In the global race for technical talent, companies are on the hunt for ways to speed up and scale the hiring process to snap up the best candidates before their competitors get to them. Today, a company that has built a solution to help with one aspect of that -- the interviewing process -- is announcing a big round of funding that underscores that demand.
Karat, which has built what it calls the "Interviewing Cloud" -- essentially, an "interviewing-as-a-service" platform that provides customers with a way to funnel candidates to Karat's team of trained online interviewers, engineers themselves who screen applicants for skills and problem-solving abilities as part of the online assessment -- has closed a round of $110 million, a Series C that values the Seattle startup at $1.1 billion.
The round is being led by Tiger Global, which also led the company's $28 million Series B in 2019. Norwest Venture Partners, 8VC, Exor, Base Partners and Sempervirens Fund -- all previous backers -- also participated.
Karat plans to use the funding to continue building more technology and data science into its process -- both to train and guide the interviewers, and to analyse the interviewing process to improve it in the future. Longer term, it might also look to bring in interviewers, skillsets and data to grow beyond technical hiring. Technical hiring, however, remains a huge market for the startup. Working with companies like Roblox, American Express, Intuit, Compass and Wayfair, Mohit Bhende, Karat's co-founder and CEO, said a typical day might see 500 interviews conducted on the platform (not all for one company).
The last time we checked in with Karat, COVID-19 was not even on the horizon -- it was May 2019 -- and so the focus on providing tools to get work done virtually were nice rather than essential in the bigger mix.
Meanwhile, Karat's position that live, technical interviews were far superior to giving actual tests seemed still to be a subject for debate.
Fast-forward several months and the world has completely changed, and with that so has the world of work. Karat's tools have suddenly come into their own as a key way for companies to continue their recruiting activities, and maybe even to do them better than before.
The company started out sourcing people to conduct interviews by presenting it as a side-gig for working engineers. Now, Bhende says that the volume of interviews is such that those who run them on the platform use it as their primary source of income, with a number of them making $250,000 annually via Karat. (That is not to say that they are full-time employees of Karat: Bhende confirms that they are all contractors, and all are working in compliance with their local employment laws.)
That shift in who is running the interview process speaks to the bigger challenge with finding people to conduct technical interviews in-house, and the push to recruit more engineers in general. As Bhende describes it, it's nobody's job, not formally at least, in part because engineers are too busy.
"There are not enough engineers in a company to interview engineers," he said.
Typically, one of the ways that the interviewing process has been compressed is to rely on tests, which Karat believes are not an accurate enough way to determine a candidate's real-world problem-solving skills and ability to collaborate with others. Plus, especially now, "people crave and want human-to-human interaction," he added.
Indeed, while the human aspect of the service runs strong throughout the platform, what seems to be the lever for how Karat scales is the technology that underpins the platform. Bhende notes that the company trains the people based on the data that it sources from past interviews, which in theory gives it a stronger strike rate for identifying strong candidates. It can be a tricky area, since Karat is essentially at the center of how companies build new strategies and products: recruitment ads, indeed, are often a way that information leaks out about what a company is trying to work on in secret.
"We have a team of interview scientists trying to identify the perfect candidate interview," said Jeffrey Spector, the president and other co-founder of Karat. "We are a competency-driven company and so we are looking for underlying skills and questions that map to the perfect candidate." He says these are represented as modules, which Karat might then map to what a specific company is looking for. This is also one way that an interviewer -- who is not employed by the company for whom s/he is doing the interviewing -- is able to keep a wall around what might be a company's confidential or proprietary information, while still determining if a candidate would be a good fit for the role. "It means they're not learning every single thing."
"We believe Karat’s human + technology Interviewing Cloud is the way most companies will hire engineers,” said Scott Shleifer, partner at Tiger Global, in a statement. “We know the gap between the supply of engineering talent and demand will continue to widen and are excited to deepen our investment in the category creator and leader."
Updated to correct the final quote from CEO to "they're not learning."