Driver feedback provider WorkHound sold to WorkStep

WorkHound, the company formed 10 years ago to take in truck drivers’ feedback on their employers, has been sold to a similar company.

WorkHound has been acquired by WorkStep, a company with an analogous value proposition but focused primarily on warehouse workers as well as other parts of the supply chain.

The deal was announced by WorkHound’s president and founder, Max Farrell, last week; he will become vice president of partnerships in the combined entity.

“WorkHound and WorkStep are honestly very similar companies because we both focus on, ‘How do you get a voice from the front-line workers,’” Farrell said in an interview with FreightWaves. “They happen to have a lot more in warehouses and 3PLs, whereas WorkHound has a greater density of customers in transportation. And you know, we set out to tackle a very similar problem in similar ways.”

Farrell would not disclose the sales price of WorkHound. It received a $12 million funding injection in 2022, which was almost six times earlier funding rounds. 

WorkHound takes in feedback from transportation workers, overwhelmingly drivers, on conditions and relations with their employers, both positive and negative. The feedback is sent in via text messages on the WorkHound platform. 

If drivers or other workers agree, their anonymity can be unmasked, allowing their employer to respond directly to the issue raised by the workers. But communication can also be set up by WorkHound in a way that anonymity is maintained. 

Farrell said WorkHound has more than 40,000 workers on the platform. By the company’s metrics, WorkHound last year “helped retain over 12,000 workers across North America.”  

Farrell said the standard in that metric is “based on a company taking action. So if a worker shares a comment, and the company intervenes, either requesting to reveal somebody’s identity, or they have a two-way anonymous communication, they’re able to resolve that issue. We track the success rate of that.”

A bigger base for comparison

One advantage WorkHound touted in its announcement of the acquisition is that companies using its service now can compare themselves to a larger universe. The bigger company, according to the announcement, will allow users to “gain access to a larger and more diverse community of HR and Operations professionals, providing richer benchmarking data to contextualize your performance.”

Farrell said the companies both had Covenant Logistics (NASDAQ: CVLG) as a client. (Covenant and Farrell are both located in Chattanooga, as is FreightWaves.) Covenant had been using WorkStep for its warehouse workers. 

“They said, ‘We want to keep both of you,’” Farrell said. “And so that spared a conversation between our two companies to say if we could be better together for a company like this, I’m sure there’s plenty of others where we can create a win/win situation.”

A second key reason for the sale, according to Farrell, is that discussions WorkHound was having with clients showed him that “the thing they need to be successful in this wild moment in this market was more features and functionality.”

Farrell said his discussions with WorkStep CEO Dan Johnston led him to realize that what he gauged at 80% of the features customers had been requesting “we’d be able to deliver really fast together.”

Culture of curiosity

Farrell said the work that companies like WorkHound do “creates cultures of curiosity. And as we do that, they want more reporting. They want more data, because leaders are making decisions based on feedback, whereas in the past, they didn’t.”

Farrell said the combined entity will have approximately 34 full-time workers. He added that ultimately, one combined platform is expected to be created for the company’s customers. 

WorkStep, besides its presence in warehouses, has customers in retail, manufacturing and other corners of the logistics industry.

“I think it sets us up well to continue to extend our focus on companies where people don’t sit at a desk,” Farrell said. 

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