Matt Schulman shares the story of founding Pave, a company empowering CFO’s, HR and finance leaders to make smarter compensation decisions. Having recently raised $46 million in series B funding, Pave is creating a fair playing field and making the black box of compensation more transparent for all stakeholders.
Compensation is stuck in the dark ages. Not just for candidates and employees, but even managers and recruiters — it’s safe to say that nobody truly understands how and why compensation decisions really get made. Merit cycles, compensation reviews, and benchmarking surveys are phrases that elicit groans from HR and finance leaders, leading to opaque comp decisions shrouded in mystery and fueled by manual input of stale data.
In addition to the stress and anxiety it causes for employers and employees alike, this information asymmetry is essentially a tax on the economy, creating inequity in the workforce and potentially causing people to leave their jobs.
Pave is a company on a mission to make the black box of compensation transparent and fair for everyone in the ecosystem.
Matt Schulman, an alum of the third cohort of the On Deck Founders Fellowship, built Pave to allow CFOs, HR and finance leaders to make smarter comp decisions. They’re doing it by offering a suite of compensation tools and giving businesses easy access to market data so they can plan, communicate, and benchmark in real time.
In August 2021, Pave raised $46 million in series B funding led by YC Continuity, Andreessen Horowitz, and Bessemer Venture Partners. CEO Matt Schulman sat down with us to take a look at the ways in which compensation is broken and how Pave is planning to use this fresh funding to fix it.
A passion for financial literacy
A self-described math and finance nerd from a young age, Matt has always liked building things. He pursued a career path in coding, getting his engineering degree from the University of Pennsylvania and a business degree from Wharton.
After a year of freelance coding and climbing mountains around the world, Matt returned to Silicon Valley to work as a software engineer at Facebook. While there, he began to notice something frustrating about the compensation decisions being made.
“I would get this piece of paper from my manager twice a year that said, hey, you've received this rating and this promotional decision, and thus you have received this many equity refresher shares and this much money. I would ask my manager how he came up with those numbers, and he would say that he hadn’t, and it was all done by computer algorithm.”
Seeing the ways that Facebook failed to present clear reasons behind compensation really crystallized the opaqueness of salary structures to Matt.
When he left Facebook after two years, he decided to build an app that would function like a personal financial assistant. A few months into building, when Matt was talking with VPs and CFOs to conduct user interviews, he received some career-defining feedback.
“VPs of People and Finance told me, you're a little bit off the mark, but you're close to something that is truly top-of-mind painful for us.”
That pain turned out to be stock options, which proved baffling and stressful for HR and finance leaders alike. For Matt, this discovery was the pull from the market that led to his deep exploration of how compensation is fundamentally broken — and how it could be fixed with better tools and real-time data. He realized he could build something that would demystify stock options and compensation structures, helping CFOs and people leaders communicate and plan around them.
COVID-19 as the tailwind
At this stage of his career, Matt only had engineering experience, with no sales or go-to-market skills under his belt. But he had enough evidence to believe he was onto something big.
“I was pretty excited. I purchased a list of emails, set up HubSpot, bought LinkedIn Sales Navigator, and sent out 200 emails to CFOs and VPs of People.”
It was a shot in the dark, but it paid off with a massive dopamine hit. Out of 200 emails, 59 turned into meetings to discuss what was wrong with the compensation status quo. The sudden influx of Calendly notifications from frustrated CFOs, managers, and HR leaders showed Matt just how ready the market was for disruption.
“There was underlying pain that had been here for decades, unaddressed.”
Determined to address a pain so visceral that people would pay to fix it before even seeing a prototype, Matt resolved not to write a single line of code or raise so much as $1 of VC money until he had revenue.
He didn’t have to wait long. The COVID-19 pandemic caused a flux in the labor economy, making compensation a focal point for companies. The hurried rethinking of how and what to pay people in a newly remote workplace led to Matt’s first sales revenue in March of 2020.
Now that there was money in the bank from sales, it was time for Matt to pivot back into coding mode and build the prototype he had promised those first clients.
Joining On Deck
A solo founder, Matt was “running around town like a chicken with his head cut off”, trying to build a groundbreaking product on his own — a lonely pursuit if there ever was one.
“I was definitely looking for community and a feeling of belonging.”
Through friends, Matt had been aware of On Deck since its early days, but when one of them suggested he join the On Deck Founder Fellowship as a founder, things finally clicked. As a Fellow in the third cohort, Matt found the sense of community he’d been after. Beyond that, introductions made by On Deck’s Brandon Taleisnik led to a couple of early hires, to help supercharge the next stage of growth.
“On Deck is an amazing community of like-minded builders who don’t want to just be a cog in the wheel. They want to make the wheel. I’m grateful to be tapped into the broader community.”
Further empowered by the people and resources Matt had access to at On Deck, Pave started selling in earnest in November 2020. In December, their first sales rep almost doubled his quota — in one month. From that point onwards, doubling down was the only way to go, so Pave (known as Trove at the time) hired more salespeople and engineers. Late 2020 is also when the company raised a series A led by a16z, Bessemer Venture Partners, Bezos Expeditions, Dash Fund, and Y Combinator. Growth was extremely strong going into 2021, and contributed to inbound interest in the series B.
Ready to Pave the way for the future
That interest from investors offered even more validation of how Pave’s impact resonated with HR leaders. According to Matt’s vision for the company’s growth trajectory, this is ‘Chapter One’ of three: doubling down on the US market while building tools that go deep into the realm of the intelligence behind all compensation decision-making. Companies can retain talent and reduce churn by having better, up-to-date market information when attracting talent.
“We can look at a potential offer and say, if you gave $5,000 more, it would be more likely to close by 16%. We’re leveraging that market insight, that proprietary knowledge into the tools, so no other competitor could replicate them.”
Pave today is focusing on tech companies in the US, but broken compensation structures are not just a Silicon Valley problem.
“Every single company in the world has to get capital, and they have to use that money to hire people, figure out how much to pay them, strategically communicate that to candidates, retain employees, and stay calibrated with the market over time. It is truly the most ubiquitous part of how the labor economy works on a global scale.”
This is the driving thesis behind ‘Chapter Two’ for Pave: taking the playbook of how the company went from zero to escape velocity in the United States and replicating it in markets around the world, as well as in other verticals outside of the tech ecosystem:
“Even department stores like Home Depot and Lowe's need to understand how much to pay their people.”
‘Chapter Three’, however, is the one that really fires Matt’s imagination. For Pave to become a trillion-dollar company, Matt envisions building one of the world's biggest and deepest professional graphs; an online employment record graph of 3.5 billion humans that would allow us to understand what the global labor economy is doing in real time.
“Our broader vision is to build this global network of data. There's three and a half billion humans in the global labor economy, and we want all of that data to be in the online world instead of the offline world.”
The possible impact is massive and the potential reach is global. But at its core, Pave is delivering on Matt’s underlying love of personal finance and, through that, creating real impact for people tired of unfair and murky comp structures.
“We can help people find better opportunities, better jobs. And we can change how compensation fundamentally works, so that it's a transparent and fair process for everyone.”