HackerRank, the skills-based recruiting platform and online coding challenge community, today announced that it has raised a $30 million Series C funding round led by JMI Equity, a fund that specializes in helping software companies scale. Exiting investors Khosla Ventures, Battery Ventures, Randstad and Chartline Capital Partners also participated in this round.
As HackerRank co-founder and CEO Vivek Ravisankar told me, the company now has over 3.4 million developers in its community, which has grown organically since the company’s launch in 2012. What’s maybe just as important, though, is that the service has also brought on a wide variety of companies to its HackerRank for Work program that are looking to use the services platform (and community) to recruit developers. According to Ravisankar, these customers include five of the top eight commercial banks, for example, as well as auto manufacturers, retailers and others. Ever company is now a software company, after all, and they are all looking for talent. With these customers, HackerRank was actually cash flow-positive for a part of 2017 and expects to return to that in the near future.
Over the course of the last year, HackerRank also expanded beyond core programming skills and adding support for other technical roles, including DevOps positions, database specialists and others.
“To be frank, we didn’t think we needed $30 million,” Ravisankar told me, but JMI looked like a good match for HackerRank and this round, which brings the company’s total funding to $58.2 million to date, gives it a long runway to expand its product portfolio.
Specifically, Ravisankar is focussing on three areas: doubling down on customer acquisition and HackerRank’s go-to-market strategy, investing more in its community, and using machine learning and data science to better match employer and job seekers.
It’s this last part that’s probably the most interesting. HackerRank sits on a trove of data about what skills job seekers possess and which ones employers are looking for. “It’s very hard for a lot of companies to quantify what makes a great developer,” Ravisankar explained — and the same goes for developers who don’t always know what they are looking for. So at this point, the HackerRank team is trying to figure out how it can best use its data to say whether a developer is a good fit for a job.
HackerRank currently has about 150 employees but this new round will allow it to hire a few more, too. Chances are, it’ll use its own platform to do so.
In Los Angeles, where I live, there are three things you can always count on. The first is weather — perfect to the point of being boring. The second is traffic — awful to the point of dictating a surprising number of daily decisions about where to go and when. The third is encountering hordes of people who think they can act, write or direct better than the people who make a living in the entertainment industry.
Everyone’s got a screenplay. Everyone’s a comedian. In such a subjective field, with no objective measures of competency or qualification ahead of whether viewers actually watch the end product, millions of people take a shot. It’s no wonder Hollywood Boulevard has been called the Boulevard of Broken Dreams.
With so many candidates for each role, every hopeful knows it’s fairly hopeless unless they have an agent. CAA, WME, ICM, UTA and their brethren represent every working talent in Hollywood. As a result, these agencies wield extraordinary power — effectively deciding who works with whom, and which movies get made. (James Andrew Miller’s recent book about CAA, Powerhouse,tells the story about how CAA decided that the prank-calling “Jerky Boys” should get their own movie, thereby creating the cultural nadir of the 1990s.)
Why are Hollywood agents so powerful? Because they serve as the clearest signal for talent at the too-crowded top of the entertainment hiring funnel. When an agent with a good reputation vouches for talent by representing them, producers and casting directors will take notice, cast aside other hopefuls and take a meeting.
Over the past decade, the top of the hiring funnel has gotten very crowded outside of Hollywood. Why? Because today more than 85 percent of all job openings (and nearly all “professional” positions) are posted online. As a result, the typical job posting generates hundreds of applications — in some cases more than 1,000.
Last summer, Allan Ripp, owner of a public relations firm, wrote in The New York Timesabout how difficult hiring had become. In the “vast online jobs marketplace… restless applicants shoot off their résumés like one of those T-shirt cannons at a football stadium, firing without aiming.” For an account director position, Ripp received applications from an auto collections manager, a home health aide, a visual merchandiser, a fiscal benefits analyst, an emergency medical technician and a brand ambassador. Naturally, “it didn’t take long for the résumés to blur.”
Hiring managers are becoming increasingly reliant on trusted intermediaries.
While few employers have taken to writing in The New York Timesabout their experience, most are frustrated. Their frustration is manifesting itself in two ways: adding qualifications to job descriptions — either “experience inflation” or “degree inflation” — in an effort to tighten the filter; and leaving jobs unfilled. There are currently 6 million unfilled jobs in the U.S.
From my perch at University Ventures investing in human capital markets, I also see a Hollywood effect. To deal with the hundreds of hopefuls for every job, hiring managers are becoming increasingly reliant on trusted intermediaries to send talent signals. We’ve always had such intermediaries for top executives, i.e. recruiters or headhunters. They’re also commonly used in many industries for lower-skill positions, i.e. staffing. What’s changed is that staffing or fee-for-placement intermediaries are emerging for a range of professional positions.
10x is a tech talent intermediary started by former entertainment agents who used to represent stars like John Mayer, but now represent “digital rock stars.” For employers, 10x provides access to talent they wouldn’t otherwise see or be able to access. In a profile in The New Yorker, Camille Kubie, who runs a design and branding agency, said 10x developers “knocked it out of the park.” And 10x is careful to vet its talent for soft skills. “It wasn’t embarrassing to let them out of their cave,” said Kubie.
While 10x staffs experienced coders, more intermediaries are focusing on entry-level positions, and leveraging technology to assess talent. Companies like HackerRank and CodeFights are identifying software developers through a range of competitive coding challenges. Once they’ve identified top talent, they match them to job opportunities, present curated candidate profiles to employers and charge a placement fee. Revature is doing the same thing, except instead of simply matching to jobs, Revature identifies potential, provides “last-mile” training on advanced coding skills and then staffs out to employers on an eval-to-hire basis.
EquitySim is proving the model in the financial sector. The company deploys a trading simulation to colleges and universities, identifies top trading talent, then takes a placement fee from banks and hedge funds. Scouted is an intermediary for “analytical athletes” — identifying excellent problem-solving abilities that can be deployed in entry-level marketing, business and finance analytics positions. Avenica is identifying and placing entry-level talent in insurance and healthcare. Strive Talent is doing it in sales. In a world where there are hundreds of hopefuls for every good job, intermediaries that can serve up the perfect candidate on a silver platter have the potential to become the CAA of their sector.
Because the impact of technology on hiring has been far too many false positive and false negative hiring decisions, and because the cost of a bad hire is high — according to one expert, as high as $240,000 — I have predicted that we’ll soon see online competency marketplaces. Competency marketplaces will help candidates understand the jobs and careers they’re most likely to match, and help employers identify candidates who are on track (or on a trajectory to match in the future) and manage long talent funnels in an automated way.
What will a competency marketplace look like? If you’re a job-seeker, think of your LinkedIn profile shifting from a recitation of your education and experience to a long list of competencies and levels. While this list may be unintelligible to you, it won’t be unintelligible to the algorithms sitting atop the applicant tracking systems and HR information systems that employers will use to engage in competency-based hiring and predictive hiring.
For the vast majority of employers, hiring will remain high-touch.
It will be irresistible for employers to use competency marketplaces to meet hiring needs. Your firm has to hire 100 entry-level salespeople every year? No problem. Your next-generation applicant tracking system has already identified 250 19- and 20-year-olds whose demonstrated curricular and co-curricular competencies correlate to sales success in your company, and either advised them to take a course in business statistics or invited them to participate in a short online course, the result of which will be an invitation to interview for a summer job.
Sounds good, right? The challenge facing would-be competency marketplaces — which today take the form of job-matching platforms — is that current matching algorithms are primitive, and because the top of the hiring funnel is already so crowded, the last thing most hiring managers want right now is more unvetted candidates. Moreover, the second-to-last thing most hiring managers want is to have to check another platform for unvetted candidates. (They already use their applicant tracking system along with LinkedIn.)
As a result, I’m seeing many HR tech startups that began life as job-matching platforms pivot to a placement or staffing model. Why? Because employers are more willing to pay a placement fee for the perfect candidate than to pay a subscription fee for access to a platform that promises access to more candidates.
Will hiring halt at the Hollywood model and never progress to competency marketplace utopia? For some sectors, probably so. In the past quarter century, many entertainment industry prognosticators have said that technology will provide talent with a direct line to consumers and disintermediate not only agents, but also production companies, studios and networks. This hasn’t happened. In fact, top YouTube stars now have agents at CAA and WME.
While technology will help unclutter the hiring funnel, what differentiates Revature, Avenica and these emerging intermediaries is that they haven’t forgotten that hiring is a very human activity. Avenica has eight offices around the U.S. in order to be close to candidates and employers. And while there will always be a handful of employers willing to fully embrace technology-driven hiring — like India’s Flipkart, which has announced an “interview-less” approach, hiring candidates based solely on their competency profiles — for the vast majority of employers, hiring will remain high-touch. Which means that companies seeking talent will rely increasingly on the intermediaries that represent future stars.