Innovation in recruiting tech

Innovation in Recruiting
Insights by: Mohamed Khalil (mkhalil490@gmail.com)
Mohamed Khalil (mkhalil490@gmail.com)

Executive Summary
• The ~$3B Talent Acquisition Technology market displays rapid growth both organically and through Venture
Investment
- Talent Acquisition Tech has grown 9% from 2013 to 2014 and is expected to continue growth at the rate of 8-10 %
- Rapid changes in the workforce have caused increased growth in the Talent Acquisition Technology industry
• Venture investment in Talent Acquisition Technology is on the rise, especially amongst early stage start-ups
- The rise of VC interest in Talent Acquisition Technology has caused seed stage companies to receive over ~40% of
investment dollars
- VC interest in Talent Acquisition Technology can be attributed a) exit opportunities primarily through M&A and b)
companies are investing more YoY in recruiting technology
- The rise of mobile and social networks has expanded talent pools, creating a need for effective selection of
candidates
• There are a large number of key providers in Talent Acquisition Technology, all with significant market share
• Several key trends are shaping the Talent Acquisition Technology industry, primarily driven by the needs of
recruiters and candidates
• Customer Demand for All-in-one Solutions customized to personal needs has prompted the evolution of partner
networks
- Multiple providers have started to create strategic partnerships with top sourcing and assessment providers

Contents
• Talent Acquisition Overview
• Market Growth
• Investment Activity (VC / M&A)
• Competitive Landscape
• Trends shaping the industry and response

Talent Acquisition tech enables candidate interaction, hiring process
management, and integrates hiring into the HCM value chain
Talent
Acquisition
HR
Talent
Management
Benefits
Workforce
Management
Payroll
Source
Assess
Integrating new hires into a company
(e.g. providing information pre-start date, compliance docs, etc.)
Qualifying candidate skills/personality for a role
(e.g. interviews, tests, role-play)
Monitoring candidate interactions and activities as related to
acquisition
(e.g. credential collection, background verification, touchpoint archiving)
Attracting and identifying passive and active candidates
(e.g. social networks, job boards, career sites)
Track
Onboard
Talent Acquisition Lifecycle
Focus of today’s discussion
Corporate Recruiters & Staffing Firms (e.g. executive search, RPO, Headhunters) are the target client
audience for talent acquisition technology

• Talent Acquisition Overview
• Market Growth
• Investment Activity (VC / M&A)
• Competitive Landscape
• Trends shaping the industry and response
Contents

Increased competition for talent and evolving candidate expectations
led to growth in the Talent Acquisition Technology market
Talent Acquisition Technology
3.09
2.83
2.60
2016E20152014
Key Market Growth Drivers:
• Increased competition for skilled candidates
due to:
- Aging workforce
- Average employee tenure declining
- Increased Globalization
- Candidate desire for an experience
versus a long term career
US Market Size, $B
Source: Ten Disruptions in HR Technology for 2015: Ignore At Your Peril, Josh Bersin
The market grew 9% from 2014 to 2015 and
a continued 8-10% annual growth is expected

As VC investments grow, a larger share goes to early stage
start-ups as interest in the industry picks up amongst investors
Talent Acquisition Technology VC Investment
Source: CB Insights; Talent Tech Labs: HR Tech VC Perspective
Early Stage: Seed through Series B; Late Stage: Series C and beyond
US Market, $M
The No. of
investments in
early stage
companies has
grown 270% in
4 years
55%
68%
409
45%
H1 20142010
67%
2011
71%
2012
76%
2013
94
33%
135
29%
271
24%
278
32%
Late Stage Investment $
No. of Early Stage Rounds
No. of Late Stage Rounds
Early Stage Investment $

VC investments in Talent Acquisition Technology are largely driven
by a high degree of a) M&A activity & b) increased market demand
VC Exit History
With the majority of exits primarily being M&A
driven, there is a faster & much more attractive
investment lifespan
Source: CB Insights; Talent Tech Labs;Towers Watson: Companies Worldwide Spending More on HR Technology; North
American Staffing and Recruiting Trends Report, Bullhorn
Corp. HR & staffing firms increase Talent Acq.Tech spend
• 33% of Corp HR plan to spend more in the coming year vs. the
previous year
- 23% plan to increase spend by 20%
- 10% plan to increase spend by 20%+
• Staffing firms begin to introduce Talent Acquisition technology
as a pillar of their growth strategy
- RPO’s are the fastest adopter of technology as a key element
of their growth strategy for success. They can act as “Tech
partner” to less tech savvy clients
- Many staffing firms taking the role of talent advisor verses
search provider
- Technology increasing efficiency allows for shortened search
time, allowing for price reductions which can lead to
incremental business
96% 96%97%
3% 4%4%
2011 2012 2013
IPO
M&A

Large and mid-size HCM players have acquired technology &
talent inorganically
Acquirer Acquisition Rationale for acquisition Price
Acqui-hire of data scientists to
include predictive analytics in talent
platform
Building out the IBM HCM Presence
through utilization of Kenexa’s RPO
business and Talent Technology
$3.4B
$1.3B
Move to cloud based services
provider in HCM market
Move to cloud based services
provider in HCM market
$1.9B
Part of attaining a larger strategy of
entering social recruiting space.
To allow sourcing capabilities to be
directly integrated with the candidate
management system
Large
Mid-
Size
To create an HCM Suite built on big
data
To leverage the power of big data
analytics to make better workforce
decisions
This is just a representative sample, a fuller list of M&A activity available in the Appendix
Undisclosed
Undisclosed
Undisclosed
Undisclosed
$43M
Date
2012
2011
2012
2014
2014
2014
2014
2014
Large companies are defined as any company with over $1B in annual revenue

The competitive landscape has grown in recent years, particularly
in the Source and Assessment areas of Talent Acquisition
Source
Assessment
Onboard
Track
2010Pre-2010 2011 2012 2013 2014 2015
Cross-Segment
Talent Acquisition Technology Competitive Landscape
This is just a representative sample of the overall competitive landscape

Market share leaders are able to deliver against functionality
demands of HR practitioners
Web-Mining
Employer
Brand
Assessment Mobile OnboardingMarket Share
Market Share vs. Capability Index
Source: Datanyze: Market Share Data; McLean & Company: Vendor Landscape
17.6%
9.3%
6.1%
2.5%
2.4%
Feature Present Feature Partially Present Feature Absent
Email
Integration

Several key trends are causing a shift in traditional talent
acquisition practices
Post & Pray
Social Media
Integration
Candidate
Processing
Management
Candidate
Relationship
Management
Employer
Empowered
Candidate
Empowered
Out-of –the-box
ATS
Customized /
Integrated ATS
Desktop Career
Sites
Rise of Mobile
Manual Screening
Predictive
Analytics
In-Person
Interview
Virtual Interview
Recruiters are moving away from the traditional job posting and using
social network integration to identify passive and active candidates that
are a fit for open roles
Instead of recruiters self-screening resumes and evaluating a candidates
potential fit , predictive analytics quantify a candidates fit with a role, team,
and culture
Moving away from a non-transparent clunky tracking system with no
focus on applicant experience to candidate relationship management,
treating them as customers requiring a tracking systems with high
transparency, optimum user experience, and constant feedback
With an aging workforce and a rise on need for skilled talent, recruiting
will be a marketers role requiring a strong employer brand to enable
“closing the deal” on hiring candidates
Interviews are moving more towards video instead of live in person to
provide minimal candidate inconvenience and reduce costs
One-size fits all ATS is being replaced by tracking systems custom
tailored to a company’s needs through seamless integration of best in
class solutions all managed through one vendor
Mobile will begin to dominate all parts of the recruiting experience due to
its versatility and incredibly high response rates
Shifting From Trending To Rationale
ATS: Applicant Tracking System

Recruiters state that social media and online job boards are key
drivers for their quality hires
Insights from Recruiters
• The ability to aggregate information from Applicant
Tracking System databases and social networks
will become vital in the competition for top talent.
• Predictive analytics is becoming an enabler for
talent identification
- Social network profiles can easily be mined
for fit analysis
- Identifying internal hires will be much easier
when internal databases can be mined as
well
Source: 1) North American Staffing and Recruiting Trends Report, Bullhorn; 2) Linkedin Recruiter Survey
Source
Rank of
Effectiveness
Internal Databases 3.3
Referrals 3.4
Social Media 3.5
Job Boards 3.6
Re-Hires 4.8
Cold Calling 4.8
Best
Worst
Sources of quality vs. quantity of hires1
Effectiveness of recruiting source2

Candidates welcome multiple shifts in talent acquisition practices
as they provide better experiences and more opportunity
Social Media Integration
Candidate Relationship Management
Experience
Rise of Mobile
Predictive Analytics
Candidates welcome the idea of aggregating data from social networks to
assess their fit with a role and company culture as long as the analysis of
their profile data is not an eliminator from the process, merely a
secondary data point used with their overall experiences and
accomplishments.
Use of predictive analytics to calculate the probability of success in a role
is welcomed for technical roles (e.g. programming, web design, etc.).
However, candidates believe that calculating success for more creative
and social based roles (e.g. sales, art, etc.) cannot be done through data
analysis.
Candidates strongly welcome a more transparent and accommodating
process when interacting with a company in regards to a role. Candidate
find the lack of constant communication and lack of transparency to their
status as aggravating as they consider multiple options.
The ability to apply, manage, and interact via mobile for jobs is crucial to
candidates. Due to constant access to their mobile devices and managing
all other life activities through mobile devices (e.g. appointments, social
networks, fitness), connecting with candidates via mobile integrates well
with their day to day lifestyle.
When choosing a job, candidates look for the immediate experience they
will gain as well as the future opportunities that can arise in the near
future. Candidates look for fast growth and look for roles that promise
rapid career growth as well as diversified experiences.
Source: Interviews w/ college level job applicants
Shifts in Talent Acquisition – Candidate Perspective

Competitors are leveraging rich partner networks to complement
their own offerings
Source Assessment OnboardMarketplace Owner
Salesforce also provides Apps in their Marketplace created by employees in Salesforce Labs
Source: Data collected from competitor publicly available web sites

Appendix

Key players in talent acquisition have strengths and
weaknesses that they may look to supplement via acquisition
Strengths Weaknesses
• Applicant Portal provide a leading candidate
experience (e.g. Auto parse resume/ Linkedin
to populate info
• Multiple add-ons including Outlook plug in and
scheduling center
• Vast partner program allowing third party
vendors seamless integration into suite
• Intuitive and highly configurable user interface
• Integrated with 2,000+ job boards
• Comprehensive library of electronic forms
• Career sites easily configured without IT
expertise
• Rich functionality for searching Social Networks
• Job matching based on score and rank criteria
• Customer service to both internal users and
candidates
• Dedicated client service manager
• To enable easy approvals and candidate data
collection, a Smart Email feature provides non
system users with links to live system data
• Vast partner program allowing third party
vendors seamless integration into suite
• Streamlined mobile functionality with free add-
on applications
• Onboarding Platform sold as a separate product
• Add-ons not available for browsers other than IE
• 24 hr. customer support is only 5 days/week
• Mobile capability not as robust as others
(current investing in mobile development)
• Limited sourcing capabilities
• Mobile device support still evolving
• Limited email/phone support
• Limited email integration
• Limited Career Center Branding Capabilities
• Corporate Career Portal do not provide much
customization capability
• Declining service and support

Available Players: Sourcing
Company
Date
founded Description and business model
Funding to
date ($M) Leading investors
Allows recruiters to search for the best software
engineers and designers across the social web.
Battery Ventures, Menlo Ventures
2011
Aids in hiring skilled developers by using proprietary
data analysis that examines developers' actual work.
Menlo Ventures, Globespan Capital
Partners, Baseline Ventures, Sapphire
Ventures, Correlation Ventures
Matrix Partners, Serena Capital, Yuri
Milner, Steve Pogorzelski, Clara Shih
Enables organizations to extend their employer
brands, drive referrals organically and target
specific profiles from social networks.
2011
2012
Algorithm to find ideal job fits based on
experience, job description, and employee
qualifications
2013 GrandBanks Capital, Relay Ventures
Sourcing platform which searches a range of
social platforms to identify, match and rank quality
passive candidates for recruiters as well as
broadcast your jobs through social networks
2011
People Analytics solution to enhance data-driven
recruiting methods and predict the success of
every placement, hire, and employee success.
2014 Nicolas Draca

Available Players: Assessment
Company
Date
Funding to
2008
Platform for companies to discover top talent
challenges that are real world projects allowing
showcase of job skills to prospective employers and
build credibility into their profiles
Ravi Trivedi, Phanindra Sama, Jay
Sethuram, Hemant Kanakia2011
Predictive employee performance technology;
competency based assessments and reference
assessments.
Rand Capital, Cayuga Venture Fund,
Seed Capital Fund of CNY, Martin
Babinec
Bain Capital Ventures, Lightbank
Platform provides interview guides, candidate
scorecards, and allows users to order credit checks,
criminal and background checks, and view
personality profiles.
2011
2012
Neuroscience-based assessment and prediction
technology to transform the way companies hire,
retain, and develop their employees. This
technology will cut cost- and time-to-hire, reduce
turnover rates, and address perceived talent
shortages.
2013
Khosla Ventures, Bob Pittman, Jeff
Hammerbacher, Andy Palmer, Terry
McGuire
Reference assessments which use insight and
feedback from managers, peers and other
employees who have worked with job candidates
to allow prospective employers to make better
hiring decisions.
Primus Capital, Milestone Venture
Partners, Inflection Point Ventures,
Innovation Ventures, Lambda Funds
2013 Uses the power of games to help recruiters
discover high-potentials, match people with the
right opportunities, and unlock the hidden
potential inside their company.
Kleiner Perkins Caufield & ByersUndisclosed
2.50
0.25
1.80
2.35
12.60

Available Players: Tracking
Company
Date
Funding to
2012
Cloud-based software with integrated tools that helps
companies post jobs online, manage applicants and
hire employees.
Babcock & Jenkins, John Crowe, Jeff
Crowe, Ryan Finley, Chris Finley
2012
Streamline the entire recruitment process from job
Scoring and ranking of applicants helps quickly sort
through a large pool of prospects to identify the top
candidates that the company can then focus on.
Self-funded
Openfund, 83North, Greylock
Partners, Alexis Pantazis, Dimitris
Vranopoulos, Chrysanthos
Chrysanthou
Helps small and medium-sized enterprises manage
their recruitment process with simple tools to promote
their jobs online, review candidates, and schedule
interviews.
2012
2012
Modern, smart recruiting platform that automates
and simplifies the best practices for recruiting top
talent, continuously monitors your recruiting
activity, and automatically suggests
improvements.
Benchmark Capital, Felicis Ventures,
The Social+Capital Partnership,
Resolute.vc, Social Starts
7.50
0.00
1.00
24.50

Acquired Companies (1 of 2)
Acquiring
company Acquisition
Description and business model
of acquired company Rationale for acquisition
Price/
multiple
Matches candidates to employers through
a talent database drawn from candidate
activity on social websites.Logo
CEO stated that is part of attaining a
larger strategy of entering social
recruiting space.
Date
2014
Logo
$16-20M
Identified analyzes the work history,
education and demographic data of
Facebook users, and tracks the hiring
behaviors of companies to produce Score
for people, companies and schools.
Acqui-hire of data scientists2014 Undisclosed
The company delivers solutions across
the entire employee lifecycle that are
backed by behavioral science insight
and the unique combination of content,
technology and services.
To grow IBM social business
presence
$1.3B
Delivers automated social recruiting
solutions that help companies efficiently
source the highest quality candidates.
2012
2012
Build out Oracle HCM presence Undisclosed

Acquired Companies (2 of 2)
Acquiring
company Acquisition
Description and business model
of acquired company Rationale for acquisition
Price/
multiple
Online tools for managing recruiting
management and talent management
Move to cloud based services provider
Date
2011 $3.4B
Scores and validates digital, social, and
technical skills, using crowd-sourced test
design and an adaptive scoring algorithm
similar to the one used to rank chess
masters.
Shift in acquisition strategy from
content to platform capability
expansion, this acquisition provides
credible way to measure where
people are with their skillsets
2014 $75M
Cloud service analyzes 39 behavioral
traits for job candidates and produces a
fit rating
To allow Infor to be one of the first
HCM suites to deliver a real-world use
case for big data that impacts results
that can be measured.
Helps leading organizations utilize relevant
internal and external data to objectively
evaluate the skills, work experience and
personalities of their employees and job
candidates.
2014
2014
To leverage the power of big data
analytics to make better workforce
decisions.
$43M
Undisclosed
HRsmart’s Talent Management
solutions streamline and automate the
entire employee lifecycle, allowing
companies to smoothly and seamlessly
recruit, onboard, develop, compensate,
and track their employees
2015
To expand Deltek HCM portfolio Undisclosed

Partnerships
Company A Company B Description Rationale for partnership Terms
cloud-to-cloud integrations of
the two companies’ industry-
leading human resources
(HR) software and services.
Kenexa
The product integrations are
expected to help customers
improve their business
processes and make fact-
based decisions with access to
a wider range of data
Date
2015
• Strategic Alliance,
pooling resources
to create high end
HCM solution.
2015
Integration of the two
software platforms to allow
data sync
To provide a better client
experience and grow sales
channels.
2015
Use of eHarmony technology
and matching algorithms to
assess fit against jobs on
simply hired.
Use of eHarmony technology
with Simply Hired job indexes
to match candidates more
effectively
• Strategic Alliance, to
build out eHarmony’s
“Elevated Careers”
business.

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