Chasing Taleo for 18 Years?

Recruitsoft, Taleo, Oracle Recruitment -- it's had several names -- but that recruiting software has been the favorite of large company multinationals for years. Many competitors under various leaders have butted up against its brick wall. But for 18 years, only one company run by one man has consistently tried to be Avis to Taleo's Hertz -- iCIMS. Can it possibly become No. 1?

By Bill Kutik

You know we have hundreds of technology start-ups every year, especially in recruiting or talent acquisition. But you may not realize that very few were designed to last.

Every venture capitalist and private equity firm considering investing in a start-up asks: "What's your exit strategy?" In other words, how do you plan to cash out after your four or seven years of incredibly hard work, lose your baby in the process and give investors the ginormous returns they want are looking for?

Often the discussion centers around a "liquidity event," which usually means going public or selling the start-up to another company.

Professor Jeffrey Pfeffer, the closest thing Stanford Business School has to an HR professor, nails the reality perfectly as he usually does:

"Silicon Valley is really only 10 to 20 large companies and 400 or more small ones acting as their R&D labs and sitting around hoping to be acquired by them."

Not iCIMS.

And not just because the TA vendor is in Mattawan, N.J., between New York City and the Jersey Shore. Plenty of investment bankers, VCs and private-equity guys have trooped through the office.

The reason is, after spending his two years after Cornell with an IT recruiting firm, CEO Colin Day founded iCIMS in 2000 at the age of 23 and has been at it ever since without taking a dime of outside operating capital!

I'm fond of saying he gave his youth to the company, but does 40 qualify as being middle-aged anymore?

This is totally anecdotal and unscientific, but for years, whenever a company told me they wanted to get off Taleo, they always said they were looking at iCIMS as an alternative.

By late 2016, Colin had built a profitable company with no debt, 700 employees and 3,200-plus customers generating $125 million in yearly recurring revenue. And the jewel in its crown is Microsoft buying two of its three modules for use in recruiting in 40 countries now, with plans for a total of 100. Also Amazon leaving Taleo for iCIMS.

Not exactly Zenefits, huh? Precisely the point: Colin got there the old-fashioned way, by following the rules and working hard for 18 years. And passing up a lot of offers to be acquired.

His vision is to become the #1 recruiting platform with $250 million in revenues in 2020. And to beat Taleo. Always to beat Taleo.

iCIMS' basic product has three modules: Recruit, Connect and Onboard. Like many of his competitors, Colin came a little late to the idea that the center of value in TA had shifted away from the ATS (Recruit) to recruitment marketing (Connect). He released his marketing module about three years ago and now has more than 660 of his 3,200 customers on it. But many were already using add-ons like Avature, making it a harder sell.

Plus, I may be wrong about the center of value moving to marketing, though I've been saying it for years. Only terrifically well-staffed recruiting organizations can spend the time chasing happily employed candidates, rather than trying to attract their dissatisfied colleagues with various forms of advertising.

The third leg of his stool, Onboard, has done better. Nearly 1,500 customers are using it.

Now, Day has a platform play called "UNIFi" with three parts: a software marketplace, standard connectors for partner products and a developer's platform to write new applications.

Every vendor wants to have a marketplace because recruiting requires so many different applications. Why not facilitate your customers buying and integrating them, and getting a cut, besides?

iCIMS marketplace is quite large, given its recent launch in 2016. It has 23 categories of more than 600 products on it already; plus, seven of those categories have standard connectors. Customers have already bought more than 1,200 connectors.

Now with "iNSIGHTS," the company is jumping into analytics with both feet using anonymous data from all its customers.

Colin talks about having developed a whizzy competitive analysis product with software. Whether he uses that or the back of a shovel, he keeps closer track of TA marketshare -- particularly Taleo's -- than anyone in the industry.

These are all his numbers as of June 2016 released at iCIMS Analyst Day late in 2016.

Colin's numbers show iCIMS catching up to Taleo by adding more than twice as many new customers a year. The totals in June were 3,500 for Taleo (which jibes with what Oracle says) and 2,600 for iCIMS. The followers in descending order are Taleo Business Edition, Ultimate, IBM/Kenexa and SilkRoad.

Getting more fine-grained, its numbers show Oracle losing market share and iCIMS gaining it for the years before July 2016 and 2015. They show that in every market segment: 100 to 749 employees, 750-2,499, 2,500 to 7,499 and 7,500 and larger.

But Colin's 18-year chase to beat Taleo in market share may be hard to realize in just four years since his own numbers show Taleo with 22 percent and iCIMS with 10 percent.

If and when Colin finally does beat Taleo, I think it could be the best moment in 22 years to offer to buy iCIMS.


HR Technology Columnist Bill Kutik is co-chair emeritus of the 20th Annual HR Technology Conference & Expo, returning to Las Vegas, Oct. 10-13, 2017. Watch top thought leader Jason Averbook on the 25th episode of his broadcast-quality video series, Firing Line with Bill Kutik, for his 2017 predictions.


Jan 3, 2017
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