Marc Lore has built companies by trusting the numbers. At his latest startup Wonder, that philosophy now extends to deciding who gets promoted, with the help of AI.
The billionaire entrepreneur told Fortune’s Allie Garfinkle in a recent Term Sheet podcast episode the food-tech company uses an AI-powered performance management system that determines whether employees should advance through the organization based partly on scores submitted by their colleagues.
At least a dozen coworkers rate an employee on their performance, behaviors, and leadership qualities every six months, Lore explained, and these ratings, combined with written feedback, are fed into AI that generates a performance report. The company also adds another metric it calls “value above replacement,” or VAR, which measures how difficult it would be to replace an employee with someone at the same organizational level.
“Between your VAR score and your performance management score, AI basically calculates whether or not you should be promoted,” Lore said. “So it’s very objective.”
The system also calculates how long employees should remain in a position before advancing. Human management can override the model’s recommendation with a convincing argument that the algorithm missed something, Lore explained, but those cases are increasingly rare and disagreements with the model can also turn into data used to change it.
“There’s a handful of exceptions every period where we disagree with the AI model,” Lore said, but “the model is getting smarter, and there’s less exceptions every time.”
Lore argues putting more of the decision into a standardized system can make promotions fairer by reducing the role of personal bias and even potential discrimination against women and minority employees.
“This kind of corrects for that,” he said.
The AI system fits with Lore’s longstanding habit of approaching complicated business decisions with numbers. In a Fortune profile last year, his uncle Joe Lore, recalled that even as a teenager he would try to arbitrage horse-racing rather than simply cheer on one favorite, betting on multiple in smaller amounts to win. Decades later, that instinct remained central to how he approached his companies.
“It will always revert to a percent or percentage, and putting the odds in your favor,” Joe Lore told Fortune about how Lore operates. “It doesn’t matter if he’s selling screws, widgets, hamburgers.”
At Wonder, even the organizational chart has a formal ranking system. Lore told Fortune positions are represented by colors modeled after taekwondo belts, progressing from white and yellow through brown and black. Looking at the color-coded organizational chart lets him quickly assess where Wonder is putting senior talent and how many lower-level employees report to higher-level workers.
Wonder also has a transparent compensation system so employees can see what others at the company make.
Wonder’s automation track record
Lore’s use of AI in helping decide promotions is landing right as Wonder is becoming considerably larger—and increasingly leaning on automation.
Wonder raised more than $650 million at a $9 billion valuation this summer, bringing its total funding since its 2018 founding to roughly $3 billion. Lore told Fortune exclusively the company, which operates 135 food halls across 10 East Coast states, will be “ready and prepared to go public early next year.”
Lore is also pushing automation into Wonder’s kitchens. He said at Fortune Brainstorm Tech in June an automated bowl-making system can produce as many as 500 bowls an hour, compared with up to 45 for a human worker.
The post ‘It’s very objective’: Billionaire Marc Lore’s Wonder uses an AI algorithm to determine who gets promoted appeared first on Fortune.
