HR as an industry has remained strangely in the dark ages when it comes to being disrupted by the booming tech market, but now “HR-Tech” looks set to become the next hot sector and Boston based startup Workable, fresh from a $27 million Series B raise are leading the charge in the small business hiring software market, estimated to be worth $2 billion+.
SMBs could certainly use the help. According to the society for Human Resources Management, one in every two Americans is employed by a small business and yet it costs eight times more for a small business to make a hire than for a firm with over 5,000 employees.
The company’s latest round, led by Balderton Capital with Notion Capital and 83 North, formerly Greylock IL also investing, brings their total amount raised to $34 million, which CEO and cofounder Nikos Moraitakis believes is enough for the company to nail down its position as America’s favourite hiring software and provide an HR solution for smaller firms that can finally rival the in-house software used by bigger corporate firms.
The Workable team are looking to hire in Boston, London and Athens; luckily, they have the right... [+]
Workable’s cloud based solution allows employers to post jobs, track candidates and hire as a team, consigning the days of email and spreadsheets to history, they say. The software allows small firms to build their own branded careers sites, advertise positions on their Facebook pages using a bespoke “Jobs tab”, create new job descriptions quickly and easily using templates and add screening questions to online applications.
Companies can use Workable to post vacancies to job boards like Monster, Simply Hired, Glassdoor, and LinkedIn, secure discounts on premium listings sites and develop their “social recruiting” strategies by browsing sites like Facebook, Dribble and Angelist to find “passive” candidates, often the most effective kind of hire, with the best matching skillsets.
All the trials and triumphs of building a business – delivered to your inbox.
At the interview stage Workable’s “360 view” of candidates let’s hiring managers see all of their company’s previous interactions with candidates, social media profiles, screening test results and feedback from other members of the hiring team. The software is even available on smartphones for those who prefer to keep up with their hiring plans outside of the office.
Workable also stores historical data and uses its reporting and analytics tools to provide an overview of the entire hiring process, present data in a meaningful way and deliver insights into how future hires can be conducted in the most efficient way possible.
The platform is currently used by more than 3,000 SMBs across 52 countries, but founder Nikos Moraitakis said when I interviewed him by telephone that this is just the tip of the iceberg, as the majority of America’s 22 million small businesses are actually yet to try hiring software.
Small businesses account for 70% of all hires made in the US but their hiring software is light years behind the kind of tools and processes employed by major corporates, says Moraitakis; “hires at small businesses are usually carried out by line managers, sales directors or managers who see hiring very much like a second job. They don’t have the time to trawl through ten different recruiting sites to find talent but that is what they had to do to find the best employees.”
“Hiring at smaller firms can be a protracted, expensive process but ambitious, growing businesses need to be able to bring people on board fast so that they can grow at the speed they want to. Without collaborative tools in place hiring managers struggle to identify the right targets, share information and feedback with other managers at the firm and end up doing everything on their own when really they want to be focusing on their main job.”
Moraitakis and Workable co-founder Spyros Magiatis have first-hand experience of this having both begun their careers at a high growth tech company. “We were making a lot of hires so we quickly understood how painful the hiring process can be and we said to ourselves “we can do better.”
“We felt that HR Tech had been left behind by cloud software so we built a tool to help small businesses hire better. Smaller companies had never had this kind of tech before, they aren’t like big firms who have entire HR departments; we built a nice product in Athens using a great network of engineers and we quickly realised that there was huge demand in the market for a tool like ours.”
Workable has grown fivefold in the last year and is still growing at a rate of 15% per month as more and more businesses become aware of the software and start to use it. “To begin with nobody knew that this kind of software existed; we simply built the software that we felt we most needed at the time, in all honesty we didn’t complete much due diligence around the size of the market but we just knew that we found it valuable ourselves.”
The demand became obvious however and to meet it, Workable completed their first funding round with a small VC firm in 2013. Several months later they raised further funds and completed a Series A with Greylock Partners shortly after that. The firm relocated to Boston in the US “because we wanted to go where the majority of our clients were”.
Moraitakis believes that startups and small businesses have been disadvantaged when it comes to making the best hires for too long. How can a small firm compete for talent with a large corporate when that firm has its own HR department, a careers section on their website that promises the best of everything to fresh faced college grads, and dedicated hiring managers whose only responsibility is to find top talent, and keep them happy.
And yet, thanks in no small part to the disruptive power of tech, working at a “startup” or small business has never been more in vogue and smaller companies are contributing more and more to countries’ bottom line with every passing year. “SMBs are invariably highly ambitious and they are very reliant on having an effective hiring process, but they traditionally lacked the resources to make that process more efficient”, says Moraitakis; ““Big companies have been using heavyweight applicant tracking systems for decades, but now Workable is levelling the playing field for them, giving ambitious companies the chance to compete for talent”.
Moraitakis says that a sizeable proportion of the latest fundraising will be spent on developing the data analytics side of the business which he believes will provide smaller firms with more useful information about where to find talent and how to evaluate it than ever before. He also plans to invest in marketing to further open up a market which is worth $2 billion in America alone, and of course, he’ll be hiring: in Boston, London and Athens. “Of course, of course, we’re very happy to “eat our own dogfood”, he replies, using a favourite expression of venture capitalists when I ask if he’ll be using Workable to make those hires.
Prices for the Workable software begin at $19 per month and rise as high as $400, which is a negligible amount when you consider the vast sums that big companies pay for similar services. The Company put it simply on their website: “It has everything you need and nothing you don’t. It’s built for teams. It’s on the cloud, it doesn’t need a manual, it gets the job done.”
It certainly seems to fit the bill and the passion of the founding team is evident as well. They have no plans to “sell out” or move towards working with larger corporates; “don’t try to be all things to all people”, says Moraitakis, concentrate on what you do best.”
He says he doesn’t feel the pressure of completing such a large fundraising either. Partnering with Balderton, who are based in London (Notion Capital are based there too) he says was a no brainer as “they had been watching us for several years and came in at just the right time.”
“With fundraising”, he says, "to begin with somebody has to believe in you and what you are doing, and as you peel off the layers of risk surrounding the project one by one, you soon reach a size where it’s clear that you can execute on your plans. You collect more and more proof points and so more and more investors want to come on board.”
It’s never an easy process but it’s still the best model for scaling fast. “As we grow problems such as finding funding are replaced by different problems.” Most entrepreneurs want to solve big problems; they don’t come much bigger than consolidating a fragmented HR Market. Workable’s platform is another victory for the disruptive power of tech; David and Goliath have never looked more evenly matched.
