The Numbers Look Good. Don't Get Too Comfortable.

Editor’s note/Personal digression: When I was 14 years old, my girlfriend’s house burned down. One minute you are a kid right square in the middle of a junior high school crush, and the next minute you’re standing on smouldering foundation with a girl who is weeping in the remains of everything she has known. Right now, some of our families, our friends, our colleagues, and our clients are dealing with this same thing right now in LA. Please meet this moment with kindness and grace for those affected. If you are in a position to help, please do.?

Musical accompaniment for this week’s newsletter. The Work Tech funding downturn is over. In 2024, Work Tech Investment increased significantly year-over-year. The $21.1 billion invested was a 156% increase over 2023’s $8.23 billion. Deal volume was also way up – 601 deals in 2024 vs. 326 in 2023.?

Perhaps not surprisingly, AI deals made up 57% of the deal value. One deal – Open AI’s $6.6 billion funding round – certainly skews the numbers. However, even if AI deals are excluded, Work Tech Investment increased 67% YOY.

Where is the money going?

To state the obvious, AI has eaten Work Tech. Across every category, AI is factoring in to just about every funding announcement. So, this is good news, right? Well, it depends how comfortable you are with change.

We aren’t in a SaaS market anymore, and AI is a whole different thing. Most folks in our industry haven’t come to terms with this yet. The go-to-market strategy is different. The pricing model is different. User adoption will be different. Most folks would nod their heads in agreement with these statements while they are still running SaaS models for all of these.

If you are a traditional SaaS player, you have this year to figure it out while AI startups are still riding the hype cycle. Improving market conditions may lull you into a false sense of security, but you better be laying the groundwork for big moves.

If you are an AI, don’t get complacent. The demos that we have seen for most of the whiz-bang big-money AI startups are shit. They are repurposing ChatGPT for pedestrian use cases that aren’t leading to any innovation. By Q1 2026, many of these startups will be scrambling to figure things out as the screws get tighter from investors. Product is only one part of the equation. AI startups will require a level of service support that SaaS startups, by and large, didn’t require. Think systems integrators for Workday. That’s what every one of these high-flying startups will require.

We’ve all been waiting for things to stop sucking for three years now, and 2025 will be better. Use your time wisely. This is the year that will separate the quick from the dead.

What else is going on this week?

Funding and Acquisitions

• Solera Health raises $40 million. The Phoenix-based technology platform is focused on building efficient, cost-effective operational support for turnkey digital health programs for payers and employers. (FinSMEs)
• Maki raises $26.8 million Series A. The NYC startup is building a conversational AI agent for talent acquisition. (FinSMEs)
• Holly raises $2.2 million pre-seed round. The NYC AI startup aims to revolutionalize government hiring. (FinSMEs)
• Snappy acquires gifting startup Covver as it seeks to roll up players. (TechCrunch)
• Employment Hero acquires Canadian employment platform Humi in $100 million acquisition. (Press Release)
• HR Path acquires Intsys Solutions. (Press Release)

The Big Number

Percent of job postings – at a minimum – of jobs advertised in 2024 were appeals for new workers that never actually got filled, according to Greenhouse Software . This Wall Street Journal article on the topic of ghost jobs is highly worth reading for the insights from Greenhouse co-founder Jon Stross . My conversation with him last year in NYC was one of my best single hours of my entire year. He’s a supersmart guy with a ton of perspective on talent acquisition today.

Micro Pod Ep 78: Let's Talk About BOFU

When it comes to marketing content, top-of-funnel (TOFU) gets most of the attention—even though the bottom-of-the-funnel (BOFU) is where conversions actually happen. This week, Matt Tatum interviews Lashay Lewis, the BOFU queen, in Ep 79 of Micro Podcast. WATCH NOW

Industry Notes?

• Degreed achieves profitability, releases Its AI coach into production, and welcomes former SAP sales leader Erik Lossbroek as Chief Revenue Officer. (Press Release)
• Looking for a job could get less miserable this year. (Wall Street Journal)
• Cost avoidance has become an AI buzzword for holding down headcount. (Wall Street Journal)
• New details emerge about Deel facilitating payments for trading platform accused of operating Ponzi scheme. (Calcalist)
• Workjam launches shift bidding for frontline teams. (Press Release)

READ: Work Tech Brandscapes 2025

Catch up on Work Tech brands as we head into the new year. Check out TSC’s 11 Work Tech Brandscapes for 2025.?

ICYMI: Last Week’s Top 3 Reads

The three most-clicked links from the previous Work Tech Weekly:

1. Paychex acquires Paycor for $4.1 billion. (Bloomberg)
2. Madeline Laurano at Aptitude Research analyzes the Paycor acquisition. (LinkedIn).?
3. How you can donate to LA fire relief efforts. (LA Times)

Around The Shop

Stuff we’re finding interesting right now at TSC.

• RIP David Lynch: The guy who made weird mainstream. (The New York Times)
• A limousine driver watches her passengers transform. (The New Yorker)
• The king of Ozempic is scared as hell. (WIRED)

That’s it for this week!?

Everybody love everybody,

Steve

P.S. Let’s meet. Are you a #WorkTech or #EnterpriseSoftware company with more than $10 million in revenue or funding that wants to accelerate your growth? Book a meeting with us to discuss how we can improve your go-to-market strategy and execution.

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About TSC | Previously The Starr Conspiracy