Welcome to our “Innovators Worth Watching” series, spotlighting interesting and potentially disruptive players across a spectrum of industries.
The combination of COVID-19 and increased recognition of deeply entrenched systemic inequities has rendered the scaling of equitable hiring practices an urgent national priority. This palpable urgency is starting to show results: as of July 2020, 16.3 million Americans are unemployed, down from 23 million three months prior.
A growing trend in this bounce-back is the increased use of pre-hire assessments. Instead of using college degree attainment as the main proxy for ability—an inequitable, costly practice that led to degree inflation after the Great Recession—a small but growing number of employers are relying more on personality, cognitive, and/or skills tests in their hiring processes.
Vervoe is one company helping employers use online skills assessments, particularly for high-volume roles—currently a widespread need. The Australian company, currently a cohort partner in the JFFLabs Assessment Impact Accelerator program, is atypical in that it applies skills assessments toward the top of the hiring funnel before other screening steps can introduce biases or eliminate capable candidates for the wrong reasons.
Vervoe’s skills assessments are also context- and role-specific, such that job candidates are essentially auditioning. “In the movie business, you get people to audition and play the role,” noted Vervoe CEO Omer Molad. “If you want to test [pro tennis player Roger] Federer, you put him on the court. We translate that to every context and job.”
Skills-based hiring is hardly new, but applying it more broadly across the labor market—and as an early screening mechanism—very much is. Could Vervoe, which has experienced a 40% growth in its customer base in June and July, and its audition-like skills assessments prove disruptive to recruiting consultants? We put Vervoe through our six-question assessment for identifying disruptive innovations.
1. Does it target people whose only alternative is to buy nothing at all (nonconsumers) or who are overserved by existing offerings in the market?
Yes. Competency-mapping and creating customized skills assessments typically require bringing in consultants for an expensive and time-intensive setup that is out-of-reach for smaller companies and more expensive than many employers would like.
Vervoe is able to target small- and medium-sized businesses, for whom such customized solutions are usually inaccessible, in addition to the enterprise clients that many assessment providers focus on.
2. Is the offering not as good as existing offerings as judged by historical measures of performance?
It depends. One dominant historical measure that employers care about is educational and professional pedigree—whether or not candidates have a degree, who issued that degree, and where candidates interned. To the extent that employers hire recruiting consultants to produce qualified candidates based on those metrics, Vervoe won’t fit the bill. Vervoe’s assessments disregard these proxies, instead ranking candidates exclusively on how well they perform on context-specific skills tests.
But Vervoe sees this as a strength. “Anecdotally, we get daily feedback that clients stop using resumes for their entire company,” noted Molad. “There’s no going back from skills-based simulation once you try it.”
On the other hand, some recruiting consultants help deploy assessments to measure aptitude and job fit. Relative to those measures, Vervoe’s offering is likely competitive.
3. Is the innovation simpler to use, more convenient, or more affordable than existing offerings?
Yes. Vervoe’s question banks provide employers with both out-of-the-box options for those with less experience hiring for certain jobs, and customizable options for companies with prior experience. Further, Vervoe’s machine learning models (more on this below) have allowed the company to onboard new clients, overnight in some cases, during the pandemic.
The hiring solution industry is rather opaque in terms of pricing. Vervoe offers a free trial followed by tiered monthly pricing starting at $79, as opposed to more common per-candidate pricing models.
4. Does the offering have a technology that enables it to improve and move upmarket?
Yes. Central to Vervoe’s success is its use of AI and natural language processing in generating and adjusting its questions, and optimizing which questions to use in assessments. Vervoe incorporates feedback from subject-matter experts, test-takers, and employers based on direct ratings of question utility, how often employers reuse questions, and on metadata such as time spent scrutinizing answers to particular questions. The assessment provider also incorporates how well prospective employees do in future steps of the hiring process, and can pool this data across its growing network of clients as appropriate.
All of this allows Vervoe to improve the predictive power of its assessments over time, and in multiple professional contexts, not to mention enabling rapid deployment. Upmarket growth would entail Vervoe expanding its user base across a growing number of industries and across levels of expertise along a career path.
5. Is the technology paired with an innovative business model that allows it to be sustainable?
Most likely. Vervoe’s insistence on introducing its skills-based solution near the front end of the hiring process provides an unusual value proposition that will likely grow more popular as the broader skills-based value network proliferates in the US. Further, its growing question bank has also had a marketplace-like effect, attracting more expert authors to add and validate questions.
6. Are existing providers motivated to ignore the new innovation and not feel threatened by it at the outset?
Unclear. The pre-hire assessment market is heating up. Fast. Companies like pymetrics, HireVue, HackerRank, and many others are jockeying for position in a high-profile fashion, which has almost certainly drawn the attention of incumbents. Recruiting consultants will likely make their stand against this competitive set.
Even if Vervoe’s approach differs in several ways from these other pre-hire assessment companies, it could still get swept up in the fray. The company’s saving grace on this front could end up being its strength in the small- and medium-sized business sector, at least initially. Enterprise clients are the big fish, so Vervoe may have some time to fly under the radar.
Vervoe is doing exciting things in an exciting space. The company’s disruptive potential depends partially on how that space evolves in these uncertain times of tremendous need, but many of the ingredients are there.
And if Vervoe can ace its current audition for bolstering economic recovery and getting people back into jobs, they could get hired plenty more times themselves.