Understanding the competitive landscape and identifying companies with the greatest growth and profitability potential is crucial for making the right investment decisions. Recently, Aura analyzed SpotOn, a US-based software company founded in 2017, specializing in point-of-sale (POS) systems for restaurants and small businesses.
As a rising player in this industry, assessing workforce trends and benchmarking against key competitors like Block/Square and Toast will provide a solid foundation for investment. Aura has examined SpotOn's workforce shifts since its Series E investment round, offering valuable insights for informed decision-making.
Across all three firms, we saw workforce increases over this two-year period. SpotOn saw sizable growth between their Series E & Series F rounds, with 22% growth over these eight months, but has stabilized significantly more since then despite the significant funding injection. Square has similarly grown slowly (+18%) from September 2021 to June 2023, in line with its status as an ‘incumbent’ in the POS space.
On the other hand, Toast's remarkable 70% workforce increase indicates a significant strategic threat to SpotOn. Despite the challenges faced by many restaurants and brick-and-mortar stores during the COVID-19 pandemic, Toast persevered, albeit with a workforce reduction of 50% in 2020.
Through functional analysis, it becomes evident that SpotOn differentiates itself from Toast and Square by maintaining a steadfast sales focus. This breakdown of workforce functions enables a comprehensive comparison of strategic priorities among these companies. Plus, it aids in assessing whether investment rounds have influenced noteworthy shifts in these priorities, potentially leading to subsequent personnel changes.
Seniority and span analysis play a crucial role in optimizing and restructuring the workforce. It enables the identification of opportunities to streamline processes and reduce personnel costs within a company. With Aura's spans & layers analysis, the workforce is categorized into four main layers based on seniority: junior staff, managers, directors/VPs, and C-suite/top-level management.
By assessing the number of full-time equivalents (FTEs) per manager across each layer, we gain actionable insights into potential overstaffing or understaffing situations. This analysis provides a professional framework for making informed decisions and driving improvement within the organization.
When analyzing the seniority structure, it is evident that Square's organization follows a pyramid model. The top and middle management oversee a larger group of junior staff, comprising approximately 60% of the employees. This approach enables effective workforce planning and controls personnel costs, particularly with higher compensation for upper management. On average, there are around 2.2 junior employees per lower-level manager, ensuring a manageable workload.
Conversely, SpotOn seems to have an excess of middle management (around 45% of employees) when compared to lower and upper management. This imbalance can lead to challenges such as inefficient communication and decision-making, increased personnel costs, and limited empowerment and creativity for junior employees.
Evaluating Management Team and Leadership: The True North of Investment Decisions
Venture capitalists diligently assess investment opportunities with a key focus on the management team and leadership of potential portfolio companies. This critical evaluation encompasses various aspects, including capabilities, track record, vision, expertise, alignment with investment goals, and more.
In that same vein, venture capitalists are known to invest in people, not just companies. Similar to Captain Kirk's indispensable leadership for the successes of the USS Enterprise in 'Star Trek,' a startup's journey relies heavily on the prowess of its leadership team. In this analogy, Aura plays an important role, functioning like a starship's onboard computer, meticulously recording all significant events. It can effectively monitor changes in the management team and the broader workforce, encompassing key metrics like attrition to provide comprehensive insights over time.
This tracking provides invaluable insights into the stability of the leadership, its ability to attract and retain talent, and, ultimately, its overall effectiveness.
A seasoned team with a successful history demonstrates their ability to navigate the industry, adapt plans, and build a thriving company. Aura can assist in creating a comprehensive view of management and leadership experience, talent sourcing, and skills.
Understanding the competitive landscape and evaluating growth and profitability potential is vital for making informed investment decisions. Aura's analysis of SpotOn, a rising player in the point-of-sale systems market, highlights the importance of assessing workforce trends and benchmarking against key competitors like Block/Square and Toast.
By utilizing Aura's comprehensive workforce insights, investors can access unparalleled data, a single source of truth, and domain expertise, ultimately allowing for a better understanding and evaluation of investment opportunities in the dynamic and competitive market of software companies.
Book a demo today to see how Aura can simplify global workforce data and deliver actionable and personalized insights to your business!
