pymetrics (C)

John R. Wells; Benjamin  Weinstock

Supplement | HBS Case Collection | September 2019

pymetrics (C)

by John R. Wells and Benjamin Weinstock

Abstract

In August 2018, pymetrics, a solution offering neuroscience-based recruiting tests, closed a $40 million funding round that valued the business at $160 million. Over 60 companies around the globe were using pymetrics tests in their recruiting process, including Unilever, Hyatt, and Accenture. Clients were seeing real impact, including time and cost reductions – 75% reduction in time-to-hire and 25% reduction in recruiting costs, as well as significant increases in diversity (in some cases over 100%) –and new-hire performance through metrics like retention. In addition, 1 million job candidates around the world had played pymetrics games to obtain career guidance.
pymetrics tools offered significant advantages over traditional personality tests such as Myers Briggs because they measured brain function rather than responses to self-administered questionnaires. They also collected a lot more data very quickly and measured critical brain functions associated with effective executives, ranging from analytical capacity and risk aversion to attentiveness, resolve, ability to interpret emotions, speed of learning, and capacity for trust.
In early 2019, the company was expanding rapidly. It employed nearly 100 people and operated out of 4 offices around the world. CEO Frida Polli was contemplating next steps. What should the priorities be? Was it more important to add more clients or develop more services to build current clients? How many global offices should the company operate, and how should these be organized? And could the company make more of its bias-free recruiting processes in a world where regulation against discrimination was becoming increasingly important?

Keywords: BrainTech; psychodynamics; psychology; Hiring of employees; hiring; strategy; strategic evolution; strategy and execution; Startup; start-up; Startups; start-ups; entrepreneur; employment; bias; rapid growth stage; Recruitment; Selection and Staffing; Business Startups; Growth and Development Strategy;

Language: English

Format: Print

7 pages

Citation:

Wells, John R., and Benjamin Weinstock. "pymetrics (C)." Harvard Business School Supplement 720-376, September 2019.

In August 2019, Mark Zuckerberg, founder and CEO of Facebook, was surrounded by controversy. The first major storm of protest followed the surprise election of Donald Trump as President of the United States on November 8, 2016; many put the blame at the door of fake news stories served up on Facebook’s Trending News Feed. Zuckerberg dismissed these claims as “crazy,” asserting that Facebook was a technology company, not a media company. In 2017, it was revealed that a Russian intelligence team had purchased 3,000 political ads on Facebook in an attempt to influence the 2016 US Presidential Election. Then, in March 2018, the public learned that Cambridge Analytica, a political consultancy, had used 87 million Facebook profiles obtained from scraping the site to affect the election. As a result, Zuckerberg was called to Congress to testify. In early 2019, Facebook announced the company was to merge its Facebook, Facebook Messenger, Instagram, and WhatsApp platforms and share data, but that this data would be more secure. The claim was greeted with much skepticism. To explain the move, Zuckerberg published a blog post, changing the company’s mission from making the world more open to achieving privacy-focused communications on its platform. Meanwhile, Facebook continued to struggle with fake news while expanding its service offering. In June 2019, it announced it was to launch Libra, a new global cryptocurrency for its 2.5 billion users around the world. In early September 2019, it launched Facebook Dating, which promised “[to help] you start meaningful relationships through things you have in common, like interests, events and groups.” That same month, Facebook announced that it bought a New York-based start-up called CTRL-labs, which was working on developing a wristband that allowed people to control their electronic devices with brain signals. There was little doubt of the scale of Zuckerberg’s ambitions. But, ongoing investigations into Facebook’s privacy violations and calls to break up the company pointed to more fundamental issues.

In April 2019, Manoj Badale and Charles Mindenhall, co-founders of Blenheim Chalcot, were contemplating how they might go about developing their portfolio. Since founding the company as an internet consultancy called netdecisions in 1998, Badale and Mindenhall had transformed Blenheim Chalcot into the United Kingdom’s “leading digital venture builder,” having successfully built, and, in 15 instances, exited, 42 businesses across a number of sectors, including technology, financial services, sport, media, property, and education. In 2018, Blenheim Chalcot had portfolio sales of over £350 million and employed over 3,000 people.

Unlike a traditional venture capital firm, Blenheim Chalcot was a “venture builder,” often developing its own ideas then bringing in and supporting entrepreneurs with a range of services and support, and funding them in return for a majority equity stake (typically 80-90%). The idea was to increase the probability of success by allowing the entrepreneurs and their teams to spend less time fundraising and dealing with time consuming tasks, such as property, recruitment, legal set up, and gaining access to a client network. This enabled the entrepreneur to focus more on product and customers. The downside of this approach was that the growth of the group was somewhat constrained by the founders’ own capital and their access to co-investment funds.

As Badale and Mindenhall contemplated the future, they were asking themselves how they could best develop their ecosystem for building innovative businesses. In October 2018, they had opened an office in New York. They were also partnering with Imperial College London to open a 200,000 square-foot tech and innovation campus in early 2020. Should they continue on their current track? Or, should they be bolder, perhaps going public, adding new sectors, more businesses, bigger opportunities, and expanding into new geographic markets? How could they achieve these growth goals while maintaining sufficient control over the businesses? How could they achieve growth and maintain the quality of the businesses – and not spread themselves too thinly?

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