It was Game 7 of the 2016 World Series, and Kurt Heikkinen was watching intently at home. During a 17-minute rain delay in the 10th inning, Heikkinen interviewed seven candidates for a position at his company, Montage Talent Inc., from the comfort of his couch using its on-demand video interviewing software.
He viewed each of the candidates’ pre-recorded responses to his questions, and moved on within a couple of minutes if he felt the person wasn’t a fit.
“You would erode your brand if you got on the phone (with a candidate), you scheduled 20 or 30 minutes, and after three minutes you said ‘You know what, I’m not interested.’ This gives you the ability. Major time savings,” Heikkinen said.
That’s the key value proposition of the technology Heikkinen and three other co-founders developed in 2007 to allow employers to more efficiently schedule and conduct interviews, driving down their costs and time per hire.
Montage has quietly been building its presence in the world of human resources technology out of an unassuming office in Delafield.
And come December, the firm will be moving into a much larger office space next door. Because while you might expect a rapidly growing software developer with a client base that includes global powerhouses like Capital One Financial Corp., Wyndham Worldwide Corp. and Samsung Group to move to a larger city, its leadership sees Delafield as a competitive advantage.
“Eighty percent of the hires that we make, we’ve been really blessed to tap into the greater Milwaukee area, but even the east side of Madison,” said Heikkinen, president and chief executive officer. “Being one of the few SaaS technology companies, we’ve created an opportunity that’s unique, so we’ve been able to attract some of the best software engineers in the area who want the experience of helping to build product that’s used in the enterprise outside of their organization – something that’s very different from a software engineer working inside of Johnson Controls or Manpower or Northwestern Mutual Life.”
Montage recently raised an $8 million series D funding round, a rare feat for a Milwaukee company, and acquired Costa Mesa, California-based market leader GreenJobInterview. The acquisition closed Aug. 31 for an undisclosed price.
The 85-employee firm is growing at a 50 percent annual clip, with plans to increase to 300 employees within five years, driven by demand from large corporations for more efficient and less costly hiring processes. While Heikkinen won’t get into specifics, he describes Montage as having “strong ongoing profit potential.”
The need
Hiring is a massive challenge for businesses across the globe. Companies spend an average of $4,129 per hire and the average time to fill a position is 42 days, according to the Society for Human Resource Management’s Human Capital Benchmarking Report.
Add in the tight talent market and pronounced labor shortages in many industries, and employees have gained significant leverage while employers compete for their attention.
Montage offers video, voice and text interviewing software-as-a-service and hiring process tools to large corporations. It already commanded the large corporation chunk of the human capital management market, but by acquiring GreenJobInterview, has expanded its client list with firms like Wal-mart Stores Inc., MillerCoors LLC, Anthem Inc., The Home Depot Inc. and PepsiCo Inc.
The merged company serves 100 of the Fortune 500 companies and 300 total clients, including a number of competitors. But that hasn’t presented a challenge, Heikkinen said.
“In many instances, those clients see it as validation that they’ve made the right decision,” he said.
And Heikkinen sees room for continued growth, both by bringing on new clients and adding new products, and via strategic acquisitions.
“One of the things we need to be mindful of is the great market potential that exists,” Heikkinen said. “We look at the category in which we sell as a $1 billion-plus category.”
Founded in 2007 by Heikkinen, Andy Bonk, Mike Bonk and Patrick Foy, Montage was originally called Expressume, but rebranded in 2010. Andy Bonk and Foy are also still with the firm.
The original idea was to allow job candidates to better present themselves using video. Now, it is targeted to employers.
“By definition, Montage is a film editing technique that brings together pieces of information to tell a story, and we thought that was perfect in terms of both the medium in which the technology exists, but also what we do for employers,” Heikkinen said.
Configurability and the ability to integrate with a client’s other technologies are key differentiators for Montage, he said.
Montage’s competitors include Skype, WebEx and Facetime, but those applications aren’t purposely built for interviewing or easily integrated with other technologies in an enterprise, Heikkinen said. It’s competing for niche market share with other video interviewing firms like VidCruiter, Spark Hire Inc. and RIVS Inc.
Even as the job market and economic conditions change, Heikkinen expects the candidate-centric market to continue as the gig economy proliferates. Millennials expect this experience, he said.
“We think about growth,” Heikkinen said. “We don’t think about near-term exits because we think there’s a long, long runway for the success of this company. We see a long growth trajectory for years to come. We think more in terms of future acquisitions than we do in terms of exit.”
How it works
The traditional recruitment process doesn’t work for anyone involved, Heikkinen said. It’s rife for disruption.
“There has been technology to help support connecting employers and candidates at the top of the funnel,” he said. “Where innovation hasn’t happened is once that candidate becomes engaged. And that’s where the process is very slow and very frustrating for the candidate.”
It’s the part of the process in which the applicant does a lot of waiting and wondering.
“Those pains and challenges are driving our growth,” Heikkinen said. “People know they have to do it better. There has to be a better way for the candidate to compete, to win that war for talent, and for the efficiency and effectiveness of the recruiting teams.”
The average recruiter has upward of 50 job requisitions at one time, and may be juggling 100 different applicants.
Montage’s on-demand interviewing allows a candidate to record videos answering a set of questions whenever he or she is available.
The companies using Montage software create a virtual foyer to brand themselves and engage candidates, where they often explain more about the position, introduce the candidate’s potential co-workers and even do a video tour of the office. The hiring manager at Blue Bunny ice cream maker Wells Dairy Inc., for example, opened the freezer and showed candidates the free ice cream inside.
“ESPN had a specific initiative to improve the diversity of their on-air talent,” Heikkinen said. “Bristol, Connecticut’s not a great spot from a diversity standpoint, so they essentially used our technology and over a six-week period, were able to reach over 500 applicants from over 53 different countries. That foyer becomes a great way to elevate an employer’s brand, a great way to reach employees in markets and areas that they never would have been able to reach before.”
The applicants auditioned for the broadcaster job via an on-demand video interview, uploading their highlight reels and calling a sports clip in real time.
Or, interviews could be conducted via SMS using Montage’s newest product.
It is helping FedEx fill 100,000 positions for the holiday season, and on-demand chatbot text interviews are a way to ask knockout questions like: “Are you willing to work for $12.25 an hour?,” “Can you start Nov. 1?” and “Can you lift more than 25 pounds?”
Employers can allow candidates to pause the interview and come back to it later, or re-record their answers. But when the employer wants the candidate to think on his or her feet, such as a technical proficiency question, the employer can turn off that feature.
The employer can pre-record questions for a phone interview that is administered to the candidate at his or her preferred time. The candidate has the option to hang up and call back later.
“We afford the client a tremendous amount of configurability or control over the candidate experience,” Heikkinen said.
Montage has been able to reduce its clients’ time to hire by two to three weeks for professional positions.
“In the past, a recruiter might only do two phone interviews in an hour. Now, with our application they can review 10 or 15 applicants in an hour,” Heikkinen said. “They’re getting A level talent as opposed to the B level talent because they move faster.”
Clients pay for Montage via multi-year annual subscriptions, priced per hire. The cost ranges from $15,000 to $1 million annually, depending on how much a client uses it. Client success managers from Montage help implement the solution at the company, demonstrating its attributes and helping drive adoption.
“You have to do some education, you have to do some evangelism and you have to help people understand how it can impact their day-to-day,” said Sarah Doughty, vice president of client success at Montage.
Doughty helps clients calculate their return on investment and time and cost savings, before and after using the product.
“We find that our clients will typically save $250 to $450 per hire by using Montage,” and two to five hours per hire, she said. “If you do the on-demand process, you’re really eliminating scheduling time altogether, because now you’re giving the candidate the opportunity to do that on their own time and then the recruiter can review that on their own time.”
Montage has seen its usage patterns change over time, with video becoming a smaller percentage of its growing number of uses. And the company has added new features as technology has evolved and consumers have become more comfortable with using smartphones.
The company supports millions of interviews worldwide each year. It recognizes a user’s device and automatically translates into 20 different languages.
With its event manager scheduling tool, the recruiter can make blocks of time available, and the candidate then self-schedules the interview.
“How do you go back-and-forth with the candidate and all of the interview participants in terms of achieving the scheduling?” Heikkinen asked. “Our large clients, they’re scheduling tens of thousands or hundreds of thousands of interviews a year.”
In high-volume hiring situations, Montage can calculate candidates’ scores on multiple choice questions and the employer can view just the 100 percent applications. And an employer ranking tool allows multiple managers to view and sort candidates, provide feedback, and give a thumbs up or thumbs down to each.
New digs
Montage has been in its current 10,500-square-foot space since 2010. In its new 27,000-square-foot offices next door, Montage will start by occupying about 13,000 square feet, and will expand as it grows.
The company is currently renovating the new space, located at 440 Wells St. in Delafield, which will include screens and devices to allow for interactive demonstrations of its product to clients and visitors when they arrive.
“We really want to showcase the elements of our brand and our culture,” Heikkinen said. “The foyer will be the centerpiece for that and really bringing clients’ stories to light and the technology to light. While you’re waiting in the foyer, you might be able to go through a sample interview.”
The buildout of the space, which is owned by Hendricks Commercial Properties LLC, is being amortized over the length of a five-year lease, so Montage isn’t making any upfront investment.
“I think they see it as an opportunity to keep a high-tech growing company in Delafield,” Heikkinen said.
The company expects to move in to its new digs in December.
Attracting the funding
Investors are very discerning, so the co-founders of Montage knew they had better have a big idea with the right leadership and vision, Heikkinen said.
His 25-year background in human capital and human resources, including at global software firm PeopleSoft Inc. and Brown Deer-based financial software firm Metavante Technologies Inc. (now FIS), helped convince investors of his worth, Heikkinen said.
“Early on, one of the first hires that I made was an individual named Greg Meyers. Greg had a deep background in architecting and building enterprise-level software. He had been with a startup company in the early ‘90s called Palladio (Software Corp.); they sold it to Rational (Software Corp.) and Rational was sold to IBM,” Heikkinen said.
Meyers described his role as helping Heikkinen make his idea a reality. The original features were live and on-demand interviewing.
“What was most difficult at the time was at that point in time, SaaS was relatively new and the platforms that were available weren’t quite as mature as they are now,” Meyers said. “We had to go through that maturation process along with the technologies that we use to deliver our software-as-a-service.”
Montage updates its software every two weeks and rolls out major new feature deployments about once a quarter, he said.
“We’re constantly updating to remain compatible with different browsers, different mobile devices that are available and then also adding new capabilities,” Meyers said.
Among the key factors when considering new capabilities for the software are market acceptance, whether it solves clients’ business problems and whether it is scalable globally. Meyers has helped deploy Montage servers around the world to assure the technology responds quickly in the correct language and meets data and privacy regulations, wherever a client may be.
Montage also made wise decisions along the way in terms of how it innovated and its target market, Heikkinen said.
“We have an internal term here called a zebra. When you see a zebra, you don’t confuse it for another animal, right? You’re pretty sure when you see a zebra, it’s a zebra. That same concept applies to our ideal client profile,” he said.
A “zebra” is a large enterprise of 5,000 employees or more that values the candidate experience, has a central talent acquisition function with a diverse set of hiring needs, has a visionary leader in charge of talent acquisition and shows it is willing to invest in technology, Heikkinen said.
There’s more than 15,000 companies with 5,000-plus employees, so it’s a large addressable market in which Montage focuses on a particular niche.
“Our investors have looked at that and said ‘You’ve got the leadership in place. You’ve got a huge market opportunity. You’ve got a business strategy that makes sense.’ And we’ve invested in sprints. To get to this round, we’ve had to have demonstrated success. It’s no longer an ideal. It’s ‘Has that capital been put to good use?’”
The first investors were Madison-based Calumet Venture Fund and Waukesha-based Gary Comer Inc.
“At that stage when it’s series A, we had limited revenue and it really became about helping Calumet and GCI understand the market potential,” Heikkinen said. “At that point in time, it was less about the technology we had built and more about the market trends. It was a combination of helping them understand the market opportunity and then our business plan for success.”
Another early and ongoing investor in Montage is Baird Capital.
Jim Pavlik, a partner at Baird Capital, said the division of Milwaukee-based Robert W. Baird & Co. Inc. has focused on investing in the human capital management space. In its research on the sector, Baird watched the emerging technology companies in the video interviewing space and noticed that Montage was right in its backyard, he said.
In 2010, the companies connected and Baird was impressed by Montage’s strong platform and initial commercial wins.
“One of the big drivers behind our decision was really the leadership at Montage,” Pavlik said. “A lot of our evaluation process behind investing in earlier stage companies is our belief and confidence in the leadership’s ability to really scale and grow an organization and innovate, and we certainly had a lot of that confidence in Heikkinen and we’re big believers in his ability to take Montage to the next level.”
Baird was intrigued by the market opportunity for video interviewing technology, and expected it would drive great efficiency in large-volume recruiting once adoption picked up.
“There is a high level of work flow automation and overall just operational efficiency that you can really bring to bear using this type of technology,” Pavlik said. “We really felt it was a matter of time before it became really industry standard.”
Baird decided to invest in that first round, and has continued to double down on Montage in its successive funding rounds. It has now invested about $5 million into the company, and Pavlik is on the seven-member board.
“It’s really been based on the company’s continued growth and success in the market,” he said. “We’ve continued to see broader market demand and interest in the technology, and frankly, we’ve seen Montage really execute very well in terms of continuing to innovate its technology platform.”
Montage has raised a total of $24.7 million to date.
Next steps
Since Montage just completed an acquisition of a competitor and raised a substantial round of funding, exit isn’t top of mind for Baird capital right now, Pavlik said. The focus is on scaling the business and maintaining its growth trajectory.
“When they first invested in us in 2011 or 2012…it was the first time that Baird Capital had invested in an early stage Wisconsin-based company in several years. Prior to that it was Pinstripe, which is now Cielo,” Heikkinen said. “I’ve got a lot of pride in the fact that we were able to secure that investment and continue to re-earn that investment and become a showcase here in Wisconsin.”
Montage’s first big clients were Jack Daniel’s maker Brown-Forman Corp. and Metavante. Brown-Foreman sought out Montage because many prospective employees hadn’t heard of the parent company, and it needed to utilize its strong product branding.
“In an early category, early market like this, you have to service them very well and turn them into raving fans and make sure they’re willing to tell others about that,” he said. “Our first 10 or 20 clients were so critical for us.”
Also among Montage’s early clients were Milwaukee-based global recruitment firm ManpowerGroup and then-Glendale-based Johnson Controls International plc.
“I’ve been a competitive guy my entire life,” Heikkinen said. “I grew up playing hockey. I love to compete. If the puck’s in the corner, I’m going to come out with it. I saw this massive opportunity and I wanted to create something unique, not only for shareholders but for southeast Wisconsin.”
Part of this for me is about proving that successful technology companies can be built anywhere, and Delafield, Wisconsin’s a great place for it.”
Investors have challenged that idea, but Heikkinen said the anywhere nature of its technology means it doesn’t matter where Montage is located—it has still been able to attract business from an international client base.
“Kurt Heikkinen. If I had to use one word to describe him, I would say ‘driven,’” said Kathleen Gallagher, executive director of the Milwaukee Institute, a nonprofit computational science and technology organization dedicated to helping economic and workforce development efforts in the region. “He is just a hard-driving tech executive. Exactly what we need in Wisconsin. He has the pedigree to be doing this.”
Milwaukee has an under-recognized expertise in the staffing and recruiting industry, led by ManpowerGroup, Patina Solutions Group Inc., Cielo Inc., Robert W. Baird & Co. Inc. and others, she said.
“Milwaukee really has an expertise in this area and there’ve been a lot of startups, so I think it’s exciting that someone of the caliber of Kurt has another one,” Gallagher said. “To me, it’s no surprise that a company in the staffing and recruiting space is having a later (funding) round because this is one area of expertise for Milwaukee and … we’ve got all the pieces that you need for that kind of a sector to grow.”
