Central: Transforming Back-Office Automation

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Transforming Back-Office Automation with Central

American companies spend an estimated $222 billion on payroll and hiring, benefits and compensation management, and various forms of compliance operations. Roughly $30 billion is still paid in fines for violations related to these core business functions.

This is expensive and doesn’t seem very reliable, as evidenced by approximately 14% of preventative spend still being racked up in penalties.

Additionally, companies are being forced to build entire operations teams to handle the 5-10 software solutions they use to manage each of these corporate responsibilities, adding further cost and distraction.

For startups, these expenses, whether financial or attention-based, can make or break a company when every cent and second is critical to building, shipping, and iterating on products that customers love.

Central is building the OS for back-office functions, automating everything from hiring documents and compliance to health benefits and payroll.

Whether you’re a small startup with a handful of employees in-office and relying on contracts from around the world, or a massive corporation with distributed teams in offices across the United States, Central has the tools to compliantly handle back-office operations.

While more expensive than other solutions ($50/head per month), the cost looks far more justified when accounting for the fact that it claims to replace Rippling, Gusto, and Deel, with its comprehensive ops solution, greatly reducing headaches while allowing teams to put HR on autopilot and return to their VS Code windows.

Traction:

• Early customers include InQuery, dime, and Keywords AI

Market Size:

• TAM: $40 billion

• SAM: $6 billion

• SOM: $60 million

Competition:

• ADP, Intuit

• Gusto, Rippling, Deel

• Zenefits, OnPay, Pilot

Team:

• Josh Wymer, CEO: ex-Mixpanel, ex-Meta Tech Lead

• Pranav Kashyap: ex-Stripe, ex- Mixpanel PM

• Nilay Modi: ex Clayboard (YC W20) co-founder and designer

Risks:

• Spread too thin, too fast: quality declines, and keeping up with changing regulations and codes in all of these areas (and the associated fines) is tough af for a team of ~12

• Competition and Differentiation: pricing is higher than most, and there are tons of similar products, so marketing the differences will be tough and critical

• Market dependence: though there will always be a floor on how much recurring revenue can fall, downturns in the market will lead to layoffs, and this directly impacts revenue numbers for Central

What I like:

• Boring but necessary: how many kids are born and say to themselves “i want to be an operations associate when i’m older!”? exactly. the boring, repetitive, yet necessary functions in the corporate world like these will be some of the first that companies look to automate

• Edge case coverage: though I listed “spread too thin” as a risk, I actually do admire the myriad of edge cases covered by Central, from remote workers in any US state to even contract workers in more than 200 countries and the various benefit plans companies may be looking to offer to each of them

• Users love them: never bet against a company who’s users are their biggest marketers (looking at Peloton, Tesla, beehiiv)… early testimonials make Central seem like the next big company with a rabid base of users who make being a user their entire personality

Opportunities:

• Content: Central’s site is pretty bare, and though the social proof is a nice touch, there is a long way to go to better explain the value of their product, particularly if broken down by role/function. Also, as mentioned, it’s a competitive space, so getting creative with ads and organic socials could be a huge differentiator if they’re able to establish a name for themselves as a company with personality

• Niche down: companies live and die by the pursuit of PMF, and it’s tough to find that when you have no clear audience. Central may find a strong central (pun intended) audience in a specific industry for which they can build sector-specific features and benefits. They can leverage this as a wedge to break into a more industry-agnostic platform

• Integrations and/or partnerships with value-add services: I’m a big believer in the B2B2C/B approach, whereby partnerships are leveraged to symbiotically place products in front of a tangential audience, and Central can form these sorts of partnerships (or at the very least, integrations) with other products that their customers may be interested in, such as financial planning, subscription and spend management, and project management softwares

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