organisational changes effectively and they need the right tools to guide them through the process.
How does Functionly maintain engagement with users over the long-term, even after significant organisation design changes have finished being executed?
Companies are constantly going through waves of change. Functionly’s purpose isn’t just to help leaders through project based organisational redesigns, but to support the full life cycle of continuous organisational change. We believe there is an underlying customer driven shift from large disruptive reorganisation events to leadership-led real time reorganisation, and Functionly are here to support and accelerate that change.
How we built conviction
Ultimately, we were impressed by not only the calibre of the team, but also the product-led growth they’ve already demonstrated at this point. Their obsession over crafting an amazing product for their customers has already generated early signs of success, with leaders from globally-recognised organisations organically finding Functionly and championing their mission.
The team has a clear line-of-sight to ship several user-demanded features this year which will facilitate better collaboration, integration and organisational chart analysis, all of which will power growth and customer retention. These features are being shipped at break-neck speed, to the extent that other investors we regularly collaborate with are beginning to use Functionly as an example of what A+ product execution looks like to the rest of their portfolio.
We’re proud to back the Functionly team and are excited to see them execute on their road-map to take an already-exceptional product to the next level.
Check out Functionly here, and if you’re a company looking for a better way to design your organisation, sign up for a free trial.