Payroll Billionaire Tom Golisano Bets On Employee Retention Startup HelloTeam

The billionaire led a $10 million investment in the Boston-based employee performance startup.

While building payroll company Paychex into a multi-billion dollar company over half a century, Tom Golisano became steeped in the challenge of hiring and holding onto the best workers. So Golisano, worth $5 billion by Forbes estimates, took a particular interest in a Boston-based employee retention startup called Hello Team–so much so that in October of 2022 he supplied $7 million out of a $10 million Series A funding round, Forbes is the first to report.

“Employees want good communication from their management about the issues going on at that company,” Golisano told Forbes. “My experience has been [that] employees complain the most about employers who don’t communicate with them. I think the product, the timing of the product, particularly with the remote environment today, I think was excellent.” Golisano, 81, founded Paychex in 1971 with $3,000 and a credit card and took it public in 1983; today it sports a $39 billion market capitalization.

HelloTeam, an employee and performance management software company, was founded in 2016 by Tanya Bakalov, a Bulgarian immigrant and former consultant at Deloitte. In 2005, Bakalov cofounded SevOne, a network performance monitoring company, which was acquired for an undisclosed amount by software firm Turbonomic in 2019. Two years later, IBM acquired Turbonomic along with the SevOne product line.

Bakalov traces HelloTeam’s origins to SevOne, saying that as she kept hiring employees, she found herself doing “everything and anything” it took to retain them. She started using different tools to measure employee performance and satisfaction with the company, but a disorganized system made for faulty results. She then focused on building a centralized software system to address her concerns.

“I quickly realized that in order to build a great company, it takes a great team,” she says.

Bakalov, who says that the cost of not retaining an employee can be upwards of two times that individual’s salary, wondered about the efficacy of communication between management and employees. She says she aimed for transparency, recognition and continuous feedback when designing her new product.

“HelloTeam takes performance management and employee engagement and puts it into one platform that is focused on everything a company needs to do to keep that employee happy and productive, and ultimately staying within that organization,” she says.

The platform, designed to enhance communication and company culture, allows employees to access their coworker’s profiles – letting them know how much time their peers have been working at the company, who’s on their team and what skills they have. She emphasizes how employees can get recognized for their accomplishments in a public forum, which she describes as being “rewarded from a social perspective and not just monetarily.”

Some of the startup’s clients include the Netflix show The Home Edit, artificial intelligence company Precision AI and hospitality industry B2B payments and business intelligence provider Onyx CenterSource.

“Since implementing HelloTeam’s employee retention platform, we have seen a significant reduction in turnover, saving us north of $4 million per year,” says Becky Ospina, Senior Vice President of Human Resources at Onyx CenterSource. The company fully implemented HelloTeam in 2022, lowering its turnover rate by one-third, it said.

Bakalov first met Golisano through another startup founder, Enrico Palmerio. Palmerio is the founder and CEO of Botkeeper, an automated bookkeeping company that raised $42 million in a Series C funding round led by Golisano in 2021. Palmerio referred Golisano to Bakalov and a week after a three-hour pitch session in Rochester, New York, Bakalov got a call from Golisano’s investment firm, Grand Oaks Capital, saying they were interested in working with HelloTeam.

“Tom is the pioneer, I would say, and a true legend in the human resources space,” Bakalov says, adding that “prior to Paychex, payroll was very much decentralized, broken, similar to how we view engagement and performance management today, and in both cases, the industry was ripe for disruption.”

Bakalov says HelloTeam, which had revenue in the single digit millions last year, is looking into artificial intelligence for its next move. The 37-employee company plans on using the $10 million in funding it has raised to expand AI around retention, taking insights from the engagement of employees and their performance. Bakalov expects the program to roll out in the next year or so.

Golisano stepped down as CEO of Paychex in 2004 but has remained a board member. In addition to backing HelloTeam, he has invested in around 20 companies during the past five years, including the inventory financing platform Kickfurther and first-responders software platform 3AM Innovations.

He has also come up with an idea for a year-round school that will launch in September. The billionaire will fund a college with no summer vacations, with the goal of cutting curriculum time from four years to two. He says the Golisano Institute for Business & Entrepreneurship, which he is endowing with an undisclosed amount, will be located in Rochester, New York. It will have tuition of $8,900 a year–which is higher than in-state tuition for public universities like State University of New York, Purchase or San Diego State University, but far lower than places like Washington University in St. Louis (nearly $30,000) or Southern Methodist University in Dallas (nearly $62,000 in tuition and fees).