MSIV Invests in Sausalito’s Sageful AI
Q&A with Co-Founder & CEO Michael Papay
Monday, June 3, 2024 from Sausalito, CA
In 2021, Marin Sonoma Impact Ventures launched the North Bay’s first regional venture capital fund and began deploying capital into Marin + Sonoma’s most promising startup companies.
Today, we are excited to share details about our April investment in Sausalito’s Sageful AI, a company building a chat-based coach for enterprises to support learners while documenting performance improvement from training and development and large-scale change initiatives.
Sageful’s ‘Sagey’ product is a learning transfer coach that integrates with Slack and Teams and aims to foster behavior change that amplifies the impact of internal corporate training initiatives.
MSIV is proud to have led Sageful’s initial capitalization by investing $360,000 as part of Sageful’s Seed financing round – the company is currently testing its product with beta customers and plans a full rollout in the months ahead.
Why We Invested
Corporate learning is a $340 billion industry and the sad reality is that nearly all of that spend has no efficacy – it is tantamount to lighting bags full of cash on fire. Companies get too few measurable outcomes for their massive investments and are craving effective, customizable solutions that actually work.
HR technology thought leader Josh Bersin published a long-form missive on this space in March where he very bluntly concluded that “AI…is about to flip this industry on its head.” Sageful AI co-founders Michael Papay and Drew Batshaw are well-positioned to accelerate this transition in corporate learning by bringing Sagey to market to change how learning gets done within companies.
Michael and Drew are a repeat duo that has successfully built twice before in HR technology. They first collaborated at Fort Hill Company where they pioneered tech-enabled learning transfer solutions and counted Cisco, Oracle, Pfizer, and Sony as clients. They then founded Sausalito-based Waggl in 2014, a software company that redefined employee feedback and ultimately achieved a successful exit to Perceptyx and Technology Crossover Ventures (TCV) in 2021.
Sagey will help employees maximize their career potential while ensuring corporate training investments are measurable and effective.
MSIV Founder & Managing Partner Zachary Kushel sat down with Sageful AI Co-Founder & CEO Michael Papay to discuss Sageful’s vision and Michael’s lessons learned in building solutions that enable positive change at work.
Sageful AI CEO Michael Papay
ZK: Michael, you’ve spent your career building businesses that improve the workplace. Where did your passion for this come from?
MP: My first job out of college was working as an analyst at a Fortune 1000 healthcare company in my hometown in Pennsylvania. I had studied entrepreneurship at Babson and one day I got a call from a college friend’s father who had been doing management and leadership development for 20 years. He asked if I’d help him write a business plan for a new concept. That ended up becoming Fort Hill Company, where I would spend the next 15 years of my career.
Fort Hill supported large-scale change efforts – think when Carly Fiorina came into HP and when Bob Nardelli took over Home Depot – and I developed a passion for helping leaders develop and improve. The idea for Waggl was incubated inside Fort Hill, and it was a way to focus on the authentic employee voice while making it actionable. It’s one thing to capture feedback from a survey, but to act and improve is hard work – so with Waggl, we pushed feedback questions out to organizations, allowed employees to prioritize the answers, and made it all immediately transparent which put a lot of pressure on companies to act.
ZK: After exiting Waggl in 2021, how did you decide to launch Sageful and embark on another entrepreneurial journey?
MP: I was inspired to help launch Fort Hill’s web-based business in 1999 because of the Internet revolution – I knew what we were building was going to be game-changing with how fast the world was shifting. I felt the same way at the beginning of last year with the advances in AI. As an entrepreneur and someone who cares about the workplace experience for employees, I wanted to really think about what we know to be true and begin ideating on solutions.
I got together with my longtime business partner Drew Batshaw where we would meet up over coffees and lunches over a series of three or four months. The idea we kept coming back to was behavior change and how most people don’t have access to a $300,000 executive coach. Even online virtual coaching is quite expensive. For those employees fortunate to be put through top-notch training programs, our research shows only 12%-15% of people who attend these programs take action in a way that improves their performance. We knew this gap between training and action persisted. We launched Sageful to tackle this challenge at scale.
Sageful AI CTO Drew Batshaw
ZK: This is your third time partnering with Drew – what’s been key to ensuring a successful collaboration time and time again with your co-founder?
MP: Drew is a spectacular partner. First, co-founders need to operate with a lot of mutual trust, which we have built over the years. Second, it’s important that our skill sets complement one another. For us, this goes beyond Drew building the tech and product and my role being more market-facing. Drew led the Leadership and Organization group while getting his MBA at USC and has served as an executive coach – I think it’s rare to find a CTO who has such a natural passion for employee development and who is building tools that so deeply align with his personal mission and belief.
ZK: Tell us more about your product vision for Sagey – how do you see this space evolving over the months and years ahead?
MP: Our mission is to democratize access to coaching and ultimately help people thrive at work. We spend much of our waking time in the workplace, and if Sagey can make that a more positive experience for people, that’s what gets me up in the morning and excited to tackle this challenge. When it comes to learning, experts have been saying for years that ‘content is king,’ but with Sagey we think more in terms of ‘context’ being king. If we know what an employee is trying to accomplish, what business challenges they have on their plate, and their overall team dynamic, then we can better coach and support that individual.
Our philosophy is to meet employees where they are in the flow of their work, which means we don’t want to build another system you have to log into, but rather be integrated right in with Slack or Teams or wherever your work is getting done. The old way of doing things was companies would identify a gap and build a training course to close that gap. It might take months, if not a year, to build that course, and oftentimes by the time it was ready for implementation the business context had changed and the content was no longer relevant.
What’s exciting about Sagey is that context can be hyper-localized at the individual employee level and that training can occur in real time. We commonly refer to the 70/20/10 rule in learning, where 70% of learning occurs on the job, 20% through relationships, and 10% through formalized training. With a conversational coach supporting individuals in real-time, we’ll be able to measure and analyze what is happening in that 70% bucket, determine whether someone is hitting the mark, and help them with adjustments as needed. That is a game-changer for corporate learning.
Waggl team photo in Sausalito
ZK: What excites you about building in the North Bay again?
MP: With Waggl, building locally meant everything to us. You put a tremendous amount of time, energy, and passion into a company, and at the time of our launch, I had a young family. I wanted to build an organization that was flexible and would prioritize employee experience, knowing that we would afford people trust to get their work done. This allowed me to coach my daughter’s youth soccer teams, by example.
There is so much talent here in the North Bay. Many of my peers wanted that same kind of experience, so we built here. I’m a firm believer that when you build a great internal experience, that flows out to a great customer experience and ultimately results in a great shareholder experience.
With MSIV now leading the charge here locally, I feel strongly that the next wave of organizations coming out of this community are going to be wildly successful. We’re excited to be part of it, to tap the MSIV network to help our effort grow, and to lean in to give back to other entrepreneurs around us, right in our backyard. Entrepreneurship is a privilege, and the accessibility to entrepreneurial opportunities is not always equitable. I’m eager to give back to this community that has given so much to me and make it even better for the next generation of local entrepreneurs.
