Our Investment in Kombo

A summary of our investment in Kombo
Thomas Otter
December 6, 2023

The last few years have seen an explosion of specialized HR Tech solutions. We have backed a few of these, and we are confident that nimble specialist solutions, solving genuine business problems will continue to attract the attention of HR leaders and their budgets. Some niches will grow into massive categories. Some of them will grow to dominate a category, a few will expand to command strong positions in multiple categories. Some niches will grow into massive categories. AI will create new categories and disrupt others. It is a great time to be investing in the Future of Work.

The substack UX guru put this here.


At the same time we are acutely aware of what Josh Bersin aptly names the kitchen drawer problem.

Many organizations have bought a lot of SaaS solutions, sometimes these solutions overlap, and more often than not, they don’t connect with each other. The lack of data sharing between these applications undermines adoption and data quality. Integrating these solutions with each other and into incumbent suite vendors is often cumbersome and expensive. Many organizations keep putting off the drawer tidying project, but some are having their Mari Kondo moment.

We are also aware of the ebb and flow of the suite v niche cycle (Like the Kondratieff Waves in economics). Over the last year or so we have seen organizations seeking to “leverage” the suite and reduce exposure to niche applications. The LOB v CIO pendulum has swung back a bit in favour of the CIO and the suite.

Some ancient history

In 1994 I interviewed at SAP South Africa, in the office opposite the Hyde Park shopping centre. George Oertel and Claas Kuehnemann interviewed me, and I remember both interviews with a surreal level of clarity. The leitfaden in both conversations was integration, integration, integration. Through the 1990’s, integration was SAP’s magic word. The SAP of the 1990s built an integrated end to end ERP product. At the time it was revolutionary. It pretty much bludgeoned the competition. I learnt a tremendous amount from George and Claas. I still do.

It isn’t 1994 anymore

The world today is more complicated. Whereas back then to be an applications vendor you needed to create your own proprietary stack, today, the barriers to entry to build new applications are much lower. And at the same time, the larger the vendor, the harder it is for it innovate at the edges. So while the kitchen drawer problem is real, innovative solutions that solve specific business problems will continue to thrive. We are already seeing a new wave of AI centric plays that will probably mean organizations are going to need another drawer.

Connecting independent SaaS vendors together, whether niche to niche, or niche to suite has, until recently required lots of hand-stitching, forensic knowledge of mysterious APIs, deep patience and deep pockets. It slows down sales cycles, deployments, and soaks up R&D capacity in both the vendor and the end customer that could be spent elsewhere.

In my product days at SuccessFactors, we worked on making it easier for niche vendors to connect to SuccessFactors, but the complexity the partner programmes made it difficult for smaller vendors to easily connect. I like to think we did a better job than the other suite vendors, but it was a low bar.

I’ve written extensively elsewhere about APIs and their politics.

If were to do a start up, it would be in integration: Sorting out the drawer.

As an investor, I sometimes play the thought experiment, “If I were to be an entrepreneur, what would I want to build?” More often than not, I come back to the wicked problem of integration. Jason, David and I have had our eye out for an integration play for a while.

HR integrations can get complicated. You are dealing with PII, so data protection law comes into play, so to do organizational authorization requirements. Humans also change, so the data can be quite dynamic (effective dates anyone?) Different HR systems require different levels of data fidelity. Payroll needs a high level of fidelity, recruitment less so. Transaction and Masterdata blur. Most reasonable size organizations will have more than 100 HR applications. And HR data needs to find its way into other business applications too.

For a start up building a focused niche product, one of the questions they will get almost all the time is how to do you integrate with the HRIS, LMS, ATS etc. For many start ups this is daunting. The challenges are both technical and organizational. How on earth can you get a test environment? Is the API documentation available? Who do I talk to at the large vendor? The vendor is often relying on the prospect to help them, not ideal.

I sense that a legacy of that early SAP success with pre-integrated software means that German companies generally make a bigger deal about integration than I have seen elsewhere, especially the US. Ordnung muss sein and all that. So integration is Germany is seen as a end in itself, rather than a means to an end.

While some integrations will still need to be hard-carved, improvements in middleware and APIs means that there are vendors that offer integration tooling and solutions. Over the last couple of years we have seen vendors such as Fitch and Merge focus on HR integrations. Also more sophisticated integration tools such as Snaplogic and Boomi are able to serve HR use cases.

About our investment in Kombo

We met Alex from Kombo while the project was still in Y-Combinator, earlier this year. We didn’t initially invest, but an German angel investor, Jens, who is also an LP with us, did. Several other angel investors we know also invested, as did Robin at Robin Capital. Over the next few months, Jens kept us up to date with their progress. We also heard good things from other investors. At the same time Alex introduced me to several early customers, and we also got some great feedback from one of our portfolio companies that is using the product. Alex and I stayed in touch, and we become more and more impressed with Kombo’s approach to the technical challenges of integration and how they were winning time and time again against more established competition. At the same time Alex and his team saw the benefit from working with Acadian. Our network in the HR tech space as well as our deep understanding of the technical and business problem means that we are bringing more than just cash.

A few of things we particularly like about Kombo.dev.

  1. Deep grasp of the implications of GDPR for interface and integration design.
  2. Deep technical chops (AI and more).
  3. Deep focus on specific HR use cases.
  4. Unified API concept shields complexity from customers.
  5. signs of a repeatable sales model with strong network effects.
  6. Focused understanding of their ICP
  7. Excellent revenue growth
  8. Not over-marketed or over-sold
  9. Fit to our portfolio is excellent. Symbiotic opportunities abound.

We are very excited about the opportunities to thoughtfully apply AI to integration, and expect Kombo to be at the forefront of this next wave of HR Tech. I’m looking forward to spending time in Berlin getting to know Alex, Aike, Niklas, Fabian and the rest of the team. I can see all sorts of benefits for our other portfolio companies to collaborate with them too.

kombo team

Jason and I have also been looking for a German investment for a while. The forthcoming ESOP reforms make me more bullish on the German market.

Exciting times.

Four pulled-out MAXIMERA kitchen drawers with various items in a cutlery tray, an adjustable organizer for drawer and boxes.

Reminds me that I really ought get mine done.

As I usually do, here is some music that has an obtuse link to the post. A bit of Berlin, integrating hip hop, reggae, dancehall and more. Seeed.

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