DeveloperAuction, a startup that’s trying to change technical recruiting by letting venture-backed companies bid on top engineers in auctions, is seeing some momentum after coming out of beta last week. The company put a call out for engineering candidates on Hacker News last week for an auction today, and saw about 7,500 applications.
They also just picked up a new COO in Sujay Tyle (pictured left), who was a Thiel fellow and previously a vice president of business development at mobile gaming company Scopely.
DeveloperAuction is trying to reverse the way that in-house recruiters attract top-flight engineers. Developers that are actively interested in leaving their current companies and have good credentials can apply to be part of a batch of 150 or so candidates. Venture-backed companies like Dropbox and Quora will then bid to offer them interviews. (They usually have to be Series B-funded or later, with some evidence of traction.)
These companies try to lure engineers for interviews by sharing compensation details like salary and equity. Developers can pick and choose which interviews they want to take. If the engineer follows through and ends up taking a job with the company, the employer pays DeveloperAuction 15 percent of their base salary.
That fee ends up being a little bit less than what a standard recruiting agency might charge at 20 to 25 percent. DeveloperAuction also splits their bounty with the candidate, sending them 20 percent of the 15 percent commission on their first day of the job (plus some balloons and Dom Perignon).
A big question though is how far this model can scale. DeveloperAuction is already profitable, but how many high-caliber engineers are around? Tyle says that if the company ran three simultaneous auctions per day for entry-level, mid-level and then VP of engineering or CTO-like roles in 10 cities, DeveloperAuction could be a business that generates millions of dollars per month in revenue. During a recent October auction, engineering candidates attracted $78 million worth of offers, (but this isn’t actual cashflow since the candidates have to choose which interviews they want to accept and DeveloperAuction only gets their fee if the person ends up working at a new company in the system).
The screening process is still also very hands-on. In the first couple of auctions, the company limited candidates to those who had come from an elite school like MIT or had passed technical interviews at Google or Facebook. For the one this week, they’ve opened up applications to developers all over the U.S.
They’ve hired developers to go look through the GitHub repositories of candidates to check the quality of their work, and they look through resumes to see whether a prospective hire has spent time at a well-regarded tech company like Facebook. On top of that, they have to make sure the person is actually looking to leave, not just use a competitive offer to raise their own salary.
The model also seems relatively easy to copy and there have already been a few clones that have popped up. But Tyle says they have first-mover advantage and enough connections to make sure that they attract the very best instead of second- or third-tier quality candidates.
“The system that wins is the system that can curate the best engineers,” he said.
The company was founded when Matt Mickiewicz, who co-founded 99Designs and Flippa, and LiveOps founder Douglas Feirstein, ran into each other at a conference and started complaining about how difficult it was to hire decent engineers. They started thinking about how to apply auction and game theory to recruiting and from that, DeveloperAuction emerged.
They’re fundraising now, not necessarily because they need the capital (since the company is already profitable), but because they’d like more connections to the portfolio companies of VC firms.
“Many of the biggest firms have internal talent teams, and we can take their portfolios and help solve their recruiting needs,” Tyle said.