Bootstrap First, Raise Money Later from Utah: HireVue CEO Mark Newman (Part 3)

Sramana Mitra: People were resonating with your value proposition.

Mark Newman: The product-market fit that we came across wasn’t the value proposition or the value creation that we delivered to our customers. It was the change management. Were people ready to change how they hired? It’s been done the same way since the invention of business. Then saying, “Now, do asynchronously. Trust that the system can ask the questions.” For HireVue, the journey has never been about the initial value proposition. That’s always made inherent sense to people. It’s been about the change management of refocusing how people build and coach their teams. When we do that, we see great results. Just like trying to help people quit smoking, the value is there and people know it. It’s the change and the drive that is the hard part.

Sramana Mitra: Anything that requires human behavior change is a very tough road. It’s an uphill task to make people change behavior. From 2004 to 2009, you invested $100,000. What was the ramp?

Mark Newman: From 2008, we did $100,000 in sales. We ramped from zero to $100,000 in sales. Then, 2009 was the inflection point. That was the best thing that happened to HireVue. It was the great recession and organizations needed to think differently around how they built their teams. Even though there was this giant perception of layoffs going on, companies weren’t necessarily growing their head count, but they still had turnovers. The turnover that they had to replace had to be done with fewer recruiters and in a more cost effective way. It helped us actually.

The other dynamic that happened was because there were fewer jobs, there were way more applicants per job. In tight times, you might only have 10 or 15 applicants per job and you’re fighting for them. In times like 2009 to 2010, you had hundreds of applicants for a job and you needed to figure out how to differentiate between people. Fortunately for HireVue and unfortunately for the rest of the market, that was the greatest thing that ever happened for us. We did over a million dollars in revenue in 2009. That’s when we started bringing in investors and actually growing the team from two people to about 200 people today.

Sramana Mitra: What was your first round of financing?

Mark Newman: We raised a million dollars in 2009 led by Peterson Ventures. Joel Peterson, the professor from Stanford is the Chairman of JetBlue Airlines.

Sramana Mitra: What happens after that? What does 2010 look like? What were the major strategic developments in 2010?

Mark Newman: In the HR technology space, we needed to get validated by the big software companies that provided HR technology to big companies. We needed to get recognition from them – that we are a legitimate solution for big business problems. In 2009 to 2010, we went about hiring the people that were the best partners for those companies. Organizations like Taleo, SuccessFactors, and Kenexa have since been acquired by Oracle, SAP, and IBM respectively. We did everything possibly to get in front of them.

Kenexa founder and CEO is a guy named Rudy Karsan. I just cold-emailed him and said, “I’d really like to meet you just to get some advice.” Next thing you know, that started the conversation. We went down the same path with SuccessFactors. Taleo, which had the largest market share in the recruiting technology space, told us no dozens of times. Finally we said, “Listen. Who is your best partner?” They said, “This company called HireRight.” I said, “Who at HireRight?” They said a guy name Josh Schwede. We spent the next three months recruiting Josh to HireVue. Then he says, “What do you want me to do?” We said, “Go get a partnership with Taleo.”

This segment is part 3 in the series : Bootstrap First, Raise Money Later from Utah: HireVue CEO Mark Newman
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