Salt Labs, a rewards platform for hourly workers, today emerged from stealth with $10 million in pre-seed funding led by Fin Capital with participation from Anthem Venture Partners and others. Co-founder and CEO Jason Lee tells TechCrunch that the money is being used to build out Salt Labs’ initial team, product development and go-to-market strategy and execution.
“The mission of Salt Labs is to enable hourly workers to own the long-term value of their work,” Lee said via email. “Salt Labs believes that by modernizing the total rewards structure for frontline workers, companies can better align their long-term interests with those of their workers.”
At a high level, Salt — which will launch sometime in early spring, available to any worker — attempts to gamify work by allowing frontline workers to earn rewards for every hour worked. Lee compares it to a frequent flier program, only instead of earning miles for flying, workers earn a virtual currency called Salt for working.
Salt can redeemed for goods and experiences, similar to how other rewards programs work — or transferred to family and friends. But Lee and Rob Law, Salt’s other co-founder, have broader ambitions for the platform. They expect to add a “vesting” feature to Salt that’ll allow workers to earn additional rewards by working at a given job for some period of time.
“We believe there are a ton of companies outside of tech who are struggling to hire workers,” Lee said. “In order to do so, they’re having to raise wages multiple times to attract workers in an environment where most companies are looking to reduce expenses. We think this is the ideal time to rethink employee loyalty and better align enterprises’ long-term interests with those of their workers.”
Workers might rightly bristle at the suggestion that virtual currency is the answer to companies’ retention problems, not higher pay.
In a September survey from Bankrate.com, more than half of respondents said that their incomes hadn’t kept up with rising household expenses amid persistent high inflation. A report from the Economic Policy Institute, meanwhile, found that, as of June 2022, 14% of gig workers in the U.S. earned less than the federal minimum wage and that 26% earned less than $10 per hour.
Subminimum wages have led to significant hardships for gig workers, no surprise. Relative to salaried workers, gig workers are more likely to live in households that don’t seek medical treatments because of cost, go hungry because they can’t afford to eat or frequently skip utility bills.
Equally unsurprisingly, turnover tends to be high among frontline workers. The Economic Policy found that more than half intended to find a new job within the next three months.
So will earning “Salt” convince these generally underpaid workers to stick around? Lee argues that it can so long as frontline workers — who usually hold down multiple jobs, he notes — gain rewards across multiple jobs.
“Despite working multiple jobs, individuals in this demographic often live paycheck to paycheck, making it difficult for them to allocate discretionary income towards longer-term investments,” Lee said. “Salt Labs considers companies that manage long-term asset ownership, including 401k and investment accounts, as its main competitors.”
That’s wildly optimistic. But to Lee and Law’s credit, they have a successful company in the worker payments space under their belt.
The pair previously founded DailyPay, which has raised hundreds of millions of dollars in venture capital for its service that charges up to $3.49 for users to instantly receive their earned, but unpaid, income. DailyPay has a partnership with ADP, roughly 500,000 active users (as of 2020) and customers such as Hilton, Kroger and Dollar Tree.
Success is a relative term, of course. DailyPay’s fee has been compared to traditional payday lending — prompting regulatory scrutiny. One of DailyPay’s competitors, Earnin, settled a lawsuit that accused the platform of causing more than a quarter-million workers to incur the overdraft and other fees that it promised it would protect them from.
With Salt Labs, which currently has ten employees and about 100 people participating in its closed alpha, Lee and Law aren’t anticipating the same challenges.
“Salt Labs is focused on addressing wealth inequality that exists for lower- and medium-income Americans,” Lee said. “While available to any worker who downloads the app, Salt Labs’ vision is that by offering Salt as part of a total rewards plan, employers will be able to differentiate themselves towards potential employees in a tight labor market.”
Time will tell whether that vision comes to pass.
Source @TechCrunch
