Sramana Mitra: Was it a direct selling model? Were you selling directly to the hiring departments of these companies?
Mark Newman: Yes, that has always been the business model.
Sramana Mitra: What is the business model?
Mark Newman: At that point in time, we used to charge per interview. Four years ago after a lot of our hard costs were taken out of our cost model, we converted to a subscription model. Things like shipping webcams went away with the ubiquity of mobile phones. We were able to convert to a full subscription model.
Sramana Mitra: What’s in the product? On the surface, doing a webcam interview, you can do it on Skype. You can even do it on FaceTime. What’s special with HireVue?
Mark Newman: We invented this program called the On Demand Interview. That was where we started. That’s a completely asynchronous experience for candidates and hiring managers. If you want to meet thousands of entrepreneurs or screen them for some type of assessment, you build an interview with questions that you care about and you want answered, videos that play before and after, scenarios inside the interview, and then invite candidates to participate on their own time. People go in on their own time answering these question one by one. They don’t have a chance to re-record and don’t see them beforehand. For a company, there’s nothing scalable about face-to-face interactions.
Sramana Mitra: Multiple people can then listen to the interview rather than one person sitting in a room.
Mark Newman: Totally. A company like Hilton Worldwide can interview a thousand people and get to know a hundred thousand different people. You do on demand interviews at this high-volume scale. We offer all sorts of interview types. For programmers, you can do coding challenges. For financial analysts, you can do financial modelling. You do this either on an on demand way, which is 90% of our volume, or live.
Everything gets recorded. We have a giant cloud-based infrastructure with media nodes and storage. The purpose for that is to record every single interview that you do because we found that you can learn incredible things form them. We have all sorts of analytics on top of that where you tie it to the outcome. Who was successful and who wasn’t? Who made it to training and who didn’t? Who delivers great customer satisfaction? We take that back to all the interview interactions with that person from when they were hired, on boarded, and when you coached them.
Sramana Mitra: How much of this was in place in 2004? How long did it take you to get product-market fit?
Mark Newman: You could record a response to a question through a camera in 2005. From 2005 to 2009, we were only able to invest about $100,000 in our technology. From 2009 to today, we’ve invested around $35 million to make it enterprise grade. It was very basic back then. For product-market fit, we actually had it quite quickly. The alternative was flying people in and try to coordinate logistics on a grand scale.