Culture Amp Acquires Zugata: Employee Feedback Market Gets Hotter

Today Culture Amp, one of the leading providers of employee engagement tools, announced the acquisition of Zugata, an innovative AI-based peer-to-peer development platform.

What does this really mean? 

Well as I’ve written about in my latest research, there is a fast-growing reinvention of the HR software market taking place, largely driven by innovative new vendors. This is an example of that trend playing out.

Culture Amp, a pioneer in pulse feedback surveys (founded in 2011), is a company focused on helping companies improve their employee engagement and culture. They’ve succeeded through a focus on easy-to-use survey software, great I/O psychology, and a culture that focuses on customer success. Many of the fastest growing tech firms use Culture Amp, and they’re a demanding bunch.

Zugata, a company founded by technology entrepreneurs, was founded to find a new way to solicit peer to peer feedback. When I first met Srinivas Krishnamurti, the CEO of Zugata, I was excited about his vision: the platform looks at your email traffic and then quietly and carefully sends developmental surveys to your peers, aggregates the results, and gives you coaching. 

Srinivas’ original vision was to make the whole feedback process easier, giving people a tool that structures questions around specific skills, creating development feedback you can use. It’s incredibly useful and fits somewhere between a 360 assessment and a development planning tool.  (The product ADP Compass is very similar.)

The problem Zugata found was that there was no established “category” for this kind of system, so they tried to pivot into performance management. Performance Management, which is an enormous market, is highly complex and requires many features Zugata had yet to build. So rather than try to build out an end-to-end performance solution, the company chose to join Culture Amp.

employee engagement

As this chart shows, I believe this clearly puts Culture Amp into the 3.0 category for employee feedback: now offering a tool that gives customers direct pulse surveys, annual surveys, and ONA (organizational network analysis) based feedback and coaching directly from the Zugata platform. 

The $8 billion acquisition of Qualtrics by SAP is focused on this market, as was the acquisition of Glint by LinkedIn, and a series of new investments by Humu, Towers Watson, Great Places to Work, Waggl, Officevibe, TinyPulse, and many other vendors. The ERP providers (Ultimate Software, Workday, Cornerstone) are all getting into this space too, creating even more demand for focused companies like Culture Amp.

Is this a next-generation performance management tool?  I don’t think so. While Zugata started to position themselves in this market, that space is now highly competitive with advanced tools like BetterWorks, Reflektiv, Impraise, HighGround, as well as a new continuous performance system from SuccessFactors and new offerings from Workday.

In my thinking, this is a way for Culture Amp to further differentiate itself in the feedback and engagement market, and now partner with learning solutions as the company offers more and more developmental feedback to employees.

One of the biggest issues in companies today is the need to reskill, upskill, and reinvent its workforce around automation, AI, and new job roles. The combination of Culture Amp to assess culture and engagement with Zugata to assess skills can be a critical component in this solution. If they align themselves with the next generation of learning companies, I think the company can grow rapidly.

There’s a lot more to come in this space. Let me simply say that Culture Amp is a very well run company, and this expansion of their capabilities has tremendous potential. I look forward to seeing what’s next.