May 29, 2020

After Harvard and Raising a $98 Million Investment, Serbian Veteran Startupers Quantify Human Capital in Due Diligence

Igor Bogicevic co-founded one of the MIT’s 50 smartest companies in the world, Seven Bridges Genomics (SBG), which raised $98 million worth of investments, and is now valued at $500 million. Luka Babic studied at Harvard and served as CHRO of a hyper growing tech unicorn startup, Infobip. As veteran founders, they founded another startup, Orgnostic. This time, they found a way to quantify team culture and leadership and connect those indicators to a company’s profit. 

The (in)famous “human factor”

The phrase “human factor” is what managers use to describe that they have no professional explanation of why things are not happening. 

Have you ever wondered what the exact factors that influence the investor in deciding whether to invest in a startup are? Angel investors frequently report that, besides due diligence, they base it on “hunches” or a “gut feeling”. They had a good feeling about the team or the leader, sometimes they even reminded them of themselves. Their hunches can be attributed to their experience that distilled itself into intuition. But what if there was a tool that could quantify intuition, leadership, organizational culture and provide projections related to business results and advice on how to proceed? 

A tool for companies that base their progress on people progressing

Industries like IT rely on human capital and business models based on knowledge and team members’ intellect. The ways people are organized, their environment, leadership, etc are the key factors in companies that base their growth on people progressing. And still, there is no tool that can measure team effectiveness, connect them with work performances, and indicate areas of improvement. It wouldn’t be surprising if there wasn’t, since it is quite difficult to imagine a tool that can measure a human, let alone the elusive concept of organizational culture. 

Yet, that is exactly what Orgnostic is. Under the slogan “Making your intangibles tangible”, the startup aims to provide managers with input on how to increase employee and customer satisfaction while improving profit margin as well. 

They launched the first version of the software in May 2020., welcoming the companies around the world to try it

Inspired by due diligence that fails to estimate human capital

Igor Bogicevic, short bio: 

Igor Bogicevic co-founded Seven Bridges Genomics with his American partners back in 2009. Together they managed to convert their vision of personalized medicine to reality. As CTO of this company, he oversaw the construction of a complex biotechnology product and managed a team of 250 people, thus getting a very high quality business network and experiences. Although he is no longer part of SBG team, he left a legacy of a company that successfully went from building a prototype platform to building a product now used in pharmaceutical drug development and clinical trials, raising $98 million in investment. 

I never had the ambition to run a corporation or a large team of people, but when I was placed in that position, especially after SBG team counted more than 100 team members, me or the other SBG managers or the HR team were not able to assess the effectiveness, culture and team values, nor the team or organizational health. The tools available on the market provided metrics that were many things, but reliable was not one of them. We had to rely on intuition, and the organization was growing fast. Building a team of 5, 10, 50 and then 250 highly qualified people is a very complex task, at best. 

Igor Bogicevic, co-founder of Orgnostic 

Negotiating with investors about the worth of a company when the company’s core value is human capital (that can not be measured) is a form of art on its own. These experiences directed Igor’s attention to a solution he himself needed. 

Luka Babic, short bio: 

Meanwhile at Infobip, Luka Babic as CHRO was facing similar challenges, as within 6 years he played a crucial part in growing the Infobip team from 250 to 1500 team members. Having studied psychology and working as a research assistant at Harvard helped him gain insight into the most relevant scientific research about the dynamics and significance of human capital in business. 

During my psychology studies I had the opportunity to work with professor Richard Hackman, considered one of the most renowned organizational psychologists today. He conducted research of the preconditions that exist in teams that generate better results than others. That was the spark that ignited my interest and got me into the field of industrial psychology, followed by my work in Infobip. Only by combining those two experiences, business and academic, this idea came to be. I remember when we wanted to create a spin-off business, we got surprised that during due diligence investors did not consider human capital, other than talking to the CTO or CEO of the project. 

I had an idea to connect a part of the research from my studies and provide quantified references that can give relevant insight into design, team efficiency and then how that impacts company’s value, and how to automate and standardize that process. We added factors of culture and leadership, and generated one holistic tool for assessment of human capital. 

Luka Babic, co-founder of Orgnostic

The founders deduced that most metrics and methodologies just give numbers without explanation or background. The most important part, a valid interpretation is sorely missing and that is the problem the whole industry is facing. Orgnostic combines design, scientific research and technology that will present users very complex information in a very straightforward and understandable manner. 

Arsenije Catic is in charge of design and UX, bringing over a decade worth of experience in the area. 

Orgnostic had already delivered measurable results

Orgnostic had proved in real-life conditions that when their software analyzes team organization and culture, it gives metrics directly correlated with: 

  • Increase of sales
  • Increase of profitability
  • Increase of client satisfaction
  • Increase of team effectivity; 

The team started scanning the competition and locating the “hole” in the market during the fall of 2019. They then verified their hypothesis about product usability by providing consulting services, and product development started in the beginning of 2020. 

Automated measurement of people and teams is difficult to imagine, no matter how useful it sounds. However, Orgnostic team believes they made just that. The research that the methodology is based on was conducted at Harvard, University of Michigan and other prestigious academic institutions, during a 30 years period, resulting in a database with over 25 million entries about team culture and effectiveness from over 10,000 companies. Currently, this job is reserved for very expensive ongoing projects executed by big teams of specialized and very pricey consultants. 

The perspective: over $2 billion invested in “HR tech” 

The indicator of the potential of this market is seen in rapid growth in the number of “HR tech” companies competing for funds. VC funds invested in only 10 companies of this kind in the beginning of 2017. The number of companies backed by capital grew to 100 in the beginning of 2019. For example, company Glint was sold to Linkedin for $ 400 million, and the estimated annual revenue is $ 100,000. The annual revenue of Culture Amp is estimated at $ 75 million. 

The target for the product would definitely be: 

  • Professional investors and experts in companies. They need an ace in their sleeve to assess a company’s value and human capital that will indicate future growth. 
  • C-level executives.
  • HR professionals.

The company is oriented towards the USA and other global markets with companies that have big appetites and even bigger growth rates. 

As far as competitive advantage goes, Orgnostic believes that what will make them stand out from consulting houses and established tools is the unique blend of tech, design and data accuracy, wide array of metrics and very clear recommendations for interventions that lead to measurably better business results. 

The significance of veteran founders for the Serbian startup ecosystem 

The richness and the maturity of the startup market is measured in knowledge and experience diffused by existing startups. According to Startup Genome 2020, Serbian startup ecosystem is in “activation phase”, meaning that the founders that have the extensive knowledge of building a product from scratch are rare, but they are the indicator of a new phase in the ecosystem development. This is one of the reasons Tesla Nation was founded, to help connect the ecosystem with the USA and diffuse the necessary knowledge by merging Serbian experts with American entrepreneurs and investors. Seasoned veterans mean a higher success probability, especially because Orgnostic is a truly trailblazing innovative product led by people who had done trailblazing things before. 

Serbia has been recognized as a source of lucrative talented workforce and street savvy bootstrapping founders that leveraged their knowledge to make up for lack of capital when Serbian startup ecosystem was in its embryo phase. They managed to create scalable worldwide phenomena, such as Top Eleven, Fishing Booker and pave the way for many others we are awaiting to ripen, much like Orgnostic. 

Serbian experts are looking for clients and co-founders worldwide in order to increase scalability of their ideas. One of Tesla Nation goals is to help them get there. If you have any inquiries, please be welcome to contact vukasin@teslanation.org to connect you to a wellspring of engineering talent inspired by Nikola Tesla himself. 

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