HireVue, a 13-year-old recruiting software vendor, is pivoting. At its recent user conference, Digital Disruption, management shared with IT and financial analysts some insights into the future of the company. Informal conversations with customers and prospects also shone a light on the changing nature of the company.
Some of the notable observations include:
- HireVue’s target customer and customer mix has recently changed. Their new CFO has been particularly vocal in moving product sales upmarket to larger firms and to cross-selling the new intelligent assessment solution to existing video interviewing customers. These efforts have increased deal size and exploded the number of video interviews that have been conducted on the HireVue platform.
- The management team has substantially changed. The company has a new CEO (Kevin Parker – ex-PeopleSoft CFO and ex-Deltek CEO), a new CMO (Diana Kucer ex-LinkedIn and Intuit), a new head of sales (Doug Leonard - formerly of Ceridian and Cornerstone OnDemand). Their CFO, Marty Ostermiller, came on board a little over two years ago.
- Large company customers and prospects were in abundance. Not unexpectedly, many of these companies are using (or will use) the solution to fill job openings where there are large numbers of often similar positions available within the firm. As a result, I spoke with HR executives using video interviewing technology to fill call center, nursing, retail and other positions. One customer, a Class 1 railroad, is ramping up its hiring after years of low turnover and because of retiring baby boomers leaving their workforce in numbers. To the one, all customers and prospects that I spoke with were very pleased with video interviewing. Due to the newness of the intelligent assessment technology, I did not have an opportunity to collect much feedback on intelligent assessment technology but did hear very positive commentary from a number of speakers and a few non-speakers on the use of the solution. (Note: a surprising number of big logo customers were speakers at this event.)
Company and product line evolution
HireVue was one of the pioneers in the video interviewing/recruiting space. In fact, early users of the software often had HireVue mail web cams to prospective hires as few people possessed built-in or standalone video cameras as part of their desktop computer, laptop computer or smartphone.
Today, the ubiquity of these technologies makes the rapid adoption of video interviewing technology quite frictionless and deserving of a place in the recruiting technology stack of most businesses.
But while the company’s start in video interviewing is an interesting historical fact, it’s the incredible improvements in Internet access, high-speed, mobile communications and almost limitless and cheap technology storage that allow HireVue to now supplement this technology with its intelligent assessment service. In a nutshell, this service can analyze some 25,000 data points during a 15 minute or less video interview.
These assessments utilize the big data gleaned from some 4 million prior video interviews as well as the insights of industrial and organizational psychologists as part of their algorithmic assessments of a job seeker and their interview.
The intelligent assessment is something that the new executive team’s banking heavily on. Where video interviewing has become lower cost and commodity-like in the recruiting technology space, the assessment technology is far more difficult to develop and provides a competitive advantage to HireVue.
Changing value proposition
The value in this intelligent assessment technology comes from a more consistently applied set of criteria being used in comparing jobseekers, the elimination of a lot of bias in the process and the saving of time.
Time savings can be material as operational and recruiting personnel are spending markedly less time with individuals who will not proceed to the next level of the recruiting process. Greater workforce diversity was also mentioned as a benefit.
One speaker from Goldman Sachs described how their firm can now evaluate candidates from across hundreds of B-Schools consistently and recruit from all of these sources successfully.
Now, they can compare, for example, a top grad from numerous schools and select all of those that display the intellectual, cultural, thinking, etc. characteristics they have found to be a great fit for their firm.
Improved candidate quality, better fit and reduced costs are key value drivers HireVue is claiming with these assessments.
The original offering, video interviewing, can also provide significant economic benefits to customers because the technology saves a lot of time for both the candidate and the employer. It can also save a material amount in T&E time, operational leader time, etc. HireVue executives showed some impressive time and carbon savings that major firms have realized from moving a lot of campus interviews to a video format.
Time is an important value driver for both solutions as time is one of the biggest reasons that the best jobseekers will abandon an employment opportunity with a firm. Again, different speakers emphasized that lengthy/time-consuming assessment tests, 14-page online application forms and months-long interviewing processes are HUGE turnoffs to the best and brightest candidates.
Customers that get ‘it’ and prospects that don’t
Not all recruiting managers or chief HR officers are the same. Some are cosmopolitan, gutsy and willing to expend a little political capital if they can acquire a technology that will help the business. Sadly, too many will opt to keep the status quo.
HireVue’s situation, especially its intelligent assessment technology, is classic Innovator/Early Adopter space in Geoffrey Moore’s Crossing the Chasm world. Thankfully, someone at HireVue has read that book and is using vertical penetration strategies to get more prospects in specific industries to adopt their solution.
Big banks, hospital chains and other verticals are hearing how their competitive peers are sopping up the best and brightest talent and hurting their competitors’ bottom lines. Strong word of mouth within an industry helps create the herd mentality that drives oversized deal opportunities. This is a good thing.
On the flip side, there’s no escaping the fact that the cool kids in Recruiting (i.e., the companies that use products like Entelo, SmashFly , etc.) go to shows like HireVue’s Digital Disruption while so many others stay at home and allow their old, obsolete HR and Recruiting processes to age like a fine wine or cheese.
Unfortunately, old technology doesn’t go up in value like a rare vintage wine. No, it becomes (less than) worthless.
The marketing challenge for HireVue is to find ways to reach these more risk-adverse, conservative buyers of Recruiting technology. There are too many people out there with recruiting solutions that feel like “Motherhood, Apple Pie and the American Way” when their firm really needs a gutsy leader who’ll introduce solutions more like “Sex, Drugs and Rock & Roll” into their organization.
How does HireVue convince these staid, slow-buying firms into accepting something so different?
HireVue’s solution today runs on the Amazon AWS cloud. Conformity with SSAE 16 and other standards will be completed shortly.
Great algorithms and AI/ML technology should have transparent (not opaque) rules and a feedback mechanism for customers to refine/teach the algorithms as exceptions and new learnings become known. When I asked management about this for HireVue, an executive stated that customers need to communicate any new learnings back to HireVue for inclusion in the system. The feedback mechanism is not automated.
The algorithms are not very transparent and often require tuning based on the customer. For example, the kind of call center employee who does great work with customers, loves their job, etc. at one firm may have different qualities than one at another company. Each customer may have a lot of prior job history (big) data to back up their specific needs/wants.
With so many pedestrian, run-of-the-mill recruiting technologies out there, it’s kind of neat to run into HireVue.
The kinds of questions and issues that you and I can throw at company executives are so different, new and novel with cutting edge solutions. They are pioneering a lot of new stuff.
If you’ve ever cleared a field that’s never been planted for crops, then that initial clearing is brutal compared to subsequent re-plowing of that field. Creating all new solutions can be the same way.
The new team must achieve hockey stick growth on more fronts than just the number of video interviews conducted. Before management can take the company public, they’ll need to grow revenues, average deal sizes, customer counts, geographic penetration and the product line.
Wall Street won’t like a firm that isn’t growing big-time across a lot of different dimensions. That kind of growth takes time and/or money. Executives commented that the firm is already supporting over 30 languages and has customers all over Europe (20 new deals alone closed in Japan). Profitable geographic expansion can be tough – remember HireVue only has around 225 employees currently.
The other growth concern I have involves the ability of the company to consistently and successfully implement the solution in many large accounts simultaneously. In the past, the company had a lot of smaller accounts that had short, fast, bite-sized implementations. Big organizations bring big change management, training, project management and other headaches. I’ve spent years of my life doing these projects and the software issues were always secondary to the politics, power struggles, passive-resistive and other unproductive behaviors that require constant management.
This could be a great partner opportunity for some HR consultancy or it will be a staffing and leadership challenge for HireVue.
Today, the company only solves a portion of the recruiting process needs. Firms like SmashFly tackle the filling of the recruiting pipeline with other vendors providing large and small pieces (e.g., I-9 verification) of the puzzle. While HireVue’s current niches are defensible now, a well-heeled competitor could undertake the development of competitive offerings.
This is pivot change for which you’ll want a front row seat.