Written by Daria Danilina on 3rd Feb, 2020
We're really excited to announce our $22M investment in Codility alongside Kennet Partners, backing a bootstrapped software company on its way to become a global category leader in talent management software. Codility helps engineering teams scale faster and work together more effectively by simplifying the process of recruiting technical team members. Thousands of valuable hours of engineering capacity are wasted creating and grading take-home coding assignments in an effort to find the right hire, while many qualified candidates are rejected due to unconscious biases and process inefficiencies. Codility is on a mission to solve this, giving engineers their time back to build awesome products and giving candidates a fair shot at landing their dream job.
Leveling the playing field for technical talent
A lot has been written about the need to reform education systems. Peter Thiel is still famously paying the most talented students to drop out of college. Coding schools such as Lambda are democratising access to higher education in computer science, by offering students of all backgrounds affordable training that allows them to land jobs previously reserved for top tier university graduates. Technical job applicants struggle to showcase their real skills in a recruiting process still dominated by one-size-fits-all CV screening.
Here at Oxx we spend a lot of time thinking about the future of work and how deployment of new technology will change the way we go about our day-to-day. As highlighted by Sam Lessin in this excellent article in The Information: “the ‘future of work’ narrative has shifted toward more immediate and practical applications of technology that will be available soon — ‘near in technology’ — to disrupt traditional work.” Several of these “near in technology” trends are converging to pave the way for Codility’s software to make a significant impact on recruiting processes, and we are excited to help them make this happen.
There is also a strong pull from the market for a solution. Recruiters are trained to recognise a ‘strong’ candidate based on signals about their education and previous workplace. But few companies have the luxury to hire candidates solely in their home market, or build large enough recruiting teams to be able to assess candidates from a variety of different geographies. On top of that, more and more technical candidates are likely to come from a coding bootcamp or other non-traditional background, making it even harder to compare the skills and fit between different candidates. And last but not least, some candidates, especially women, are just not that great at talking about their accomplishments, unconsciously downplaying their role in significant projects, which puts them at a disadvantage in standard CV reviews (and if you want your company to improve on that last point, check out this awesome gender bias report produced by Codility!).
Codility helps engineering managers and recruiters improve their selection process by automating screening to identify candidates most fitting for the job. Its sophisticated programming tests can be tailored to represent a variety of real-life situations that developers are likely to encounter on the job. Further down the recruiting funnel, Codility’s software provides an online code editor for interviewers to collaborate with candidates during remote interviews. As a result, valuable hours are saved by both engineers and recruiters while candidate experience is improved, which is why companies including Microsoft, Tesla, Slack, Amazon, Intel, Okta, Paypal, Volvo, Zalando and many others trust Codility to help them grow their teams.
Talent is universally distributed — but what about opportunity?
Codility had been around for almost 10 years before raising its first institutional round of funding, financing its growth with cash flow from customers and a venture debt line from SaaS Capital. While unusual in the tech world, not raising venture funding early on doesn’t immediately mean that a company can’t accelerate its growth rate as it becomes more mature. Here at Oxx we appreciate working with founders who have bootstrapped their businesses because they learn invaluable skills and become more resilient to downturns.
What we mean by bootstrapping is funding the business with money from its customers. This is not an easy task for a small company without reputation in the market and resources to hire an experienced sales team. However, again and again, we see that stellar products win over lack of resource, and that is exactly how Codility could survive and grow without taking funding. Early on, before a great UI was built and the task library grew, hiring teams were already convinced that Codility’s solution had the best signal-to-noise ratio among its competitors. That meant they could reliably use Codility and trust the assessment results they were getting. This significantly reduced the number of hours engineering managers had been spending with candidates who were ultimately not a good fit for the role. One customer in the financial services sector saved hiring 1,008 hours in 3 months. In-person interviews are usually the biggest bottleneck in recruiting processes and significantly slow down time to hire. Codility helps customers reduce time to hire by accelerating the speed with which candidates move through the recruiting funnel. One of the customers we spoke with, a fast growing technology company recruiting ~2,000 engineers per year, reduced their time to hire by as much as 15 days per hire. Not only do time savings equate to cost savings, but time is of the essence when hiring developers, who can receive 5–6 other job offers in the span of 15 days. At the same time, Codility helps customers avoid the costly mistake of hiring wrong candidates.
Out of all factors that go into evaluating a potential investment such as market size, growth metrics and team credibility, timing is definitely the hardest for an investor to judge. Why is now the right time for this company to go to market with their solution? Are customers beyond early adopters ready for the solution this company has to offer? And most importantly, can the company survive long enough for the market to take off? Blitzscaling is great but only when product-market fit is robust and the market is ready for the new solution. History is ripe with examples of products that were too far ahead for their time. Capital efficiency (at odds with Blitzscaling) buys companies more time to wait for the market to catch up with their product. In Codility’s case, the market wasn’t ready for software with such a high degree of automation 10 years ago. For example, next generation applicant tracking systems such as Greenhouse and Lever weren’t founded until 2012 and without an accurate view of the recruiting funnel that those systems provide, Codility is difficult to implement at scale. At the same time, the market for technical talent wasn’t nearly as competitive as it is today.
A lot has changed in the last 10 years and we believe that now is the right time for Codility to push the acceleration pedal. The need to hire developers globally far outstrips the resources available to hiring managers and recruiters. ‘Old world’ incumbents are facing competition from tech-first newcomers and they need to become tech companies themselves in order to stay competitive. More and more companies adopt a remote working model, which opens up potential employee pools and has introduced complexity to the recruiting funnel. These are some of the challenges Codility helps solve for its customers — and we’re thrilled to be part of their journey!