Hiring platform GroupTalent acquires Work For Pie users, vows to fix technical recruiting

By Michael Carney , written on August 22, 2013

From The News Desk

From Silicon Valley to Omaha, Nebraska, the one thing that unites every startup ecosystem regardless of its size is the challenge of hiring good technical talent. One consequence of the imbalance between talent supply and demand is that developers and engineers are routinely hounded by recruiters, both inside and outside of hiring companies, trying to sell them on the next best thing.

For the last two years, GroupTalent has worked to address this problem by offering an intelligent hiring platform and employment marketplace for technical workers. At present, there are more than 6,000 developers and 200 companies registered and using the site, including high profile names like SpaceX and LeapMotion, among others. Most employers are startups between their Series A and Series C stages of funding with 30 to 50 employees, although some fall outside this range (in the case of SpaceX, way outside).

Today, the company is announcing the acquisition of the 4,500 registered members from the now defunct developer community, Work For Pie. The notion of “acquiring” another company’s member and transitioning them to your complementary but different service may seem like an odd one. The reality is that at best, you can pay for the privilege of inviting them to transition. But GroupTalent CEO Manny Medina doesn’t view it this way, pointing out that the move is completely optional.

“We’ve acquired the members of another service before with TinyProj,” the CEO says. “We have a very satisfied community and anticipate being able to convert roughly 40 percent of Work For Pie’s members.”

Another challenge the company will have to contend with is balancing the liquidity equation in its marketplace. Adding more developers is great, but the only way to keep them happy is to add more companies and job opportunities in parallel. Today’s acquisition does nothing to address this issue.

The main selling point of GroupTalent is its contract-to-hire opportunities, through which both employees and employers get the opportunity to test one another out over a predefined period of time. Developers earn market wages under these contracts, which regularly result in long-term employment. The company also offers traditional short-term and long-term employment opportunities without the need for a probationary period.

GroupTalent promises to use its “eHarmony-like” algorithm to create suitable matches between talent and employers. Matching is based on salary, location, skills, and preferred company type matching. It speaks to a genuine problem in the industry, where recruiters and recruits often pad resumes or otherwise misrepresent, despite the fact that this dramatically reduces the likelihood of a mutually successful employment.

Developers use GroupTalent for free, while companies pay to list their employment opportunities on the site. The company is beginning to test the waters of inviting professional recruiters onto the platform. But it’s wisely being extremely cautious in that regard, Medina says, inviting only a select few professionals with which he has existing relationships. There’s nothing that has a greater potential to ruin a developer employment platform than a rogue recruiter or two.

Work For Pie had a slightly different approach to serving the developer community. It attempted to create a “LinkedIn for developers,” offering a platform through which to publish and maintain a portfolio of open source contributions and community involvement. The platform had its share of fans, but the path to monetization was unclear and Work For Pie ultimately ran out of money.

Work for Pie CEO Cliff McKinney said in a statement:
We wanted to partner with a company that had a similar vision for how recruiting and hiring could be better, and that maintained the trust we’ve earned from our users. After analyzing several alternatives, we decided that our customers would have the greatest chance of success, and would receive the best suite of services and attention from GroupTalent.
GroupTalent declined to reveal the price it paid for Work For Pie’s assets, but given that it’s not acquiring any employees or maintaining the company’s existing website or business, it’s a good bet that it wasn’t much. Memphis-based Work For Pie had raised $315,000 in Seed funding from Solidus, a>m ventures, and Seed Hatchery. GroupTalent, by comparison, raised $1 million in seed funding from Version One Ventures, Menlo Ventures, and Founder's Co-op. The company is a graduate of TechStars Seattle in 2011, but is now headquartered in San Francisco.

Beyond convincing Work For Pie’s members to stick around, GroupTalent will have its hands full going forward in balancing the need to cater to both its developer and company constituencies. This is made more difficult by the fact that the developers are the more scarce commodity, but the companies are the ones writing the checks.

There are other companies cultivating similar developer-centric communities online, although most are less exclusively focused on recruiting than GroupTalent. GitHub is the 800 pound gorilla in the space, with by far the largest community of developers online. StackOverflow operates a variety of technical forums, not to mention a job board, and also has a far larger audience than GroupTalent. AngelList has also thrown its hat into the talent ring as of late, both allowing companies to list open positions within their profiles and helping match the talent from failed companies elsewhere within the ecosystem.

But the biggest competitor of all would have to be LinkedIn. Despite not focusing on any one particular talent category – i.e. developers – LinkedIn is the go-to platform for recruiters and almost everyone who takes their employment seriously has a profile there.

Given the competition, GroupTalent is unlikey to win in terms of scale. Thus, to outmaneuver the professional networking giant and the adjacent developer communities, it will be forced to offer value that is not available elsewhere. The prospect of filtering out ill-fitted matches between employers and employees is a good start, so long as it can live up to that promise. The platform’s contract-to-hire model is also intriguing, but seems easily duplicated should the competition deem it to be a differentiating factor.

The company’s future roadmap calls for improvements to the filtering and matching algorithms. But the big opportunity may be to look beyond traditional employment opportunities, Medina hints.

“There are many ways to consume developers other than full time and tryout engagements,” the CEO says. “There are needs around advice and instruction, as well as other opportunities for developers to monetize their skills.”

[Image via bgottsab, Flickr]