There's this thing about falling: the higher you start up, the faster you're going when you hit the ground.* The analogy works well with a scenario we are witnessing in the HR tech space at the moment (it's far from the first, nor will it be the last, time this scenario has played out).
For a bit of background, Hired was founded in 2012 with a great deal of fanfare and early high-profile early investments from Crosslink Capital, Google Ventures, NEA, Sherpa Ventures, SoftTech, and Step Partners. As it scaled, it continued to raise capital, and raised more than $130 million in funding, according to Crunchbase, making it one of the most well-funded startups in the recruiting technology sector. Their last round, a D for $30 million USD, was led by the Investment Management Corporation of Ontario (IMCO), a fund which typically invests in infrastructure firms (think massive hydroelectric projects, like dams).
From the start, the firm focused on technology firms in and around Silicon Valley, counting WeWork and other high-flying startups as clients. Their promise was delivery of "a career marketplace that matches tech talent with innovative companies. Users on the Hired platform receive objective guidance throughout the interview process from a dedicated Talent Advocate, as well as the ability to compare new opportunities side by side so they can make their next career move with confidence. Employers get access to a hand-picked pool of candidates." Unpacking that a bit, they offered a solution that was powered by a mix of machine learning, matching technology, and human filters.
Lofty stuff. Expensive stuff. And, as it turns out, really hard to make work. Layering a human transactional element into software dilutes what makes technology, ultimately, profitable. The goal is to invest in the creation, and then scale it rapidly through automation. People don't scale the way software can. You introduce a brake into your upward velocity.
Hired was, at its height, valued at over $500 million. This brings us back to the acceleration bit (a bit of indulgence, by they way: like many of us, I find myself a part-time math/physics/ELA/gym teachers all of a sudden, and words like "acceleration", "velocity", and "vectors" now haunt my dreams).
$500 million is a great, great height to fall from. You're moving quickly when you get towards the bottom.
According to an in-depth investigation by The Information released just five days ago:
The company’s chief financial officer, Edward Schaffer, told some shareholders last week that the board has been unsuccessfully attempting to sell Hired since the start of the year as its cash reserves dwindled and its ability to raise new funding had become doubtful. Hired’s board brought on William Brinkman, a restructuring expert, to sell the company’s assets and distribute any proceeds to its creditors, similar to the process of filing Chapter 11 bankruptcy.
The article also reports that Hired CEO Mehul Patel “abruptly resigned” via Zoom in early October. No word on how that went down, but it's generally a sign that things are about to go south. Quickly.
Vettery was itself acquired by the Adecco Group in 2018 for a rumored $100 million (it's not clear what the mix of stock and cash was). Vettery touts itself as an employment marketplace for job seekers, and was an attempt to pull an Uber on the staffing industry. Their acquisition by Adecco in 2018 placed them deep within the belly of a temporary staffing behemoth, albeit with the goal to help the parent company take a bit out of the lucrative permanent staffing industry. In March, it was announced that Vettery's founders/ leaders were moving on "to pursue other entrepreneurial endeavors", and the company's chief product officer, Josh Brenner, was taking the helm as CEO. Brenner joined as CPO late in 2019, and has zero prior experience in the recruitment and staffing industries.
In Adecco's 2019 annual report, the company reports: "Vettery’s innovative, subscription-based digital permanent recruitment model continued to gain traction, with placements up 80% in 2019 and strong momentum on the enterprise side. In order to build on the momentum established to date, the Group will continue to invest in the Ventures at approximately the same level as 2019 (EUR 65 million), to support growth in 2020 and beyond."
A few things to take from that. First, EUR 65 million does not equal USD 500 million. At any level. Second, permanent placement fees have been slashed in 2020 as companies adjusted budgets and slow down external hiring. (Temp staffing has done very well, by comparison). The assumption is that Vettery's growth has been flat compared to 2019. Justifying paying large for an investment in those circumstances is challenging, at best.
RNN has reached out to Adecco for terms of the deal to confirm the rumor (and logical assumption) that this was an absolute fire sale.
*Bonus for reaching the end of the article - if you're a parent trying to explain gravity, velocity, and wordplay to your "student", you could do worse than watching Rosencrantz & Guildenstern Are Dead with them.
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