Building a High-Impact EdTech Venture from Alabama: QuantHub CEO Josh Jones (Part 4)

Sramana Mitra: So who were these corporate customers? The corporate customers were not for this hiring interviewing tool. Then, you were selling something else besides this product, right?

Josh Jones: Yes, we had a number of customers that we talked to that expressed interest. The first interesting customer was one of the largest consulting firms in the world. We pitched this product to them and asked for their feedback. We said we’ll continue to build and adapt this to their needs.

We partnered with them for about a year in an unofficial manner where essentially they just gave us feedback on what they liked and what they didn’t. Ultimately, we grew that into a contract that was something they were willing to pay for. That has been a very fruitful five-year relationship and based on that, we launched the business. They were the first customer.

Sramana Mitra: Can you talk about pricing? How did you price this product?

Josh Jones: We did a market analysis of comparable products because at that time there wasn’t anything doing what we were doing. We looked at what computer software tests were priced at to give us a sense of the universe to sit in.

We also looked at the value add that we were giving to that customer. If you’re going to hire a data scientist and you don’t know what you’re doing, or you don’t have the time, you’re going to pay some consulting firm or recruiting firm 20% of their first year salary to find that person for you. That would cost about $25,000.

So we figured that the value add for this is a handful of percentage points per candidate. If the corporation is finding them through their own channel they’re doing all the work, but we’re doing the assessment to give them confidence that they’re hiring the right person. We felt that the plus or minus two percent to get a candidate in a seat is a safe insurance policy for that company. It would make sense. That’s essentially where we landed.

Then from there, when we added enterprise features like single sign-on, enhanced security, and adverse impact studies, you’d start thinking through pricing for one candidate versus a thousand versus ten thousand. We’d build a pricing table with discounting and then we would do the pricing accordingly.

Sramana Mitra: Did you price it as a percentage of salary or did you price it at that band but used absolute numbers?

Josh Jones: We used absolute numbers.

Sramana Mitra: What kind of ballpark did that come to?

Josh Jones: Per position, it would be a few thousand dollars. Again, you would sign up for hiring one candidate a year or a hundred candidates a year. It comes to about two or three thousand dollars per candidate.

This is a big perspective shift for us, and this actually influences our business today. The way this tool worked the best was when companies sent every candidate possible through the tool and then interviewed the top scoring candidates for culture and fit.

In one pricing model, I’m going to pay per test and in the other model, I’m going to pay per position. We prefer the pay per position model with hire. It costs us a little bit more for customer support and server usage.

When you do it per test, the company’s doing all of the hard work and they’re getting to the finish line saying, “I think I want to hire this candidate, but I just need an extra bit of confidence.” The problem is you’ve injected bias in that process. You’ve gone through the pain of going through resumes and sorting them out.

On the other hand, if you just give them an invite code and you say anybody who applies for this position, the first step is taking this test. Now, we’re going to sort by test scores and our test gets very granular. So it’s not a data analyst test. It is a data wrangling plus data visualization plus statistical modeling, plus Python or SQL. So you get a very granular readout of their skills at a deep level. So a team can look at that and say which candidate best fills those skill gaps.

Then based on that, we’re going to interview maybe the top two or three candidates. What’s really nice about that is, we’re actually less gender averse than the SAT when it comes to those sorts of things. So we’ve looked at how do you decrease unconscious bias? How do you get normalized test results? How do you really make the most fair and equitable test to all candidates? But at the same time, what that means is if I’ve tested a hundred people, the top three scoring people, when they walk into the office, they’re going to be really good and you can get right to those soft issues.

Sramana Mitra: So an unlimited number of tests for a single position is a couple of thousand dollars per position kind of pricing. And do you work with mostly large companies? Who are your target customers? Large enterprises?

Josh Jones: Yes, that’s really where we see a lot of our success. We work with any company that’s hiring a data scientist at any level.

This segment is part 4 in the series : Building a High-Impact EdTech Venture from Alabama: QuantHub CEO Josh Jones
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