Case Study – Navigating Time Constraints in Entrepreneurship

Co-founders Petter and Jon began working on the project that would later evolve into Candario in the autumn of 2017. Their future co-founder Daniel was spending a semester abroad in Australia and joined when he returned in January 2018. In the period from August to September 2017, the (then) two-person team were engaging in market research about the software needs of companies with substantial recruiting activities. As Petter later explained,

I sat down with people I knew and made a list of questions about what systems they use, how their process of recruitment is organized internally and so on. At the end of every interview they talked openly about what the problems were with existing solutions. The main thing they said was: We don’t have all the information [about prospective candidates] in one place and so you can’t easily share access with other employees. This means that if an HR-department has access, they are typically the only department that has access.

The solution Candario first designed addressed this issue specifically, by allowing companies to collect, organize, and easily share information about candidates across their organization. Petter later stated about Candario’s value proposition at the time,

Our solution is a tool that focuses on this, or these problems. It gives [companies] shared access which makes it very easy for them to follow up with candidates, which was one of the problems they were having. In addition, we have features which make their days more efficient, for instance making it easier for them to extract the GPA [grade point average] of a candidate and so on.

All three founders of Candario entered the project with practical experience, having interned in the Norwegian management consultant and IT industries. In addition, all three founders had experience from working with a student organization called Bindeleddet (The Connector), which arranged on-campus recruiting events for students and companies looking to hire. Having spent semesters abroad, all three founders at Candario were also early to notice a European initiative led by the Erasmus+ student exchange programme, which aimed to make it easier for foreign exchange students to have their academic credits and associated grades transferred between European universities. The Norwegian initiative to join the network, Vitnemålsportalen, had been commissioned in 2011 but only launched in January 2017, 6 months before Candario began their market research period. Using Vitnemålsportalen’s application programming interface (API), Candario designed an import tool which made it easy for companies to request and review students’ grades. The tool helped companies sort through and parse candidates via quantitative measures such as how long they had been stud- ying, what their grade point average was, and which courses they had excelled in. Regarding the problems this tool was addressing, Petter later stated, ‘Recruiting is a very time-consuming process which often comes in addition to an already long day of work, so it often doesn’t get prioritized. In addition, there isn’t enough attention paid to following up with candidates.’ In an interview in February 2018, Daniel reiterated this view, stating, ‘From my perspective, it’s the following up of candidates that is the most important; the direction recruiting will have to go in the future.’

Candario secured the first pilot customer for their candidate management software in January 2018. Following three sales meetings over the course of a few weeks in the autumn of 2017, they sold the first licence to a division of Swedbank, one of the largest banks in Scandinavia. The introductory price for the licence was NOK3,500 per month. They had made the sale by first approaching a former student from their graduate programme (who worked at Swedbank) while he was attending a career fair on the company’s behalf in the autumn of 2017. As they pitched the value proposition of their product, he echoed their belief that it filled a need Swedbank had, stating, ‘McKinsey does it this way; so should we.’ At the time, Candario’s value proposition was stated by Petter as ‘being able to acquire, organize and track the evolution of a candidate throughout their time as a student and keep in touch’.

Around the same time, in January 2018, Daniel returned from his semester abroad and joined the team. In February, Petter and Daniel were interviewed together about the progress of their start-up and their current plans for further expansion. Confident following their success in reaching an agreement with Swedbank, Petter stated, ‘We have a goal of securing two [more] companies in February, in addition to the one we already have. By June, we hope to have 10 paying customers.’ Regarding customer segmentation, at the time, the founders stated that they were focused on ‘high-end talent recruiting, primarily within management consultancies and finance’ because they themselves and much of their social network knew how recruiting worked in these industries. Although they had early on considered including companies recruiting within law and IT, they decided to focus on management consultancies and financial institutions because such companies often employed alumni from their own graduate programme. The firm’s customer acquisition strategy at the time involved ‘sales meetings and cold-calls. … Then 3 to 4 weeks after on-boarding we call again, if they haven’t gotten in touch with us before that,’ according to Daniel.

Candario met their goal of signing two new clients in February. By April, they had six paying customers, from all the industries they were targeting, paying anywhere between NOK18,000 and NOK78,000 per year for use of their software. Replying to the question ‘What is the response among them?’, Petter at the end of April replied, ‘Finance is very hard. They work a lot and so never find the time. … It’s not that they’re uninterested; it’s just that they don’t focus on it all year long, only during recruiting season in the autumn.’ Regarding pricing, Petter later stated, ‘We’ve experimented with pricing, since we don’t know exactly where the market is.’ To improve and expand the functionality of their product, the founders later con- ducted user interviews with existing customers, typically the head of human resources, while also stating that ‘these often turned out fairly boring, as we often knew in advance what their problems were’.

Although they were progressing in accordance with their own milestones, Candario in the period from March to April 2018 decided to pivot away from their existing value proposition (‘being able to acquire, organize and track the evolution of a candidate throughout their time as a student and keep in touch‘). The founders highlight two events as especially important to them in reaching this decision.

The first was a strategy session with alumni from their graduate programme at NTNU in early March 2018. During the session, as Petter later attested,

A lot of the feedback made us begin to gradually shift our focus. We realized that we had been thinking a little bit too big and wide. … We realized that we had to narrow in, and were given some guidance and good advice which we later deliberated on internally and agreed would be a good strategy.

Given that the three founders were also still students themselves, they decided that focusing on candidates who were still students might be the ‘narrowing’ they needed. As Petter described, ‘We chose on-campus recruiting as a more targeted market. … It was very convenient for us to focus more on campus events and career fairs.’ Adding to Petter’s reply, Daniel stated, ‘I think we needed [a wake-up call] in order to confirm intuitions we already had. Although we had spent a lot of time talking about various tools for recruiting, including of more experienced candidates, the conversations always came back to students and campus events.’

The second event that helped convince the student entrepreneurs that narrowing in on ‘on-campus’ recruiting might be a good strategy was an interview they had for the world-renowned start-up accelerator programme Y Combinator, which occurred in April 2018. Later replying to the question, ‘How did you arrive at the decision to focus on creating more value for students?’, Petter at the end of April replied, ‘By applying to Y Combinator. Writing that application, a lot of the questions asked us what our unique value is. … When you’re facing people who are considering investing a million NOK, you have to be honest.’ Y Combinator is a seed money start-up accelerator used by over 2,000 companies includ- ing Airbnb, Stripe, Dropbox, Coinbase, and Instacart, whose combined valuation was over USD155 billion at the time of the study. Daniel added, ‘We were still in the process of figuring that out. Although we offer a lot of functionality in one place, many other competitors and services offer similar things that we do.’ He continued, ‘We drilled each other on figuring out exactly what our unique edge should be. It was a fairly long process, some weeks of writing the [Y Combinator] application and banging our heads into the wall. Late nights.’ Although the team ultimately did not get accepted to Y Combinator, they decided to stick with the vision they had outlined in their application and interview and build a platform for on-campus recruiting.

So that’s the plan, we’re going to work on it this summer, so that we’re ready for the career fairs this autumn and can start capturing unique data from both companies and students. (Daniel)

When Petter and Jon first launched their project in the autumn of 2017, Jon was the technical lead for the project. Later, Petter referred to the product at that point as ‘a cross between a recruiting tool and CRM [customer relationship management]’ whose incumbent substitute solutions (for smaller companies) included ‘Excel or HR solutions which they try to adapt to their own needs’. By summer 2018, the team was committed to the idea that to generate more value for companies, they would need to expand their offering by generating more value for students. However, to do that, their technical solution would need to be largely rebuilt. As Daniel stated in February 2019, ‘For all intents and purposes, it would have been impossible to turn our existing product into a platform. It was built using unique databases for each company.’ This technical limitation made it impossible to provide additional value to students, as information about each candidate was exclusive to the companies they had applied to. ‘So, we had to build up a new back-end structure. … We didn’t just “end up” becoming a platform, we deliberately chose to become one, which entailed investing in it instead of our former solution.’

The rewrite of their software (using much of the functionality they already had) took 7 to 8 weeks, ‘perhaps even less, but we did do a fair bit of planning’. Rather than having individual databases for each company, Candario’s new back-end structure stored companies’ data about students in a shared database. To accomplish this, Candario had to ensure that the privacy and security of students’ data was maintained, and that each company only had access to the specific information each student had agreed to share with them in addition to the company’s own data about the students (such as notes, emails, and additional information). ‘We added mechanisms to ensure that, when logged in as one company, a user would never be able to retrieve data points from other companies’, Daniel stated. Replying to the question ‘Did customers notice the change [to the platform]?’, he responded, ‘Mostly no, they didn’t. What they did perhaps notice is that there is now a common login, where before they all had their own domain-specific logins.’ He added, ‘Without doing anything they now [also] have access to some additional, common data across the platform which they didn’t have before, such as information about events and career fairs. That’s information everyone wants to see.’ Looking back, Daniel estimated that 90% of the code written for their candidate management system had to be rewritten for the platform, adding, ‘It’s of course always easier to build a new system when you’ve already made it before. We knew we had the same classes, each candidate still had a first name and so on. The issues were more at the level of linking between the various objects in the database.’

Having successfully rebuilt their database and relaunched their service, now as a platform, Candario was—as Petter had promised—by August ready to begin matching companies and students. However, as they were aware, creating value for both sides of a two-sided market is not necessarily a trivial pursuit. As Daniel later attested,

We are suddenly relying on the fact that we have a bunch of companies that students want to work for, if we want students to be actively using the platform. To have students think
that Candario is the ‘natural tool to go to as a student looking for a job‘, well that requires that most companies who are recruiting are also using Candario. That’s the challenge we had to overcome.

Returning to their university in the autumn of 2018 with a new, two-sided platform in hand, the founders of Candario set to work on overcoming the circular challenge of attracting companies and students to their new solution. At that point, from the perspective of existing customers, their service was still a candidate management software. With less than 2 months to go before the first career fairs were starting, they believed they had come up with a strategy that would change that. Replying somewhat vaguely to the question, ‘How will you attract students?’, Petter answered, ‘The companies will do that, at career fairs.’ Jon later described their strategy in more detail:

We reached out to career fairs and presented a kind of value proposition, that offered value [both] to their [participating] companies and students. This led to 10–12 fairs agreeing to partner with us. The partnership agreement involved … when they send out questionnaires to the participating business, they ask how many chairs and tables they want for their stand. We asked them to include a yes/no question that asks something like ‘Would you like to know more about the candidates you meet at the fair?’ (Jon)

That is, rather than approach companies with their former value proposition (described by Petter as ‘a cross between a recruiting tool and CRM’), Candario’s founders instead devised a new value proposition, later described as ‘a tool that makes it easy for companies to register information about students at career fairs’. In addition, critically, they devised a new sales strategy for on-boarding companies, through partnerships with career fairs: ‘It’s a win for everyone. Career fairs are able to offer more value to companies, companies receive more information about potential candidates and students can more easily share their résumés and grades’ (Petter).

The team hired their first employee to help execute the strategy, another early-20s male from Jon and Petter’s graduate programme named Morten. He later described how ‘Petter called me and said that they needed another person to help with business development and sales. I obviously accepted.’ As he explained,

At that time, they had just rebuilt their service from scratch and were about to launch a new strategy of partnering with career fairs. Through these partnerships, we received lists of companies who would be attending and so might be interested in our ‘sign-up tool’. The first 2 months consisted of calling each of these companies and convincing them to use Candario at their next career fair.

Jon later concurred that ‘We leveraged our partnership with each career fair to offer companies Candario free of use for the autumn term. About 70–80 companies agreed to this.’ In addition, Jon estimated, ‘I think we had about 200 additional companies in the pipeline by that point; although we didn’t get them all, we did get a fair share.’ Morten later described doing ‘100 demos of the service in that period alone’.

By participating, companies were promised an easy way for them to retrieve much richer data about potential candidates than they would ever be able to capture themselves with their typical system of Excel sheets: ‘They get richer data about the students in a very simple way, including name and contact information, work experience, a photo from LinkedIn, informa- tion about their graduate programme, their year of graduation and so on. In addition, students can choose to share their grades with them.’ Business developer Morten later described the problem they were solving for companies as follows:

A company attending a career fair typically meet somewhere between 2–300 students in a day, which is 2–300 potential new hires. However, all they leave the fair with is an impres- sion of ‘we had decent traffic today’. They have no idea who these students are or whether or not they are attractive candidates. They also have no way to reach them. Despite the fact that they might spend tens of thousands to attend, they really don’t know what they are gaining from it.

Replying to the question, ‘How is Candario changing this for them?’, he added, ‘They can leave and go back to the office knowing that they have 100 potential leads, who they are, which year they graduate and which 30 might be potential candidates for internships in the coming year.’

This led to about 30–40 companies using Candario during the career fair here at NTNU. Meaning, each company had a contact form on an iPad or a laptop where interested students could enter their name and email address. Students would later be sent an email where they could import their LinkedIn information and/or share their grades. (Jon)

Candario’s solution, in other words, allowed companies to review each student’s résumé and grades (from Candario’s API integration with Vitnemålsportalen) and easily send out person- alized emails to candidates they considered interesting. ‘Some companies used this function- ality to invite candidates to an early morning informal mingling session. When 20 students showed up, they [later] said they would never have managed to do this without our system.’ Jon added, however, that ‘I don’t know if they [actually] used our tools to filter through the students that had shown interest, or whether they just sent them out to everyone, but at least it enabled them to more easily follow up each student from that point on.’ Morten reiterated that if their customers had used their old systems, most of the companies would have had chaotic Excel documents full of emails but no easy way to request or organize résumés and grades. For the mass-email feature, he stated, ‘They could use the mail-merger functionality in Outlook, but it’s a pain. Some poor HR employees have to do it, but it takes a lot of time. That’s one of the things we solve for them.’

By the end of the recruiting season of 2018, a year into the company’s founding in November, Candario had processed close to 10,000 students’ applications to companies via their career fair strategy, all over Norway. They spent the remainder of the year approaching companies who were not yet paying for their software to begin doing so for the coming calendar year of 2019. By January 2019, Petter was describing Candario’s value proposition as a ‘marketplace for businesses and students/new graduates’, stating that ‘Companies use Candario to collect information about candidates, parse through applications and do follow-up. Students use Candario to find new career opportunities, share their profile with companies and apply for jobs.’ Following a successful autumn semester of marketing their service towards companies through partnerships with career fairs, their service was now being used by 93 companies, with a 7-day retention rate of approximately 50% among companies. By June 2019, the student entrepreneurs were in the process of signing term sheets for venture funding totalling NOK3,000,000. At that point, Candario’s platform was being used by approximately 12,000 students. Since the autumn of 2018, an average of 10 students per week had secured job offers through Candario’s new platform for on-campus recruiting.