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Aaron Au looks back on SuccessFactors, looks ahead at Gloat

Aaron Au co-founded SuccessFactors, which helped bring about HR's shift to cloud-based platforms. Here's how Au, now chief strategy officer at Gloat, changed the face of HR software.

In 2001, many firms kept HR records on paper and in spreadsheets, and the SaaS market was in its infancy. It was also the year Aaron Au became a co-founder of SuccessFactors, one of the most successful startups in the HR software market.

Au stayed at SuccessFactors until 2019 as vice president of engineering and CTO. He recently became chief strategy officer at Gloat, an Israeli-based HR AI startup that has developed a talent marketplace to foster internal mobility.

Routine new job appointments in the technology industry rarely get attention, but Au's history is worth telling, especially for HR professionals. It speaks to the rapid development in HR software, how quickly good ideas can catch on and how quickly the industry has changed.

SAP bought SuccessFactors in 2011, just 10 years after its start, for $3.4 billion and it remains the anchor of SAP's cloud-based human capital management (HCM) product line. Most founders exit a year or two after an acquisition. Au remained at the firm until about a year ago.

In the beginning

In the late 1990s, the rush to e-commerce created a massive financial bubble. By 2000, the big investment darlings of the dot-com era, such as Pets.com, were evaporating. Despite the market upheaval, some investors were still moving forward. In 2001, Au was contacted about SuccessFactors.

Aaron AuAaron Au

At the time, Au was working for a startup unrelated to SuccessFactors, which wasn't doing well, despite building some good technology, he said. That firm and SuccessFactors had common investors, which is how Au learned of the company. Au said SuccessFactors needed his expertise -- someone who could build a cloud-type platform in a time when cloud wasn't even a term.

Au was introduced to Lars Dalgaard, the other co-founder of SuccessFactors, who would become its CEO. Dalgaard is a venture capitalist today.

Au, a University of California, Berkeley, computer science graduate, had experience in the forerunner of SaaS, which was application service provider (ASP). Under the ASP model, a customer would pay the vendor to host an application.

From SaaS startup to HR AI startup

The approach used by SuccessFactors in building its SaaS HCM platform was to build a tool for employees, as well as HR departments.

We can't just build a tool just for HR.
Aaron AuCo-founder and former CTO, SuccessFactors

"The real problem of what we are trying to solve is a more business-centric problem related to people," Au said. "In order to really solve it, it's not just trying to make HR function more efficiently."

They wanted to make the employees "be better at HR themselves -- to be a better coach, to be a better mentor. To do that, we can't just build a tool just for HR," Au said.

Its talent management product was launched in the fall of 2001. In 2007, SuccessFactors went public.

Today, HCM is a multibillion market. The total worldwide HCM software market was $18.5 billion in 2019, according to IDC. The largest HCM vendors that year by market share were SAP, 13.9%; Workday, 12.1%; ADP, 10.5%; Oracle, 8.9%; and Kronos, 6.1%.

Au said they didn't need to sell the company in 2011 but merged with SAP because they felt it was a strategic fit and opportunity to grow faster.

Au left SuccessFactors to pursue his interest in developing firms and mentoring. He doesn't see Gloat as a competitor to SuccessFactors, but HR AI startups appear to share an employee-centric approach, where the tools they build are meant as much for HR departments as they are for employees.

Gloat's "talent marketplace is not designed just for HR," Au said, but it's designed for employees "to really experience and explore their career" and try to "align their passion" to the company's goals.

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