After Jerome Ternynck completed his military service in France in 1992, the 22-year-old paratrooper platoon leader drove with a friend to Prague to be part of the economic resurrection of Eastern Europe that followed the fall of the Berlin Wall. The two briefly thought of opening a pizza joint, but instead decided to spend their $2,000 in capital to start a recruiting agency. “Everyone was talking about how hard it was to find great people,” says Ternynck, the founder and CEO of SmartRecruiters. “It was pretty hard to find a marketing person in a country where none of the universities taught marketing.”
Thus began a lifelong mission to rethink how to match people with the right job. After building not one but two large agencies in Eastern Europe, he founded one of the first online recruiting software companies in 2000. A decade later, he founded SmartRecruiters in San Francisco.
“For two decades, I’d heard people complain about the recruiting function,” says Ternynck. Most gripes were about how difficult and unsatisfying the process was for both managers and candidates. “Even today, more than 80% of Fortune 500 CEOs don’t believe they have access to the best talent, and 80% of candidates accept the first job they are offered because they don’t believe they will find the job of their dreams,” he says. “That’s why we started SmartRecruiters – to help companies have hiring success and help people get jobs they love and do it at scale.”
That notion of “hiring success,” which offers a fresh new approach for attracting and hiring top talent on demand and on budget, is resonating more than ever as companies find themselves in a global competition for talent in a post-pandemic world where people can work from anywhere. While SmartRecruiters has grown steadily in recent years, sales rose 70% in 2020 and are on pace to grow even faster this year.
The company raised a $110 million Series E in July that valued it at $1.5 billion. Ternynck plans to double headcount to 600 this year as he seeks to pursue the vision of connecting people to jobs at scale.
“We’re seeing evidence of an accelerated digital transformation of the recruiting function,” says Ternynck. The pandemic has accelerated major shifts in labor markets, such as the rise of remote work, the Great Migration of workers to new locations and the Great Resignation by people who for one reason or another have decided to change jobs. “The relatively simple process of hiring people within 10 miles of your office has become a nationwide or sometimes a worldwide competition. The level of fluidity and complexity in recruiting at the moment is unprecedented.”
“The pandemic has forced every company to modernize their hiring systems, because there was no other choice,” says Mayfield partner Rajeev Batra, who championed Mayfield’s decision to be lead investor in a $5.5 Million Series A round in early 2012. “Suddenly, talent acquisition teams had divine license to spend money on technology.”
Ternynck doesn’t just believe in the globalization of work, he lives it. An avid catamaran sailor — he races an 18-foot Flying Phantom and a 40-foot cat that he says is “for sure” the fastest sailboat in San Francisco Bay — he’s as likely to work from homes in Costa Rica and France as from San Francisco.
What sets SmartRecruiters apart
SmartRecruiters’ SaaS offering is unique in that it’s designed to serve three constituencies: candidates, who can easily tailor their applications and be alerted when their resume is read or an interview is scheduled; managers, who want low-hassle tools to collaborate with each other and with recruiters; and HR staffers, who are measured by how quickly and efficiently they can complete searches.
This approach is long overdue, says Ternynck. He should know, having had a hand in the industry’s evolution. He grew that Prague-based recruiting agency, Accord Group ECE, into a 200 person practice and sold it. He then built another agency in the late 1990s, when the recruiting industry started going digital. To get in front of that trend, he then started MrTed Ltd., which developed the world’s first “applicant tracking system” in 2000. Makers of ATS represent the largest segment of the recruiting technology market.
After London-based MrTed was purchased in 2010, Ternynck began work on SmartRecruiters to help with one of the major problems keeping CEOs up at night: the war for talent. While an ATS can help administer hiring tasks, it has limitations. “Does an ATS help you find the best candidates? Nope,” he says. “Does it put a smile on the face of the managers who have to use it? Nope. They can help put butts in seats, but they definitely don’t help organizations achieve hiring success.”
Disrupting the massive recruiting industry would be costly, so Jerome moved to San Francisco to raise venture capital. Shortly after arriving, he was introduced to Batra by two business friends from Europe, including GoodData CEO Roman Stanek, who had literally been the first person Jerome’s first recruiting firm had placed in a job, and Stephane Panier, a former Google executive and business school classmate.
Batra had been evaluating the HRtech landscape and had met dozens of companies, none of whose founders were compelling enough to spark his interest. He spent 6 months getting to know Jerome, introducing him to his network, brainstorming the model and together imagining where the company could go.
“What struck me was the completeness of Jerome’s vision,” says Rajeev. “Ultimately, he wanted to use technology to eradicate unemployment, but he also understood that none of the existing players had come up with a way to use software to transform the way they hired.”
The road to a “hiring success” platform
With just a mock-up of a prototype to go on and a handful of employees, Rajeev and the Mayfield team decided to invest despite concerns about Jerome’s original business model. Since big companies were spending only $1 billion or so per year on recruiting software – a pittance next to the $500 billion they spent on the recruiting function – he wanted to give away SmartRecruiters’ software for free, and make money instead by taking a cut of revenues from headhunting firms, job boards and other ecosystem partners.
With the help of Brett Queener, a former Salesforce executive vice president who became SmartRecruiters’ President in 2014, the team scrapped the free plan and decided to go after the big prize instead. Although other start-ups were raising big funding rounds to build recruiting platforms for small and mid-sized companies, the company followed a path similar to the one chosen by SaaS powerhouses such as Workday by targeting sophisticated companies with hundreds of thousands of employees. After years of development, the company introduced its Talent Acquisition Suite in 2015. “I certainly wish we could have done it faster,” he says. “But I don’t think there are any shortcuts when you’re trying to build an enterprise software company.”
Indeed, when it was time to raise its next round of financing, many investors were wary of the HRTech category, and only a handful shared Rajeev’s enthusiasm. So Mayfield took the lead role in wooing other investors such as Salesforce, and ended up pulling together a $19 million round. “An entrepreneur wants to know that an investor is going to believe in them when others won’t show up,” says Rajeev. “These days, it seems you can raise millions if you can yawn twice. But that’s not always the case.”
The service quickly gained traction with Silicon Valley companies such as LinkedIn, Twitter, Visa and Square. By 2017, large, non-tech companies were paying attention. A major milestone came that January, when Bosch moved its entire recruiting function onto the platform. With 400,000 employees speaking 37 languages in more than one hundred countries, the account was ten times larger than anything SmartRecruiters had taken on at that point. But the onboarding went smoothly. “It signaled to other companies that there was now a real alternative to ATSs,” says Ternynck.
By 2019, the word was out. The company added 120 large companies to its customer list, and research firm IDC named it the leader in a newly-created category called modern talent acquisition suites. Then the pandemic hit, putting talent acquisition even higher on the list of things-to-keep-CEOs-up-at-night. Companies dealing with massive complexity as economies shut-down and opened up, such as IKEA and Domino’s Pizza, were among the 200 large accounts that signed on in 2020. A methodology and toolkit for diversity hiring devised by SmartRecruiters to eliminate unconscious biases and subjective opinions is already being used by 500 companies. And the total number of applicants on the platform is 60 million, 100% more than a year ago.
With so much momentum, the company was able to land term sheets for the latest financing round in just four weeks. The $110 million round was led by Silver Lake Waterman, and Mayfield as well as Insight Partners, who have also been great partners to Jerome and the company, re-upped. The money is being used to expand sales and marketing around the world, and to accelerate R&D. While the focus to date has been on helping companies find the perfect candidate, the company is looking at ways to present promising opportunities to individuals who apply for a particular job.
And Jerome, an eternal learner, has been working to grow from product visionary to a great CEO. “Great entrepreneurs need to invest in themselves to become great CEOs,” says Rajeev, pointing out that SmartRecruiters scale and velocity surpassed that of Jerome’s earlier company. After a year of persistent urging, Jerome agreed to join a peer-based coaching group called 10XCEO that Rajeev recommends to many of his portfolio company CEOs. Before long, “Jerome was saying ‘why didn’t you tell me about this before?’”
At the same time, Jerome is strengthening the team around him, with world class people such as Chief Marketing Officer Mark Jewett, Chief People Officer Lisa Sterling, and Chief Financial Officer Jeremy Johnson joining the Company.
“SmartRecruiters has the best product, the best customer base, and is the most interesting and visionary company in the industry,” says Rajeev. “In addition, Jerome lives his vision everyday, spearheading diversity initiatives and joining Pledge 1% to give back to the community. While the company and board are always working to set and achieve the next great milestones, I’m incredibly proud of what Jerome and the team have accomplished.”
If you’re interested in working with a fast-growing, game-changing company that knows how to hire great people, look here.