Cherry, A Y Combinator Work Perks Startup, Provides Flexible Employee Benefits

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Downward Dog. Tree. Bridge. Warrior. Lotus.

These yoga poses impart flexibility on our bodies and restore harmony within our minds.

Yet, there is not something equivalent to yoga that brings physical and mental versatility in our corporate work lives.

Perks and benefits offered by emerging startups and established companies are the current answer to the question of work-life flexibility. Compensation is not enough to convenience prospective candidates to join a company; therefore, perks are a core differentiator between corporations. However, these perks are standardized and fail to meet each employee’s unique needs. Gillian and Emily O’Brien saw first-hand the difficulties of these inflexible perks and created Cherry as a solution. Cherry is an office perks startup that allows its users access to a marketplace where they can pick and choose what benefits they want to keep. The San Francisco-based company was a part of Y Combinator’s Winter 2019 batch.

Gillian experienced the frustrations stemming from a lack of control over what benefits her previous employer granted her. “I realized I was missing out on a few thousand dollars each year because of this - and my company was wasting money too,” Gillian says. “Emily experienced a similar issue as well with her previous employer.” The standardization of perks can ensure some degree of parity between the total compensation of employees. However, there is the underlying assumption that these perks can be equally accessed and used by all employees. That is generally not the case, as the O’Brien sisters found out the hard way. More importantly, employees are looking beyond a standard package of benefits when comparing companies to join full-time. For companies to continue working to secure the best talent available, they need to rely on a perks marketplace that encourages employee choice.

There lies a lucrative, compelling opportunity to provide flexible perks to knowledge workers across the U.S. labor force. Devra Gartensin of Chron states that “the average cost of benefits for employers adds up to a nearly 50 percent increase in payroll expense.” These benefits come in a standard package for the majority of employees working in America. According to Workfront, there are 60 million knowledge workers in the U.S. The Bureau of Labor Statistics found that employers spend an average of $23,000 a year on providing employee perks. Assuming the average cost of employee perks applies to employed knowledge workers, an estimate for the market size is $1.38 trillion. Drilling deeper, if we are to assume that 50% of these employee perk costs go towards health benefits and exclude those, the market size is $690 billion. Further examination of the U.S. tech workforce and by applying the previous assumptions, the roughly 12 million workers in this sector of the economy represents an opportunity of $138 billion for a startup like Cherry to service.

A flexible perk marketplace could help reduce the cost for companies providing a traditional benefits package by allowing employees to pick and choose what perks they want to utilize. For example, employers don’t need an on-premise fitness facility to offer fitness as a perk. Instead, they can offer their employees access to a perk marketplace which allows employees to become members of their preferred chain or local gym, paid for by their company. The company can maximize happiness for those who do want to use one of their perks for a gym membership and those who do not. More importantly, a company does not have to rely on its capability to offer perks, as it can partner with other entities that provide these services through the marketplace. The downstream result is that companies can strengthen their employment pitch to prospective employees by relying on external vendors to provide these benefits.

Cherry is a virtual Visa card that works just like a regular debit card, but it can only be used at the merchants admins pre-approve and only up to the amounts they have set. This means human resource managers can streamline inclusive, flexible perk programs that scale. And employees get to choose their own perks. A corporate card is a simple, active device to empower employees to self-manage their perk selection.

The cofounders claim that the autonomy provided by the Cherry card promotes the health, happiness, and productivity of a company’s employees. The O’Brien sisters have built Cherry to integrate with Slack. Most importantly, Cherry works seamlessly in the background, requiring little maintenance while providing automated reports of perk utilization across a firm’s employees. The sister’s partnership has allowed them to build such an accessible, flexible, and automated platform to give employees more autonomy in their working lives.

If the prevailing wisdom around selecting cofounders centers around trust and understanding, one could not go wrong with picking one’s sibling as a business partner. Putting aside their familial ties, these two female founders bring plenty to the table in terms of their technical skills and business savvy. Emily, the Chief Technology Officer, graduated from George Washington University. She previously worked at Refinery29 and Giphy as a software engineer. Gillian, the Chief Executive Officer, graduated from New York University. Yet, the most critical factor in their collective success so far is the fact they are sisters. Emily says, “We entered our relationship as business partners with a prerequisite understanding of how the other ‘worked.’ We’re in sync. We know how to communicate and resolve the conflict, which is an interpersonal skill that builds over time, evolving as the relationship (and the people inside it) grow.” Gillian adds, “It’s true that the length of time I’ve known her (almost 25 years) and the amount of time we’ve spent together has lent itself to creating a deep familiarity and understanding between the two of us.”

This familiarity and understanding between the two sisters are what they are trying to create between employers and employees. As yoga strengthens our mind and body, Cherry brings flexibility and autonomy to our work lives.

Correction: This piece has been updated to reflect that Emily O'Brien graduated from George Washington University, not New York University.

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