Startup Twine, created by Wharton MBA 2017 graduates Joseph Quan and Nikhil Srivastava, beat out 28 other semifinalists to win the University of Pennsylvania Wharton Entrepreneurship’s first “Startup Challenge.” Twine’s software uses algorithms with the goal of aiding companies in determining internal candidates to fill open positions in hopes of increasing employee retention and reducing the cost of new hires.
Along with the credibility and prestige that comes with winning such an award, Twine’s creators earned a grand prize of $30,000. In addition, they will receive accounting, strategy, and legal services valued at $15,000. The company also participates in Penn’s VIP-Xcelerate, which is a four-month long program geared towards nurturing startups.
According to a recent interview with Knowledge@Wharton, a broadcast program that airs on SiriusXM, Quan said that he and Srivastava started working on Twine around a year ago with the idea of creating software that recommended networking opportunities for individuals within a large organization.
Within one week of debuting their pilot program 60 percent of their class — a little more than 1,000 students — had signed up. It was then that they decided to turn what had been a side project into a business, making the decision to focus on B2B client building rather than consumers.
The University of Pennsylvania became their first paying customer, which emboldened them to reach out to Fortune 500 and 1000 companies. Four months ago, they signed their first such client, New York-based Nielsen. According to Srivastava, Twine is in the middle of a project involving 10,000 of the company’s employees in North America and 20 of their recruiters who focus on internal hires.
Twine was designed with larger companies in mind. As Srivastava stated in the Knowlege@Wharton interview, once an employer has a staff of 3,000 or more, it becomes more difficult to manage internal hires. He and Quan are currently marketing their software solution to the HR departments of the medical, pharmaceutical, financial services, and data and analytics industries, though they believe any large employer would benefit from using Twine.
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“The average Fortune 500 company loses $100 million every year to preventable employee turnover,” said Srivastava. This is already high, but often hidden expense will continue to grow as the millennial generation takes over the work place. This subset of the population has been found to leave a company after only two to three years and will likely hold an average of 12 jobs over the course of their lives.
“Thirty years ago, that was five jobs,” Srivastava went on to say. “Every time they lose someone, it costs anywhere from 50 percent to 100 percent of their annual salary to replace and retrain someone. The first problem is just losing skilled people. The No. 1 reason these people leave is because their jobs no longer fit their skill sets and their aspirations.”
Quan cited research done by Wharton professor Matthew Bidwell that found internal hires to be 20 to 30 percent cheaper than employers traditionally spend on new employees. These individuals have also been found to perform around 35 percent better.
Aside from working with Nielsen, Twine is in the process of building its sales base of large institutions and is in the pilot stage with several such employers. Neither Quan nor Srivastava offered the names of these companies.