Hired.com, which runs weekly auctions of developers for hire, is looking to challenge the way that traditional recruiting agencies charge their startup clients.
Technical recruiting in the Valley is often done by boutique agencies or headhunters with long rolodexes, histories and networks among local developers. Often, if they're successful in getting a candidate, they'll hand over a lump sum bill worth about 20 percent of a hire's first-year salary.
But Hired.com, which started out as Developer Auction, is looking to change that. They're introducing a payments model that resembles more of a subscription.
Instead of charging for new hires up-front, they'll be charging 1 percent of a developer's salary for the first 24 months of their employment. If the hire stops working for the startup, Hired.com will stop charging. If they stay longer than two years at their new employer, Hired.com will also stop charging after the 24th month.
It looks like a way for Hired.com to lock in their clientele over the long-run. Clients that are already paying Hired.com one or two thousand dollars a month might be more inclined to keep using the service if don't get sticker shock.
“A company that's adding 10 employees could be facing several hundred thousand dollars in recruiting fees,” said Matt Mickiewicz, who founded the company after starting crowd-sourced graphic design community 99Designs.
It will also help them expand their market reach out to companies that haven't historically relied on recruiting agencies.
Hired runs weekly auctions with 50 to 60 developers each that are hand-selected by an in-house team, for their technical skills and work histories. They started out last year to become a “transparent marketplace for recruitment," where engineers could attract offers of interest from multiple startups instead of having to seek out each one by one.
With the imbalance of supply and demand for good engineers in markets like San Francisco and New York, the auctions took off. The company is profitable and now has 25 of its own employees, up more than threefold from six months ago. They place “dozens” of candidates every quarter and in one day, they even placed five hires. They recently raised $2.7 million from NEA, Sierra Ventures, Crosslink Capital, Google Ventures, Sherpa Ventures, Jeff Clavier's SoftTech VC, and John Suliman's Step Partners in March.
They've signed up hundreds of clients including Airbnb, Twitter and OpenTable and recently launched in four cities including New York, Boston, Los Angeles and Seattle.
They've also worked on the sticky issue of preventing current employers from knowing that their engineers are on the hunt for new work. They've filtered out current employers from seeing their own people on the site. Candidates are also on the site for only one week at a time, reducing the risk they'll be seen by their current employer.
“It maintains privacy and integrity,” Mickiewicz said.