The insurance industry has priced workers' compensation the same way for decades: estimate what a business will pay its employees over the next year, then charge accordingly. If the estimate is wrong - and it almost always is - the business either gets a refund or owes a surprise check at audit time. For a small contractor running 30 workers, that uncertainty is not a pricing quirk. It is a cash flow crisis waiting to happen.
Tom Sagi knew this not from a market research report but from sitting with the spreadsheets himself. An Israeli immigrant who came to the United States and went straight into the family's construction business, Sagi was the one processing payroll. Every week. By hand. "Every Friday the workers were paid, so I spent every Thursday collecting time cards in the field," he recalled. The time cards came in. The spreadsheet got built. The workers' comp calculation got guessed at. And somewhere in that cycle, he decided there had to be a different way.
He co-founded Hourly in 2018 with Shay Litvak, a technologist with two decades of engineering experience, and Amir Faintuch, a tech entrepreneur who joined as Executive Chairman. The company's founding insight was deceptively simple: if you already know exactly what someone earned - because you just ran their payroll - you already know exactly what their workers' comp premium should be. No estimates. No audits. No year-end surprises. Just real-time math, updated with every paycheck.
Hourly launched its platform and raised a $7.15 million seed round in late 2019, led by Israeli VC firm S Capital. The timing was surgical: small businesses with hourly workers represented a massive underserved segment, scattered across construction, home services, retail, and restaurants, all running payroll the old way because enterprise software was priced for enterprises. Hourly built for the business owner working from a smartphone on a job site, not from a desktop in a corner office.
The numbers validated the approach quickly. Within nine months of launching its workers' comp product, Hourly crossed $10 million in policies sold. By June 2022, the company announced a $27 million Series A led by Glilot Capital Partners, expanding to $32 million by October of that year with additional backing from Vintage Investment Partners, J-Ventures, and Upshot Ventures. Monthly revenue was growing at 20 percent. Hourly was operating with approximately 1,000 customers in California alone, concentrated in construction, home services, accounting, and retail.
The strategic play did not stop at software. In November 2022, Hourly announced an MGA (Managing General Agent) collaboration with Great American Insurance Group, a Cincinnati-based carrier with roots going back to 1872. Then in mid-2023, it announced a partnership with Nationwide - one of the largest insurance providers in the country - to function as a Managing General Underwriter. Coverage began August 1, 2023. Through the Nationwide arrangement, Hourly's platform and underwriting model became available to a network of more than 3,000 appointed independent insurance producers across the country.
The insight behind these partnerships is the same as the founding insight: Hourly's real-time data is worth something that legacy underwriters simply do not have. Most insurers price workers' comp using payroll data that is 12 to 18 months old. Hourly prices it on what happened last Thursday. That difference - between a stale estimate and live numbers - is where the company's competitive advantage lives.
Sagi has consistently framed Hourly's mission around the specific anxiety he felt as a construction company manager: "I was constantly stressed about fixing timesheet errors, getting paychecks out on time, paying payroll taxes, and more. On top of that, I never knew if I'd owe money on my workers' comp insurance at the end of the year - and if so, how that'd affect our cash flow and ability to pay everybody on time." The product is not abstract software. It is the answer to a question he used to lose sleep over.
Hourly has grown to around 130 employees, won a Comparably Award for Employee Happiness in 2022, and expanded its insurance agent network into a national distribution channel. Sagi has made Hourly deliberately mobile-first - because the people who most need it are the ones least likely to be sitting at a desk. The platform handles payroll, time tracking, and workers' comp from a single app, and premiums update automatically as payroll runs.
The company lost its co-founder and CTO Shay Litvak in September 2023. Hourly's About page carries a memorial: "an exceptional innovator, a supportive colleague, and a devoted family man." Sagi has continued building the company, bringing on new leadership including COO Sonia Faruqi and expanding the engineering and business development teams.
The workers' compensation market in the United States is worth roughly $50 billion annually. For most of its history, it has been priced on educated guesses and corrected by annual audits. Sagi's bet is that real-time data makes better insurance - and that the businesses most in need of it are the ones doing the kind of hourly, physical work that he used to manage from the seat of a pickup truck, driving job-site to job-site every Thursday afternoon.