You know you’re getting old when you’re spending your third year in a row hosting a competition for HR technology startups, and even that’s only a fraction of the time I’ve spent watching this once glacial space emerge from a backwater into the sexiest category in startups today, save healthcare. Although both industries do feature geriatric end users, it’s interesting that while life has always been a lucrative business. the work part is just now becoming the next darling of capitalists, entrepreneurs and consultants all out to make an altruistic buck or million.
Congrats, HR and recruiting – you’re hotter than you’ve ever been before, and people like hedge fund investors and Stanford PhDs in computer engineering suddenly putting the back office on the front burner. This infusion of outside intellectual capital (and venture capital, for that matter) is only a good thing for all of us in recruiting.
For these passionate and singularly focused entrepreneurs pouring all their sweat equity into an increasingly crowded and competitive space? They know that statistically speaking, they’re going to fail – it’s not a matter of if, but when.
That’s where the ‘hedge’ in hedge fund comes in, by the way – it’s a lot of bad bets in the hopes of a big payoff. There are a lot of pissed off customers, irate investors and broken dreams littering the path to every successful exit event in every industry, but it’s a particularly perilous path in this particularly perilous industry.
Blood in the Water: Swimming in The HR Technology Shark Tank.
As an OG in tech terms, I’ve seen a ton of would be category killers burn bright on VC money before quickly blowing up and disintegrating – leaving hundreds of millions of wasted dollars and maybe a punchline or two as the only legacy of their failed products. Branchout, you were the only reason we ever logged onto Facebook (except, of course, for BeKnown by Monster).
This is the average life cycle of the average HR Technology company, and honestly, most of them deserved to die a quick death. Their products sucked, they spent money on dumb shit like lavish HR Tech after parties – because enterprise software decisions happen in the Foundation Room at the House of Blues Mandalay Bay, right? And yeah, let’s buy the sickest office in Chelsea – no, dude, we need it to get kick ass programmers, OK? Class A, all the way to Chapter 11…
This isn’t to say all products that make it long term are any good – in fact, the longest tenured players in the space are often the worst (cough: Taleo), nor are all that fail terrible products. In fact a few actually kicked ass. RIP, Jobs2Web and Trovix. But the majority of the ones who don’t make it don’t make it for the reason that they shouldn’t have been made in the first place.
Given the high rate of market catch up plays (hey, video interviewing. No one’s doing that, so dozens of companies probably should simultaneously try, right?) and worthless “acquisitions” that are thinly veiled PR plays or improbable pipe dreams borne of desperation (Goziak, Bright.com, Sonar 6) or failed due diligence.
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The products that make it do so for a few very specific reasons:
1. The first is that they actually solve a real recruiting problem or practitioner pain point.
2. The second, because their pricing model isn’t prohibitive, or is at least competitive, with existing solutions.
3. The third is they don’t waste time building product roadmaps around company specific RFPs (rookie mistake) – they build for end user adoption and utility instead of as a way to close an enterprise account whose logo they can use on their homepage. Investors love that shit.
4. The fourth is their product actually helps recruiters and HR practitioners and leaders be more efficient and effective at their jobs, instead of hindering their ability to focus on high value, strategic and meaningful work.
5. The fifth – and this is by far the most important – is that the startups who succeed in either a favorable exit event (also known as getting paid, son) or even rarer, the ever elusive (and hella lucrative) IPO – Cornerstone OnDemand, Workday and Fitbit (which is apparently a corporate wellness solution, according to their trade show booth) are the exception in going public, rather than the rule.
That said, I would not count out any of the finalists from this year’s North America iTalent awards from achieving this rarified air, save for the one for whom the first question following their pitch, from Lucky Charms guy Johnny Campbell himself nonetheless, was: “what exactly is it your product does?) – neither of us know, frankly.
They say the third time is a charm, and I have to say that the caliber of competition this year was really, really high. A couple years back, the finalists were all viable technology companies, but nothing you’d really get excited about. Cool, middleware for MSPs – how kick ass is that, guys? Yawn. I know – not as bad as the one who basically used astrology as a case use for an assessment product, I shit you not.
2016 iTalent Competition: 99 Problems, But A Pitch Ain’t One.
But as VC money and new companies in the space proliferate, and deal volume remains as robust as ever (even if overall VC dollars flowing into the industry are down sharply from their peak), the exciting thing for our weird little corner of the business world is that in just the past few years, HR tech in general, recruiting solutions specifically, have actually become way, way better than even my first go round as the iTalent ringleader at the annual HRO Today North America Forum.
I don’t know why they let me back into this thing, and how, somehow, iTalent is actually kind of a thing, but all I know is of 28 pretty stellar entries this year (and a few complete duds, inevitably), the selection panel couldn’t decide on just five, the previous number of finalists – although we screwed the pooch on one of them.
The basic premise of the iTalent competition is this: startups have seven minutes (exactly) to pitch their product in front of a panel full of judges, global RPO/MSP/BPO executives and their high value enterprise clients’ CHROs, trotted out for case studies and panels and a chance to get out of the office for a couple days to stay at some swank ass hotel and go to lavish vendor after parties.
The order of presentation is randomly chosen, and after seven minutes, the participants’ mic is cut off. After each pitch, the panelists have the opportunity to ask questions to the presenter. Judges score each entrant on a scale of 1-20, based on equally weighted scores of four categories: innovation, global impact, business relevance and pitch style/presentation.
Audience members are given the chance to vote via mobile phone throughout the course of the competition, and the winner of this vote is awarded an additional 20 points – which this year, actually, made the difference between the top three. The order hinged on a swing of six votes, and was a true statistical toss up in terms of the winner, runner up and third place winners.
The judging panel consisted of Elliot Clark, the head of the HR Outsourcing Association and publisher of HRO Today Magazine; Bill Filip, Executive Director of Delancy Street Capital; Brian Cole, Director – Investment Banking, Robert W Baird & Co; Jonathan Campbell, cereal spokesperson, Notre Dame mascot and CEO of Social Talent; and Michael Beygelman, CEO of Joberate and a seasoned HR Technology investor. Tough crowd.
The reason I really like iTalent is the fact that it’s unlike a lot of HR Technology “competitions” which are often completely arbitrary, lack any sort of transparency in judging (a press release and an awards dinner are about all that seems to be involved) or else are obvious pay-for-play PR fodder (Job Board of the Year? Magic Quadrant?)
They are not actually geared towards selling product to practitioners or highlighting some case study for some brand name company, either. These are pitches for investors who actually spend money (successfully) on early and mid stage HR technology companies, and as such, tend to focus on financials, business model and growth strategies instead of some lame ass “hiring is broken” slide deck followed by a demo and some out of context supporting statistics (80% of your workers say they’d leave their job tomorrow.*) Forget the nuance of source or statistical validity or vendor bias. Most enterprise salespeople do.
The fact is that these painful presentations take a minimum of a half hour (although most are an hour if you’re actually an active buyer), which is a lot of wasted time for small talk, unnecessary exposition and lame ass Q&A sildes (which are inevitably met with awkward silence).
Ain’t no one got time for that. Unfortunately, HR leaders never get to hear what technology investors do, which is the condensed, no BS, ‘does this work’ and ‘how does this make money’ style of product pitch that CEOs, not account execs, have to do to successfully startup. Which is too bad, because they’re way more interesting and ultimately, way better insight into a product than the fluff that gets pushed out of the C Suite and into the sales org.
You’re My Inspiration: What HR Technology Startups Can Learn From The Muse.
This year’s winner, and deservedly so, was The Muse. One of the purported perks of winning the iTalent competition is a featured story in Recruiting Daily, and I’m actually glad to have an excuse to pay homage to one of my favorite companies in this category.
I don’t normally cover product, and since no one talks shit on them (their customers actually like their product) and there’s really no skeletons in their closet, just a well run, well financed and rapidly growing company that’s proven itself over the course of around 5 years while consistently improving its core capabilities, expanding its service offerings and building an army of loyal advocates among recruiters, candidates and career coaches alike.
That, my friends, is no easy feat. Nor is surviving as long as they have by offering a product suite covering categories where each of their offerings faces significant competition from both established players and specialized point solutions. But somehow, the Muse continues to defy expectations – and I actually feel kind of proud having really seen their growth up close more or less since their inception.
You see, I was one of their early clients (I’m not even sure they knew I signed off on that spend, since I didn’t touch that particular project personally, back when I was pretending to be a big shot).
The reason was that their value prop was they’d come in, build an entire world class, personalized employer brand presence for you, including original videos and content with amazing production quality, targeted landing pages and a gorgeous, intuitive and clean careers destination.
Full service, no work involved other than working with their team on some creative and brand stuff and maybe getting some internal approvals. They’d come onsite for one day, get the office photos and video footage they needed (with a predetermined checklists of assets and what they’d need from you sent well in advance, making it more or less idiot proof).
Within a couple weeks, they’d have a mock up ready to go that was as good as any actual ad agency in this space has ever put together, at a comparative bargain bin price. I mean, we’re talking less than the cost of one LinkedIn Recruiter seat for a turnkey employer brand (or rebrand) rollout. Seriously, it’s like giving a req to a retained firm – they’re the ones who do the work.
This, of course, is awesome if you’re like most HR or marketing leaders and have way better things to do than sweat how to get your crappy ATS to render those crappy stock art photos of your “culture” onto mobile devices, or go find a videographer, a freelance writer or the myriad other service providers required to build an employer brand presence from scratch. It’s the easy button in an often hard job, and let’s face it – recruiters will buy anything that allows them to do nothing.
The Muse most certainly achieves this, but more importantly, it creates great looking websites which improve candidate conversion rates and online recruitment marketing while also more or less offering an employer brand in a box (a light blue Tiffany’s one, wrapped in a bow).
It also offers a vibrant place for career advice content which doesn’t suck (and a robust career coaching market for mostly emerging workforce and recent college hires) and a native job board featuring listings from a blue chip roster of clients, running the gamut from conglomerates like AT&T and Comcast to big name tech players such as Facebook, DropBox and Slack to global consulting firms like KPMG and Spencer Stuart.
Seriously, their client list (all of whom have active Muse microsites so you can see immediate proof of concept, which is great but way too rare) reads a lot like a list of Andreessen Horowitz portfolio plays mixed in with the Dow Jones Industrial Average and some random ass employers who apparently need qualified candidates, too (see: The Washington Redskins, the City of Houston and the Encyclopedia Brittanica, respectively). Hell, the Wall Street Journal is even a Muse customer, as is Dun & Bradstreet, which pretty much says everything about financial viability and long term outlook of a startup you really need to know.
That they specialize in media production and creative content makes customers like Conde Nast, Hearst Publications and the San Francisco Chronicle speaks volumes about the quality of the end product, given the fact those are some high standards to meet, ostensibly, from a digital media standpoint.
The Value of Production Value: Why The Muse Won iTalent (and Keeps Winning Customers).
But the proof of concept requires nothing more than going onto any of their customers’ pages and seeing what the Muse looks like for these and hundreds of other companies – which is exactly what you want before making a purchasing decision instead of trusting some sales deck and obviously biased client testimonials or “references” (we know how objective reference checks are, after all).
Few offer that. The Muse does. And I think that’s a big reason it wins business. The fact that it wins business from literally every industry and company size out there – I mean, most companies segment customers so specifically (“we only work with organizations with 49,999 employees and up” or “we specialize in SMB solutions for businesses of 10-50 FTEs”), but The Muse has universal appeal, an unlimited number of customers, and a relatively cheap ass price tag, given the value of letting someone else make you (and your online recruiting presence) look good.
They do so by driving efficiencies in production scheduling (scheduling companies in the same market consecutively, for instance, working with a steady stable of freelancers who know what the Muse needs and how to get those assets as quickly and painlessly as possible, for another; and, as a former line producer, I can assure you the most important consideration is repetition of process, similar to a Hollywood studio system.
Sure, there was some duplication in terms of sets, costumes and even stock footage, but their output of high quality, original, creative content was so staggeringly high largely because economies of scale work for even things like copywriting or videography, the hardcore “creative” stuff that generally sucks for most employer brands who either DIY or use some shitty agency with an iStock subscription and a team of interns from a second tier state college’s PRSA chapter.
If you think that Michelangelo was the only painter working on the Sistine Chapel, or that Walt Disney drew Snow White all by himself, then you should know that just like the Muse, you never see all the shit that happens behind the scenes. But when it does, you don’t really care. The product just works, and when that happens, it almost always stands the test of time.
Which means that it was only apropos that this year’s award went to a company that’s neither a product nor a service – it’s in some category of its own, but that really doesn’t matter to recruiters or investors. What matters is, it does a good job at a good price with good results. And if that’s not good enough, I don’t know what is.
Do you have a killer HR Technology startup you’d like to show off to the world? Entries are now open for the 2016 APAC iTalent Competition in Singapore, presented by Recruiting Daily.
We’re looking for the hottest VC backed tech and killer tools Asia has to offer. Click here for more information or to apply today.