Culture and teams, within an organization, are something that everyone likes to talk about but few are able to do very well. It’s both an art and a science that serves a critical fabric in the tapestry that goes into building a successful business. Managers can become lost chasing growth without having a full understanding of what’s happening within their team or how to handle situations. Greenpoint-based startup Butterfly is out to change that. It’s an AI-powered leadership coach developed to provide actionable employee intelligence for managers through a tailored and dynamic curriculum based on team feedback. It’s already being used at some marquee companies including Jet, GE, Ogilvy, and Citi.
Today we sit down to with CEO and cofounder David Mendlewicz to chat about the company, its future, the ability for an AI-powered solution to deliver coaching, and the company’s seed round of funding.
Who were your investors and how much did you raise?
We just closed an oversubscribed seed funding round of $2.4M The lead investor was Daphni along with Precursor, Tectonic Capital and other notable angel investors.
Tell us about your product or service.
Butterfly is an employee intelligence and management coaching software, founded in Brooklyn by myself; Simon Rakosi and Marcus Perezi-Tormos. Our mission and the underlying objective of our product is to democratize executive coaching, making it scalable across all organizations and available to every manager. Butterfly has worked with teams at GE, Citi, Jet.com, Coca-Cola, Ticketmaster, and Ogilvy.
What inspired you to start the company?
Our founders come from disparate backgrounds, but each of us share a key common point in our careers: We were all promoted to managerial positons at a young age, at times leading large teams on a global scale. Elevated in these positions, we faced challenges and setbacks without the support and education needed to step into the role of manager. Putting our heads together, we developed the first iteration of Butterfly’s product with the intention of helping managers gain insights into their team’s mood and gather real-time feedback. With the understanding that these insights are only as powerful as a manager’s ability to act on them, we developed the first AI leadership coach, Alex, which delivers tailored curriculums based on iterative team feedback.
How is it different?
While other employee intelligence companies focus almost exclusively on empowering talent and HR teams, Butterfly’s strategy has always been to start with the manager. That’s because we fundamentally believe that managers are the linchpin to strong and healthy corporate cultures, and therefore, productive businesses. While talent teams absolutely benefit from the valuable analytics provided within the platform, our leading product feature is our virtual coach, which brings custom leadership training to managers in a powerful, yet cost-effective, way.
What market you are targeting and how big is it?
Leadership training is important no matter which industry or region you’re in. In fact, the Harvard Business Review has reported that most organizations wait up to ten years to provide any form of executive coaching to their managers. Because of this, the opportunity for Butterfly is far-reaching and we estimate the total addressable market at roughly $200 billion. We are strategically partnering with global Fortune 500s at this stage of our growth.
What’s your business model?
Butterfly is a SaaS model that’s priced on a per seat basis. The cost of our product varies by the size of the team or organization employing it.
Can an AI driven solution like this effectively capture the interpersonal nature associated with coaching?
Absolutely. Everyone can relate to the feeling of sitting through a lengthy corporate training that doesn’t feel relevant to your goals or your interests. The rising class of managers today, the “Slack generation” if you will, are accustomed to short-form content that gets straight to the heart of it. That’s why our coaching is concise and actionable, easily consumed via a smartphone (although it’s also available on desktop).
Further, the AI layer to our tool provides much needed relevance and flexibility when it comes to coaching curriculums. Managers receive content that matches up with the feedback their team is providing to them right now. As managers evolve and grow over time, the tool adjusts accordingly.
What was the funding process like?
We had a lot of fun meeting with prospective investors and getting to know our seed group very well over the past several months. That said, as any product-obsessed startup will tell you, we’re looking forward to getting back to work in the day to day of our business. With this round of backing, we’ll be scaling our team and making some key hires to help support the evolving needs of the platform.
What are the biggest challenges that you faced while raising capital?
We were fortunate to receive a lot of interest in the oversubscribed round, so the most difficult part for us was determining who our core group of investors would ultimately be. Thankfully, we found some fantastic partners in this group and we look forward to continuing the relationship with them down the road.
What factors about your business led your investors to write the check?
Our product tells a simple story and offers a simple solution. Leading investors are like us in that they can relate to the feeling of having a bad manager, or perhaps questioning their own leadership skills at some point in their careers. Leadership is an ongoing skill, and soft skills in particular are an area in which traditional corporate trainings have difficulty addressing. What we love about this group of investors is that they believe in our mission as much as we do, and understand how important leadership development is to the health of a business.
What are the milestones you plan to achieve in the next six months?
In the next few months we want to continue to partner with talent teams at forward-thinking organizations who understand the critical role managers play when it comes to employee engagement and culture. We’ll also be optimizing our product, with a few exciting announcements to come in Q1 of next year.
Where do you see the company going now over the near term?
It’s business as usual at Butterfly. We’ve got a great team in place, which we’re continuing to build out, and we’re clear on our mission and team OKRs. We’re looking at some new office space—but staying in Brooklyn (Greenpoint) where it all began.
Where is your favorite fall destination in the city?
We recently discovered Getaway, the tiny house rental startup, and we can’t get enough of it. Living and working in New York can be exhilarating, but it’s also grueling. We’re big proponents of work/life balance and taking some much needed down time from the hustle and bustle of the city to relax is a priority across the entire team. In fact, when we’re not booking tiny houses we’re having team outings in Beacon.