Introduction. Anton Derlyatka TEqV, Managing Partner

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2 2 Introduction The term Human Resources has been used for at least 70 years now, yet it rarely has been associated with technology or innovation. For better or worse, HR has never been at the forefront of corporate innovation, it has never been the most exciting and sought after job on earth either. It is all changing now. Anton Derlyatka TEqV, Managing Partner Emergence of LinkedIn marked a new era in HR a technology-driven, data-rich class of HR solutions has emerged. HR is rapidly becoming a data-driven decisionmaking science. This, coupled with a permanently perceived scarcity of talent and social and demographic changes, has created a new industry HR Tech and a new, evolved, HR profession. HR Tech, in fact, is one of the weapons in fighting the myth of talent shortage. Talent today is global, mobile, versatile, accessible via a myriad of communications tools, and trained in competing education systems. HR Tech solutions help remove barriers to a global and efficient talent marketplace. Remote labor and project management tools make restrictive immigration laws almost irrelevant, while new identification, selection, and assessment tools remove the subjectivity of human filtering. We are entering the age of talent abundance when technology will become indispensable to identify and deploy talent where it is most productive. Talent Equity Ventures (TEqV) is a venture fund focused on seed and early stage investment in disruptive HR and Education technology startups in the United States and across the globe. TEqV is an affiliate of Ward Howell, the leading Human Capital and Executive Search consulting firm in Eurasia. TEqV is a specialized investor and offers extensive experience in the HR/Education domain along with a unique industry network. TEqV's current portfolio includes RolePoint, YZZY, Venturocket, and VCV.ru. We at TEqV have been following these developments for more than 20 years now. Today we are happy to introduce our first interactive newsletter. The plan is to publish 4 to 6 newsletters every year. The focus will be on analyzing emerging trends in various segments of the HR Tech market, identifying innovative ideas and startups, and, of course, furnishing a forum in which our many friends from the global HR Tech community can share their thoughts and discuss ideas. TEqV is the first seed fund focusing specifically on the HR Technology market, and we are very excited to be in this unique position. We hope that our newsletter will become a useful source of information for HR Tech startups, venture capitalists and angel investors, HR practitioners, and members of the HR Tech community. Enjoy the reading and feel free to contribute!

3 3 HR Technology Industry Scope HR Tech industry is an emerging industry sector focusing on improving speed, quality and effectiveness of decision making in the HR function through innovative technology solutions and applications. HR Tech industry re-invents all 'classic' HR business processes such as recruitment, learning & development, compensation & benefits, engagement and performance management by introducing innovative ways of dealing with HR challenges through emerging technologies. HR Tech solutions have evolved beyond simple automation of human resources business processes, such as payroll and applicant tracking, into full-fledged business analytics tools that collect, aggregate, and interpret numerous types of data to drive more substantiated HR decisions. These solutions help HR professionals demonstrate and measure the impact talent and people-related decisions have on organizations. HR Tech re-invents all classic HR business processes by introducing innovative ways of dealing with HR challenges HR Tech is already ubiquitous in the modern world and is steadily growing due to a number of existing and emerging trends: - Continuing and growing scarcity of talent; - Rise of the millennial workforce accustomed to faster and more engaging ways to interact with the world; - New ways to learn and acquire skills, replacing traditional institutions and education models; - Globalization, falling language barriers, and growing distance work; - Emergence of Cloud and SaaS technologies; - Evolution of where and how people work; - Proliferation of social and mobile; - etter data on how talent impacts organizations strategically. However, HR Tech is relatively new to the market the majority of HR Tech solutions are quite young: well-established industry players and new startups experiment and look for new opportunities and market niches. Tradition HR service providers integrate new solutions, incubate promising startups, and launch spinoffs developed in-house. HR service providers integrate new solutions, incubate promising startups, and launch spinoffs developed in-hous HR technology applications vary from Job Boards and ATS, which have become an integral part of every HR management system, to brand new applications and tools on the cutting edge of the technology curve. Below are some of key areas of innovation within the HR Tech space: Social media becomes the most significant tool for recruitment and engine for corporate branding. It offers unprecedented access to personal information, referrals, and professional communities. "LinkedIn has demonstrated the huge opportunity to build social tools for corporate recruiting and since then dozens of companies around the world are now launching tools to help recruiters find candidates and candidates find jobs"(josh Bersin, Forbes, 2012). Startups in this area include Social MediaAggregators that parse data from various social networks to create a 360-degree profile of an individual and later on predict if s/he is going to be willing to consider new job opportunities based on his/her activity in social media. There also are companies that automate referrals via social media, helping to bring employees into the recruiting process and turn them into ambassadors of the employer brand of the company. More information about this area of the HR Tech space on Page 6!

4 4 Data analysis is the next big thing in HR. At the moment the vast majority of hiring, management, promotion, and rewards decisions are made mostly on gut feel, personal experience, and corporate belief systems. We would go as far as to say that Data Analysis, used in HR, could bring even greater opportunities than in Marketing or Finance. Data can help corporate executives answer questions like: why one employee outperformers the other? How engaged my employees are? Are people who have a business degree more successful in managerial roles within my organization than those who don t? There also are more down-toearth implications of data analysis in HR, such as CV parsing, that helps companies automate their resume screening process. Google, for instance, is known for using algorithms that can analyze the inflow of applicants and identify those who are suited for certain roles within an organization. It s often said that data analysis is the cornerstone of the emerging HR technologies: none of the tools are useful without data analytics. It s the crux of competitiveness: the best startups compete on being able to get the best data. Data analysis is the cornerstone of the emerging HR technologies: none of the tools are useful without data analytics Visualization: Modern people and especially those born after 1980 (Generation Y) tend to consume more and more information by means of visual perception. Infographics in CV and data visualization are major trends. Candidates create visual CVs where work experience, education, and achievements are presented as infographics. And key company metrics and important statistics now have to be presented in some sort of a visual form rather than as raw numbers. Gamification: As the popularity of video and online gaming has increased exponentially in recent years, companies keen to attract, engage, incentivize, and retain today s generation of workers have begun to take games and gaming concepts very seriously indeed. In virtually every HR-related function, there are an infinite amount of possibilities available: from skill testing to Farmville-like Intranets, introducing awards for behavior in line with corporate values. Video Interviewing also is gaining popularity. More and more employers are finding that conducting at least an initial, live interview can save them both money and time, and can give them a better sense of their candidates than even an in-depth phone screen. But HR Technology had already gone well beyond that. In Recorded or Asynchronous interviews, applicants are ed a link to log into a custom-branded interface; once they have logged in, they are presented with several interview questions; the job seeker then gets a set amount of time to respond, just as they would in a face-to face or phone interview. This allows recruiters to save time scheduling and conducting unnecessary interviews and introduces standardization into the interview process. Mobile: Companies that are competing for talent in today s cloud-based world stand to benefit from allowing their workers seamless, convenient, and immediate access to their own data, such as payroll and benefits plan administration. Not long ago, HR departments communicated with employees through newsletters, CEO s, and the like. Times have changed and so have employees and their habits. Many workers want rapid access to their data, just as they would insist on connecting immediately with what they need via a consumer app. Mobile also allows infinite opportunities for remote collaboration. The other surprising thing is that 7 out 10 candidates in the USA use their phone to search for a job and there are plenty of startups that are willing to help them in this process. Workers want rapid access to their data, just as they would insist on connecting immediately with what they need via a consumer app ATS (applicant tracking systems) & HRM systems evolution: ATS is considered to be a must nowadays. Well-established brands like SuccessFactors and Taleo were acquired by IT majors (SAP and Oracle) and since then corporate clients are enjoying fully integrated enterprise solutions. However, new types of HR information systems emerge they are called Social ATS; they allow integration with social networks, Job Boards, and external HR tools and services (including recruitment agencies and HR consulting companies).

5 5 Online education has been a growing trend in training and development over the last decade. Technological advances and ubiquitous internet access have helped spur the rise of various online education startups. Employees can take advantage of top-ranking education programs while juggling their jobs and balancing family commitments. Technological advances have also made online education an engaging experience; chat rooms, virtual office hours, forums, and study groups all help to empower students to engage with their peers (who also can be their colleagues) and professors. Author: Taras Polischuk Investment Associate, TEqV Ñontributors: Yana Trubnikova, Ward Howell Ilya Breyman, TEqV Employees can take advantage of top-ranking education programs while juggling their jobs and balancing family commitments Virtualization: Modern employees are often treated as free agents rather than full-time workers. They provide their services and skills (which are highly mobile) on a per-project basis. Therefore, when the deployment of a skill is not linked to or confined by a specific location, virtual companies can be created. Workforce virtualization describes access to a virtual workplace, where all tools required for the role are available via networks. Using technologies, employees can be monitored, coached, and supported in more robust ways. High-speed internet, mobile devices, and cloud computing have made virtualization not only possible, but even more effective than traditional work-style in particular ways.

6 6 Sourcing Technology Review by Bill Boorman Recruiters face a challenge in finding unique talent. In the past, professional data only was available in one place, and was dependent on people submitting data in the form of a resume or profile in one place. LinkedIn launched in 2003 and has become the dominant source of professional data for recruiters, with over 225 million profiles open to search. The challenge faced by LinkedIn is that this became an easy hunting ground for recruiters, with more than 55% of LinkedIn s revenue being derived from recruiter products. More than 55% of LinkedIn s revenue being derived from recruiter products The high volume of approaches from recruiters to indemand candidates has resulted, for those not looking for their next career move, in hiding and removing important data from their profile. Given the current fate of the acquisition of new skills, many profiles become dated almost as soon as they are published. Identifying the skills and knowledge of an individual also has become more complicated, with jobs, particularly in the technology sectors, changing at a rapid pace. Recruiters no longer can rely on qualifications and job title as a reliable means of qualifying potential candidates for new job roles. The challenge is finding current, up-to-date profiles where no single profile has all the data needed in one place. The data needed is scattered across the internet in different social media sites, forums and groups. What sourcers and recruiters needed to be able to do was build profiles from multiple sources, and ranking the profiles against a job requirement. In response to this need, a number of technology companies have developed tools that aggregate and rank profiles from multiple sources in order to create a unified profile. The tools work by taking one data point to identify a candidate, such as an address, image or profile, and spidering the internet to find other accounts, matching data to remove duplicates, filter social content and endorsements to identify professional data, and displaying it in one place. Taking data from social feeds without the need for user updates means that profiles are always up to date and current. Ranking is always in real time, based on an algorithm determined by the technology provider, although there is some indication that some of the providers are working on giving more control in this to the users through artificial learning based on search results. Recruiter searches are conducted through single-screen filters, usually 3-4 fields, with a simple user interface. Most of the products support Boolean logic, enabling skilled recruiters to operate x-ray searches in the way that they would when searching on Google or other vertical search engines. The difference is that the results come from multiple sources combined in one profile, whereas a traditional search engine will only return results from single URLs. Following the fortunes of these products, the interesting development is who is using them, and who is buying them. As people have become easier to find, but harder to qualify, message, rank and reach, this has created a market for profile aggregators. The lead products in this space are: TheSocialCV was the first product of its type to launch, developed out of London. TheSocialCV currently indexes more than 138 million profiles growing daily, available in multiple languages. TheSocialCV sources data across most sectors, and offers extra services: The Cloud Source solution enables companies to match their current resume database with the indexed profiles to bring them up to date and current, taking in to account the latest updates from more than 60 social networks. This turns a passive ATS into an up-to-date searchable record. This has been the most popular paid for service at TheSocialCV, and lead to their acquisition by Dice.Com in 2013 for an undisclosed sum. The strengths of TheSocialCV are the range of languages, strong semantic indexing, and multi-sector data. User research gives mostly a thumbs up, with some feedback on duplicate profiles. Ranking is based on social activity,

7 7 the most recent ranking highest. TheSocialCV has had more commercial success being embedded as part of the resume database rather than as a sourcing tool, indicating that the future for these products might lie here, rather than as pure sourcing tools. Dice Open Web Integrates TheSocialCV into the Dice.Com platform, indexing 2 million technical profiles, as well as continually developing the Dice resume database. Dice have been evolving a social offering over the last 3 years, building talent community features that enable technical professionals to connect. The acquisition of TheSocialCV saw this technology integrated into a job board environment with the launch of Open Web. This is a trend that I expect to see across the job board markets, offering more sourcing features outside of the job board in order to secure market share. Open Web has been well received by the market. It is a reasonable consideration that other job boards will be looking at the other tools in the market for a similar integration, making them possible acquisition or investment targets by job boards looking to diversify. TalentBin started life as a referral and reference site. The concept of the original product was to invite employees to import all of their social contacts into a central database. After building an extensive database, and identifying from a single data point, other social media accounts to import social data from the open feed, filtering out social content, and adding professional data to build a complete profile. TalentBin is the best known of all of the products in the market. Where TheSocialCV is built on semantic (meaning) indexing, TalentBin have developed a strong skills taxonomy, seeking evidence of skills from social sources. TalentBin currently focus on indexing computer software engineering, but recently has been sourcing new data from medical journals, patent lists, medical publications, and mailing archives. TalentBin ranks skills such as programming language based on activity and influence on professional social media sites such as StackOverflow, Quora, and Github. MeetUp lists professional journals and general social media. Profiles are divided by skills ranking and evidence (by skill) under the professional interests tab, and personal interests. TalentBin further has grown the user base with the introduction of a mobile look up application that enables recruiters to check profiles on the move. This freemium offering gained a lot of publicity and take up, providing a potential new customer stream. The strength of TalentBin is the concentration on skills ranking, the limitation is that the product is largely U.S.-based and focused on the technology sector. Entelo is the most recent addition to the sourcing aggregation family, focusing on software engineering. Entelo takes a different approach in that contacts are ranked according to the probability of them being open to a move. Entelo s key feature Sonar scans social networks to identify active candidates in target areas (defined by the user), tracking for changes in social profiles and external data such as news feeds. Overall the algorithm calculates likeliness of a candidate to be open to an approach based on 70 different data points. Entelo features job description parsing to produce the best search criteria for Gild, ranking the importance of different search criteria, and building an effective search string against the data on the site. In Entelo profiles are built from all social networks linking data points to give one searchable profile. Entelo supports advanced Boolean search and other search methodology. The Entelo bar sits in a recruiter s toolbar and gives access to Entelo data when the recruiter is searching outside

8 8 of the platform, for example LinkedIn. The strength of Entelo is the ease of use, intuitive navigation and the best user interface of all of these technologies. Whilst this might seem cosmetic, users running tests on competing technologies are most likely to sign up for the one that is easiest to use, and this is currently Entelo. User feedback is that the likelihood-to-move feature does throw up some strange results, but is for the most part, accurate, and it is this feature that provides a clear differentiator. Gild has built an index of profiles of computer engineers. Gild sources engineers from open source code, watching high ranking codes and activity, looks at their connections, and finds people like them. This works on the principle that good programmers stick together and collaborate on open source projects. Gild sources code, extracts contacts from within the code, and ranks the quality of the code against its algorithm, and their contributions and peer-ranking on sites like Github and StackOverflow, in order to compare potential candidates. Profiles are built by aggregating social data and applying the Gild score for quick reference and ranking. The strength of Gild is the code ranking, which provides a real differentiator. Users report that the process of exporting s from code provides accurate contact details, and the Gild scoring is a good indicator of skill levels. The risk factor that needs consideration is that the open source reference sites such as StackOverflow and Github, on which Gild are dependent for data, are introducing recruiter products of their own as a principle revenue source, which may result in them looking for ways to block access and scraping in the same way as LinkedIn has aggressively done with its competitors. RemarkableHire indexes technology and design talent, ranking them according to social evidence from sites such as StackOverflow, Github, Quora, and Dribble. Profiles are skill-based (like TalentBin), with scores applied according to how others rate their capability and knowledge. In the case of StackOverflow, this is based on how answers to technical questions are scored against the answers of others. RemarkableHire considers the aggregation of social evidence to be a crowdsourced validation of a skill, applying an algorithm to award profiles up to 4 stars in each skill. Potential candidates are identified through search on social media channels, meet-up lists, etc., with a secondary search for social evidence. The profile adds links to other social profiles and contact details. This is quite a simple tool to use, without the sophistication of ranking of the other tools listed. Swoop is a tool that was built to identify sources of expertise for learning and development that now has been applied to recruiting applications, which is why it is relatively unknown in comparison with the other aggregated sourcing tools listed. Swoop is more of an integrated recruiting application with talent pools, employee referral network, job distribution, social analytics, and integration into a range of the most popular ATSs. I have included Swoop in the list because it offers search across the social networks, and profiles consist of aggregated social data in one place. This type of product with a wider recruiting application presents the possible competition to the aggregated sourcing tools because other recruiting platforms develop similar capability. The more tools that develop similar

9 9 features, and the leading CRM platforms are developing the capability, the less beneficial standalone sourcing tools will be unless they can offer a real differentiation, accurate ranking, and access to unique profiles. There is still a wide market for social-profile aggregation and ranking technology. Where the user base mostly was made up of specialist sourcers, we are seeing a big increase in hiring managers signing up in order to source directly. Each product is differentiated by the ranking system, and demand in these areas will dictate future growth. There already are a number of new social data aggregators, like Falcoln.lo and Kred, which are gaining ground and available free. They have not yet applied recruiting features, but this is a logical step as they seek to monetize. The products that last the course will be those that develop data applications beyond recruiting, or find ways to integrate with existing recruiting technology, in the way that TheSocialCV has been integrated in o job board Dice.Com, and have developed applications for refreshing data and keeping it current. I expect these products to be fully integrated with other technology over the next 18 months. TheSocialCV is just the start. Bill Boorman is the person behind the #tru brand and a serial conversationalist. Bill has worked in and around recruiting for 27 years as a Recruiter, Consultant, Manager, Operations Director and Training/HR Director. In 2005 he started consulting and training recruitment firms and has been doing that since. The #truevents are a European set of conferences around social recruitment, through which Bill has guided thousands of people towards better recruiting in the 21st century through social media.

10 10 TEqV Portfolio RolePoint is building sourcing technology to facilitate further and deeper candidate reach than ever before. RolePoint automates employee referrals within an organization to create a pipeline of candidates introduced to the company by its employees. Referred candidates are proven to have a much higher degree of cultural and professional organization fit, which greatly increases retention whilst reducing hiring costs. The breadth of knowledge RolePoint aggregates around connections allows accurate identification about where potential candidates lie on the passivity scale. Sourcing can be targeted with a rapidly expanding set of data points, forming a more detailed picture of applicant potential than ever before. RolePoint s mission is to drive accurate engagement with candidates that is relevant, timely, and actionable to improve significantly the source of new hires to organizations. Venturocket is a marketplace where job seekers bid on their skills to compete for job opportunities and employers can cherry-pick the very best talent. The price job seekers bid reflects their true proficiency for those skills. This eliminates resume spam by filtering out unqualified candidates. VR thus enables specifically targeted search for talent and opportunity just like AdWords does for products and services. Venturocket uses a novel pay-per-connection system: both the connector and the connectee e.g., employer and job seeker pay the same fee based on the job seeker s bids for the matching skills when a connection is made. This helps ensure that (1) the job seeker is actually qualified and (2) the employer is serious to set up an interview. More info available at: More info available at: VCV.RU is the first video interviewing service in Russia and the CIS, offering corporate clients and recruitment agencies cloud services designed to help them to streamline their entry-level hiring process and avoid unnecessary interviews. VCV.RU is simple to use employer s a link to a set of questions to candidates and empowers them to record responses via webcam. Hiring managers later can view, rate, share, and compare the candidate interviews. YZZY developed a unique online tool that will disrupt the traditional executive search and management selection industry by standardizing description of professional experience and creating a seamless engine for recruiters to navigate talent and quickly build short lists of qualified candidates. YZZY attempts to do away with lengthy resumes and CV beauty contests, allowing a direct comparison of skills, experiences, and fit to job requirements. More info available at:

11 11 TEqV team Anton Derlyatka Managing Partner Anton is a Senior Partner, Ward Howell Group and a founding partner of TEqV. He is actively involved in business of portfolio companies as a board member and mentor. Anton has diverse business background in private and corporate sector. After 6 years in London in 2006 he returned to Moscow and has since been a key shareholder and partner with Ward Howell Group. Anton has an MBA from London Business School and Master s degree in Applied Math from Moscow Engineering Physics Institute (MEPhI). Ilya Breyman Managing Director Ilya is a co-founder of TEqV. He is involved in pipeline management and actively works with portfolio companies on operational and strategic level. Ilya has diverse experience in startups, as early employee, founder, and advisor. At Ward Howell, he consults government, non-profits, universities, and VC community on human capital and heads Government and Non-Profit Practice. Ilya holds a Bachelor s and Master s degree from Georgetown University. Taras Polischuk Investment Associate Taras is an Investment Associate with TEqV. He is responsible for the analysis and research into potential and current investment opportunities as well as Industry analysis and development of the investment pipeline. Throughout his career, Taras participated in the development of executive teams for Russian and international companies, conducted multiple industry research assignments and consulting projects. Taras obtained a master s degree in Financial Management from Moscow State University and a bachelor s degree in International Management from Touro College.

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