Gem Raises $37 Million In Effort To Become The Middleman Between LinkedIn And Workday
Steve Bartel is no stranger to building teams. He joined Dropbox when the company had only two dozen employees, and acted as a hiring manager as it flew past 1,000 employees. His MIT classmate Nick Bushak had a similar experience as a manager at Facebook, and as the two spent more time on hiring, they came to believe that a step was missing from the recruiting process.
The two of them were witnessing the effect of LinkedIn, whose centralized database of knowledge workers had made it much easier for companies to take the initiative and scout for job candidates. “It used to be that you can measure the worth of any company by how many factories or raw materials or finished goods it has,” Bartel says. “These days people are a company’s most important asset. So, it’s really no surprise that hiring has changed.”
That change brought about a gap in the process—the tracking of job candidates after they are contacted by the company. In 2017, the longtime friends teamed up to fill the gap by starting Gem (formerly known as ZenSourcer), with Bartel as CEO and Bushak as chief technology officer. The San Francisco-based startup’s recruiting software has gained momentum rapidly, increasing its customer count to 300 today from 100 at the time of its Series A last March. On Thursday, the company announced a $37 million Series B round led by Greylock Partners, with follow-on participation from Accel. Former AppDynamics CEO David Wadhwani, who became a partner at Greylock last year, joins the board of directors. Gem declined to disclose its valuation, but it was valued at $47 million after its previous funding round, according to PitchBook.
LinkedIn dominates its market as a tool for recruiters and hiring managers to discover potential employees, while HR management software like Workday and ADP helps manage employees after they are hired. In between, recruiters often rely on their own spreadsheets to keep track of the people they’ve talked to, as was the case for Mike Moriarty, global head of talent acquisition at Dropbox, which is a Gem customer. At his previous employer Google, Moriarty recalls manually inputting information such as name, location and skill set for each job candidate, then moving them around the sheet depending on if they had been eliminated or progressed to a later stage of the job process.
Bartel and Bushak, both of whom hold computer science degrees from the Massachusetts Institute of Technology and have experience as engineering managers, have led the rollout of Gem’s offerings at a rapid pace. The early results were enough to land Bushak on Forbes’ 2019 30 Under 30 list in enterprise technology (Bartel did not qualify due to his age). Today, Gem integrates with LinkedIn and can automate data collection and follow-up correspondence with job candidates. The software creates a centralized database for the recruiting team to keep track of whether someone was already contacted by the company, and if so, which stage of the hiring pipeline the person has reached. Analytics break down which outreach techniques are working and which team members are performing strongest.
“I think the biggest thing that people do in this industry is they try to solve for all these shiny nickels, when really the one thing that these tools need to solve for that Gem does really well is time—how can you give the recruiting team more time and efficiency?” Moriarty says.
Alongside its Series B, Gem announced a new component to its analytics that accounts for diversity and inclusion. The feature allows recruiters to identify where biases occur across the hiring process; for example, imagine a scenario in which a disproportionate amount of white candidates received an interview after the phone screen stage. The new fundraise, Bartel says, will be used to “double down on product innovation and continue to expand the platform.”
The rapid product growth has led to growth on the customer side as well, where Gem has signed on more than 300 paying customers to its software-as-a-service product (the software is free for startups with 15 employees or less), including nine new unicorns such as DoorDash and Coinbase that were brought on “in the last few months,” say Bartel. The startup claims its fiscal first quarter—which ran from February to April, coinciding with the pandemic-induced economic downturn—was its strongest to date from a revenue standpoint and comes after 4x growth in annual recurring revenue in 2019.
For Wadhwani, past experiences leading AppDynamics and spearheading Adobe’s shift to a subscription model convinced him that Gem’s product was hitting on a need for company operators. “With both [AppDynamics and Adobe], for me, the single most important investments I made were about getting the right people into the company at the right time,” he says. Wadhwani adds that he remembers spending millions per quarter on recruiting while receiving little visibility on the money’s usage.
“For such a critical part of any growth story or any sort of business to run, to have low visibility in this day and age just felt like a massive opportunity to benefit from,” he says.
