If you believe that The Go-Go’s got it wrong and vacation is definitely not “all I’ve ever wanted,” then PTO Exchange may be just the software that you do want.
The company based northeast of Seattle in Woodinville, Wash., is turning paid time off into something fungible. Employees of participating companies that use the startup’s product can swap their unused PTO for cash, to pay for student loans, make donations to nonprofits, contribute to a 401(k) or health savings account or even give it to a colleague who has health or family issues and needs extra time off.
“The problem that we have seen is that almost one-third of all vacation gets left on the books,” said PTO Exchange co-founder and CEO Rob Whalen.
Whalen himself had that experience. While working at Cisco Systems for less than five years, he accrued more than 240 hours of paid leave. Like many of his colleagues, Whalen opted for work over vacation because he had so much to do. After leaving Cisco, the company paid him more than $30,000 for that time.
“We are firm believers that [PTO] is an earned wage and individuals should be able to self-direct it for what matters most to them,” Whalen said, “instead of having to wait for companies to pay out the benefits during transition or termination periods.”
It can be a challenge for the companies when employees accumulate large amounts of PTO. The time represents a liability and can put a strain on an employer’s cash flow when it’s paid out.
The PTO Exchange platform costs companies $3 per employee per month, with lower rates for larger customers. The startup also charges a 3-to-5 percent fee per transaction fee, though the fee is waived during the first year of service.
Whalen wouldn’t name his customers, but said that they include businesses with between 200 and 55,000 employees. PTO Exchange is also partnering with the HR services company Alight, which has 22 million employees on its platform.
Whalen co-founded PTO Exchange in 2013 with Todd Lucas, who serves as chief technology officer. They met because their kids went to the same school. Whalen has years of experience in sales and was a co-founder of a software company in the early 2000s. Lucas has worked as a software engineer at companies including Wire Stone, which is part of Accenture, Infinium Labs (now Phantom Entertainment) and Microsoft.
The 11-person company is finishing a seed investment round. Whalen declined to say who was investing and how much.
Competitors in the space are mostly focused on offering loans against PTO, Whalen said. In January the insurance company Unum announced that, with the help of Fidelity Investments, it would allow employees to cash out PTO to pay for student debt. PTO Exchange has a patent on this service, said Whalen, and the program might infringe upon it.
And what about people who would like more time and less money? Can PTO Exchange run the equation the other direction? Not yet, said Whalen, but they’re considering it.
While the next year or two will be focused on customer accrual, the team is thinking about bigger ideas as well. They’re interested in exploring PTO for the gig economy — people driving for Uber or Lyft, making Amazon deliveries and other freelance jobs. Additionally, Whalen said the industry in general is looking at ways to bank PTO so that you can take it from job to job like you do a 401(k).
He pushes back against the idea of unlimited PTO being offered by some employers. While it sounds great, it’s often the case that an employee can’t actually take three or four weeks of vacation. That means it’s not really a benefit at all, Whalen said.
“Taking time away from your job may be more stressful if you are living paycheck to paycheck, are overwhelmed with student loan debt, or have health and medical bills,” he said. “Relieving stress is not just about taking days off.”
We caught up with Whalen for this Startup Spotlight, a regular GeekWire feature. Continue reading for his answers to our questionnaire.
Explain what you do so our parents can understand it: PTO Exchange allows employees to exchange the value of paid time off for goods, services and experiences. From student loan repayment, educational support, healthcare or retirement savings, funding family vacations, giving to nonprofits and sharing with colleagues in need.
Inspiration hit us when: We came up the idea at an entrepreneur’s dinner at my house; steak and good wine are the usual ingredients necessary to create new ideas.
VC, Angel or Bootstrap: I like them all because each one is necessary for scaling a business. Bootstrapping is necessary to get your idea vetted by the market, but when you need to invest in front of revenue like most SaaS companies, then angels and VCs are critical. Just make sure investors have the experience to bring the right value and can help with customer and go-to-market strategy.
Our ‘secret sauce’ is: When we started the company, we really saw that there was something unique in what we were doing and how it was being done. We decided to patent some of the unique things that our platform does. It took us four years to get through the process, but we received our patent in October 2018.
The smartest move we’ve made so far: Partnering with large human resource solution providers early. We were one of the first partners in Alight Solutions’ partner network and it has allowed us to shorten the sales process and get in front of Fortune 500 companies more quickly.
The biggest mistake we’ve made so far: Sales cycle understanding. Selling to large enterprises (B2B) is a much longer sales process than to everyday consumers (B2C). Underestimating the process and the entrenched mindset within those organizations is probably one of the biggest hurdles we are learning to overcome.
Which entrepreneur or executive would you want working in your corner? Lars Dalgaard, founder of SuccessFactors, or Aneel Bhusri, co-founder of Workday. Both have built incredible companies around helping enterprises manage human and financial capital. Their experiences and knowledge from building those companies would be extremely valuable in what PTO Exchange is trying to accomplish.
Our favorite team-building activity is: Breaking bread together with family and friends! We work hard and long hours so adding the extended team (spouses, partners and family) to the mix is a way of building the broader team support for the company.
The biggest thing we look for when hiring is: We like people who know how to problem solve and ask questions. Like most startups, the job is about wearing lots of hats. We have a motto: “We don’t manage, can’t manage and if you need to be managed, then you don’t belong here.” Ask questions, solve problems and make s*** happen.
What’s the one piece of advice you’d give to other entrepreneurs just starting out: Be persistent, always think of the customer and remember the word “no” is just two letters and they do not define who you are as an entrepreneur or the company you are trying to build.