A unicorn is a magical being that my daughter is obsessed with — and also a company that’s valuation has reached $1B. HR tech has had a number of them, especially over the last decade.
While we are in the midst of a recession, investment in HR and recruiting technology hasn’t slowed down, with $1.65B invested in the last quarter alone. The other recent unicorn, employee engagement platform Workhuman (formerly known as Globoforce), was estimated at $1.2B as Intermediate Capital Group bought up a minority stake in the organization.
Whether you believe we are in a V- or K-shaped recovery, it seems like the last technology anyone might think would be a good investment would be one that focuses heavily on recruiting. At least in the short-term, it seems like talent acquisition may be on the backburner.
Late last month, Eightfold AI made waves by announcing a $125M series D round of venture financing that valued the company at $1B. The valuation, of course, is a better-than-educated guess, but it’s still impressive for a company that’s just a little over 4 years old.
The Silicon Valley-based tech startup focuses primarily on talent acquisition solutions, though they do have some interesting functionality that reaches into employee populations. They plan to use the funding to expand and scale its technology platform.
Ashutosh Garg, founder and CEO at Eightfold, said in a statement, “The Eightfold team has spent the last four years developing a single platform servicing all talent lifecycle needs, bypassing single point solutions entirely.”
While Eightfold does replace many single-point solutions, there are certainly some missing pieces — especially when you get to talent management functionality. While we could debate all day about what is and isn’t “end-to-end,” I don’t think it matters — in the case of Eightfold, Workhuman, and probably the next batch of HR tech unicorns.
Instead of chasing feature functionality to be the next ATS or HRIS, we see more and more companies like Eightfold simply work as an experience and data layers that make heavy use of existing systems.
You can see this evident in the way both Eightfold and Workhuman approach integrations. While coopetition isn’t new in the recruiting space, it seemed that it was mostly a matter of time before the point solution wanted to grow up to become a suite. With an experience layer, organizations can get all the benefit of modernization without major transition pain.
The catch, it seems, would be a second tech bill. To Garg’s point, companies likely already have second, third, fourth…and more bills through the use of point solutions already. It’s not a traditional technology rollup strategy, but I think it can work.
Creating a consistent user experience — across candidates, employees, managers, and talent managers — across major talent management functionality makes a ton of sense. It might also create new opportunities for technology change.
The pain and expense of replacing an ATS or HRIS is a multi-year affair for large organizations, and the ROI on that transition might be measured over an even longer term.
With something like Eightfold, and data-as-a-service players like SwoopTalent, a transition from PeopleSoft to Workday or Kenexa to iCIMS, could be a lot more simple and seamless for both the organization and candidates.
To me, that’s an exciting possibility. The possibility of real transition, as opposed to just replicating existing functionality or creating new paradigms, makes what Eightfold and others are doing worthy of unicorn money. Even with short-term pains in the recruiting industry, getting organizations less dependent on legacy systems is a long-term win.