SpotlightJust deserts: Sorbet unlocks employee PTO
Spotlight
Just deserts: Sorbet unlocks employee PTO
Moving from the corporate finance world to an innovative new startup, Sorbet’s CEO is determined to help employees and employers get the most out of paid time off
Company: Sorbet
Product: PTO (Paid Time Off) optimization tool, empowering employees to take or spend their unused PTO, while saving company money.
Raised: $21 million
Round: Seed
Founded: 2019
Founders: Veetahl Eilat-Raichel, Rami Kasterstein, and Eliaz Shapira
With an impressive resume that includes L'Oréal, Lockheed Martin, a Swiss bank, Bank Hapoalim and Isracard, Veetahl Eilat-Raichel, co-founder and CEO of PTO (Paid Time Off) optimizing company Sorbet, has taken the corporate route to the startup world.
“It’s really been a long and winding road,” Eilat-Raichel told CTech in an exclusive interview. “I was never supposed to be on this entrepreneurial path. I am the product of a slightly different generation where we were more programmed to join a huge corporation where you start at the bottom and work your way up, always being the first one in and last one out, building yourself up in the company. That's kind of the way I managed my career until now. Right after school I began working at L'Oréal, starting as an intern and working my way up to product manager. Then I shifted into financial services, working for a large Swiss bank and then moving to Bank Hapoalim. Most recently I was the Chief Marketing Officer at Isracard, which is the largest payments and credit card company in Israel. So I was always on that same corporate trajectory.”
It was at Isracard, when the company was on the verge of being sold, that she first met with private equity firms and potential investors. “Eventually the company chose to IPO and a few months after that I decided to leave as I felt for the first time that I was not destined to stay in a large multinational corporation, but thought of doing something on my own.”
“Working for years within large multinational publicly traded corporations I found that there was very limited ability to create change,” Eilat-Raichel said. “Even when you do really creative out of the box things you rarely are able to truly move the needle and the changes you do manage to achieve are more incremental. That's when you start looking around and seeing the wider incredible ecosystem and things being done and think to yourself maybe this is not where I am supposed to be. I was always the “entrepreneur in residence”. I came from the product/marketing/business development side so I was always thinking creatively, creating and initiating new projects, but always within a construct that didn't really allow me to do things that were fast, significant and major in scope.”
First venture: Child care financing
Her first entrepreneurial venture centered on a mission to solve a problem she is very passionate about, child care financing. “As a working parent who started managing more and more people, I saw firsthand that when many of my employees became parents they’d either scale back or stop working entirely for a few years which not only significantly impacts their future earning potential but also creates a huge problem for employers as well. That's when I met Rami Kasterstein, a serial entrepreneur who is a well-known figure in the Israeli ecosystem, having built and sold multiple companies. He was one of the first people I ever dared to tell that I was thinking of becoming an entrepreneur and he became my first investor and co-founder and we started this journey, which continued with Sorbet, together. We raised $1.5 million pre-seed for that first venture which we called Gogo Getter. We built a platform that enables employers to retain highly qualified talent by providing a non-interest cash advance to pay for child care.”
Gogo getter is an affordable childcare financing solution designed to help new parents stay on track on their career path and assist employers in providing affordable child care benefits in order to retain talent, reduce turnover costs, and increase employee productivity. Gogo Getter partners with employers to provide the working parent with a 0% APR credit line to cover everything they need so they don't need to choose between career and family.
“This arrangement provided value both to banks that are very eager to provide financing to this particular demographic of highly qualified fully-employed working parents, and to provide value to multiple stakeholders throughout the value chain and position this financing as a 0% APR cash advance which is then paid over time.”
The pandemic pivot: PTO becomes Sorbet
With the pre-seed fundraising secured, all seemed to be trending upward for Gogo Getter until the Covid-19 pandemic hit and everything came to a grinding halt and Eilat-Raichel knew she had to pivot.
“In the summer of 2020, I started engaging with a few employers around the U.S. I was in touch with previously about Gogo Getter, but since nobody was in a sales and buying mode my discussions this time were not about pitching them a solution but more about listening. What I kept hearing organically, without specifically asking about or researching it beforehand, was that they were all very concerned that their employees were not taking any time off. I was also hearing it from within organizations themselves. Not only were HR reps and people managers speaking to me about burnout prevention, retention, turnover reduction, productivity and performance concerns, but I also heard from CFOs that when employees don't take all their allocated time off that severely affects the company financially as well. Having multiple people tell me about the problems of workers not taking time off, each from their own perspective, made it more interesting as I started to research it. I discovered this massive market failure which fascinatingly is completely untapped and unaddressed. The fact that employees do not use all of their time off and unused paid time off is very detrimental both to the employees and the employers.”
Unused PTO: “Not strictly a Covid problem”
What she discovered was that employees not taking PTO was not a Covid-19 created problem, though the pandemic, when people worked from home, did not travel, and did not take vacations, certainly exacerbated it.
“This problem of workers not using up their paid time off existed long before the pandemic hit,” Eilat-Raichel explained. “For example, pre-Covid workers on average used up about 70% of their paid time off – and it got worse during the pandemic. Pre-Covid, each year, from year to year, U.S. employers carried over on their balance sheets over $270 billion in unused vacation days.
“The key to understanding the problem is that it creates a failure both on the employers and employees side. As an employee, a portion of your compensation, PTO, gets locked up and is inaccessible to you, it's an illiquid asset which you can't use. You can't go grocery shopping with it at the supermarket, so you have to wait till an unknown point in the future when you leave the company for good and only get it paid out to you then.”
PTO today: “A bonus to ex-employees”
Eilat-Raichel sheds light on the absurd situation. “A CFO once told me something that really stuck with me. He said the way PTO is currently constructed you ultimately provide this incredible bonus (paying out unused vacation days) to ex-employees who have just left the company instead of to your existing employees. So, instead of being able to use this money to incentivize your employees while they are still working for you and legitimize and encourage them to take time off to invest in their own wellbeing you end up giving the benefit to a person who is no longer working for you, which is such a waste.”
Sorbet: Unlocking PTO
Founded in 2019 by Eilat-Raichel together with Eliaz Shapira and Rami Kasterstein, Sorbet currently has nearly 60 employees, half of whom are in Israel (Tel Aviv) and the remainder split between the U.S. and Kiev. Eilat-Raichel stressed that the company is doing all it can for their Ukrainian team, making sure they are all safe and well. The company has raised a total of $21 million to date in Seed round funding.
Sorbet is a platform that currently works through employers in the U.S. and Australia, offering it as a service through the specific company's HR department as an employee benefit. Employees at participating companies can choose to use Sorbet or not.
The system visualizes, analyzes and provides insights into the optimal way for each individual worker to use their time. Sorbet’s unique time plan is divided between the usable portion of the employee’s time, which is the time Sorbet predicts the employee will be able to use in a way that is customized to their own preferences, habits and in which life stage they are, while also considering constraints from the company to ensure work and job performance is not disrupted. Sorbet then presents a portion of the employee’s balance predicted to be unusable as time and then it's up to the employee to decide what to do with the left over time, either to allow it to get stuck on the company's books until they leave the company, or, if they so choose, through Sorbet receive that unusable portion as cash now, for which Sorbet offers various options to use it towards.
Another issue to consider is that although the vast majority of companies carry over PTO from year to year, allowing employees to accumulate PTO, some firms cap it or at least a portion of it, so if you don't use it in a timely fashion you lose it – forever. “The implication of that,” she explains, “is if you don't take that time off you end up in essence working extra days, for which you will never get adequately compensated for and people need to be aware of that. Employees tend to think about it as the time they are allowed to take off, but the other side of the coin is that when you don't take that time off you effectively worked an extra day, that’s why the company owes you this money, that's why it's on the balance sheet, that's why they ultimately have to pay it out. So if you work those days without taking PTO, you are owed this money, if you don't insure you get it, or liquidate it through Sorbet, you may lose a portion of it and effectively be working for free.
“As an employee, this is your money,” Eilat-Raichel stresses. “It's not some sort of future bonus that you have to earn if you meet certain quotas. You’ve worked for this already and it's rightfully owed to you, we're simply unlocking it for you and loading it to a prepaid card which you can use anywhere online or offline, wherever you choose.”
Unlimited vacation days? Onus falls on employees
Regarding the recent news that global companies like Amdocs now offer employees unlimited vacation days, Eilat-Raichel has reservations. "Let's talk about facts. Studies in the U.S. show that employees working under an unlimited PTO structure overwhelmingly generally take less vacation days and paid time off than their peers under a traditional structure. Employees on average lose approximately $2,000 in rightfully earned pay because they are on unlimited PTO vs the traditional structure.
“What employers do in effect when they initiate an unlimited PTO structure is remove responsibility from themselves to take care of the employees and make sure they take care of themselves by taking adequate time off. Essentially they tell them 'it's on you, you can take as much time as you want’. The employers remove all responsibility to create, measure, implement, have a process in place, change culture, and encourage – now it's all on you, the employee. You decide if you want to take this time off or not and how much. And when an employer does that, removes their own responsibility to make sure people take care of themselves, employees end up taking less time because we have to acknowledge that we live in a culture that doesn't look favorably on taking time off for wellbeing.”
Men or women? Who takes less PTO
When it comes to the sexes, Eilat-Raichel says that while it's true that men take less PTO than women, it's not purely biological. "We have found that there is a strong inverse correlation between seniority, pay and tenure, and the amount of PTO taken. The more senior a person is, the more they earn, and the longer they've been with the company, the less PTO they take. Unfortunately, because there are more men at the top of the chain than women, that's the case. Of course, there's also an issue with both child care and care for elderly family members, which usually falls on the shoulders of women more so than men, usually forcing them to take more PTO than men.”
Today, the day of this interview, is International Women's Day. As a female CEO, who are your female role models?
“I was very fortunate in that I had an amazing role model at home growing up as my mother had an amazing career. She was the manager of an airline locally for many years and her career and personal development was always something that was very important to her and was prominent in our home. She was a great example for me. She taught me to aspire and follow my dreams and to be the best, most professional person I could be. I also have had many role models in my career, both female and male managers, who gave me the sense that the fact that I am a woman is not an issue, as long as I work hard and achieve. From there the sky's the limit”
What message do you have to young women seeking to enter the business tech field?
“My only advice to women is to go after it. It's hard, it's demanding, but it's increasingly more and more possible. I would put more emphasis on what's going on at home than the workplace. I think we've achieved amazing strides in focusing on how to help women advance in their careers, but I think there's still a lot of work to be done in terms of what goes on at home and equity, the division of labor, both practical and mental. I would encourage men to take a long hard look and see how they can help their partners get an equal shot at pursuing their dreams. As I said regarding my initial startup Gogo Getter, which I still believe I will turn into a successful active venture in the not too distant future, many women rely on paid childcare help and not everyone can afford that. Equity at home is a huge driver toward equity in the workplace.”
What does the name “Sorbet” mean to you?
“We are currently in a dramatic shift in the way that we live and work and the blurred lines between them. Part of our mission at Sorbet is cultural. It’s about shifting perception and the reluctance working people have regarding taking care of themselves.
“What I have discovered in my wonderful professional journey is that people have a perception of "vacation" as some sort of huge indulgence that they shouldn't be taking and I feel that the name Sorbet is the antithesis of that. It’s not an indulgence that you should stay away from, rather it's something refreshing you should eat between main courses that cleanses your palate and refreshes you. It's sweet, but not too sweet, it’s just right. It's exactly what you need to keep going and that's how I feel we all collectively need to reposition vacation and time off."
