Greenhouse Raises $2.7M To Make Recruiting A Science For Hyper-Growth Startups Like Airbnb

“Recruiting is our top priority,” most serious startups say, yet they’re terrible at it. Ad-hoc interviews, jumbled notes. But Greenhouse turns the messy hiring process into a well-oiled machine for fast-growing startups like Airbnb, Upworthy, and General Assembly. After nearly two years of quietly perfecting its software, today it raised $2.7 million to disrupt Jobvite and grow bigger itself.

“Every exec and biz leader was talking about recruiting but not everyone was really great,” Greenhouse co-founder and CEO Daniel Chait tells me. He had founded and built the custom banking software startup Lab49 from his kitchen table, taking on the responsibilities and stress of recruiting.

When he sold the company to fellow Wall Street software company Corpus in 2011, Chait decided recruiting “seemed like a big opportunity.” He started Greenhouse to explore the questions “what makes a company great at recruiting and how can we automate that?”

It turns out hiring best practices aren’t that mystifying, yet people don’t follow them. Companies charge into recruiting before knowing who they’re looking for, let interviewers come up with a hodge-podge of questions on the spot, don’t provide consistent feedback, and don’t track if hires perform well on the job.

Interview Plan

Greenhouse’s software standardizes all of this. You define the ideal candidate, what skills you want to hire for, and what personality and cultural fit you want in an employee. You run recruitment ads and try different variants to find what works best. Then you take applications and recruit, do phone screenings, issue a take home test, then conduct a few rounds of interviews. Interviewers ask the same questions to each candidate and log their feedback into forms. Companies can quickly see candidate scorecards, and HR execs can track the progress of their recruiting teams.

The goal is to be able to make apples-to-apples comparisons so it’s obvious who the best person to hire is. Afterwards, Greenhouse can integrate with a company’s performance review system to do recruiting retrospective and determine which employees became rock stars, and how a company can hire more of them.

The applicant-tracking system market is definitely crowded, so Greenhouse is looking at a serious fight. It will have to battle with Jobvite, where Chait says he sees the most customers switching from. There’s also Jobscore, Taleo, and many more, some which specialize more in candidate sourcing than Greenhouse.

But Chait says many of its competitors just manage your existing, probably-shoddy hiring system, whereas Greenhouse tries to change your ways so you recruit right. Greenhouse provides instructions and best practices right inside the product, so engineers and other employees who help with the process know what to do without intensive training ahead of time.

Screen shot 2013-11-14 at 11.00.25 AMIn addition to Airbnb, Upworthy and General Assembly, Greenhouse clients include Klout, Quirky, HUGE, Gawker and Lookout. They pay an annual fee based on their company size, and can get discounts for buying two- or three-year contracts.

The talent wars in Silicon Valley have signaled to investors that recruiting is a hot space to invest in, helping Greenhouse to pull in a new $2.7 million round led by The Social+Capital Partnership (who Chait gave rave reviews of) and Angels in the round include Nick Ganju (ZocDoc), Seth Goldstein (DJZ and, Thatcher Bell (DFJ Gotham), Thomas Lehrman (Gerson Lehrman Group and MasterStreet), and Bill Lohse (Pinterest).

The money will go to building a bigger engineering team, sales and marketing, and growing to be able to handle more clients. Next, Chait tells me Greenhouse wants to build out a set of cross-industry recruiting benchmarks. “When I buy a job ad, how many candidates should I expect? When I open a position, how many interviews should I expect to do? Ultimately, companies want to know how they stack up,” Chait explains.

Many founders I’ve talked to say recruiting is the bane of their existence. When they want to focus on building their product and growing their business, they know they have to take extreme care with hiring. Each employee is a six-figure investment per year, and a few wrong fits can be toxic to a company’s culture and progress. Maybe it’s Greenhouse, but whoever simplifies recruiting to maximize great hires while minimizing time spent will make a killing.