How AI will change the hourly workforce

Daniel Blaser (00:07):

Hello, and welcome to On the Clock, presented by Workstream. If you care about hiring and retaining hourly employees, you're in the right place. I'm Daniel Blaser, and today's episode is a special one. We're bringing you the highlights from a recent panel discussion with Anna Khan, Ericka Garza, and Bo Li. Anna is general partner at CRV. Ericka is an advisor and former president of Alban Pan, and Bo is head of product integrations at Workstream. I had the privilege of asking these experts about the impact of AI on the hourly workforce, if your job has anything to do with hiring, managing, and retaining hourly workers, and you've been wondering how AI might impact your role. There's a lot to learn from today's episode. Enjoy. The first question I had is for Anna, when you kind of look at how, you know, new technology makes it way to different industries, what trends do you see? And like specifically, I'm wondering, you know, when you look at the hourly economy or the deathless economy like where do, where do some of those industries fall in the typical adoption curve?

Anna Khan (01:10):

Yeah, I think that's a, that's a pretty layered question. Maybe I'll address it. Two ways. I think the first is, and, and, and this is not to say that non deathless workers don't have core use cases, but the way I see the deathless market is there are few things that they really struggle with that they have to get right. The number one thing, and this is actually part of the main pitch Desmond had given me when we first invested, is they really deal with turnover and labor, labor shortages. Like you ask someone who has, who is either a franchise owner or a manager at a franchise, like that's their number one issue. And so in my investment horizon, in my investment thesis, I look for does this software or this application of software solve your top three core use cases? I'm sure there are 10 or 20 other things that products can do, but those are nice to haves.

(02:12):

And in the deskless workforce, I think there are a few things we chatted about labor turnover. So that's how do people find a job? How do they show up to an interview on time? How do you then get them onboarded? And then Bo you worked at ADP so you know this, how do you get them paid? And then all the other stuff comes after, which is how do managers talk to their teams? How do they motivate their teams? I think that's likely gonna happen in the second and third wave. When you talk about sort of the the cycle of innovation, I don't even think we're there yet. I think the first wave of critical use cases has still not been met, which is why as a VC and as an investor, we get so excited about this market because there's so much that's is still not offered, that is still, like I sort of, you know, said in my intro in binders, in papers, like, still faxes are used in this industry. And, and so that's what I think is, is, is so important and can create so much value. And then we'll get to the second, third order use cases.

Daniel Blaser (03:20):

Now, Ericka, I know you, you know, you mentioned in your intro you have this, this wide background in the franchise world, and I know franchises are all about like scalability. Why is technology such a key part of successful scaling?

Ericka Garza (03:36):

First, I think that's a great question and I, I'd love to share with you my perspective from having the experience of running a franchiser and working directly with franchisees, because I've always been the liaison <laugh> between both. So I get both perspectives and I play and I understand both worlds and, and you know, I, I think my response, I think it's important also when it comes to technology. It's, you know, from the franchisor perspective, the expectations are way higher with franchisees, what they expect from the franchisor side. So I wanted to, to share that. And scalability is fundamental. It's an aspect of the franchise business model. And it plays a pivotal role in achieving successful scaling technology. Empowers franchises to expand and grow efficiently, efficiently by street blinding operations, has enhancing customer experience and obviously optimizing decisions. In the process, I can tell you that technology is a, at least what I consider to be a key part of like scaling a business from the franchisor to franchisee by operational deficiency, data-driven decision making, standardization, enhanced customer experience.

(04:49):

From my experience, I know that from working at Yemen Banon, but most recently when it came to technology, I'll be very frank with you, I think the site of banon, we did lack quite a bit of technology and I think it, it unfortunately hindered some of the business because it was difficult to keep up. But some of the examples that I can share with you that I think Yum did an excellent and when it comes to technology and, and, and driven solutions. But for us, as I reflect back, what was limited to us, I think back about not having any labor metrics or labor system. And that's critical, right? When you're trying to like control p and ls or when you don't have loyalty or you don't have delivery I do think it's very important to share with you that Al Baan is a non-traditional business, but at the end of the bus, at the end of the day, the main goal for the franchisor and franchisees to be profitable. And so when you don't have the technology that's needed to keep up to, to keep customer service, you know, I, I won't say the word to be in trend, but I, but I will just say that it, it can hinder the business and that's where I, I strongly think that technology is just incredibly important in order for you to be able to, to grow business and scale.

Daniel Blaser (06:03):

What is it, what does the franchise space look like? Like, is there kind of that same, the same excitement around AI maybe, or is it a little bit more subdued than the broader tech market?

Ericka Garza (06:14):

I do believe, you know, in order for me to kinda approach this question, I think it's, it's, it's important that, you know, it's something that we know, but it's important to be, you know, said again in the QSR space, in the franchise space, particularly in the restaurant. This is my personal point of view. I think there's been an unfairness of, of of, of really understanding and embracing and adopting ai. I, I just do, because I think that franchisees and franchisers are so fully concentrated, which I understand on the labor and the food costs and the supply chain and all the other issues that come with running the, the restaurant space. And I think therefore, as much as ai has definitely made an impact on the franchise space. I'm just not sure if the franchisees or franchisors are jumping in or have, like you said, that subdue feeling as other industries do.

(07:11):

I think I think as much as they've been able to catch on, I think that there's a lot of, in addition to the concerns I just talked about, there's the privacy, right? There's the overall cost, which is very expensive. I think the bigger franchisors are able and have the capabilities, you know, with the franchise organizations and communities to have these pilots. But I do think that you're gonna find that sentiment that a lot of franchisees and franchisors why I think they're trying to share the same sentiment. I think it's gonna be a little bit more of adopting the approach of let's wait and see what is actually gonna happen. Because I do think the concerns are so high. And again, in my humble opinion, I think it's, it's disappointing because I think it's something that could be incredibly helpful in so many ways. But I think until these alarming concerns that are impacting the bottom line and the business and employees as well the focus is gonna be highly concentrated in those areas. And I think for, for quite some time, honestly,

Daniel Blaser (08:12):

That's a good transition to a question I had for Bo. You know, Ericka's mentioning some obstacles when it comes to, you know, certain industries of the franchise space, QSR the, she, she talked about just cost both in terms of like actual cost, but also, you know, time there, there, you know, a lot of people are just focused on day to day running their business. They, they, they can't really, you know, worry about AI or, you know, other new technology. Given some of those obstacles, like what you know, what did we kind of prioritize as, as workstream was looking into, you know, expanding into ai? Like how did you know, how was workstream AI built with some of these concerns in mind? I guess

Bo Li (08:54):

One thing that we have learned is when we talk to our customer about ai, it doesn't register because nobody knows what the heck is ai, right? It's like if we are a car builder and we find a new way of building engines and we talk about engines to a person who needs to go from 0.0 A to point B, that doesn't actually, to them it does. It's meaningless. So from a work stream perspective, we have to go through our core. What are we here to do? What problem are we trying to solve? Talk to our customer about the actual problem and how we're solving it. Maybe the last sentence is, by the way, this is powered by ai, but it's more important to talk about the problem and how we're solving it is less important to talk about the technology, if that makes sense.

Daniel Blaser (09:48):

Now Ericka, I did wanna ask you about, you know, you kind of mentioned some of the obstacles around, you know, new technology adoption. I'd just love to get your take, you know, as you kind of learn about workstream, ai, workstream assistance, some of this stuff. What was, you know, what was your kind of, your initial take, and specifically what do you think it could mean for helping those in the franchise space?

Ericka Garza (10:12):

I think in the, in the context of franchises where scalability is so crucial I believe that workstream AI is a game changer. I really do. I believe that so many franchises often face challenges in managing so many multiple things, whether it's hiring, screening, retaining and it's just hard to keep that, that flow and that process keep it going efficiently. I believe that integrating work stream AI into franchise operations will lead to improved efficiency, reduce time and ultimately contribute to the success and growth of all the franchise businesses. Plus the fact that inter lingo <laugh>, I think is, is incredible. And I, I can tell you that you know, running the franchisor and being incredibly involved in the day-to-day operations and being the leader of rolling up your sleeves and interacting with the employees at the restaurant and cafe levels, I can tell you from firsthand experience that a lot of the times that our employees weren't able to go to the next level or get any clarification and concerns that they had, it was always an issue because of language barrier.

(11:33):

That's one. Number two, there was an issue of at home, many times not having technology in their house, but they did have a phone. Number three, the intimidation, right? Because of not knowing what to ask, what to say, am I gonna sound correct? And I think the fact that work stream my, in, in my opinion, it's, it's, it's one of those, you know, when when I started getting to know more about Workstream and the benefits to the employees, the fact that there's a platform and there's a business and there's leadership in the top that is thinking of hourly employees and how to facilitate the process, not only for the business from the HR side of it, but really with the heart and the soul and the mind and the intention of the actual hourly employees and how to get them to the next step and how to facilitate the process and make this more mechanical and more user friendly for them to be able to go to the next level. So I think it's incredible and I, I am a strong believer that it's a total game changer for franchisees and franchisees, but most importantly for the employees.

Daniel Blaser (12:36):

I, I did wanna ask, you know, Anna, you, you talked about this a little bit earlier, you know, what you kind of see as being the, you know, the, the unique value of workstream AI, but I, I wanted to kind of, you know, dial down in that a little bit more, you know, like, what, what do you think are some of the other differentiators when it comes to AI for the deskless workforce, specifically the, you know, kind of the Workstream assistant model. Like how do you think that that could, you know, influence hiring and, and retention in some of these things?

Anna Khan (13:07):

I think Ericka sort of hit the nail on the head, which is they have a phone, even if they don't have enough technology at home or are comfortable interacting with it. And I think what's really great about what your team did and, and beau with, with your leadership is you took the AI where it can impact them the most, right? The modality that they're used to is a text message. And Ericka, you, you, I loved all three of your points, but your third point was also like, sort of intimidation of what to ask for. And here you're lowering the bar, like, ask me any question, like I will have an answer for it. And even if you have one of the best labor processes, maybe you're one of the biggest franchises in the world, you're not gonna get such quick tailored responses without ai.

(13:59):

And so I I, I love that you sort of met the customer, or the, right now your customer is basically that employee, even though the business is, is, is paying for it right where they needed it most. I, I think that's one. And then I think that one of the key ways to measure this goes back to like actually hitting the bottom line, is hopefully now that you've eased the burden, you sort of lowered the bar of interactivity, you now see this AI feature actually increase your attach rates. More people are buying the platform, more people are applying to the program. And when you can show that real ROI to the business, hopefully, and, and I'm sure it will sort of increase that revenue growth, increase our expansion growth, you know, hitting our net retention. And then once you sort of solve that for one product, Bo already discussed this, you can start doing it for job description generation. And as a software investor, that's what we look for. We look for, you know, what was your land in terms of an A CV and how did you expand? And the fact that you're able to do it with ai and you can paint that story. And then also most importantly, to Erica's point, help that employee that you have built the product for. I, I, I, I think there's nothing better.

Ericka Garza (15:21):

Anna, if I, if I may add to something Bo and I think it's you know, I, I'm a big believer of always, and I'm sure everybody on this panel, but you know probably has the same mindset, but I always put myself in, in the individual individual's shoes, right? So what timing, what critical timing is for me might not be for somebody else. And so these responses, right, could seem like forever when without thinking, well, somebody within the office, the GM or whoever should be responding to that, they've got a million other things to do as well, or they might not, not know how to prioritize. And with this feature, it is just this ease, I think to to, to the potential employee. And also we are in the QSR space, the restaurant industry where, you know, I, I can tell you with <inaudible>, one of the things was in some areas we're very fortunate to have loyal employees to retain them, but in many areas, right next to one of our locations, they would leave for a quarter or for 10 cents more than what you were paying for them. But why, because of timing, why, because of so many, so many factors that were differentiators from what you had. But one of 'em was speed, one of 'em was communication, and most importantly was it took you a minute to get back to me. And so there you go, you lose a great employee because of timing. So I think that this is brilliant Bo that you guys have been able to think about, I mean, about absolutely everything to make this easy for the employee.

Daniel Blaser (16:51):

I did wanna give maybe each of you just like one more chance to, if you wanna leave like one final thought, takeaway, comment, anything like that?

Anna Khan (17:01):

Yeah, I mean, I think Bo is already very much on top of this, but I would say that you know, the most important thing when you launch a product is, you know, listen to your customer, listen to your customer, listen to your customer. And I think also with Erica's help, like if we can sit and observe at these franchise restaurants, sort of how they're using our product, not how we wish they use our product, but how they actually use it. And of course, I know you guys did all this research before you developed it, but you just learn so much more. And sometimes I find in the companies that I work with after launching something, that iteration stops because it's like, oh, like we finally did it like so much work. But I would say that because AI is such a fast moving sort of goalpost and we have access to these amazing franchises that are rapidly scaling, just like spend as much time with the customer as possible. That would be my sort of final thought.

Bo Li (17:57):

Thank you so much, Anna. That's a very important reminder as a product person, I really appreciate. And also I am very grateful. Not only, you know, was you as our advisor thinking about where we're going, but we have people like Erica keep us honest because Erica and people like Erica knows the industry well, and, and that's literally know there to help us to confirm we're solving the right problem. So thank you so much, both of you.

Ericka Garza (18:31):

No, it's okay. I, I think, you know, I think embracing AI in the franchise space would undoubtedly open you opportunities and unlock so many different ways and, and create such, you know, sustainable success and efficiencies, and most importantly, innovation <laugh> for, for organizations. Because at the end of the day, the, the franchisor and the franchisee wanna be profitable. That's what, what, and I do believe with AI it's just, it's a way of just unlocking so many different potential opportunities.

Daniel Blaser (19:12):

Thank you for listening to On the Clock. For more info, visit workstream.us/podcast. I've included a link in the show notes to watch the complete panel discussion from which this episode was based, and also to connect with all three panelists on LinkedIn. Until next time, we're clocking out.