Marc Vasquez; Lattice
- Jack Altman is stepping back as Lattice CEO, the HR software startup he cofounded eight years ago.
- He tells Business Insider that he wants to return to building at the early stages of a company.
- Despite all the recent changes at Lattice, Altman says the company isn't exploring an IPO.
Jack Altman is the second Altman brother to drop the CEO title in the last month — but this time, it's of his own accord.
Earlier this week, Lattice announced it was bringing on a new CEO — former Salesforce executive Sarah Joyce Franklin — and that Altman would step down from his role and become executive chairman, eight years after founding the human-resources software startup.
These past few years, Jack Altman, who is Sam Altman's brother, led the enterprise unicorn through a period of rapid expansion, largely fueled by a tight labor market and rise of remote work, and then a restructuring as businesses — and Lattice's would-be customers — reined in their software spending. Now, Lattice is preparing for a new phase of sustainable growth, according to company insiders.
In an exclusive interview with Business Insider, Altman said he fell out of wanting to run a late-stage startup these past few years, as the challenges and scope of the work evolved. He told us he plans to return to his first love: the earliest stages of company-building.
"I love early stage — it's always what I've loved — and I happened to add another love," he said, referring to Lattice.
He said he felt a "first inkling" of wanting to move on during the '"highest of highs," when the company was blitzscaling in 2021. He says as a company scales up, "the role of a CEO just changes dramatically."
But the passion fizzled and he started to look for a successor after realizing he wasn't going to be able to give his "absolute everything to the company."
A former employee of social commerce company Teespring, Altman helped found Lattice in 2015 and built it into one of the most valuable startups in the human-resources space. The pandemic spurred a surge in demand as employers grappled with a changing workplace, catapulting Lattice from a luxury to a service seen by some people leaders as essential. In the heady days of 2021, Lattice tripled its valuation to $3 billion in a $175 million funding round.
Lattice's crucible moment
The funds largely paid for a new product that took a year and a half to develop, and reimagines how companies use Lattice. For most of its life, the company focused on point solutions — tools used to fix a particular problem — for tasks like performance reviews and workforce surveys. Then, in September, it launched an all-in-one human-resources information system — a database that collects and sorts all of the important information about employees, and feeds the right details to those point solutions and third-party apps. In time, the move may turn out to be the company's saving grace.
Sales have slowed amid a dire situation in startup land. Companies that raised funding in 2021's frothy market have less than 12 months of runway in the bank. They're going back out to raise their next round, facing venture funds less willing to write checks. And so executives are ruthlessly cutting costs to survive.
"Every CFO in the world is out there right now looking at every single software expense and just pruning," Altman said.
For Lattice, the slowdown forced its own hard decisions. In January, the company laid off 105 employees, mostly recruiters and salespeople, ensuring the company "builds with efficiency and financial health more prominently in mind," he wrote in a blog post at the time.
In her new role, Franklin will be responsible for shepherding the company through a crucible moment for business tools, as savings-savvy executives take a closer look at the money they're spending on software. They will try to negotiate costs for services they want to renew, cancel others, and consolidate vendors. For Lattice, the silver lining is rising demand for services that bundle lots of point solutions, like Lattice HRIS.
"We had always known that the long-term path included being the system of record," Altman said. "In some ways, it's lucky that there's a downturn and that we have this [HRIS] because it's more important now. We'd still be better off — as all software companies would be — if we weren't in a downturn. So it kind of cuts both ways."
Kevin Meynell; Lattice
The company is now charting a course to profitability, according to Lattice CFO Gabe Cortes. The strategy includes spending less to acquire new customers for its more mature products and putting more resources behind growing the full-stack solution.
Altman says the company doesn't need to fundraise right now. It's pulled in $330 million from investors to date and has "plenty of cash" in the tank, he added. Even as growth slows, the company is still generating revenue that covers a growing share of its expenses.
"The burn is reasonable and coming down," Altman said. "Hopefully we don't need to fundraise ever."
Leadership shakeup
Franklin is far from the only new face in Lattice's upper ranks.
Lattice has quietly reshuffled the executive suite this year. A closer look at its website team page reveals the changes: It promoted Stephen Poletto, head of engineering, to chief technology officer in February; in March, it hired Eric Schuchman as chief product officer and Stan Massueras as a general manager overseeing its international business; Elizabeth Walton Egan arrived in May to take over the role of chief marketing officer. And previous CFO Josh Brown left this fall as Cortes, who previously worked in finance at Workday, stepped in.
rAltman's Lattice cofounder, Eric Koslow, left in 2022 to pursue a new venture in the video content-creation space.
According to Altman, the shakeup marks a successful transition of executive teams for the first time in the company's eight-year history. He said some of the outgoing executives wanted to join earlier-stage companies or start their own; some of them may have stayed in their positions longer than they ordinarily would have because business was taking off in the post-pandemic tech boom.
Lattice isn't exploring an IPO
Slowing growth. Focus on profits. New leadership. Some people might suggest these changes all-together indicate that Lattice may be bracing itself to go public when the market reopens. The company wouldn't be the first to supplant its founder with a more seasoned executive who can ready the firm for a public offering. The board of Instacart replaced founder and chief executive Apoorva Mehta with Fidji Simo of Facebook following a messy dispute with investors.
However, Altman denied that a public offering is imminent. Lattice, which was last valued at $3 billion, is a much smaller company than software firms like Instacart and Klaviyo that took the plunge this year, says Altman. The market's tepid response to those offerings has likely deterred other candidates from wading into the markets.
Lattice is not yet profitable, which has emerged as a key ingredient for going public.
"There are certain markets you would IPO Lattice into right now," Altman said. "This is not one of 'em."
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