Rhythms Startup Case Study: Empowering AI-Driven Team Productivity

Rhythms

Rhythms is an AI-driven startup aiming to help organizations streamline their internal operations by identifying and replicating successful team “rhythms.” Founded by a seasoned team in 2023, Rhythms is on a mission to connect strategy with day-to-day execution, boosting productivity in modern, hybrid work environments.

Founding Year: 2023

Headquarters: Bellevue, WA, USA

Industry: Information

Business Model

Type: B2B, One-sided, Product

• Clients: Modern, forward-thinking companies of varying sizes across diverse industries, actively seeking to improve organizational performance and productivity, particularly in hybrid work environments. They are open to adopting innovative technologies like AI and value agility and data-driven decision-making.

It’s Like: Salesforce but for team productivity rhythms

Rhythms offers a platform designed to optimize and orchestrate the operational patterns of teams within organizations, much like Salesforce, which provides a platform for managing customer relationships. Both leverage data analysis and automation to improve efficiency and drive better outcomes.

With some differences, though:

• Focus: Salesforce centers around customer data and interactions, while Rhythms focuses on internal team workflows and productivity patterns.
• AI-Native: Rhythms is built from the ground up as an AI-native platform, whereas Salesforce has incorporated AI features over time.
• Proactive Recommendations: Rhythms aims to proactively identify and recommend optimal team rhythms, while Salesforce primarily provides tools for managing existing processes.

Key Pain Points

• Lack of Alignment: Companies often struggle to align their strategic goals with day-to-day execution across different teams.
• Adaptation Challenges: Rapidly changing business environments require organizations to adapt quickly, which many struggle to do effectively.
• Limited Visibility: Organizations lack clear visibility into resource allocation and how well it aligns with strategic priorities.
• Inefficient Information Flow: Siloed information and poor communication between teams hinder decision-making.
• Time wasted on Overhead: Excessive status updates and manual processes reduce productivity.
• Difficulty Implementing Best Practices: Companies struggle to identify and implement proven practices that could enhance their operations.
• Loss of Organizational Learning: Organizations miss opportunities to learn from their experiences and replicate successful patterns.

Proposed Solutions

• Alignment of Strategy and Execution: Rhythms connects strategic goals with daily tasks, ensuring everyone works towards common objectives.
• Enhanced Adaptability: The platform monitors priorities and alerts teams to changes, enabling agile responses to market shifts.
• Improved Resource Visibility: Rhythms provide insights into resource allocation, aligning it with strategic goals for optimal utilization.
• Streamlined Information Flow: Real-time insights into progress and challenges facilitate faster, data-driven decision-making.
• Reduced Overhead and Automation: Rhythms automates tasks like progress updates and streamlines workflows, freeing up time for more strategic work.
• Best Practice Implementation: The platform offers a playbook of proven processes tailored to each organization, simplifying adoption.
• Enhanced Organizational Learning: Rhythms helps organizations learn from their own data and replicate successful patterns across teams.

Founding Story

When and How Founded: Rhythms was officially founded in 2023, emerging from stealth mode in December with a $26 million seed funding round.

Founders’ Problem Experience: The idea for Rhythms stemmed from the founders’ experiences with their previous company, Ally.io, an OKR software solution. While building and scaling Ally.io (later acquired by Microsoft and becoming Viva Goals), they realized that while goal setting was crucial, true organizational success relied on consistent operational “rhythms” connecting strategy to daily execution.

Founders and Their Backgrounds:

• Vetri Vellore (CEO): Serial entrepreneur with over 25 years of experience, previously founded Ally.io (acquired by Microsoft) and Chronus (acquired by private equity). Held product and engineering leadership roles at Microsoft for 14 years. Author of “OKRs for All.”
• Madhan Subhas (CTO): Previously COO and CISO at Ally.io, scaling the platform to over 1,000 customers. 25 years of experience building enterprise platforms, with a focus on security and scalability. Worked on platforms used by Amazon and Coca-Cola.

Why Able to Start: The founders’ previous success with Ally.io, their extensive experience in building and scaling enterprise software, and their strong network of investors contributed to their ability to secure significant seed funding and launch Rhythms.

Team:

• Puhazholi Vetrivel (Head of Engineering): Led engineering at Microsoft. He spearheaded Ally.io’s integration into Viva.
• Kalyan Nanduru (CPO): 20 years launching and scaling enterprise products (Microsoft, Google, Guild), recognized as a Top 25 Product Executive.
• Cooper Crosby (Head of Design): Led design for Ally.io and Microsoft Viva Goals, focused on high customer satisfaction, and pioneered early AI interfaces in enterprise software.

Solution: Rhythms aims to solve the problem of inconsistent operational rhythms by creating an AI-powered business operating system. This platform analyzes successful team patterns within an organization and enables others to adopt those practices, connecting strategy to execution and improving productivity.

Innovation/Technology for Success: Rhythms’ key innovation is its AI-native approach to business orchestration. By leveraging AI to identify and replicate successful team behaviors, the platform aims to optimize operational rhythms and drive organizational performance.

Key Growth Milestones

• 2014: Initial OKR solution created.
• 2015: Enhanced with feedback from early customers
• 2018: The first customer joined Ally
• 2019: First round of funding, acquired customers like Slack and Remitly
• 2020: Funding and customers (Accel, Tiger Global), Slack, Microsoft
• 2021: Series C funding, Microsoft acquisition
• 2022: Viva Goals release
• 2023: Raised $26m seed round for RhythmsAI
• 2024: First customers onboarded to RhythmsAI

Market & Competition

Target Market

Rhythms primarily targets modern companies seeking to enhance agility and leverage AI for operational improvements. (rhythms.ai)

Key aspects of their target market include:

• Focus on Agility and AI Adoption: Rhythms appeals to companies embracing technological advancements and seeking data-driven solutions for enhanced productivity.
• Emphasis on Organizational Performance: The platform targets businesses aiming to improve overall productivity and operational efficiency.
• Hybrid Work Environments: Rhythms specifically address challenges faced by organizations with hybrid work models.

Market Growth and Potential:

• OKR Software Market: In 2022, the market was valued at approximately $1 billion. By 2023, it had grown to $1.15 billion, and projections indicate it will reach $2.98 billion by 2030, exhibiting a compound annual growth rate (CAGR) of 14.6% during the forecast period. Further forecasts suggest that the market could expand to $16.20 billion by 2034, with a CAGR of 15.57% from 2025 to 2034
• AI Productivity Tools Market: In 2024, the market was valued at $10.97 billion, with projections estimating it will reach $13.80 billion in 2025. Looking further ahead, the market is expected to soar to $109.12 billion by 2034, reflecting a CAGR of 25.82% from 2025 to 2034.

Potential New Markets:

• Specific industry verticals: Tailoring their platform to address unique challenges within healthcare, finance, or manufacturing.
• Small and Medium Businesses (SMBs): Adapting their enterprise-grade solution to cater to the needs and budgets of smaller organizations.

Competitor Landscape

Rhythms operates in a competitive landscape with established players in OKR and performance management software, alongside emerging AI-powered productivity tools.

Key rivals include:

• Workboard: Offers goal-based collaboration tools for teams.
• Quantive (formerly Gtmhub): Provides web design, SEO, and marketing services.
• Mesh: Offers cloud-based employee performance management software.
• Ally.io (acquired by Microsoft, now Viva Goals): Remains a competitor with its focus on goal management.
• Profit.co, Koan, Workpath, Elate, i-nexus, Cascade, AchieveIt, Perdoo, ClearPoint Strategy, Lattice, Hirebook, WorkBoard, 15Five: Also identified as competitors.
• monday.com, Wrike, Workday Adaptive Planning, STRATWs ONE, Jira: Additional alternatives in the strategic planning and execution software market.

Marketing & Sales

Main Positioning Values: Time & Quality

Website & Socials

Rhythms’ website (rhythms.ai) receives a very small monthly visitor count of about 3k per month with the majority of visitors coming through organic searches and direct links. Most of the users are from the United States, the UK, and India.

Media Coverage

Rhythms has received notable media coverage, primarily surrounding its launch and seed funding announcement:

• GeekWire: featured Rhythms’ founder, Vetri Vellore, detailing his previous ventures and the new startup’s aim to enhance productivity using AI-driven insights.
• TechCrunch: Reported on the company’s launch, emphasizing its AI-powered platform’s ability to replicate successful team habits.
• SiliconANGLE: Provided details on the funding and described Rhythms as an LLM-powered productivity platform.
• Madrona (Investor): Featured Rhythms on their website, expressing enthusiasm for partnering with Vellore again.

Marketing Strategies

• Leveraging Founder’s Network and Reputation: Rhythms heavily relies on the established network and reputation of its founder, Vetri Vellore, who has a proven track record in the OKR and productivity software space with the successful venture, Ally.io. This also involves reaching out to past connections and leveraging their trust and experience with Vellore’s previous work.
• Venture Capital Relationships: The significant $26 million seed funding secured from prominent venture capital firms not only provides capital but also access to their networks and potential customers. These investors, many of whom also backed Ally.io, likely have connections within Rhythms’ target market.
• Content Marketing: Rhythms employs content marketing to educate and engage its audience. One illustrative example is their blog post titled “How AI Can Optimize Your Content,” which delves into the transformative impact of AI on various aspects of content marketing.

Product & Innovation

AI-Native Architecture

Unlike competitors who’ve added AI features to existing products, Rhythms is built from the ground up with AI at its core.

Identification of “Rhythms”

Rhythms analyze team workflows to identify successful patterns (“rhythms”) that can be replicated.  

Personalized Recommendations

The platform provides tailored recommendations to teams on how to adjust their workflows to adopt high-performing rhythms.

Operating System Approach

Rhythms positions itself as an “AI-powered Operating System” for businesses, aiming to orchestrate operations holistically rather than as a standalone tool.

Financials & Metrics

• Funding and Investments: Rhythms has raised $26 million in seed funding. The funding round occurred on December 7, 2023, and was co-led by Greenoaks and Madrona. Other participants in the round included Accel, Cercano, and Founders’ Co-op.
• Employee Count: Estimated to be between 11-50 employees.

Structure & Culture

Key Personnel:

• Vetri Vellore (Co-founder & CEO)
• Madhan Subhas (Co-founder & CTO)
• Puhazholi Vetrivel (Head of Engineering)
• Kalyan Nanduru (CPO)
• Cooper Crosby (Head of Design)

Culture

Rhythms’ culture emphasizes:

• Operational Excellence: Stemming from the founders’ experience with OKRs and focus on efficient execution.
• Technological Innovation: Embracing AI as a core technology for business orchestration.
• Expertise and Results: Driven by an experienced leadership team with a track record of scaling successful solutions.
• Trust and Success: Reflected in the continued support from investors who backed the founders’ previous venture.

Impact & Success

The company is still in its early stages, having launched its product preview to select customers in early 2024.

However, Rhythms has received notable attention from investors, industry analysts, and media outlets. Its ability to secure 26 million dollars in funding highlights its potential.

Growth & Future

Challenges and Risks:

• Competition: Rhythms faces competition from established players in the OKR and performance management software market, as well as emerging AI-powered productivity tools.
• User Adoption: The novel concept of an “AI-native” operating system might face resistance from organizations accustomed to traditional approaches.
• AI Model Accuracy: Ensuring the AI model effectively identifies and replicates high-performing team behaviors is crucial for delivering value.
• Data Privacy and Security: As an enterprise solution integrating with internal systems, addressing data privacy and security concerns is paramount.

Future Plans:

• Market Expansion: The company aims to target companies of varying sizes and across diverse industries.
• Team Growth: Rhythms intends to use its seed funding to expand its teams in the U.S. and India.
• Platform Development: Continued investment in developing and enhancing its AI-powered business operating system.

Key Takeaways for Entrepreneurs

• Don’t wait for the perfect product to validate your idea: Rhythms secured significant funding before even launching their platform, proving that a compelling vision and strong team can attract investment even at the pre-launch stage.
• Identify an “invisible” problem that needs AI: Rhythms tackles the nuanced challenge of team “biorhythms” – a problem companies haven’t fully recognized. Find those subtle yet impactful issues that AI can uniquely address.
• Turn a biological concept into a business advantage: Rhythms cleverly applies the concept of biorhythms to team productivity, demonstrating the power of drawing inspiration from unexpected sources to create a unique value proposition.
• Solve for the “new normal” of work: The rise of remote and hybrid work presents new challenges. Rhythms capitalize on this shift, offering solutions tailored to the evolving needs of modern workplaces.
• Leverage past successes, but dare to be different: While Rhythms’ founder leverages his previous venture’s success, the new company tackles a distinct problem with a novel approach, proving that entrepreneurs can build upon past achievements while forging a new path.