A year ago, as Highland Capital Partners Vice-President of Marketing Michael Gaiss prepared the annual newsletter, he put a last-minute call out to the 50 companies who provide job listings. Within 48 hours, he received 60 listings. The large number of openings was a wake-up call that the days when startups could cherry-pick from the postboom glut of talented workers were over. Says Gaiss, "We have flipped a switch here, and all of a sudden our companies can't fill open positions."
Gaiss took the newsletter's full help-wanted page as a firmwide call to action. To help companies address the talent scarcity, he proposed Highland CareerNet, a Web-based tool that hosts job openings. Highland Capital then markets the openings through deals with job search engines, professional organizations, and even through small investments in keyword searches via Google's AdWords.
SIDE BENEFITS. Less than a year after launch, the tool has brought in 2,600 applicants, for an average 180 positions, and led to dozens of placements, saving startups more than $250,000 in recruitment fees. What's more, as VC firms compete with each other to attract the most promising startup ideas, Highland CareerNet (which is separate from CareerNet.com) is an attractive service that Highland Capital can use to differentiate itself and add value to entrepreneurs beyond simply writing checks.
The program cost Highland Capital less than $10,000 to implement. "I'm not aware of any other programs that have gone to the extent that Highland Capital's program has," says the National Venture Capital Assn.'s Emily Mendell. "This is pretty innovative."
The service has proven popular among the companies in Highland Capital's portfolio, like Web analytics company Coremetrics. The San Mateo (Calif.)-based startup is strapped for talented workers. "Two years ago it was easy to hire," says Coremetrics CEO Joe Davis. "We now have Google paying high salaries and changing the competitive dynamic for employees." Coremetrics has made seven hires, including account analysts, an account executive, and a strategic consultant using CareerNet, a move that Davis estimates has saved the company between $50,000-$100,000 per hire on recruiting costs.
TIME PRESSURE. Recent trends suggest there's a need for new recruiting resources among VC-fueled startups. A small but growing number of VC firms are hiring chief recruiting officers to act as big-game hunters. Recruiting partner Mike Ahearn has worked for Greylock Partners since 2004. Bay Partners hired Karen Loebbaka as director of recruitment. And last February, Highland Capital hired Craig Driscoll to woo C-level executives to portfolio companies.
Some firms even list job openings on their Web sites. But neither recruiters nor partners have time to address the need for scads of salespeople, human resources managers, and engineers needed to help startups grow. So Gaiss proposed a Web application that, like many of the Web 2.0 platforms VCs are now funding, offers a do-it-yourself tool for portfolio companies, allowing them to leverage the HCP brand to fill everything from a CEO position to a mailroom job.
On Highland Capital's Web site, visitors are directed to the CareerNet interface, where they can search jobs by region, industry, title, and company. Meanwhile, the back end of the database exists on Highland Capital's Extranet, where portfolio companies can log on to enter job postings. At an initial cost of just $3,500 to pay the Web designers, the system is fully automated, so once Gaiss and his colleagues trained gatekeepers at each startup, they didn't have to hire anyone to keep the postings current.
LURING THE TALENT. Once the system was up and running, it fell to Gaiss to make sure that the most talented folks in the job market would be directed to it. To do so, he struck deals with job search engines such as Indeed, Simplyhired, and TheLadders. He advertised through links on professional associations' Web sites. And he tested some online advertising strategies using keywords. Gaiss also experimented with a direct-mail campaign and event tie-ins. As these efforts take hold, the number of applicants has risen as high as 150 daily.
Job applicants like the tool because it allows them to gather a good deal of context about potential employers quickly by connecting to a funder and other portfolio companies as well. CareerNet also doubles as the HCP seal of approval, signaling to job candidates that companies have the backing of a reputable VC firm. The added value is that when applicants using an outside job board are connected to the site, they'll know up front who's funding the startup, a detail that's usually not included in a job listing. And it provides the context for applicants to tailor their résumés to fit the job better.
Take Leo Krasnobaev, a Framingham (Mass.)-based physics PhD in his mid-40s. "I am expert in analytical device development and semiconductor sites, and sometimes it is hard to understand what kind of resume to send," he says. With CareerNet, he was able to tailor his job search to startups within driving distance of his home and gather enough information about the companies to pitch himself to them successfully. Via the service, Krasnobaev applied for a job at semiconductor-equipment manufacturer Arradiance in April, and he's now a member of their senior tech staff.
VC VALUE. Of course, any social networking application is only as strong as the community of posters and applicants. As the initial excitement over CareerNet's launch gives way, CareerNet's utility will depend on the degree to which both employees and applicants continue to return to the site. The burden will fall on Gaiss and his colleagues to keep advertising the network strategically, and to remind companies to regularly post openings.
However, less than a year after launch, CareerNet is paying big dividends to Highland Capital beyond talent. For companies like Coremetrics—which, according to Davis, grew 70% last year and expects to grow 100% this year—CareerNet provides an enticing draw that increases the value of a VC firm.
Coremetrics just raised another round of funding, and as the balance of power between the entrepreneur and the investor continues to wobble and tilt to one side or another, Davis said the company had a number of funding choices. One of these was to keep working with Highland Capital—with CareerNet's service as a big draw.
"You really think about who to pick from," says Davis. "It's not just the money, it's what they are going to do for you. With CareerNet, they can actually help."