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Matt Phelan is the co-founder and co-CEO of The Happiness Index (THI). A seasoned entrepreneur, Matt launched a marketing agency in 2008 which became integral to building THI. The team has been able to grow to over £1 million in annual recurring revenue, with a 95% customer retention rate*. Now with plans to expand internationally and have more employees happy and engaged, they’re fundraising on Seedrs to a target of £475,007. We felt this was the right time to get to know Matt and his mission.
You’re a second time entrepreneur and author. Tell us about your career before launching The Happiness Index?
I started my first business, a marketing agency, in 2008 right before the last big financial crisis. Although I can’t recommend starting a business when the world is in melt-down, we certainly had to learn a lot of lessons very quickly at the time!
My first business was actually integral to building The Happiness Index. Not only did the idea come from one of our customers (who is now our Chief Marketing Officer), but our CTO at the time built V1 of our product. It was initially an in-house solution we used! Quickly our customers started asking to use it too, and now we provide a platform that’s used by thousands of people across over 100 countries.
What is The Happiness Index and what problem does it solve?
In a nutshell, we provide a SaaS platform that helps HR and People professionals measure their team’s happiness and engagement. Traditionally, emotions are left out of the workplace, but neuroscience shows us that we need to unite both the head and the heart. By understanding how employees are thinking and feeling, businesses will thrive.
How does your business model work and what are your revenue streams?
As a SaaS company, we charge for use of our platform. Typically, customers sign up for a 3 year contract which we find is the best time frame to implement large-scale cultural changes. We charge on a sliding scale by company size.
We also offer a leadership training academy, which allows ambitious professionals to get to grips with our neuroscience model so they can help build thriving cultures.
What does your competitive landscape look like and how does The Happiness Index differentiate itself?
Unlike other measurement companies, we look at both happiness and engagement. Within these broad strokes, we have a proprietary neuroscience model which uses 8 key themes. Together they help create a happy and engaged team, a thriving culture, and, in turn, a productive organisation.
We have over 20 pre-built surveys which focus on all aspects of the employee and organisation lifecycle. As well as an always-on listening tool which allows our customers to collect employee feedback as it happens.
Our technology is designed to show organisations which key neuroscience themes your business is currently performing well in and areas to improve. This will allow companies to take best practice and apply to different areas of the organisation, for example between teams or locations.
Could you tell us about some of your biggest achievements to date?
Last July we launched our Neuroscience upgrade. This revolutionised how we are now able to benchmark and analyse data within our platform. We also introduced our closing the feedback loop function. A tool which allows managers to enter into conversations about feedback while maintaining complete anonymity on behalf of the employee.
However, our biggest achievement is that we’ve managed to build our company without sacrificing our principals along the way. For us, everything is about #FreedomtobeHuman. We don’t want to do anything if it’s not right for our people.
How do you plan to create a scalable and profitable business?
I want to start by telling you about my favourite happiness study.
In 2012 Michael West and Jeremy Dawson published a paper with The Kings Fund that still shocks me a decade later! Their study aimed to look into a link between employee engagement and job performance. They looked at a range of metrics to measure performance. These included things that are quite specific to the healthcare industry, such as mortality, but also some that are relevant to other industries, such as safety measures and patient (or customer) satisfaction. They even looked at some that are arguably relevant to every employee – absenteeism and turnover.
West and Dawson proved that there were many clear associations between happiness and workplace performance. Strikingly, the data showed that an improvement in employee engagement of one standard deviation led to a decrease in patient mortality of 2.4%. This means if there were two hospitals, and everything else was exactly the same, but one had happy staff and the other had unhappy staff, more people would die in the second hospital!
We run a business, not a hospital. But by listening to our people, and measuring the happiness AND engagement of hundreds of thousands of employees across 90 countries, we can see that the same is true in business.
I’ve seen countless data points that highlight how focusing on culture and happiness has changed businesses and changed lives. You can read more about it in my book here. But safe to say, what I learned was that caring about how your employees think, feel and behave is key to running a thriving business.
Beyond this, one of our big goals for the coming year is to become B-Corp certified. We believe that scalability is all down to sustainability. If you’re not sustainable, you’re not scalable.
What do you plan to do with the money you raise?
It’s imperative to us as founders that we create a business with a sustainable growth plan. For that reason we will continue to balance our investment across:
- Growing and developing our team
- The development roadmap of our platform
- Expanding our global growth sales and partnership capability
What do you love to do in your free time?
Spending time outdoors with my kids, I love playing in nature with my son and daughter whenever I can.
I also run every day for my mental health, and have been known to kick a ball about with my mates. Other things I love include taking my son to the park or my daughter to watch Spurs women play in the WSL.
If you weren’t building The Happiness Index, what do you think you’d be doing?
I grew up on a working farm and I used to help my parents out whilst growing up. So if I wasn’t running The Happiness Index, I’d be working on a farm trying to figure out how to sustainably feed the world.
What’s the biggest lesson you’ve learnt so far building The Happiness Index?
When we alpha tested The Happiness Index way back in 2011, we made happiness a target. But making happiness a target is like telling someone who looks unhappy to cheer up. Instead we learned to view happiness and emotional data more like a weather report. For example, if it’s going to rain, pack an umbrella. If it’s going to snow, make sure you have packed the snow chains.
Today’s emotions are tomorrow’s performance. Emotional data is intelligence company board and leadership teams can use to make better decisions.
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To join Matt and The Happiness Index team on their quest to improve employee wellbeing, check out their campaign here.
*Based on unaudited management accounts.
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