Investors are betting on the automation of human resources management in China. We reported last year that Moka, one of the key players in the space, secured roughly $27 million for its Series B led by Hillhouse Capital. This week, the startup announced closing a Series B+ at over 100 million yuan ($14.4 million), lifting its total raise for the B round to 300 million yuan ($43.2 million).
The startup declined to disclose its investors in the latest round, saying the proceeds will go towards recruitment, product innovation and business expansion. GGV Capital invested in its Series A round.
Chinese investors have in recent years shifted more attention to enterprise-facing products as the consumer tech market becomes crammed. Moka makes software to aid HR managers’ day-to-day operations, from posting job openings, discovering potential candidates, to managing current staff. For instance, Moka will alert the HR manager when employees update their resumes, a sign that they could be sniffing out new opportunities.
Moka’s newly appointed CEO Li Guoxing, a former engineer at Facebook
As the new round closed, Moka also appointed its co-founder Li Guoxing as its new chief executive officer. The five-year-old Beijing-based startup was founded by Li, a Facebook veteran, and Zhao Oulun, who was previously the CEO of the company. Zhao worked at the car-sharing service Turo in San Francisco before returning to China.
The new CEO claimed that Moka acquires users at two-third of the industry average cost, with subscription renewal rate for its software-as-a-service hovering above 100%. “The future of business competition definitely lies in the fight for talent,” he said. “So hiring will surely become a company strategy in the future.”
As of June, Moka had accumulated over 700 paid clients, from tech giants like Xiaomi, Didi, Arm China, Shopee, Alibaba, to fast-food giants Burger King and McDonald’s. Its team of 300 staff operates out of five major cities in China.
When a Walmart associate named Jacqueline Cote filed a charge with the Equal Employment Opportunity Commission in 2014 contending that the company was discriminating against her by denying health insurance benefits to her same-sex spouse, it signaled the beginning of a drawn-out legal battle.
It was not until December 2016 that the company announced that it had agreed to a settlement retroactively compensating Ms. Cote and other employees affected by the denial of spousal benefits.
If, by contrast, Ms. Cote had brought her case after the Supreme Court ruling on Monday holding that lesbian, gay and transgender employees are covered by the civil rights law that protects workers from discrimination on the basis of race, religion and sex, said one of her lawyers, Janson Wu, executive director of LGBTQ Legal Advocates & Defenders, the case would probably have been resolved much more quickly.
“At the time we litigated that case employers could argue that an employee didn’t have a legal claim to bring,” he said. “With this decision, it should be clear that employees shouldn’t even have to bring a lawsuit to enforce their rights.”
Even before the ruling on Monday, employers were moving toward nondiscrimination on the basis of sexual orientation and gender identity, prompted by state laws, significant E.E.O.C. rulings in 2012 and 2015, and federal appellate decisions since then.
Many companies adopted rules stating that sexual orientation and gender identity did not affect their hiring, firing or promotion decisions, and providing same-sex spousal benefits. According the Society for Human Resource Management, 82 percent of employers offering insurance extended health benefits to same-sex spouses last year, up from 46 percent in 2014. (Walmart made health benefits available to same-sex spouses in 2014 but, until the 2016 settlement, maintained that it was not obligated to do so.)
Because there was no nationwide policy, however, the changes were largely ad hoc and conditional — dependent on corporate calculations about costs and benefits.
While the E.E.O.C. could authorize workers to bring lawsuits under Title VII of the Civil Rights Act of 1964, its determinations did not bind a judge, and the outcome in many jurisdictions was far from clear even if plaintiffs proved discrimination based on sexual orientation or gender identity.
As a result,many employers decided that it was worth aggressively litigating an area in which their responsibilities were ill defined, or trying to settle on favorable terms.
In a 2014 lawsuit by a Texas-based employee of Saks Fifth Avenue contending that she had been harassed and later fired because she was transgender, the company sought a dismissal by arguing that federal law did not ban discrimination based on gender identity, only to reverse course under pressure from civil rights groups and the Justice Department.
The pressure appeared to work, but it raised questions about what would happen at companies less susceptible to public pressure.
“The arguments raised by Saks in that case, that transgender employees are not protected, it caused a firestorm for them because of the fact that they are a retailer that has a lot of policies favoring L.G.B.T.Q. people,” said Jillian Weiss, a prominent employment discrimination lawyer who brought the case. “They backed off that position. But now nobody is going to be able to take that position.”
Ms. Weiss said she expected the decision on Monday to change her bargaining position in settlement talks with defendants who had said, “We’re not going to give you more because once the Supreme Court rules, then we’d have to give you zero.”
Ahead of the Supreme Court ruling, some 200 companies, including Google, Facebook, Hilton, Nike and the Walt Disney Company, signed a brief in support of the plaintiffs — making it one of the largest instances of employer support for employee plaintiffs in Supreme Court litigation, according to Tico Almeida, now at the law firm WilmerHale, who helped to write the brief.
Mr. Almeida said support for the brief was often propelled by advocacy by companies’ gay employees.
But while the cases in the Monday ruling involved relatively small employers — a skydiving company, a mortuary, a county government — many gay-rights proponents predicted that large employers could wind up as defendants in other cases.
Even though such companies are more likely to have inclusive human resources policies, adoption can vary significantly.
“We see big employers who often have managers in certain locations that have really offensive discriminatory actions,” said Sally Abrahamson, an employment lawyer at the firm Outten & Golden.
After the Supreme Court’s 2015 decision that same-sex couples had a constitutional right to marry, some lamented that workers could be married on a Sunday and fired on a Monday — only because they had acknowledged being gay.
Ms. Abrahamson said that such practices were often as prevalent at large employers as at smaller ones, and that her firm had heard from workers in recent years who had been fired from chains in states like Indiana and Georgia after marrying a same-sex partner.
“There are so many terminations in states that have no protections,” she said, adding that she expected a significant uptick in litigation. More than half of states lack strong civil rights protections for gay and transgender residents, according to the Movement Advancement Project, a think tank focused on equal rights for gay, lesbian, bisexual and transgender people.
Mr. Wu, the lawyer in the Walmart case, said the decision would affect not simply one-off workplace developments like hiring and firing, but the daily quality of life many employees experience. “Employment discrimination doesn’t just include being fired,” he said. “It includes being treated differently, workplace harassment, which transgender employees suffer at higher rates.”
He said he believed that the decision would also require employer health care plans to cover surgery and other medical costs related to a gender transition.
Other experts cautioned that even having legal protection nationwide does not mean that gay and transgender workers are likely to prevail. Over all, plaintiffs still lose most discrimination cases in federal court, though many strong cases settle before trial.
“It’s a guarantee that if a person ends up going to court, their ability to bring a claim is not in doubt,” said Chai Feldblum, a Democratic E.E.O.C. commissioner from 2010 to 2019. “Whether that claim succeeds is no different than in any other case.”
But now, she added, “there’s no longer a barrier in front of the courtroom door.”
Today, the explosion of development in artificial intelligence (AI) and machine learning (ML) technology has created a market for which it appears there’s no limit. No matter the industry, if you name a reasonably-sized (or larger) company, there’s a good chance that they’re investing in AI and ML technology as a cornerstone of their strategic plans. With each passing day, it’s even becoming part of the small business equation, too. Here are four high-potential sectors for AI and ML startup success.
The takeaway is that there are as many ways for businesses to use machine learning as there are businesses. It’s the kind of burgeoning market that is perfect for fueling startup growth, and entrepreneurs have started to take notice. That’s why there’s been such a recent boom of startup activity in the sector – creating what many analysts are referring to as a 21st-century gold rush.
The problem is, like in the original gold rush in the late 1800s, there’s going to be a point where the majority of those rushing to stake their claims will see their odds of success dry up. That’s why it’s more critical than ever for entrepreneurs to understand which parts of the AI and ML space still have plenty of room for startup innovation, so they can mine the right vein and strike it rich.
Here’s a look at four of the parts of the market that show tremendous potential, to use as a guidepost.
Educational AI Systems
As AI and ML technology started their march into the business world, much of the attention paid to AI with respect to the education sector centered on producing the skilled worker’s businesses would need to operate their new technological platforms. Very little initial movement or investment went toward developing AI or ML solutions for the education sector.
In recent months, however, that has started to change. Education-focused platforms have been starting to roll out AI-powered tools and are increasingly viewing the technology as a game-changer for the industry. An analysis of spending by the education sector on AI and ML technology predicts that it will be the industry with the biggest spending growth by percentage through 2022. For an education-focused AI or ML startup, that’s a very encouraging sign.
Human Resources AI Technology
Another industry that’s been somewhat slow to adopt AI and ML technology is human resources (HR). The one exception has been in the adoption of applicant tracking systems (ATS) that use ML techniques to perform application screening for potential hires. That alone has spawned a cottage industry of AI-enhanced services meant to improve applicants’ chances of passing muster, as these machine-created resume examples should attest.
The thing is, the surge in ATS use is expected to be just a prelude to much wider adoption of AI and ML technologies in the realm of HR, with industry experts expecting adoption rates of the technologies to pick up significant steam in the coming years. That means it’s a great time to launch an HR-focused AI or ML startup now, to capitalize on the all-but-certain growth in the space.
AI-Powered Marketing Tools
As the world edges closer and closer to an always-on internet-connected reality with the emergence of IoT technology, businesses everywhere are coming to grips with the fact that there are more marketing channels to manage than ever before. The only feasible solution is to turn the bulk of the work over to AI-powered marketing systems, using ML to adapt and evolve marketing efforts over time.
Already, such tools are cropping up in all phases of the marketing industry, from social media management to content marketing and all points in between. That, however, is just the beginning. Businesses that have already seen how AI-influenced marketing decisionmaking can help them grow are now looking for ways to turn more of their marketing efforts over to AI-powered solutions. A startup that focuses on delivering an AI solution to enable real-time marketing automation at scale could find itself well-positioned for long term success.
Financial AI Solutions
When startups are seeking an AI or ML market with solid growth prospects, their best bet is to go where the money is – which in this case means to the financial sector itself. AI and ML technology adoption in the world of finance has been so swift and complete that it spawned the whole new business category of fintech. In particular, asset managers are already going all-in on the technology as are hedge funds, financial advisors, and the entire banking sector.
It’s also an industry that has almost inexhaustible resources to pour into worthwhile AI and ML technology, which bodes well for any startup that looks to build solutions for the industry. The size and scope of the sector mean that there’s a near-limitless number of opportunities to be had in the space – and they’re all there for the taking for any savvy entrepreneur who finds an innovative way to capitalize on them.
Fools Rush In
The bottom line here is that there’s no shortage of opportunities to be had for AI and ML startups, as long as they choose their markets carefully. It’s not a coincidence that analysts are starting to call this the AI gold rush – they’re doing it because the stampede of development will eventually lead to an oversaturated market that can’t sustain the number of startups that it is spawning.
When that happens, only the entrepreneurs that made it a point to work within sectors that have long-term growth prospects will see their startups survive. When the bubble bursts, it won’t be because interest in the technologies has waned, it will be due to two factors – a systemic need to cull underperforming members of the startup herd, and a round of consolidations that will see the best of the bunch scooped up by larger entities.
Startups in the above four sectors will stand a good chance of being part of the latter group. As for those in the former group, I suggest they do some research into the end of the last gold rush for some insight into their ultimate fate.
Andrej is a dedicated writer and digital evangelist. He is pursuing an ongoing mission to share the benefits of his years of hard-won expertise with business leaders and marketing professionals everywhere. He is a contributor to a wide range of technology-focused publications, where he may be found discussing everything from neural networks and natural language processing to the latest in smart home IoT devices. If there’s a new and exciting technology, there’s a good chance Andrej is writing about it somewhere out there.